Is Your Terminal Disclaimer a Ticking Time Bomb?

As most readers are aware, the basic rule for determining the term for a US patent is 20 years from the effective filing date. That date is the earlier of:

  • The US filing date/ 371 (c) date (or, if the case is a continuation or divisional, the filing date for the parent case); or
  • PCT filing date (in cases where the case is initially filed at an international receiving office and designates the US as a filing jurisdiction)

After you determine the earlier of the two dates calculated from the above rule, there are several variables that can affect whether that 20 year term is the actual expiration date, including a) Patent Term Adjustment (PTA), which is a mechanism whereby the term of the patent can be extended beyond the statutory 20 years and is determined by the PTO, b)maintenance fee payments, which are due on approximately the 4th, 8th and 12th anniversaries of the ISSUE DATE of the patent and failure to pay any of those fees within the statutory grace period will immediately cause the patent to become abandoned, or c) Terminal Disclaimers, which are filings made by a patent attorney that ties the patent term to the term of an earlier, related patent such that both patents expire on the statutory date of expiration of the earlier filed patent. There are several points that must be considered to determine the applicability of the terminal disclaimer:

  • The terminal disclaimer has precedence over any PTA. For example, if a patent had an effective filing date of July 1, 2005 (Patent A), but the patentee filed a terminal disclaimer tied to an earlier patent that was filed on January 1, 2003 (Patent B), then they would both expire on January 1, 2023. If Patent A received a PTA of 365 days, the entire PTA would be moot because of the terminal disclaimer. Therefore, instead of expiring on July 1, 2026 (Filing date + 20 + PTA), Patent A will expire on January 1, 2023.
  • Multiple terminal disclaimers (or a single terminal disclaimer that references multiple earlier patents) are resolved by using the earliest expiration date among the multiple cited patents.
  • Terminal Disclaimers can be linked through multiple generations of patents – If Patent A has a TD based on Patent B, then Patent A expires on the statutory expiration date of Patent B. The statutory expiration date of Patent B is subject to the following:
  • Depending on the wording of the TD, the expiration date of Patent B may be extended by a PTA, but Patent A MAY OR MAY NOT.
  • If Patent B becomes abandoned because of a failure to pay maintenance fees, this DOES NOT shorten the statutory expiration date for TD purposes!
  • iii.     If Patent B has its own terminal disclaimer to Patent C, it DOES shorten the statutory expiration date of Patent B, which in turn for TD purposes will shorten the term of Patent A. In addition, it is always possible that Patent C has a TD to Patent D and so on. Using our example above, if Patent B has a terminal disclaimer linked to Patent C and Patent C has an effective filing date of October 1, 2000, then both Patent B and Patent A will expire on October 1, 2020.

It is interesting to note that, in the final example above, if Patent A ended up with an issue date of March 1, 2010, then maintenance fees would be due on March 1, 2014, March 1, 2018 and March 1, 2022 (a date that occurs after the expiration under the TD). In almost every case like that which I have seen (quite a few more than most people think), the PTO issues the maintenance fee notice for the 12th anniversary and the patentee has paid it! This is despite the fact that, based on the terminal disclaimer, the patent term has expired! As of this writing, we are not aware of any infringement suit where this issue has been raised as a defense, so it is still an open question as to how courts would rule on the matter.

Because terminal disclaimers are largely an administrative filing made as part of a larger response and because the terminal disclaimer expiration date is no longer published on the face of the issued patent, there are hundreds, if not thousands, of granted US patents whose date of expiration is much earlier than the patent rights holder may think. Such a miscalculation can result in various negative consequences including loss of licensing revenue, overpayment of maintenance fees and, worst of all, the inability to successfully pursue patent infringers.

Do you have concerns?

Let Drake & Associates analyze your patent portfolio to identify and address weaknesses like this before you find out the hard way!

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