Are Continuation Patents Still Viable After a Parent is Cancelled?

Patent families are formed of multiple continuation/divisional filings stemming from the same disclosure. Typically, continuation patents present marginally different claim sets. An age old prosecution strategy is to keep a continuation pending to adapt claim sets in an iterative fashion to competitor designs. But what is the impact of the PTAB cancellation of a parent patent’s claims on such pending continuations?

At least from the PTAB perspective, indistinct claims are to be estopped by a PTAB cancellation. That is, in accordance with 37 C.F.R 42.73(d)(3)(i), the agency should not issue claims that are patentably indistinct from claims cancelled by the PTAB . Still, continuation patents that issue prior to a final written decision of the PTAB are not barred from issuance. While courts, including the Federal Circuit have found such claims barred by collateral estoppel, the question of patentable distinctness may require some litigation.

The District of Delaware grappled with this issue last week in Stragent, LLC v. BMW of N. Am. The pending case in Delaware is the third set of litigation between the parties.

This case revolves around patents related to the AUTOSTAR communication standard. Plaintiff in both cases asserted patents from the same family, but in an earlier litigation Defendant succeeded in invalidating the first set of patents at the PTAB. This resulted in the Plaintiff disclaiming the patent and filing a motion to dismiss the earlier case with prejudice in the Eastern District of Texas (EDTX).

While the case in the EDTX was pending, the four patents now at issue in Delaware were allowed. Subsequently, the Plaintiff filed suit for infringement against the Defendant in Delaware.

Defendant argued, in its motion to dismiss, that claim preclusion barred Plaintiff’s action. The Delaware court concluded that the case did not involve the same cause of action. The Court reiterated that the general rule, that each patent gives rise to its own cause of action. However, patents that are patentably indistinct may not give rise to separate actions. The Court observed the key inquiry is whether the scope of the patents is substantially the same.

The Defendant attempted to leverage the USPTO estoppel rule and prosecution events pertaining to patentable distinctness to emphasize that there can be no question that the claims are patentably indistinct. For example, the defendant highlighted the terminal disclaimer filed with the PTAB to overcome a double patenting rejection (i.e., finding of patentably indistinct claims), arguing that this is a “strong clue” that continuation patent claims are patentably indistinct from the now cancelled parent. And that the continuation patents in this case recite the same core elements.

The defendant also argued that at the USPTO, the continuation claims would have been precluded had they been pending after the cancellation/disclaimer of the parent claims under 37 C.F.R. § 42.73(d)(3)(i). But the Court pointed out that this rule does not apply outside of the agency, only to what may be “maintained” within the agency after an adverse decision.

Finally, the Court determined that at the motion to dismiss stage it was not in a position to evaluate whether the additional limitations contained in the Delaware asserted patents rendered these claims patentably distinct.

While the plaintiff may have dodged the motion to dismiss in this instance, the determination by an expert agency that the claims are in fact patentably indistinct, and the filing of a terminal disclaimer by the patent owner in acquiescence of that determination, would seem to be very hard facts to ultimately overcome.

It is critical for patent owners to be mindful of this threat and build their portfolios accordingly. For example, by filing applications with higher claim counts, a restriction requirement (likely) will allow some claim sets to be spawned out to divisional applications (I.e., patentably distinct filings as recognized by the USPTO).

Scott A. McKeown is an author of the Patents Post Grant