• Federal Circuit Clarifies Terminal Disclaimer Practice
  • February 12, 2010 | Authors: Scott T. Bluni; Malcolm K. McGowan
  • Law Firms: Bingham McCutchen LLP - Boston Office; Bingham McCutchen LLP - Washington Office
  • In its recent decision in Boehringer Ingelheim International GMBH and Boehringer Ingelheim Pharmaceuticals, Inc. v. Barr Laboratories, Inc. and Barr Pharmaceuticals Inc., and Mylan Pharmaceuticals, Inc., the Court of Appeals for the Federal Circuit addresses the use of terminal disclaimers, holding that a terminal disclaimer filed over an expired patent is ineffective. The Court also addressed the “safe harbor” provisions of 35 USC 121, holding that the “safe harbor” applies to related applications that do not claim overlapping subject matter, without regard for whether those applications are denominated as “divisionals” of the application in which a restriction requirement was made by the examiner.

    Terminal Disclaimers

    The Boehringer case is a “paragraph IV” case, which arises because the defendants filed an Abbreviated New Drug Application (“ANDA”) with the FDA directed to a compound claimed in a Boehringer patent. Boehringer responded by filing suit against the ANDA filers in the U.S. District Court for the District of Delaware. The District Court found the claims of the patent-in-suit to be invalid for obviousness-type double patenting, and Boehringer appealed.

    The patent-in-suit was a grandchild of a patent that was subject to a complex 10-way restriction requirement, with claims directed to compounds, methods of preparing those compounds and methods of treatment. The parent patent was explicitly designated as a divisional of the grandparent; however, the patent-in-suit was not designated as a divisional of either the parent or the grandparent patents. The Federal Circuit found the claims of the patent-in-suit and the parent were drawn to groups that had been held patentably distinct by the examiner of the grandparent patent. Nevertheless, the Court also found that the claims of the three patents did not overlap with respect to the groups defined in the restriction requirement in the grandparent patent.

    At trial, the defendants argued that the asserted claims of the patent-in-suit were invalid as obvious over the claims of the parent patent. On the last day of trial, in March 2008, the plaintiff attempted to overcome the obviousness-type double patenting argument by filing a terminal disclaimer in the patent-in-suit over the parent patent. Ordinarily, a terminal disclaimer operates to ensure that two (or more) patents with claims that are obvious in view of each other will expire at the same time, in order to prevent unlawful extension of patent term.

    In this case, the parent patent expired in 2006; the plaintiffs agreed to disclaim the ordinary term of the patent-in-suit that would have extended six months past the expiration of the parent patent. However, the patent-in-suit would remain pending because it had been granted an extension of patent term of over four years due to delays associated with regulatory approval of the claimed compounds. The terminal disclaimer did not waive the extended portion of the term of the patent-in-suit. The District Court held that the terminal disclaimer was ineffective, because it had been filed after the parent patent expired. On appeal, the Federal Circuit agreed.

    By failing to terminally disclaim a later patent prior to the expiration of an earlier related patent, a patentee enjoys an unjustified advantage -- a purported time extension of the right to exclude from the date of the expiration of the earlier patent. The patentee cannot undo this unjustified time-wise extension by retroactively disclaiming the term of the later patent because it has already enjoyed rights that it seeks to disclaim. Permitting such a retroactive terminal disclaimer would be inconsistent with “the fundamental reason” for obviousness-type double patenting, namely, “to prevent unjustified time-wise extension of the right to exclude.”...We therefore hold that a terminal disclaimer filed after the expiration of the earlier patent over which claims have been found obvious cannot cure obviousness-type double patenting.

    (emphasis in original)

    As a result of this ruling, patent applicants, patentees and their counsel need to be careful to file any necessary terminal disclaimers before related patents expire. In this case, had the plaintiffs filed a terminal disclaimer in the patent-in-suit over the grandparent patent before it expired, the disclaimer would have been effective. However, plaintiffs undoubtedly put off filing a terminal disclaimer in this instance because they thought they were protected by the “safe harbor ” provisions of 35 USC 121.

    35 USC 121 Safe Harbor

    At trial, the plaintiff not only relied on the terminal disclaimer; it also argued that the claims of the patent-in-suit were protected by 35 USC 121 from being found obvious over the claims of the parent patent. The “safe harbor” provision of 35 USC 121 provides,

    A patent issuing on an application with respect to which a requirement for restriction under this section has been made, or on an application filed as a result of such a requirement, shall not be used as a reference either in the Patent and Trademark Office or in the courts against a divisional application or against the original application or any patent issued on either of them...

    The patent-in-suit was not explicitly denominated as a “divisional” of the parent or grandparent patents, and no restriction requirement had been made in the parent patent. Plaintiffs’ argument was based on the restriction requirement in the grandparent patent, and the fact that the claims of the patent-in-suit were directed to subject matter that the examiner of the grandparent patent had held to be patentably distinct from the subject matter claimed in the parent patent.

    The District Court agreed with the defendants that the patent-in-suit was not eligible for the “safe harbor,” because it was not filed “as a result of” the restriction requirement in the grandparent case. On appeal, the defendant/appellee also argued that the safe harbor does not apply to a “divisional of a divisional” like the patent-in-suit, but only to a divisional of a patent in which a restriction requirement was made.

    The Federal Circuit reversed the District Court, holding that the “safe harbor” of 35 USC §121 extends to the patent-in-suit.

    Assuming all other requirements of §121 are met, the safe-harbor provision may apply to a divisional of a divisional of the application in which the restriction requirement was entered. We note that this holding is fully consistent with the purpose of §121 -- namely, to prevent a patentee who divides an application in which a restriction requirement has been made from risking invalidity due to double patenting.

    The Federal Circuit also held that plaintiffs did not lose the right to rely on the safe harbor even though the claims of the patent-in-suit encompassed subject matter from multiple groups in the restriction requirement in the grandparent patent, because there was no overlap between the subject matter claimed in each of the three patents.

    An overlap of claims to independent and distinct inventions within a given divisional application is neither contrary to the restriction requirement nor relevant to the [safe harbor provisions of] 35 USC §121. Rather, what consonance requires is that the claims prosecuted in two or more applications having common lineage in a divisional chain honor, as between applications, the lines of demarcation drawn by the examiner to what he or she considered independent and distinct inventions in the restriction requirement.

    This holding by the Federal Circuit is a refreshing elevation of substance over form. Still, the entire argument might have been avoided had the plaintiffs simply designated the patent-in-suit, and the parent patent, as “divisional” applications. This serves as an important reminder to patent applicants to carefully consider the designations of their applications when they are filed, as the USPTO typically does not go back to check such designations for accuracy.