The ETHIC Act amends 35 U.S.C. §271(e) to restrict how many patents a patent owner may assert in infringement actions connected to FDA approval pathways for drugs and biologics. It bars asserting more than one patent from the same “Patent Group” against an applicant, holder, or a party making or selling an FDA‑approved product under the ANDA/505(b)(2) or BLA/351(k) pathways, and prevents bringing subsequent suits on other patents in that group against the same party.
The change targets so‑called patent thickets—large clusters of related patents that drug innovators use to prolong exclusivity—by tying the grouping to terminal disclaimers under 35 U.S.C. §253. The provision applies prospectively to FDA applications submitted on or after enactment, which creates a legal regime for future portfolios and alters litigation leverage, settlement dynamics, and patent drafting strategies in the pharmaceutical and biotech sectors.
At a Glance
What It Does
The bill adds a new paragraph to 35 U.S.C. §271(e) that limits a plaintiff in an infringement action brought under that section to asserting no more than one patent per defined ‘Patent Group’ against an ANDA/505(b)(2) applicant or a 351(k) biosimilar applicant, and it bars bringing additional suits asserting patents in the same group against that party.
Who It Affects
Directly affects generic and biosimilar applicants and holders using FDA approval pathways (505(b)(2), 505(j), and 351(k)), brand drug and biologic patent owners with clustered portfolios, and patent assertion entities that monetize multiple related patents tied to a single product.
Why It Matters
By constraining how many related patents can be litigated against an applicant, the bill changes the calculus for both enforcement and defense: patent owners lose multi‑patent leverage, while entrants face a narrower, more predictable litigation exposure—potentially accelerating competition and lowering entry costs.
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What This Bill Actually Does
The ETHIC Act attaches a limit to infringement suits that rely on the statutory safe harbor and infringement framework tied to FDA approval activities (the portion of 35 U.S.C. dealing with acts reasonably related to obtaining federal regulatory approval). Under the bill, if a patent owner wants to sue an ANDA or biosimilar applicant under that statutory pathway, the owner may pick only one patent from a defined cluster of patents—called a Patent Group—to assert in that action.
Once the owner has asserted a patent from that group against a given party, the owner may not turn around and sue that same party on another patent in the same group under the same statutory route.
The legislation defines a Patent Group by common ownership plus linkage through terminal disclaimers filed under 35 U.S.C. §253. In practice that means multiple patents or patent applications that cross‑reference each other with disclaimers to overcome obviousness or double‑patenting concerns will be treated as a single unit for assertion purposes.
The bill also explains that any patent that identifies the same patent via a disclaimer, or is identified by a disclaimer, joins that group, producing potentially broad clusters anchored by terminal disclaimer chains.The scope is narrowly tied to FDA pathways: applicants or holders of approvals or licenses under 505(b)(2), 505(j), and 351(k) are covered, and so are parties making, selling, importing, or offering for sale the approved drug or licensed biologic. Importantly, the statute applies only to FDA applications submitted on or after enactment; existing litigation and earlier‑filed regulatory applications are outside its reach.
That prospective cut‑off means patent owners can continue to enforce existing portfolios as before, while new filings and future portfolios will face the new one‑patent‑per‑group constraint.Operationally, the bill shifts litigation strategy. Patent owners must identify which single patent within a Patent Group they will assert—their strongest or most enforceable claim—while applicants gain certainty that they will not face serial suits from the same owner on related patents.
It also makes terminal disclaimers—a routine device in patent prosecution—central to litigation outcomes, elevating their strategic and evidentiary importance.
The Five Things You Need to Know
The bill amends 35 U.S.C. §271(e) by adding a new paragraph that caps the number of patents a plaintiff may assert in an action connected to FDA approval activities to one patent per defined ‘Patent Group’.
It defines ‘Patent Group’ as two or more patents or applications commonly owned and linked by one or more terminal disclaimers filed under 35 U.S.C. §253 (including chains where patents identify the same patent via a disclaimer).
The restriction applies to actions brought under §271(e) against applicants or holders of approvals under 21 U.S.C. §355(b)(2), (j) and 42 U.S.C. §262(k), and to parties making, using, selling, offering for sale, introducing into interstate commerce, or importing the approved/ licensed product.
The bill bars a patent owner who has asserted a patent in a Patent Group against a particular party from later bringing any additional §271(e) action asserting other patents in that same Patent Group against that same party.
The limitation is prospective: it applies only to FDA applications submitted on or after the date of enactment, leaving pre‑enactment applications and the enforcement of existing portfolios untouched.
Section-by-Section Breakdown
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Short title
Names the statute the “Eliminating Thickets to Increase Competition Act” or “ETHIC Act.” This is a labeling provision only; it has no legal effect on interpretation but signals the congressional purpose to target patent 'thickets' in the pharmaceutical and biologics markets.
Limits patent assertions in FDA‑related infringement suits
Adds paragraph (7) to §271(e). Subparagraph (A) imposes the core rule: in a §271(e) action against covered FDA applicants/holders or parties making/selling the product, the plaintiff may assert no more than one patent per Patent Group. Practically, this forces patent owners to select one enforceable claim per group when initiating litigation tied to regulatory submissions, compressing what historically could be dozens of asserted patents into a single contested patent per related cluster.
Defines who the restriction protects
Specifies two categories of protected parties: (i) applicants or holders of FDA approvals (505(b)(2), 505(j), 351(k)) and (ii) entities making, using, selling, offering for sale, importing, or introducing into interstate commerce the approved drug or licensed biologic. That language mirrors existing Hatch‑Waxman/BPCIA structures and ensures the rule captures both the regulatory applicant and commercial actors engaged with the approved product.
Prohibits subsequent assertions of other patents in the same group against the same party
Bars the patent owner from initiating any additional §271(e) actions asserting a patent in the same Patent Group against that same defendant. This provision prevents piecemeal litigation strategies where an owner sues repeatedly on different patents from the same cluster to prolong litigation, settlements, or injunctions targeting the same market entrant.
Defines ‘Patent Group’ by common ownership plus terminal disclaimer linkages
Defines Patent Group as two or more commonly owned patents or applications that either identify or are subject to one or more terminal disclaimers under 35 U.S.C. §253. It clarifies that any patents identifying the same patent on a disclaimer, or identified by such a disclaimer, are all part of the same group—so chains of terminal disclaimers create potentially large clusters. This makes ordinary prosecution artifacts determinative for litigation rights under this rule.
Prospective application tied to FDA submissions
Makes the amendment applicable only to FDA applications submitted under 505(b)(2), 505(j), or 351(k) on or after enactment. This prospective rule preserves the current enforcement regime for pre‑existing applications and pending portfolios, while applying the new limitation to future regulatory filings and the patents that will surround them.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Generic and biosimilar manufacturers and applicants — They face narrower infringement exposure (one patent per Patent Group) and reduced risk of sequential suits, lowering litigation costs and uncertainty during market entry under ANDA/505(b)(2) and 351(k) pathways.
- Payers and purchasers (insurers, PBMs, government programs) — Faster or more certain market entry for lower‑cost generics and biosimilars could reduce drug spending and procurement prices over time.
- Patients and providers — Greater likelihood of timely competition may improve access to lower‑cost medicines and increase choice for prescribers and patients during and after the regulatory review process.
Who Bears the Cost
- Originator pharmaceutical and biotech patent owners — Firms holding dense portfolios tied to a product lose the ability to assert multiple related patents against the same applicant, reducing enforcement leverage and settlement bargaining power.
- Patent assertion entities and owners monetizing suites of related patents — Entities that rely on aggregating and asserting multiple patents against entrants see a compressed revenue model and fewer litigation targets.
- Patent prosecution and portfolio managers — Will face new constraints on how they structure claims and disclaimers; may incur costs rethinking filing strategies, reallocating prosecution resources, or pursuing non‑disclaimer workarounds to preserve enforcement options.
Key Issues
The Core Tension
The central dilemma is straightforward: reduce overlapping patent enforcement that delays competition versus preserve the full scope of patent enforcement that incentivizes costly R&D. The ETHIC Act favors competitive access and predictability for entrants by curtailing multi‑patent assertions, but in doing so it limits the ways patent owners can protect and monetize incremental inventions—creating a trade‑off between faster market entry and maintaining the property value of patent portfolios.
The bill anchors the grouping rule to terminal disclaimers under 35 U.S.C. §253, which makes an ordinary prosecution tool determinative for litigation rights. That raises predictable implementation issues: courts will need to adjudicate the scope and timing of disclaimers, the meaning of “commonly owned” (especially with corporate transfers, joint ownership, and licensing), and whether assignment or re‑assignment of patents can break or reconstitute a Patent Group.
Those disputes could themselves generate a new tranche of preliminary litigation and factual discovery about ownership chains and prosecution histories.
Because the restriction applies only to actions under §271(e), patentees may seek alternative enforcement paths—suing other defendants not covered by the statute, asserting patents in district court outside the FDA‑triggered framework, or bringing claims against manufacturers rather than applicants. The prospective‑only applicability also creates a two‑tier system: existing portfolios remain fully enforceable, which may preserve some incumbent leverage and complicate the policy’s market impact.
Finally, the linkage to terminal disclaimers may create perverse incentives: drafters could alter claim drafting, file divisional applications without disclaimers, or reassign patents to evade grouping; courts and the PTO may be pressed to police these strategies, raising administrative and judicial costs.
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