When a claim of a patent is an obvious variation of a claim of another commonly owned patent, the latter-filed patent is invalid. This situation is called “obviousness-type double patenting.” Obviousness-type double patenting exists to prevent patent owners from extending the life of a patent by filing obvious variants of the patent’s claims. To keep a patent from being invalidated under a finding of obviousness-type double patenting, a patent owner can file a terminal disclaimer on the latter-filed patent. By filing a terminal disclaimer, the patent owner disclaims the period of the latter-filed patent that extends beyond the expiration of the first patent. In other words, it shortens the life of the second patent so that both patents expire at the same time.
An unsettled question arises when the following events occur: (1) a patent that should have been rejected under obviousness-type double patenting makes it through the USPTO unscathed, (2) the patent owner asserts that patent in court, and (3) the court finds the patent invalid under obviousness-type double patenting. The patent owner can overcome this type of invalidity finding by filing a post-issuance terminal disclaimer. But this leads to a question about damages: can the patent owner receive money for infringement that occurred from the time the patent issued to the time the terminal disclaimer was filed?
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With reference to the above figure, should the patent owner receive damages for any infringement that occurred during the blue period? This question has not been directly addressed by the courts and remains an open question. On one hand, the patent was invalid before the terminal disclaimer was filed, and a patent owner has no rights in an invalid patent.1 On the other hand, all the patent owner needed to do was file a terminal disclaimer, and the patent would have been valid. In many cases, this is exactly what the patent owner does: as soon as a court invalidates the patent under obviousness-type double patenting, the patent owner simply files a post-issuance terminal disclaimer.2 This brings the patent back to life. But what of the infringement while the patent was issued but technically invalid? Can the patent owner recover for loss during that time?
The Federal Circuit has expressly refused to decide the issue.3 However, both the District of Delaware, in Tyco Healthcare v. C.R. Bard, and the Northern District of California, in Asyst Technologies v. Empak, have implied that a terminal disclaimer could have retroactive effect, so that a patent holder may recover damages for infringement occurring before the terminal disclaimer is executed.
In Tyco Healthcare, the proceedings were in the summary judgment stage, so court did not tackle the retroactive damages issue head on. But it seemed to side with the patent owner on the question of whether the patent owner could recover for infringement during the period between issuance and the filing of the terminal disclaimer. The defendants argued that the terminal disclaimer was effective only prospectively because the patent was invalid prior to the filing of the terminal disclaimer. Thus, the defendants argued that the plaintiff could not recover damages for infringement during the period of invalidity. The court disagreed, stating that Plaintiff’s filing of a terminal disclaimer achieved the underlying purpose of the bar against obviousness-type double patenting, which is to prevent extension of the statutory monopoly beyond its specified term.4
Asyst also favors patent holders regarding the retroactive effect of post-issuance terminal disclaimers. The court said that although it would reserve until trial a final decision on the question of whether the filing of a terminal disclaimer would only have prospective application, it was inclined to agree with the patentee that the terminal disclaimer could be deemed to have retroactive effect so that it would not impact the damages period.5
Based on these cases, it appears that when a court does decide the issue, it will likely side with the patent owner and find that a post-issuance terminal disclaimer can reinstate a patent’s validity as if the terminal disclaimer were filed prior to issuance. But because retrospective infringement damages is still somewhat of an open question, a patent applicant might be wise to file terminal disclaimers early and often, to avoid giving up any damages. On the other hand, a patent owner might correctly decide not to file any terminal disclaimers, even when a terminal disclaimer might be appropriate. A finding of obviousness-type double patenting in litigation is more precise than a terminal disclaimer filed with the USPTO. A terminal disclaimer limits the term of all claims in a patent, even those that might survive an obviousness-type double patenting defense. Fighting an obviousness-type double patenting defense in court may allow a patent owner to maximize damages by extending the life of at least some of a patent’s claims to the full 20-year term, instead of cutting them short with a terminal disclaimer.