Overview
In In re Cellect, 81 F.4th 1216 (Fed. Cir. 2023), the US Court of Appeals for the Federal Circuit held that a later-expiring patent can be invalid for obviousness-type double patenting (ODP) in view of an earlier-expiring, commonly owned patent, even if the later expiration date is solely due to patent term adjustment (PTA).[1] The Federal Circuit denied a petition for en banc review of Cellect in January 2024 and, in May 2024, Cellect LLC filed a petition for certiorari with the Supreme Court of the United States.
The Cellect decision expanded the scope of potentially invalidating prior art and created new pitfalls for patent prosecutors. Patent owners and potential defendants should remain alert for potential Cellect issues while the Supreme Court considers whether to take up Cellect LLC’s petition.
In Depth
PROCEDURAL HISTORY AND IMPACT
The Patent Trial & Appeal Board found several related Cellect patents invalid for ODP in view of each other. Although the Cellect patents all claimed priority to the same original application, their expiration dates varied based on different PTA grants. Because the asserted claims of several Cellect patents were obvious in view of earlier-expired Cellect patents, the Board found those claims invalid for ODP.
On appeal to the Federal Circuit, Cellect argued that PTA should not be considered in the ODP analysis. Rather, the relevant expiration date for purposes of ODP should be the original expiration date before PTA was granted. The Federal Circuit previously found in Novartis AG v. Ezra Ventures LLC, 909 F.3d 1367 (Fed. Cir. 2018), that a similar rule applies to patents subject to patent term extension (PTE). In Cellect, the Federal Circuit rejected extending that rule to a PTA context, noting explicit differences between the statutory language governing (and purpose behind) PTA and PTE. the Federal Circuit specifically noted that, unlike the PTE statute, the PTA statute explicitly referred to terminal disclaimers, which are the common solution to and “inextricably intertwined with” ODP.[2] The Federal Circuit also rejected Cellect’s argument that there was insufficient evidence supporting the “equitable concerns underlying ODP,” such as the “improper timewise extension of a patent term and potential harassment by multiple assignees.” As to the latter consideration, the Federal Circuit noted that the patents at issue had expired recently and that a risk of separate ownership existed. The Federal Circuit thus affirmed the Board’s finding of invalidity.
Under Cellect, PTA is a double-edged sword. Once beloved by patent owners for extending the term of their monopoly, PTA is now a potential invalidity minefield in their portfolios, especially where continuations or continuations-in-part are present. Where PTA once served only to increase defendants’ potential damages exposure, it now serves (for the time being) as a new arrow in their invalidity quiver.
THE ARGUMENTS ON CERTIORARI
In its petition for certiorari, Cellect advanced two primary arguments. First, it argued the Federal Circuit wrongly supplanted a statutory PTA mandate with the judge made ODP doctrine. Specifically, Cellect notes that 35 U.S.C. § 154, which governs PTA, includes “shall” language nearly identical to that in the relevant PTE provision (Section 156) and that various Patent Act provisions reference one or the other of these sections in a way that indicates US Congress intended the two provisions be treated similarly. Thus, according to Cellect, Novartis applies equally to PTE and PTA. Second, Cellect argued that the Federal Circuit erred by applying ODP as a hardline rule lacking “traditional equitable considerations,” such as gamesmanship or evidence of a risk that the patents at issue might be split between multiple assignees.
Finally, Cellect addressed “two perceived differences” cited by the Federal Circuit to distinguish Sections 154 and 156, arguing that Section 154’s reference to terminal disclaimers only meant to imply that “PTA cannot extend a patent’s term when circumstances already required the applicant to disclaim patent term” and that PTE addresses delays in product approval while PTA addresses delays in processing the patent is “a distinction without a difference.” The terminal disclaimer issue is one of the Federal Circuit’s strongest points, and Cellect’s response is thin. For instance, Cellect does not explain what other “circumstances” besides ODP would require a terminal disclaimer. Its interpretation would seemingly allow ODP to be corrected only if discovered during prosecution (at which point the examiner may require a terminal disclaimer before allowing the claims and, thus, before a determination would be made regarding PTA) but not if discovered in subsequent litigation.
Unless and until the Supreme Court reverses the Federal Circuit’s ruling, potential patent litigants should be on the lookout for potential Cellect issues and keep the following tips in mind.
PRACTICE TIPS FOR PATENT PROSECUTORS
Force a Restriction Requirement During Prosecution
A restriction requirement allows patentees to file divisional applications where multiple distinct inventions may have been claimed in the same patent application. The benefit of filing a divisional application is that it brings the claims in the subsequent divisional patent under the safe harbor provision of 35 U.S.C. 121, which states, “A patent issuing on an application with respect to which a requirement for restriction under this section has been made, or on an application filed as a result of such a requirement, shall not be used as a reference either in the Patent and Trademark Office or in the courts against a divisional application or against the original application or any patent issued on either of them, if the divisional application is filed before the issuance of the patent on the other application” (emphasis added). Thus, the claims of a divisional patent cannot be used against an earlier-filed but later-expiring parent patent.
Provoke ODP Rejection During Prosecution
Patentees can also provoke an ODP rejection during prosecution and address the patent examiner’s concerns regarding any ODP issues. The benefit of raising, addressing and disposing an ODP argument during prosecution is that it reduces the chances (even if slightly) that a subsequent district court would rule that the US Patent & Trademark Office (PTO) got the ODP decision wrong. This strategy would allow patentees to lean on previous PTO findings on ODP issues and ask Article III courts to give deference to an examiner’s findings on the very same issue that is before the district court (e.g., ODP rejection over another patent from the same family).
Review Soon-to-Expire Families for Potential Remedies
As to already-issued patents, owners should implement routine procedures at regular intervals to assess which patent families are expiring soon and determine whether any involve asymmetric expiration due to PTA. For any such families, owners should compare the claims across patents and consider proactively filing terminal disclaimers on any later-expiring patents with claims that may be found obvious in view of claims in earlier-expiring patents. While the terminal disclaimer will certainly shorten the life of at least one patent in the family, it is preferable to losing the validity of the patent entirely due to ODP.
Seek PTE in Lieu of PTA, if Available
Owners of pharmaceutical patents should strongly consider pursuing PTE. PTE is available for patent applications directed to certain human drugs, food or color additives, medical devices, animal drugs and veterinary biological products to restore to the terms of those patents some of the time lost while awaiting premarket government approval from a regulatory agency. (See 35 U.S.C. § 156 and MPEP 2750.) As noted above, in Novartis, the Federal Circuit held that extension under PTE is not considered in the ODP analysis.
If PTA is awarded, consideration should be given to filing a terminal disclaimer preemptively.[3] Some patent owners may prefer the certainty of eliminating Cellect risk over the additional patent term. However, because it’s unclear whether and how the Supreme Court will address Cellect, this option is (for the time being) most applicable for patents issuing from long-pending prosecutions with extensive family trees, where it’s more likely that an earlier-expiring patent from the family will come up for expiration (and potentially create an irreversible Cellect problem) in the near term.
PRACTICE TIPS FOR PATENT INFRINGEMENT PLAINTIFFS
Plaintiffs should check for Cellect issues before filing suit.
If there is a potential ODP issue over a patent that has not yet expired, consider whether the ODP arguments are strong enough to warrant proactively filing a terminal disclaimer. If the earlier-expiring patent still has substantial life remaining, it may make sense to delay filing a terminal disclaimer until invalidity contentions or claim construction clarify the ODP risk. However, it is prudent to docket a reminder to file a terminal disclaimer (if necessary) before it is too late.
If there is a potential ODP issue over an expired patent, ODP cannot be avoided by filing a terminal disclaimer. In such cases, plaintiffs should consider focusing on the expired patent and/or only patentably distinct claims from the later-expiring patent.
PRACTICE TIP FOR PATENT INFRINGEMENT DEFENDANTS
Defendants should look for Cellect issues as part of their initial case triage. Because some plaintiffs may be unaware of this still-nascent issue, it could have effective “shock value” in settlement negotiations but keep timing in mind. If the underlying reference patent has not yet expired but soon will, playing the Cellect card too early could give plaintiffs an opportunity to moot this potential defense via a terminal disclaimer.
