Terminal Disclaimer to “Expedite” Patent Prosecution?

A District Court committed error, says a Federal Circuit panel, “by presuming that terminally disclaimed continuation patents are patentably indistinct variations of their parent patents without analyzing the scope of the patent claims.”  SimpleAir, Inc. v. Google LLC, No. 2016-2738 (March 12, 2018) (precedential) (opinion by Judge Lourie, joined by Judges Reyna and Chen).  The question here was whether SimpleAir could allege infringement of a terminally-disclaimed patent in a chain of continuations when prior litigation with Google had resulted in judgments of non-infringement of three other patents, including the parent, in the chain.  The district court had granted Google’s Rule 12(b)(6) motion to dismiss on grounds that the Kessler Doctrine and claim preclusion barred SimpleAir from its claim that Google infringes other, never-litigated, patents in the family.  The Federal Circuit vacated that decision.

The court agreed with Google that just because the prior litigation had not included the presently-asserted patents did not mean that claim preclusion was foreclosed. However, even though “there is a substantial overlap between” the present and the previously-asserted patents, including “a common specification and terminal disclaimer to a common parent,” there was nonetheless an insufficient record to support a holding of claim preclusion.

Claim preclusion requires accused activity to be “essentially the same,” which was also the standard that the court here adopted “for comparison of the claims between asserted patents.” Further, in “the particular context here, [the court] conclude[d] that claims which are patentably indistinct are essentially the same.”

Google argued that the claims were essentially the same “without any direct analysis of the claims,” based simply on the fact that the patent Examiner made an obviousness-type double patenting rejection, and the applicant filed a terminal disclaimer. The court disagreed, citing a line of cases that “foreclose the inference that filing a terminal disclaimer functions as an admission regarding the patentability of the resulting claims.” But then the court suggested that perhaps it would have liked to have made this inference, noting that a panel could not “deviate from this precedent.”

Further, the panel noted that the terminal disclaimer should get “strong weight.” A patent applicant waives “potentially valuable rights” by sacrificing patent term with a terminal disclaimer. The court would not “lightly presume” that these rights were forfeited “as a mere procedural expedient.” But even if “a terminal disclaimer is a strong clue” that the patent examiner and applicant regarded continuation claims as patentably indistinct from a parent, this does not excuse a comparison of “the patents’ claims along with other relevant transactional facts.”

The court also suggested that the claims might in fact be patentably indistinct. It considered SimpleAir’s arguments, and noted similarities between the current and the prior asserted patents. The district court on remand had discretion to determine “whether formal claim construction is necessary.”

And giving even more ammunition to the district court on remand, the panel agreed that its findings concerning SimpleAir’s delaying and duplicative litigation tactics were potentially “persuasive” policy considerations. However, improper litigation contact could be dealt with in other ways; the district court needed to correct its error in presuming that “filing a terminal disclaimer during prosecution of a continuation patent implies that the continuation patent is patentable he indistinct from its parent.”

The court further disagreed with Google that the Kessler doctrine applied. The Kessler doctrine “preclude[s] assertions of a patent against even post-judgment activity if the earlier judgment held that ‘essentially the same’ accused activity did not infringe that patent.” The point of the Kessler doctrine is “only to bar assertion of the claims at issue against essentially the same products made or sold after the judgment of noninfringement in the earlier case, i.e., products that claim preclusion could not reach because of their timing.” (Emphasis in original; citation omitted.) On the other hand, if the District Court finds on remand that claim preclusion applies, the Kessler doctrine would likewise apply to “Google’s provision of essentially the same . . . services post-judgment.”

Lessons for Practice

There is a big, albeit indirect, lesson for patent prosecutors in this case. People often think that terminal disclaimers are of little moment, because these days (see 35 U.S.C. § 154(a)(2) and (c)(1)) the term of a continuation patent is measured from the earliest effective filing date of its parent. Different patent term adjustments potentially applying to different patents in a chain is one reason to challenge such thinking. But the big lesson is this: the risk that, even if not conclusive, an applicant’s submission of a terminal disclaimer will be persuasive evidence that claims are patentably indistinct.

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