Supporters of Life Sciences Innovation Spar with Drug Pricing Advocates in Comments to Terminal Disclaimer NPRM
“Armitage argued that, as currently worded, the NPRM on terminal disclaimers appears to be outside the agency’s regulatory authority and conflicts with 35 U.S.C. § 282(a)’s mandate that the validity of each patent claim must be addressed independently.”
With the public comment period on the U.S. Patent and Trademark Office’s (USPTO) notice of proposed rulemaking (NPRM) on terminal disclaimers filed to overcome non-statutory double patenting rejections closing on July 9, the Office has so far received a total of 114 comments. Many of the comments filed by industry stakeholders share the view of several former highly-ranking USPTO officials who urged the agency to rescind the NPRM for its deleterious effects on patent owners. Those entities supporting the NPRM largely rely upon drug pricing arguments that rely on controversial data.
U.S. Chamber: Changes Based on Faulty Science Will Hamper Life Sciences Innovation
Although the proposed rule changes on the use of terminal disclaimers is framed in a technologically neutral way, the U.S. Chamber of Commerce’s comment notes that the agency’s NPRM would mainly impact continuation practice in the life sciences sector. Criticizing the use of studies based on flawed methodologies to show supposed patent thickets, the U.S. Chamber points out that a recent empirical study by the USPTO undercuts claims that access to medical treatments are burdened by excessive patenting. Contrary to claims made by groups like the Initiative for Medicines, Access & Knowledge (I-MAK), the USPTO’s report found that brand-name drugs like Lyrica and Eliquis were each protected by only three patents, well below numbers reported by I-MAK.
The U.S. Chamber points out that the life sciences industry has used continuation practice for decades to promote investments in follow-on medical innovations. The ability to obtain continuation patents claiming different aspects of inventions that have been disclosed in earlier applications allows life sciences companies to protect the full scope of medical inventions that might be unknown at the time that a patent application is filed to obtain priority, the organization contends. The U.S. Chamber also argues that discouraging life sciences innovation by expanding the use of terminal disclaimers runs counter to the USPTO’s own stated goals in a request for comments issued this March seeking input on improving the commercialization of products protected by intellectual property.
Robert Armitage: Terminal Disclaimer Changes Should Prioritize Statutory Mandates
Intellectual property strategist Robert Armitage urged the USPTO to limit the NPRM to interpretations to explicit statutory requirements in the America Invents Act (AIA) and Uruguay Round Agreements Act (URAA). Armitage argued that, as currently worded, the NPRM on terminal disclaimers appears to be outside the agency’s regulatory authority and conflicts with 35 U.S.C. § 282(a)’s mandate that the validity of each patent claim must be addressed independently.
Armitage’s comment cites legislative history leading up to the enactment of the AIA noting that provisions found at Section 3(b)(2) of that law were designed to address situations where double patents were issued under the Cooperative Research and Technology Enhancement (CREATE) Act. Disclaimers against separate enforceability could be expanded from the CREATE Act and applied to all patents, preventing serial enforcement of patentably indistinct claims. Armitage also argues that the agency’s terminal disclaimer rules should be aligned with the URAA’s mandate that U.S. patents receive a 20-year period of exclusivity.
Campaign for Sustainable Rx Pricing: USPTO Must Address Costly Patent Thickets
Changes to terminal disclaimer rules will help address the unsustainable nature of high drug prices, the Campaign for Sustainable Rx Pricing (CSRxP) argues in its comment . Citing data published by the U.S. Department of Health and Human Services, CSRxP notes that prices for more than 1,200 drugs increased in excess of inflation between July 2021 and July 2022 by an average of $250. The Campaign also cited I-MAK’s controversial data set to argue that delayed competition for blockbuster drugs like Keytruda and Humira could create nearly $150 billion in unnecessary costs to patients and taxpayers. Data published by the National Institutes of Health shows that 80% of the patent portfolio covering Humira are bound by terminal disclaimers and do not cover patentably distinct inventions, CSRxP claims.
IPValue Management: NPRM Ignores Federal Circuit Precedent, Increases Prosecution Costs
In its comment to the USPTO, IP portfolio consultancy firm IPValue Management notes that the NPRM itself cites several rulings from the Federal Circuit rejecting the idea that patent claims are invalidated if they are terminally disclaimed to other claims that are held to be invalid in federal court or at the agency. These cases include Motionless Keyboard v. Microsoft (2007) and SimpleAir v. Google (2018), both of which reiterate that terminal disclaimers are not an admission that bears on patentability. Despite this recognition, the USPTO is choosing the “more draconian outcome” of rendering an entire patent as unenforceable when terminally disclaimed to invalidated patent claims.
If implemented, the USPTO’s proposed rule would add tremendous costs to the patent prosecution activities of most entities, IPValue contends. Assessing the prosecution history of one randomly chosen patent for which a terminal disclaimer was filed, the consultancy firm notes that more patent applicants will find themselves forced to raise challenges to poorly reasoned non-statutory double patenting rejections that require element-by-element claim comparisons and more thorough assessments of the Graham obviousness factors. Interestingly, IPValue’s randomly selected patent is owned by Garmin International, which filed its own comment supporting the USPTO’s proposed rule and urging action against continuation patents.
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Steve Brachmann
Steve Brachmann is a graduate of the University at Buffalo School of Law, having earned his Juris Doctor in May 2022 and served as the President of the Intellectual Property […see more]
