This week’s Federal Circuit decision confirms that term-adjusted patents can be invalidated by earlier-expiring patents in the same patent family under the obviousness-type double patenting (ODP) doctrine. This ruling is significant for patent owners who obtain claims covering one aspect of their invention first, receive patent term adjustment (PTA) because of Patent Office delays with that first application, and then patent additional inventions disclosed in the original application in continuations. The Cellect decision means that these later applications may invalidate the main patent’s PTA and reduce its patent term.
Patent professionals should closely monitor this case. Petitions for rehearing are due on October 12, 2023, and amicus briefs are due on October 26, 2023. Companies should also revisit their patent prosecution strategies to reduce the risk of intra-family ODP challenges and to minimize their reliance on PTA when other options are available.
The Backstory
The double-patenting doctrine generally bars an applicant from receiving more than one patent on the same invention. ODP is a judge-made extension of the double-patenting doctrine that bars a later-expiring patent from having a claim that is “patentably indistinct” from a claim in an earlier-expiring patent.
ODP traces its roots to the late 1800s when U.S. patent term was measured from the date the patent was issued. Under the old system, inventors could theoretically extend their exclusivity by filing several applications claiming obvious variations of the same thing. The patents could be issued at different times, thus giving the inventor a longer monopoly. Courts created ODP to avoid this type of perceived potential for gamesmanship.
ODP, however, has a safety valve. If an applicant has two patents on indistinct inventions, the applicant can file a terminal disclaimer to make the patents expire on the same day. If the patentee files a terminal disclaimer before the earlier-expiring patent expires, this cures ODP. But after the first patent expires, a terminal disclaimer is no longer an option—ODP simply makes the later-expiring patent invalid. Terminal disclaimers are therefore useful to protect later-expiring patents, but they can come at the cost of valuable patent term.
Congress passed several reforms that affected patent term in the 1980s and 1990s. First, in 1984, Congress authorized patent-term extensions (PTE) to compensate pharmaceutical patent holders for patent term that is effectively lost during the FDA review process. Then, in 1995, Congress pegged patent term to when the inventor filed its first patent application, not when the patent was issued. Because time during patent-application pendency would now detract from patent term, Congress also created PTA to compensate inventors for time lost to excessive delays by the Patent Office. PTA and PTE both mean that patents that trace back to the same original application can have different expiration dates.
These reforms prompted a question that has taken more than two decades to answer: What role does ODP play in this new regime? Even though different patents claiming related inventions may still expire at different times, the differences typically are due to statutorily authorized adjustments and extensions (PTA and PTE), not gamesmanship. The Federal Circuit confirmed in 2007 (and again in 2018) that differences in expiration dates caused by PTE did not trigger ODP, but the interplay between PTA and ODP has been less certain.
Starting in 2014, the Federal Circuit hinted that it might view PTA differently from PTE. Since then, several district courts have grappled with the question, reaching different conclusions. But until In re Cellect, no case had cleanly presented this issue for the Federal Circuit.
Cellect is about a family of five patents covering image sensors. All the patents trace back to the same original application, so if not for PTA, they would have expired at the same time. But four of the five patents had PTA—only the last one filed did not.
Cellect asserted the patents against Samsung, which persuaded the Patent Office to reexamine the claims. The patent examiner concluded that claims in the four later-expiring patents were invalid for ODP over the one patent that did not have PTA. The patent without PTA had expired as of the appeal, so terminal disclaimers were no longer an option. Cellect sought review by the Patent Trial & Appeal Board, which affirmed. Cellect then appealed to the Federal Circuit and raised this long-unresolved question.
The Cellect Opinion
The Federal Circuit affirmed in a unanimous precedential opinion by Judge Lourie, joined by Judges Dyk and Reyna. The case received significant amicus attention, with BIO, PhRMA, IPO, the Association for Accessible Medicine, Samsung, and Alvogen filing briefs.
Cellect raised two main arguments—that PTA should not be considered in the ODP analysis (just as PTE is not) and that the PTAB should have considered evidence of its good faith and lack of gamesmanship. The Federal Circuit rejected both and “conclude[d] that, while the expiration date used for an ODP analysis where a patent has received PTE is the expiration date before the PTE has been added, the expiration date used for an ODP analysis where a patent has received PTA is the expiration date after the PTA has been added.”
“We conclude that … the expiration date used for an ODP analysis where a patent has received PTA is the expiration date after the PTA has been added.”
On the first question, the Federal Circuit rejected Cellect’s attempt to analogize PTA to PTE. The court explained that PTA and PTE arise from different statutes (35 U.S.C. § 154 and § 156, respectively) that “deal with differing circumstances” and “have quite distinct purposes.” Looking at the text of the two statutes, the court found a hook in section 154 for including PTA in the ODP analysis but found no such hook in section 156.
Both the PTA and PTE statutes say that a patent’s term “shall” be extended if certain conditions are met, with some exceptions. One exception in the PTA statute relates to terminal disclaimers. Section 154(b)(2)(B) says that “[n]o patent the term of which has been disclaimed beyond a specified date may be adjusted under this section beyond the expiration date specified in the disclaimer.” Because terminal disclaimers are linked to ODP, the court reasoned that this exception “is tantamount to a statutory acknowledgement that ODP concerns can arise when PTA results in a later-expiring claim that is patentably indistinct.” The court noted that the PTE statute does not mention terminal disclaimers, thus explaining why “PTA and PTE should be treated differently from each other when determining whether or not claims are unpatentable under ODP.”
The Federal Circuit treated the PTA statute’s reference to terminal disclaimers as clear evidence of congressional intent. “Congress intended,” it stated, that “when a terminal disclaimer has been entered in a patent subject to PTA, no patent (or claim) may be extended beyond the disclaimed expiration date.” The court did not discuss legislative history, but it found Congress’s intent apparent from the statute alone and reasoned that “[t]here is nothing in the PTA statute to suggest that application of ODP to the PTA-extended patent term would be contrary to the congressional design.”
The panel also rejected Cellect’s equitable arguments. Further distancing ODP doctrine from its anti-gamesmanship roots, the Federal Circuit explained that “[t]he ability of the applicant to show good faith during prosecution does not entitle it to a patent term to which it otherwise is not entitled.” Rather, the Federal Circuit focused more on the fairness of allowing PTA on an indistinct variant of an expired claim than on the fairness of allowing a later-issuing patent to nullify PTA. It wrote that a holding in Cellect’s favor “would, in effect, confer on the reference claims … PTA to which they were not entitled.” A concern about having five patents with patentably indistinct claims—which Cellect conceded—both permeated the court’s opinion and garnered much attention at oral argument.
So after more than two decades of waiting, the Federal Circuit has answered how ODP works with the patent-term reforms of the late twentieth century: PTA is vulnerable to ODP challenges, but PTE is not.
Between the Lines
The Cellect decision resolved an open question in a way that disfavors patentably indistinct claims in multiple patents. ODP began as an equitable tool to prevent unjustified patent term extensions caused by claiming patentably indistinct inventions in separate applications with different expiration dates. Such extensions became much less feasible after the United States started calculating patent terms based on filing rather than issuance dates, but ODP has persisted. As Cellect shows, ODP is now being applied to discourage multiple related patents rather than to discourage gamesmanship. Indeed, Cellect confirmed that a patentee’s good faith and lack of gamesmanship are not a shield against ODP.
The Cellect court also suggested that Congress has acknowledged modern ODP doctrine. The panel found the PTA statute’s reference to “terminal disclaimers” to be implicit congressional acknowledgment that ODP should operate as a limitation on PTA because “terminal disclaimers and ODP remain inextricably intertwined.” In other words, the court concluded that the 1999 PTA statute acknowledged ODP doctrine, which suggests that efforts to change how ODP applies to modern patent practice may be better focused on legislation.
How This Affects Your Company
For many years, companies have sought several patents in the same patent family on critical breakthroughs. It has been common to pursue a narrow patent that protects a company’s key asset first and then seek continuation patents to protect related breakthroughs that are also disclosed in the original application. Cellect jeopardizes PTA term in families like these.
Companies should take several steps to mitigate the effects of this decision.
First, companies should assess their patent portfolios to reduce their exposure to ODP risk. For example, pharmaceutical companies may consider seeking PTE instead of PTA days in patents on essential assets. This option may be available only in limited circumstances, but companies should consider it before or shortly after the FDA approves the drug supporting PTE. Companies should also review soon-to-expire patents to determine whether terminal disclaimers are appropriate, and they should carefully weigh the risks of continuation applications that contain claims that could be used as ODP references against existing term-adjusted patents.
Second, companies should also revisit their patent prosecution strategy. Cellect tips the scales in favor of including more claims in a single application and pursuing only patentably distinct claims in continuations. Likewise, patent prosecutors should brush up on the safe harbor for divisional applications, which protects certain patent applications from ODP challenges.
Finally, companies should also closely watch the next steps in Cellect and, if appropriate, make their voices heard. Cellect may file a petition for rehearing by October 12, 2023, and because this case raises an issue that IP-heavy industries have closely watched for many years, it is possible that the Federal Circuit will grant rehearing en banc. Amicus briefs in support of rehearing are due by October 26, 2023.
WilmerHale has significant experience evaluating and addressing ODP, PTA, and PTE issues. Please reach out to the contacts below with any questions.
