Latest Developments in Calculating Patent Term Adjustment (PTA) from the District Courts

Bernadette McGann | November 21, 2012

Exelixis, Inc. v. Kappos

Decided  November 1, 2012

U.S. District Court for the Eastern District of Virginia

University of Massachusetts v. Kappos

Decided  November 9, 2012

U.S. District Court for the District of Colombia

Summary

This week, rather than discuss a CAFC case, we take a look at two important District Court cases dealing with Patent Term Adjustment (PTA).  According to Exelixis, under 35 U.S.C. §154(b)(1)(B), the filing of a Request for Continued Examination (RCE) has no impact on PTA determinations when filed after the three year examination guarantee has passed.  Additionally, according to University of Massachusetts, under 35 U.S.C. §154(b)(1)(A), a fundamentally flawed Office Action will count towards calculating an A delay.

Details

Overview of PTA

The purpose of 35 U.S.C. § 154(b), the Patent Term Adjustment (PTA) statute, was to compensate a Patentee for delays in the patent examination process.  There are three types of delays, which the statute addresses.

An “A delay” occurs when the USPTO fails to act within a particular time frame, such as issuing the first Office Action within 14 months of the date on which an application was filed under section 111(a) or the date on which an international application fulfilled the requirements of section 371; issue the next action within 4 months of a response; and issuing a patent within 4 months of payment of the issue fee.

A “B delay” occurs when the USPTO fails to issue a patent within 3 years from of the actual filing date of the application. 

A “C delay” occurs when the application is involved in an interference or appeal, or is subject to a secrecy order.

Exelixis

During the examination of the application, the Patentee filed an RCE after the expiration of the 3 year period from the actual filing date of the application.

The USPTO argued that time consumed by an RCE is always excluded from the calculation of B delay regardless of when it was filed.  Thus, if an RCE is filed after the guaranteed three year examination period, then that time is not calculated for the B delay.  That is, after the three year period, a Patentee may be entitled to B delay up until such time as an RCE is filed.

The Patentee argued that the filing of an RCE after the guaranteed three year examination period did not reduce the B delay.  That is, once the three year period has expired, B delay may not be reduced by the filing of an RCE. 

The District Court reviewed the statutory language and held that:

Simply put, the goal of this subparagraph, as its title indicates, is a “Guarantee of no more than 3-year application pendency.” It accomplishes this goal by (i) starting a three year clock on the date the application is filed, (ii) tolling the running of this clock if, within the three year period, any of three events occur, including an RCE filing, and (iii) adding a day for day PTA to the patent term for any delay in the issuance of the patent after the three year clock, less any tolling, runs out.

The District Court held that the subparagraph (B) of the PTA statute contains two calculations, one being the calculation of the three year examination period minus any tolling events, such as the filing of an RCE, and the second being a day for day addition of PTA for every day beyond the end of the three year period.

The District Court noted that 1) the statute does not address the filing of an RCE after the expiration of the three year period,  2) the statute does not treat an RCE as an applicant delay, and 3) the purpose of the PTA statute is to provide Patentee with a remedy for delays attributable to the USPTO and to reduce PTA for delays attributable to the Patentee.

The District Court granted summary judgment in favor of the Patentee and held that the statute “makes clear that once the three year clock has run, PTA is to be awarded on a day for day basis regardless of subsequent events.”   The District Court held that the USPTO’s interpretation was contrary to the language and purpose of the statute.  “RCE’s operate only to toll the three year guarantee deadline, if, and only if, they are filed within three years of the application filing date.” 

 University of Massachusetts

A patent application was filed on February 4, 2005 and issued on December 1, 2009.  The USPTO issued the first Office Action, a Restriction Requirement, on July 13, 2007.  On October 9, 2007, the Applicant filed an Amendment and Response to the Restriction Requirement. Applicant did not challenge the validity of the Restriction Requirement in the response.

During several telephone interviews, Applicant challenged the validity of the Restriction Requirement.  The Examiner’s Supervisor suggested that the Applicant submit a Supplemental Amendment, adding back the cancelled claims so that the Examiner could essentially start over and issue a new restriction requirement.

On November 21, 2007, Applicant submitted a Supplemental Amendment.  In the Remarks section, Applicant stated that they understood “that the Restriction Requirement set forth in the Office Action mailed on July 13, 2007 will be vacated due to errors on the part of the USPTO….”  On February 21, 2008, the Examiner issued a new Restriction Requirement. Applicant responded to the new Restriction Requirement on March 18, 2008.

On December 9, 2009, the patent issued with a PTA of 623 days.  Applicant filed a Request for Reconsideration of PTA requesting a PTA of 1,276 days. In the USPTO’s Decision Upon Remand and Reconsideration of PTA, the PTO determined that the mailing of the first Restriction Requirement stopped the clock for purposes of calculating A delay because the Examiner mailed a new restriction requirement to address applicant’s new claims, not because the Examiner was vacating the first restriction requirement.

The Patentee argues that the first Restriction Requirement was fundamentally flawed, and thus, it did not stop the fourteen month clock from running against the USPTO with regards to calculating the A delay. 

The USPTO argued that the first Restriction Requirement satisfied the statutory notification requirement.  Further, the first Restriction Requirement had not been vacated.

Under the Administrative Procedure Act (APA), the factual findings of the USPTO will be upheld as long as they are supported by substantial evidence.  “[I]t is the role of the agency to resolve factual issues to arrive at a decision that is supported by the administrative record, whereas ‘the function of the district court is to determine whether or not as a matter of law the evidence in the administrative record permits the agency to make the decision it did.”  The District Court held that the USPTO’s characterization of the first Restriction was supported by substantial evidence.  The District Court notes that the PTO found no record of an express assertion by the Examiner that the first restriction requirement was vacated. 

The issue before the District Court is whether, as a matter of law, when an applicant successfully convinces an Examiner to change a ruling contained in an Office Action, regardless of whether it is classified as a vacatur, that renders the first Office Action a nullity for purposes of calculating A delay under the PTA statute (subparagraph (A)). 

The District Court looked to the plain language of 35 U.S.C. § 154(b) for guidance.

(A) Guarantee of prompt patent and trademark office responses.— Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to—

        (i) provide at least one of the notifications under section 132 or a notice of allowance under section 151 not later than 14 months after

              (I) the date on which an application was filed under section 111 (a); or

              (II) the date on which an international application fulfilled the requirements of section 371;

The District Court held that the A delay clock stops when the first Office Action is issued, regardless of what transpires thereafter.  The District Court held that the plain language of 35 U.S.C. § 154(b) supported the USPTO’s position.  The PTA statute does not place any requirements on the first Office Action. 

The statute does not require that the first Office action be correct. The statute does not require that the first Office action ultimately stand, either completely unaltered or with only minor tweaks. The statute does not award additional A delay if an applicant successfully convinces the PTO that the Office action was erroneous. And the statute does not provide, either explicitly or implicitly, that an Office action, once taken, can be rendered a nullity.

 

Takeaway

Patentees should carefully review their PTA in light of these new cases. 

Exelixis

According to the District Court, an RCE tolls the running of the three year period if the RCE is filed within the three year period, but an RCE has no impact on PTA if filed after the three year deadline has passed. 

University of Massachusetts

According to the District Court, even a fundamentally flawed action may count against the Patentee with regards to an A delay. 

Exelixis Full Opinion

University of Mass Full Opinion

 

Relevant Statutory Language:

35 USC §154 (b) Adjustment of Patent Term.—

(1) Patent term guarantees.—

(A) Guarantee of prompt patent and trademark office responses.— Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to—

(i) provide at least one of the notifications under section 132 or a notice of allowance under section 151 not later than 14 months after—

(I) the date on which an application was filed under section 111 (a); or

(II) the date on which an international application fulfilled the requirements of section 371;

(ii) respond to a reply under section 132, or to an appeal taken under section 134, within 4 months after the date on which the reply was filed or the appeal was taken;

(iii) act on an application within 4 months after the date of a decision by the Board of Patent Appeals and Interferences under section 134 or 135 or a decision by a Federal court under section 141, 145, or 146 in a case in which allowable claims remain in the application; or

(iv) issue a patent within 4 months after the date on which the issue fee was paid under section 151 and all outstanding requirements were satisfied,

the term of the patent shall be extended 1 day for each day after the end of the period specified in clause (i), (ii), (iii), or (iv), as the case may be, until the action described in such clause is taken.

(B) Guarantee of no more than 3-year application pendency.— Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the United States Patent and Trademark Office to issue a patent within 3 years after the actual filing date of the application in the United States, not including—

(i) any time consumed by continued examination of the application requested by the applicant under section 132 (b);

(ii) any time consumed by a proceeding under section 135 (a), any time consumed by the imposition of an order under section 181, or any time consumed by appellate review by the Board of Patent Appeals and Interferences or by a Federal court; or

(iii) any delay in the processing of the application by the United States Patent and Trademark Office requested by the applicant except as permitted by paragraph (3)(C), the term of the patent shall be extended 1 day for each day after the end of that 3-year period until the patent is issued.

(C) Guarantee or adjustments for delays due to interferences, secrecy orders, and appeals.— Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to—

(i) a proceeding under section 135 (a);

(ii) the imposition of an order under section 181; or

(iii) appellate review by the Board of Patent Appeals and Interferences or by a Federal court in a case in which the patent was issued under a decision in the review reversing an adverse determination of patentability,

the term of the patent shall be extended 1 day for each day of the pendency of the proceeding, order, or review, as the case may be.

(2) Limitations.—

(A) In general.— To the extent that periods of delay attributable to grounds specified in paragraph (1) overlap, the period of any adjustment granted under this subsection shall not exceed the actual number of days the issuance of the patent was delayed.

(B) Disclaimed term.— No patent the term of which has been disclaimed beyond a specified date may be adjusted under this section beyond the expiration date specified in the disclaimer.

(C) Reduction of period of adjustment.—

(i) The period of adjustment of the term of a patent under paragraph (1) shall be reduced by a period equal to the period of time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application.

(ii) With respect to adjustments to patent term made under the authority of paragraph (1)(B), an applicant shall be deemed to have failed to engage in reasonable efforts to conclude processing or examination of an application for the cumulative total of any periods of time in excess of 3 months that are taken to respond to a notice from the Office making any rejection, objection, argument, or other request, measuring such 3-month period from the date the notice was given or mailed to the applicant.

(iii) The Director shall prescribe regulations establishing the circumstances that constitute a failure of an applicant to engage in reasonable efforts to conclude processing or examination of an application.

 

 

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