[author: Courtenay C. Brinckerhoff]
Although most of HR 6621 (introduced by Rep. Lamar Smith on Nov. 30, 2012) would make changes “[t]o correct and improve certain provisions of the Leahy-Smith America Invents Act,” the bill includes other provisions that are entirely unrelated to the AIA and that would dramatically impact patent term. The provision receiving the most public attention would eliminate the term of patent applications filed before June 7, 1995 (“pre-GATT applications”) that are still pending. But another provision would affect all pending and new applications, as well as recently granted patents, by changing the way that Patent Term Adjustment (PTA) is calculated and challenged under 35 USC § 154(b).
The PTA Provisions of HR 6621
Section 1(h) of HR 6621 sets forth three categories of proposed changes to the PTA provisions of § 154(b).
Change #1: U.S. National Stage Applications
The first change would impact PTA for U.S. national stage applications, and would treat “commencement of the national stage” as equivalent to the filing date of a direct U.S. application (an application filed under 35 USC § 111(a)). These changes would impact the calculation of “A delay” and “B delay,” and are embodied in proposed amendments to § 154(b)(1)(A) and (B):
(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 —
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(II) the date on which an international application fulfilled the requirements of section 371 of this title of commencement of the national stage under section 371 in an international application;
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(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 the application under section 111(a) in the United States or, in the case of an international application, the date of commencement of the national stage under section 371 in the international application, 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.
The proposed amendment to § 154(b)(1)(A)(i)(II) may permit applicants to take advantage of the new option to delay submission of the inventor oath/declaration without losing the ability to accrue PTA if the USPTO fails to issue a first Office Action within fourteen months of entry of the national phase. The proposed amendments to § 154(b)(1)(B) are consisted with how the USPTO calculates “B delay” for U.S. national phase applications under the current statute.
Change #2: The USPTO’s Initial PTA Determination
The second change would permit the USPTO to provide its initial PTA determination “no later than the date of issuance of the patent,” rather than with the Notice of Allowance, as required under current law. This change is reflected in proposed amendments to § 154(b)(3):
(3) PROCEDURES FOR PATENT TERM ADJUSTMENT DETERMINATION. —
(A) The Director shall prescribe regulations establishing procedures for the application for and determination of patent term adjustments under this subsection.
(B) Under the procedures established under subparagraph (A), the Director shall —
(i) make a determination of the period of any patent term adjustment under this subsection, and shall transmit a notice of that determination with the written notice of allowance of the application under section 151 no later than the date of issuance of the patent; and
(ii) provide the applicant one opportunity to request reconsideration of any patent term adjustment determination made by the Director.
(C) The Director shall reinstate all or part of the cumulative period of time of an adjustment under paragraph (2)(C) if the applicant, prior to the issuance of the patent, makes a showing that, in spite of all due care, the applicant was unable to respond within the 3-month period, but in no case shall more than three additional months for each such response beyond the original 3-month period be reinstated.
The proposed amendment to § 154(b)(3)(B)(i) is problematic because it eviscerates the right to have PTA reinstated under § 154(b)(3)(C). That provision provides a mechanism for reinstating PTA that was subtracted due to applicant delay if the applicant makes a showing that excuses the delay. Section 154(b)(3)(C) requires that the showing be made prior to the issuance of the patent, but under the proposed changes to § 154(b)(3)(B)(i) the applicant will not even know that it has been charged with applicant delay until that deadline has passed, because the USPTO will not provide its initial PTA determination until the patent issues. Congress should consider § 154(b)(3) as a whole, and extend the time period in § 154(b)(3)(C) if the changes to § 154(b)(3)(B)(i) are adopted.
This proposed amendment also shortens the time period that applicants have to assess the USPTO’s PTA determination. Under the current law, the initial determination is provided with the Notice of Allowance, and a request for reconsideration is due by the time the Issue Fee is paid, which can be up to three months later. If the PTA determination is not provided until the patent issues, the patent holder will have less than two months to assess the USPTO’s determination and file a request for reconsideration.
Change #3: Appeal of USPTO PTA Determination
The third change would impact PTA appeals by amending § 154(b)(4):
(4) APPEAL OF PATENT TERM ADJUSTMENT DETERMINATION. —
(A) An applicant dissatisfied with a determination made by the Director under paragraph (3) shall have remedy the Director’s decision on the applicant’s request for reconsideration under paragraph (3)(B)(ii) shall have exclusive remedy by a civil action against the Director filed in the United States District Court for the Eastern District of Virginia within 180 days after the grant of the patent the date of the Director’s decision on the applicant’s request for reconsideration. Chapter 7 of title 5 shall apply to such action. Any final judgment resulting in a change to the period of adjustment of the patent term shall be served on the Director, and the Director shall thereafter alter the term of the patent to reflect such change.
(B) The determination of a patent term adjustment under this subsection shall not be subject to appeal or challenge by a third party prior to the grant of the patent.
For patent holders who have requested USPTO reconsideration of a PTA determination, the proposed changes to § 154(b)(4) would come close to codifying the recent decision of the U.S. District Court for the District of Colombia in Bristol Meyers Squibb Co. v. Kappos, by measuring the 180-day time period for bringing a district court civil action from the date of the USPTO’s decision on reconsideration. However, the proposed changes to § 154(b)(4) would eliminate the option of directly challenging a PTA award in a district court civil action. Instead, the right to pursue an appeal in a district court civil action would be conditioned on having asked the USPTO to reconsider its initial PTA determination, and having received a decision on that request for reconsideration.
While this change might ensure that the USPTO has an opportunity to reconsider (and perhaps correct) its own mistakes, it could leave patent holders out in the cold if the USPTO does not decide requests for reconsideration in a timely manner. Indeed, while the statute requires the USPTO to render its initial decision within a certain time period (e.g., by the notice of allowance or issue date), the language regarding requests for reconsideration in § 154(b)(3)(B)(ii) states simply that “the Director shall … provide the applicant one opportunity to request reconsideration of any patent term adjustment determination made by the Director.” It is possible that a patent holder could seek a writ of mandamus in extreme cases of USPTO inaction, but I would be more comfortable if the statute imposed some timeliness requirement on the USPTO’s decision on a request for reconsideration.
This proposed change also would limit the ability of patent holders to bring appeals based on a PTA decision rendered in another case. For example, a number of patent holders have filed civil actions in the wake of the Exelixis PTA decision. Many, but not all, of these plaintiffs pursued requests for reconsideration at the USPTO. Under these proposed changes, however, only patent holders who had pursued requests for reconsideration at the USPTO would be able to bring suit in a district court, even if there was an intervening change in the law.
In forcing patent holders to request USPTO reconsideration, this proposed change appears to be proposing a “solution” where there is no problem. A review of PTA civil actions confirms that most patent holders do file requests for reconsideration with the USPTO before pursuing a district court civil action. In the few cases where no request for reconsideration was filed, it is likely that such a request would have been futile. In most such cases, the USPTO had determined PTA in accordance with its interpretation of the statute as reflected in its implementing regulations, and the patent holder was challenging the USPTO’s interpretation as being inconsistent with the statute. The USPTO is not going to alter its interpretation of the statute when deciding a specific request for reconsideration. Indeed, when the USPTO has revised its interpretation of the PTA statute, it has done so through the rulemaking process. Thus, forcing patent holders to pursue USPTO reconsideration in all cases not only would waste patent holders’ time and money, it also would place needless demands on USPTO resources.
Another subtle but potentially significant proposed change in this provision is the insertion of the word “exclusive” into § 154(b)(4)(A). In its recent decision in Novartis v. Kappos, the U.S. District Court for the Eastern District of Virginia held that patent holders could not avoid the 180 day period of § 154(b)(4)(A) by invoking alternative theories of recovery (such as challenging the PTA award as an unconstitutional Taking or as violating the Administrative Procedure Act generally). Revising the statute to state that it sets forth the “exclusive” remedy would further foreclose alternative routes of review if a patent holder finds itself in a difficult or unusual situation. To the extent that this amendment cuts off existing rights of redress, it is a substantive change that warrants careful consideration.
Trapped by the Effective Date?
Another problem with HR 6621 is the effective date provision:
Sec. 1(o) EFFECTIVE DATE.—Except as otherwise provided in this Act, the amendments made by this Act shall take effect on the date of the enactment of this Act and shall apply to proceedings commenced on or after such date of enactment.
Sec. 1(h) does not include any effective date provisions specific to the PTA changes. Thus, by operation of the general effective date provision in Sec. 1(o), the PTA changes would apply to any “proceeding” commenced on or after the date of enactment of HR 6621. This means that a patent holder who did not request reconsideration at the USPTO before the date of enactment could be foreclosed from bringing an appeal that would have been timely and permissible under the current statute. In this way, the PTA changes in HR 6621 would apply retroactively to any patent issued after the enactment of HR 6621 but before a civil proceeding has commenced.
HR 6621 Quacks Too Loudly for Lame Duck Legislation
Perhaps if HR 6621 truly only would “correct and improve certain provisions of the Leahy-Smith America Invents Act,” it would be appropriate lame duck legislation, but the fact that it proposes significant changes to the PTA statute raises serious concerns. Indeed, given that no provision of the AIA relates to PTA, it is not clear why these changes to the PTA statute are being proposed in an “AIA Corrections” bill.
The PTA statute–35 U.S.C. § 154(b)–is one of the most complex statutes of the Patent Act, and includes numerous intertwined and interrelated provisions. Any changes to the statute should be subject to careful scrutiny, input from stakeholders, and public debate. If HR 6621 is rushed through Congress in this lame duck session, stakeholders will be crying fowl when they discover that certain PTA rights have been abrogated.
