The Federal Trade Commission (FTC) has submitted a comment supporting a proposed rule by the U.S. Patent and Trademark Office (USPTO) regarding new requirements for patent terminal disclaimer practice to address potential abuses within the patent system.
According to the FTC's comment letter, the proposed rule aims to promote innovation and competition by preventing practices that can lead to overlapping patent rights, known as patent thickets, which may block or delay market competition. This submission is part of the FTC’s broader efforts to combat patent abuse that threatens competition, including actions that delay or prevent less expensive prescription drugs from entering the market.
The FTC's comment centers on the USPTO’s proposed rule involving terminal disclaimers—a binding stipulation by a patent applicant that a patent’s term will not extend beyond an existing duplicative patent. Terminal disclaimers are used to overcome USPTO rejections for claims in a new application found essentially identical to those in an earlier patent, referred to as nonstatutory double patenting.
While terminal disclaimers ensure that the new patent's term does not exceed that of the original, they enable issuing patents with duplicative claims, which must be navigated by potential market entrants. This practice is common in patents related to prescription drugs. The excessive use of terminal disclaimers can contribute to growing patent thickets and protect dominant firms from competition.
The USPTO’s proposed rule would require applicants filing terminal disclaimers to agree that their patents would only be enforceable if not linked by a disclaimer to another patent containing any claim finally held unpatentable or invalid by a federal court or USPTO, after all appeal rights have been exhausted.
The FTC states that this rule would reduce costs for potential competitors challenging weak patents or defending against obvious variant claims of a single invention. It would also decrease incentives for market leaders to file numerous duplicative patents connected through terminal disclaimers while maintaining alternative methods for addressing nonstatutory double patenting rejections. The anticipated outcome is reduced scope, prevalence, and exclusionary impact of patent thickets.
The Commission voted 3-2 in favor of submitting this comment, with Commissioners Andrew N. Ferguson and Melissa Holyoak dissenting.
This latest submission builds on previous FTC efforts promoting competition concerning pharmaceutical drug patents. In June, the FTC supported another USPTO rule proposal involving disclosure of patent settlement agreements aimed at enhancing antitrust enforcement capabilities against potentially anticompetitive settlements.
Additionally, in February, the FTC supported using "march-in" rights as a measure against companies charging inflated prices for taxpayer-funded research-developed drugs. The FTC continues challenging improper or inaccurate listings of pharmaceutical patents in the FDA's Orange Book concerning diabetes, weight loss, asthma, and COPD medications.
The Federal Trade Commission develops policy initiatives affecting competition, consumers, and the U.S. economy. The agency emphasizes it will never demand money or make threats but provides consumer alerts and business blog updates through its social media channels.
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