[author: Courtenay C. Brinckerhoff]
On November 1, 2012, the U.S. District Court for the Eastern District of Virginia (Ellis, III, J.) interpreted the patent term adjustment (PTA) statute (35 U.S.C. § 154) in a manner that could result in significant additional patent term for many U.S. patents. Exelixis, Inc. v. Kappos, No. 1:12cv96 (E.D. Va. Nov. 1, 2012). Stakeholders may recall the Wyeth decision that addressed how to identify and account for overlapping periods of USPTO delay. The Exelixis decision addresses the impact of the filing of a Request for Continued Examination (RCE) on the ability to accrue PTA when the USPTO fails to issue a patent within three years of its actual filing date, potentially opening up a large number of situations where patent applications may receive additional patent term. To take advantage of this decision, time-sensitive action may be needed in some situations as explained below.
Patent Term Adjustment and Requests for Continued Examination
The patent term statute (§ 154) establishes that a U.S. patent’s term runs for 20 years from the earliest effective non-provisional U.S. filing date of the patent application. Recognizing that delays during prosecution operate to shorten effective patent term, Congress enacted § 154(b)(1) to provide PTA to account for USPTO delays under certain circumstances. The statute provides “guarantees” against three different types of delay:
“A” delay, when the USPTO fails to act in accordance with set timeframes (such as issuing a first office action within 14 months, issuing a second action or allowance within four months of a response, and issuing a patent within four months of the issue fee payment). 35 U.S.C. § 154(b)(1)(A).
“B” delay, when the USPTO fails to issue a patent within three years of the actual filing date of the patent application. 35 U.S.C. § 154(b)(1)(B).
“C” delay, when the application is involved in an interference or appeal, or is subject to a secrecy order. 35 U.S.C. § 154(b)(1)(C).
The filing of an RCE can affect the PTA award for B delay under 35 USC § 154(b)(1)(B)(i), which provides:
(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);
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.
The USPTO’s interpretation of the RCE provision is set forth in 37 C.F.R. § 1.703(b)(1):
(b) The period of adjustment under § 1.702(b) is the number of days, if any, in the period beginning on the day after the date that is three years after the date on which the application was filed under 35 U.S.C. 111(a) or the national stage commenced under 35 U.S.C. 371(b) or (f) in an international application and ending on the date a patent was issued, but not including the sum of the following periods:
(1) The number of days, if any, in the period beginning on the date on which a request for continued examination of the application under 35 U.S.C. 132(b) was filed and ending on the date the patent was issued ….
Thus, under the USPTO’s interpretation, once an RCE is filed, the patent no longer accrues B delay, although it might still accrue A delay and/or C delay.
The District Court Decision
In its November 1 decision, the district court determined that the USPTO’s interpretation was contrary to the plain language of the statute. Instead, the court found:
[T]he plain and unambiguous language of subparagraph (B) requires that the time devoted to an RCE serves to toll the running of the three year clock, if the RCE is filed within the three year period; subparagraph (B) does not address RCE's filed after the running of the three year period nor does it require that the time consumed by an RCE filed after the running of the three year clock be deducted from the PTA. Put simply, RCE's have no impact on the PTA after the three year deadline has passed and subparagraph (B) clearly provides no basis for any RCE's to reduce PTA; instead, 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. Thus, the PTO erred in construing subparagraph (B) to the contrary.
This means that patents granted after an RCE was filed more than three years after the application’s actual filing date are entitled to a PTA award that accounts for B delay that accrued after the RCE was filed, whereas the USPTO heretofore has not accounted for any B delay that may have accrued after an RCE was filed.
A Significant Impact on Patent Term
The district court’s decision could have a significant impact on the term of affected patents. As noted above, the USPTO has been accounting for any A delay that may have accrued after an RCE was filed, but awards for A delay are not as comprehensive as awards for B delay. PTA awards for A delay only account for delays that fall beyond certain time periods (e.g., the number of days beyond four months that it took the USPTO to issue an Office Action or Notice of Allowance after the RCE or a response was filed, or the number of days beyond four months that it took the USPTO to issue the patent after the issue fee was paid). On the other hand, PTA awards for B delay account for every day beyond the three-year date that it takes the USPTO to grant the patent. (The total PTA award is subject to deductions for any applicant delay during the entire examination process.) This means that patents affected by the Exelixis decision could be entitled to hundreds of additional days of patent term, since the B delay calculation does not have the four-month gaps that are present in the A delay calculation.
Although it is likely that the USPTO will request rehearing of this decision or pursue an appeal to the U.S. Court of Appeals for the Federal Circuit, patentees should consider taking immediate relevant action regarding PTA. For patents granted within the past two months, patentees can file a request for reconsideration of a final PTA determination under 37 C.F.R. § 1.705. Patents beyond this period, but with any PTA request for reconsideration pending at the USPTO, may want to consider raising this issue in a supplemental USPTO submission. For patents beyond the statutory period of USPTO review, but granted within the last 180 days, patentees can file a civil action in the U.S. District Court for the Eastern District of Virginia under 35 U.S.C. § 154(b)(4)(A) to pursue a PTA award based on the court’s interpretation of the statute. At the moment, it is not clear whether any avenue exists to obtain additional PTA for patents that are not within either of these windows. Stakeholders who might benefit from significant PTA under Exelixis should therefore carefully review affected patents and explore all options.