Patent portfolio building must be undertaken carefully. In a decision handed down on May 5, In re Fallaux, the Federal Circuit refused to grant relief to a patent applicant faced with a double patenting rejection based on a pair of related issued patents owned by another party.

In this case, the double patenting rejection was for obviousness-type double patenting, a doctrine developed by the courts to prevent a patent owner from getting a second patent to extend coverage of a first patent covering similar subject matter. Patent owners should get only one patent per invention, the courts reason, so an inventor seeking a second patent having claims that are similar to those in a related first patent should be denied the second patent if the subject matter claimed in the second patent would have been obvious in view of the subject matter claimed in the first patent.

Normally, the United States Patent and Trademark Office will allow a patent applicant, faced with an obviousness-type double patenting rejection, to overcome the rejection by filing a ”terminal disclaimer”—a document by which the applicant agrees that a patent issuing on the second application will be enforceable only as long as it is owned by the same party that owns the first patent and that the second patent will last no longer than the first patent.

In the present case, however, a terminal disclaimer would not work for the patent applicant because the earlier issued patents were owned by another party. Thus the patent applicant could not promise to enforce the second patent only while it is co-owned with the first patent. Because the patent applicant was unable to use a terminal disclaimer to get around the double patenting rejection, the patent applicant chose to fight the rejection.

In fighting the rejection, the applicant argued that the test used by the Patent and Trademark Office for obviousness-type double patenting in this instance was unduly broad.

In this instance, argued the applicant, the Patent and Trademark Office should have looked to see whether the subject matter claimed in the previously issued patent would have been obvious in light of the subject matter claimed in the pending application as well as the other way around. In other words, the Patent and Trademark Office should have employed a two-way test for obviousness-type double patenting, not just a one-way test.

Not so, said the Federal Circuit. The two-way test is used only when the Patent and Trademark Office, through no fault of the applicant, happens to have examined the first application after having issued a patent on the second application.

Such a circumstance does not apply here, said the Federal Circuit, and, in so saying, it impliedly warned companies building patent portfolios to be careful in handling applications that are related to patent properties owned by another party. The Federal Circuit pointed out that the applicant could have chosen to prosecute at an earlier time the broad claims at issue in the case; had the applicant done so, its crisis might have been averted.