Often, an applicant will submit a terminal disclaimer to overcome an obviousness-type double patenting rejection between two or more patent applications or application(s) and an issued patent. In the terminal disclaimer, the applicant agrees that the two or more patent applications or patents will only be valid as long as they all are commonly owned, and agrees to have both patents expire at the same time which is the earliest date among the patents. So, what happens if the terminally disclaimed patents become no longer terminally owned? For example, suppose the applicant sells one of the terminally disclaimed patents to another company (not wholly owned) but keeps the others?

This issue was addressed by the Federal Circuit in Merck vs. ITC (774 F.2d 483) in 1985. Merck received one patent of a family of terminally disclaimed patents from a Japanese company called Sumimoto, but then later received the remaining patents in a separate assignment when the defendant moved to dismiss the action because of lack of common ownership between the terminally disclaimed family of patents. The Federal Circuit decided that the patent ceased to be enforceable patents once the common ownership ended.

The next issue is what happens when ownership of only one patent from a family of terminally disclaimed patents is transferred between a parent company to a wholly owned subsidiary. The MPEP clearly states in 706.02(l)(2) that two applications are commonly owned if a first application is owned by company A and a second application is owned by company B, and both companies A and B are owned by the same parent. So my first instinct would be to say there is still common ownership. However, the MPEP only provides rules for the Patent office. It does not have the force of law.

Along this point, in a district court opinion in Nevada (Email Link Corp. vs. Treasure Island), it was decided that a terminally disclaimed patent was not enforceable when it was transferred from a parent to its wholly owned subsidiary and separated from the remaining terminally disclaimed patents. The discussion in the MPEP was not even addressed by the court even though it was brought up by the patentee. This case is strange to me, but when you consider that it was dealing with one of the most infamous patent trolls who had been taking contradictory positions in different courts, maybe you understand why the Federal Judge wanted to put a stop to it. It would not be fair to allow a patent troll to split a family of patents among 100 different shadowy subsidiaries, and have each subsidiary argue that it should not be held to the decisions of other courts because it was a separate entity, but then turn around and argue it was the same entity for purposes of the terminal disclaimer.

NUTSHELL Care must be taken to make sure all terminally disclaimed patents are commonly owned. Transfers between a parent and a wholly owned subsidiary may not be considered the same entity.