A Proposal to Address the U.S. Patent “Thicket” Problem During Examination

Posted on

A so-called patent “thicket” is a collection of many patents with overlapping claims, usually from the same patent application family, covering a single product (and its variations). The use of patent “thickets” to protect drugs and biological products has been the subject of Congressional oversight into rising drug prices.1 As explained below, a smart patent attorney can create a patent “thicket” by filing multiple “Continuation” applications, with different, but not identical, claim language. The practice is within the rules and last month the 7th Circuit Court of Appeals upheld the practice in the case of 132 patents covering Abbvie’s drug Humira, stating “What’s wrong with having lots of patents?”2 

On June 8, 2022, a group of bipartisan senators sent a letter to the Director of the U.S. Patent and Trademark Office (PTO) asking if the patent “thicket” problem can be addressed during patent examination. In the letter3 the senators asked the PTO to “consider changes to your regulations and practices to address [patent thicket] problems where they start, during examination. . . . at the preissuance stage.” The senators asked the PTO to “issue a notice of proposed rulemaking or a public request for comments by September 1, 2022, based on” six questions centered around Terminal Disclaimer and Continuation practice. We are awaiting the PTO’s notice as of this writing. 

One way to address the patent “thicket” problem is to stop incentivizing PTO examiners into allowing these thickets to exist in the first place. The current PTO examiner compensation program works on a “Count” system which was implemented to encourage a thorough substantive examination early in the application process.4 The examiner Count system seeks to achieve its goals by incentivizing examiners by giving them increased credit for a First Action On the Merits (FAOM) and reduced credit for a Request for Continuing Examination (RCE), the latter having been used to keep patent applications pending indefinitely in a process called “churning,” which has been relatively non-existent for applications filed after the U.S. went to a 20-years from filing term system in 1995. 

Patent “thickets” obtained through Continuation applications are the unintended consequence of the system encouraging early FAOMs and Allowances. Here’s how it happens.5 Examiners get full credit in the Count system for issuing a FAOM in a Continuation even when the only rejection in the FAOM is based on Obviousness-Type Double Patenting (OTDP) in view of claims previously granted in the same family, typically by the same examiner. An ODTP rejection is then automatically overcome by the patent owner filing a “Terminal Disclaimer” (stating that the patents will expire together) and the examiner gets full credit in the Count system for an Allowance.

A sophisticated and well-funded patent owner can obtain an unlimited number of patents within the rules using this route, obtaining similar, but not identical, claims by filing Terminal Disclaimers. Multiple Continuation applications may be issued into patents during the twenty-year pendency of a patent application, creating wide-ranging patent “thickets” for patent owners, and offering easy Counts and possible compensation bonuses to underpaid patent examiners. The time for obtaining a patent this way typically is less than a year and can be as short as a few months. A single examiner can issue dozens of patents through Continuation applications from the same patent application.

The PTO Director could change the examiner Count system (and the examiner review and compensation program) which currently incentivizes examiners into allowing patent owners to create patent “thickets.” Under the current Examiner Count System,6 an examiner gets full credit (1.25 counts) for a FAOM in a Continuation application, even if the FAOM only contains an ODTP rejection, and full credit (0.5 counts) for accepting a Terminal Disclaimer in an Allowance. 

Here are a few suggestions to curb patent thicket abuses and improve the quality of U.S. patents. 

  • Change the definition of a FAOM for examiner review and compensation purposes to reduce or eliminate the credit given to examiners for FAOMs containing only ODTP rejections. 
  • Consider examiner incentives based on further substantive search and examination in FAOMs in Continuation applications (and more time for conducting examinations in Continuation applications), for newly applied rejections other than ODTP rejections. 
  • Change the definition of an ALLOWANCE for examiner review and compensation purposes to reduce or eliminate the credit given to an examiner for an Allowance based only on acceptance of a Terminal Disclaimer. 
  • Consider examiner compensation programs with reduced or no consideration under a Count system, modernize the system to account for changes in the examiner workforce and workplace.
  • Increase overall compensation and benefits for patent examiners at all levels to attract and maintain high-performing examiners. 

Changing the examiner Count system to remove the incentives for allowing patent thickets, along with updating the examiner review and compensation programs, would address the proliferation of patent “thickets” during examination. The PTO should go through the normal process of inviting commentary from the public, including patent owners, examiners, economists, and relevant stakeholders, to review the impact of the examiner Count system on the creation of patent “thickets” and make recommendations on adjustments to the Count system and to overall examiner compensation. 

Endnotes:

  1. “‘Patent Thickets’ are Anti-Competitive and Lead to Higher Drug Costs,” Pharmaceutical Care Management Association (May 17, 2021) at https://www.pcmanet.org/patent-thickets-are-anti-competitive-and-lead-to-higher-drug-costs/. See also, the following study by i-MAK of the patent “thicket” for the drug Imbruvica, “Imbruvica’s Patent Wall” (July 2020), https://www.i-mak.org/wp-content/uploads/2020/08/I-MAK-Imbruvica-Patent-Wall-2020-07-42F.pdf, and the following i-MAK report, https://www.i-mak.org/wp-content/uploads/2022/09/Overpatented-Overpriced-2022-FINAL.pdf. 
  2. Mayor and City Counsel of Baltimore, et al. v. Abbvie, Inc. et al., No. 20-2402 (11th Cir., August 1, 2022), Slip Op. at 4 https://fingfx.thomsonreuters.com/gfx/legaldocs/movangmwapa/IP%20ABBVIE%20PATENTS%207thcir.pdf.
  3. https://www.leahy.senate.gov/imo/media/doc/20220608%20Letter%20to%20PTO%20on%20repetitive%20patents.pdf.
  4. https://www.uspto.gov/patents/initiatives/patent-examiner-count-system. 
  5. A 2019 statistical analysis showed that the number of Terminal Disclaimers filed in Continuation applications generally has risen each year since 2002 and in some technologies Terminal Disclaimers are filed in over 40% of Continuation applications. https://bigpatentdata.com/2019/07/terminal-disclaimer-stats/. 
  6. https://www.uspto.gov/sites/default/files/Examination%20Time%20and%20the%20Production%20System.pdf.