Invalidity of Terminal Patents Not Tied to Disclaimed Patent-in-Suit’s Expiration

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In an interesting recent case of first impression, Judge Albright in the Western District of Texas denied a motion for judgement on the pleadings filed by Defendants Google and YouTube because the asserted patent was terminally disclaimed to two other patents that had been invalidated prior to its issuance. In VideoShare, LLC v. Google, LLC, 6:19-cv-663 (W.D. Tex. Sept. 29, 2021) (Albright, J.), the Court rejected the argument that the invalidation of the terminal patents was the “expiration” of the terminal patents, and that the asserted U.S. Patent No. 10,362,341 (“the ’341 patent”) was therefore also necessarily expired because it allegedly shares the expiration date of the terminal patents. Judge Albright concluded that, to the contrary, the prior finding of invalidity of the terminal patents had no impact on the expiry of the terminally-disclaimed ’341 patent.

Some context is in order. Previously, on June 4, 2013, Plaintiff, VideoShare, filed suit in the District of Delaware asserting that Defendants Google and YouTube infringed U.S. Patent No. 8,464,302 (“the ’302 patent”) and U.S. Patent No. 8,434,608 (“the ’608 patent”) (collectively, “the terminal patents”). Defendants successfully moved to dismiss under Rule 12(c), asserting lack of patentable subject matter of both terminal patents. In 2017, the Federal Circuit affirmed the lower court’s dismissal under section 101.

In 2019, VideoShare filed the patent application that would later issue as the ’341 patent as a continuation of the ’302 patent. To traverse a non-statutory double-patenting rejection based on the ’302 and ’608 patents, VideoShare filed a terminal disclaimer. Importantly, this disclaimer included certain qualifications, namely that identified subsequent events shortening the term of the terminal patents would not also shorten the life of the ’341 patent. These events included: failure to pay maintenance fees, findings of unenforceability or invalidity, statutory disclaimer, reissue, or any manner terminated prior to the expiration of its full statutory term as presently shortened by any terminal disclaimer. The Examiner allowed all the claims in response to the qualified terminal disclaimer, and the ’341 patent issued on July 23, 2019.

Later that year, VideoShare filed suit in the Western District of Texas against Defendants asserting infringement of the ’341 patent. In July 2020, Defendants filed an unsuccessful motion to dismiss based on the doctrine of claim preclusion. Then in February 2021, Defendants filed a motion for judgment on the pleadings under Rule 12(c), asking the Court to dismiss the case because the sole asserted patent is bound by terminal disclaimer and, according to Defendants, therefore it necessarily expired before the statutory damages period began.

In their Rule 12(c) motion, Defendants further argued that the terminal disclaimer renounces any effect the invalidation of the terminal patents may have had on the ’341 patent, but only to the extent it occurred “later.” To support this thread, they relied on particular language of the disclaimer: “[t]he owner does not disclaim the terminal part of the term of any patent granted on the instant application that would extend to the expiration date of the full statutory period of the prior patent . . . in the event that said prior patent later . . . is found invalid by a court of competent jurisdiction.” Defendants argued that the invalidation of the terminal patents also ended the term of the ’341 patent when the terminal patents died in 2017. In rebuttal, VideoShare argued that the ’341 patent is tied to the full statutory term of the terminal patents, and not any legal shortening of that term such as invalidity. Further, VideoShare argued that Defendants improperly combined the legal concepts of expiration and invalidity in order to change the expiry of the asserted ’341 patent.

Judge Albright first noted that the terminal disclaimer linked the ’341 patent to a total of seven patents—not just the two previously litigated patents. VideoShare filed the ’302 patent application in 1999, which is the term of the earliest of these seven patents, and thus is the controlling term of the ’341 patent. He further explained that both sections of the terminal disclaimer referred to the “full statutory term” of the prior patents, i.e., twenty years from the date of the prior patent application. This was the operative language of the terminal disclaimer because it is the only clause that directly addressed the length of the patent term. After review of the relevant statutory language, 35 U.S.C. § 154, the Court concluded that the statute envisioned only one way in which a prior patent may cause the expiration of the terminally disclaimed patent: the statutory term of the earliest filed prior patent passes.

Further, the Court noted that the term of a patent is plainly defined by the statute, and that definition includes two methods of expiration that were not implicated in this case. Additionally, Judge Albright emphasized that his interpretation of the statutory language is consistent with Federal Circuit precedent supporting the notion that a terminal disclaimer merely affixes to the expiration date of the earliest prior patent. For these reasons, the term of the ’302 patent was “merely affixed” onto the ’341 patent and ended 20 years after its application—regardless of what happened in the interim regarding validity of the ’302 patent. Next, the Court rejected Defendants’ attempt to create an artificial “backdoor” to invalidity, by conflating the two distinct doctrines of invalidity and expiration. In particular, the Federal Circuit established nearly 30 years ago that a terminal disclaimer does not tie the validity of the later issued patent to the validity of the earlier issued patent.

Judge Albright also found that the language of the terminal disclaimer did not imply early termination. The disclaimer listed a number of events that could occur, which under the language of the disclaimer, would not shorten the term of the terminally disclaimed patent, including a finding of invalidity. Defendants argued that the disclaimer’s language protected the term of the ’341 patent from early expiration should any of the listed events happened “later,” but the terminal patents’ invalidation occurred prior to the ’341 patent’s issuance, and thus happened “before.” And, because the terminal disclaimer at issue applied to seven patents, only two of which had been invalidated at the time of the ’341 patent’s issuance, the “later” in the disclaimer still meaningfully applies to all five other patents. Judge Albright further concluded that the qualification should not be read to define the termination of a patent term as occurring on invalidation. Instead, the qualification should be read as including numerous events that would not invalidate a later patent regardless of the language, and was merely boilerplate language to protect the ’341 patent’s term from any future changes in the law.

While this decision will likely be reviewed on appeal, for now this case of first impression at least edifies the distinction of the separate doctrines of invalidity and expiration regarding terminally disclaimed patents. While perhaps a creative argument to find otherwise on these facts, Judge Albright found little support for it in the specific language of the subject disclaimer or in the governing statutes. According to the Western District of Texas, at least, the only way for a terminally disclaimed patent’s term to expire is the expiration of the statutory term of the earliest terminal patent.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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