Continuation Applications & Terminal Disclaimers: Infectious Estoppel
Patent owner estoppel is codified by Patent Trial & Appeal Board (PTAB) regulation (37 C.F.R. § 42.73(d)(3)(i)). This rule is designed — much like patent interference estoppel — to thwart patent owners from securing claims in a later USPTO proceeding that are patentably indistinct to claims lost in a PTAB trial. This regulation has largely flown under the radar relative to the more well-known statutory estoppel provisions that applies to failed PTAB petitioners. Yet, as I pointed out previously, patent owners, and more particularly patent prosecutors, would be wise to take heed of this new threat.

Yet, understanding this new prosecution threat is only part of the battle. The best practice going forward is to structure portfolios to minimize potential PTAB estoppel damage.

As noted above, 37 C.F.R. 42.73(d)(3)(i) recites that when a patent claim is cancelled or finally refused in a PTAB trial, the Patent Owner is thereafter precluded from taking an inconsistent action before the USPTO. This preclusion includes, obtaining in any patent, a claim that is not patentably distinct from the finally refused or cancelled claim. Losing at the PTAB could mean that related prosecution (e.g., continuations, reexamination, and reissue) is estopped.

For this reason, it is increasingly important to structure patent portfolios into a collection of divisional application filings rather than continuation applications. This is because the safe harbor of 35 U.S.C. § 121 will preclude a finding that the claims are indistinct and serve to insulate from the infectious estoppel of a successful PTAB challenge. Also, as well-known in the Bio/Pharma space, the safe harbor prevents double patenting rejections altogether and the necessity to file terminal disclaimers.

Of course, divisional applications cannot be filed as a matter of choice, but in response to an examiner issued restriction requirement. Yet a skilled prosecutor can often times provoke a restriction requirement with large claim groupings.

It is critical to avoid double patenting rejections in high value portfolios as once an examiner finds that claims are patentably indistinct, it may be very difficult to budge the examiner off of that position should PTAB estoppel arise in an ongoing continuation, or a later reissue of reexamination of that claim set. Although the Federal Circuit has made clear that the filing of a terminal disclaimer simply serves the statutory function of removing the rejection of double patenting, and raises neither presumption nor estoppel on the merits of the rejection, the practical import of such a filing to USPTO fact finders is a completely different story.

The Federal Circuit, emphasized the relevance of double patenting rejections/terminal disclaimers in the context of indistinct claim sets just this week in SimpleAir Inc. v. Google Inc. (here) explaining::

Although a terminal disclaimer does not conclusively show [indistinct claims] . . . the terminal disclaimer is still very relevant to that inquiry. By filing a terminal disclaimer, a patent applicant waives potentially valuable rights. We do not lightly presume that patent applicants forfeit the right to alienate their patents, and in certain cases years of exclusivity, as a mere procedural expedient. Rather, as occurred here, applicants typically file terminal disclaimers to overcome obviousness-type double patenting rejections. In construing the scope of claims, we give considerable weight to statements made by patent applicants during prosecution in order to overcome examiner rejections. . . .¶ a terminal disclaimer is a strong clue that a patent examiner and, by concession, the applicant, thought the claims in the continuation lacked a patentable distinction over the parent. But as our precedent indicates, that strong clue does not give rise to a presumption that a patent subject to a terminal disclaimer is patentably
indistinct from its parent patents. . . . Rather, the claim preclusion analysis requires comparing the patents’ claims along with other relevant transactional facts.

(emphasis added)

Thus, high-value portfolios structured under the typical continuation-style structure are quite vulnerable should a successful PTAB challenge occur during pendency of such applications, or later in reissue or reexamination. Throw in a double patenting rejection already made and the work has been done to arrive at an estoppel determination. Think ahead.

I will explore this topic as well as other aspects of res judicata and issue preclusion before the USPTO in the March 29th IPO Chat Channel program (2-3PM EST) entitled: Patent Prosecution Estoppel from PTAB Proceedings (register here).

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