Novartis AG v. Lee (Fed. Cir. 2014)

NovartisIn an opinion issued earlier today, the Federal Circuit affirmed a determination by the District Court for the District of Columbia that challenges of patent term adjustment (PTA) determinations by the U.S. Patent and Trademark Office for fifteen patents were untimely asserted by Novartis AG, Novartis Vaccines and Diagnostics, Inc., and Novartis Corporation ("Novartis").  The Federal Circuit also reversed the District Court's ruling that the Patent Office's interpretation of 35 U.S.C. § 154(b)(1)(B) was contrary to law, and remanded for a redetermination of proper PTA determinations.

As we noted in our summary of the District Court's November 2012 decision, the lower court determined that Novartis had not satisfied the 180-day limitation of 35 U.S.C. § 154(b)(4)(A) for timely challenging PTA determinations by the Office with respect to nineteen of twenty-three patents at issue, and further, that the 180-day limitation should not be equitably tolled.  For three of the four patents for which Novartis had timely challenged the Office's PTA determinations, the District Court adopted the rationale in Exelixis, Inc. v. Kappos, and for the lone remaining patent, the Court determined that the Office erred in not applying the Federal Circuit's decision in Wyeth v. Kappos.

Novartis originally brought suit against the U.S. Patent and Trademark Office Director in July 2010 under 35 U.S.C. § 154 and the Administrative Procedure Act (APA), alleging that the Office improperly determined the amount of PTA to which eleven of Novartis' patents were entitled by improperly refusing to apply the Federal Circuit's decision in Wyeth v. Kappos to patents granted prior to September 2, 2009.  Novartis also challenged the Patent Office's interpretation of the effect of filing a Request for Continued Examination (RCE) on the determination of B Delay.  The District Court subsequently consolidated that case with three other Novartis cases that raised similar issues, bringing the number of Novartis patents at issue in the consolidated action to twenty-three.

In assessing the Office's determination of PTA for each of the twenty-three Novartis patents at issue, the District Court noted that challenges to Office PTA determinations were governed by 35 U.S.C. § 154(b)(4)(A), which provided that:

An applicant dissatisfied with a determination made by the Director under paragraph (3) shall have remedy by a civil action against the Director filed in the United States District Court for the District of Columbia within 180 days after the grant of the patent.

For all but three of the twenty-three Novartis patents at issue, the Office argued that Novartis' complaints were filed more than 180 days after those patents were issued, and therefore, that Novartis was foreclosed from seeking additional PTA for those patents.  Novartis countered that the 180-day limitation of § 154(b)(4)(A) did not apply to its claims because that statute applied to determinations "under paragraph (3)," and therefore only applied to determinations of A Delay.

While the District Court sided with the Patent Office with respect to the 180-day limitation of § 154(b)(4)(A), the lower court disagreed with the Office that Novartis was foreclosed on all of the patents at issue.  In particular, the Court noted that Novartis had filed a petition for PTA reconsideration for one of the patents within two months of its issuance (as required under the applicable rules at the time), and had filed a complaint within 180 days of the Office's denial of reconsideration (but more than 180 days after the patent issued).  However, with respect to Novartis' argument that the 180-day limitation of § 154(b)(4)(A) should be equitably tolled for nineteen other patents, the District Court found Novartis' arguments to be unpersuasive, noting that "Novartis was free to raise the same issues that Wyeth and Abbott Laboratories raised in their lawsuits within the 180 days after their patents were granted."

Regarding the patents for which Novartis had timely challenged the Office's PTA determinations, the District Court noted that those patents concerned the same issue decided by the Eastern District of Virginia in Exelixis, Inc. v. Kappos, namely "whether § 154(b)(1)(B) requires that, or even addresses whether, any PTA be reduced by time attributable to an RCE where, as here, the RCE is filed after the expiration of the three year guarantee period specified in that statute."  After discussing the decision in Exelixis, the Court noted that it found "Judge Ellis' well-reasoned opinion to be persuasive," and "therefore adopt[ed] his rationale for concluding that the PTO's interpretation [of the statute] is contrary to the plain and unambiguous language of § 154(b)(1)(B), and that it contravenes the structure and purpose of the statute."

On appeal, Novartis challenged the District Court's ruling with respect to eighteen of the twenty-three patents that were before the lower court.  The District Court had dismissed Novartis' claims for fifteen of these patents as untimely asserted, and had rejected the Office's construction of § 154(b)(1)(B) for the remaining three patents.

With respect to the District Court's dismissal of Novartis' claims as untimely under the versions of 35 U.S.C. § 154(b)(3) and § 154(b)(4)(A) that applied to the patents at issue, the Federal Circuit notes that "[i]t is . . . undisputed that, for the fifteen patents, Novartis did not file suit within 180 days of denial of reconsideration [of the Office's PTA determination]."  Novartis argued, however, that the 180-day period was inapplicable because § 154(b)(4)(A) only applies to "a determination made by the Director under paragraph (3) -- or, as Novartis contended, only to the provisional PTA determination that the Office made at the time of allowance" (under the applicable rules at the time).

Finding Novartis' interpretation of § 154(b)(4)(A) to be "unreasonable," the Federal Circuit states that "[t]he applicable version of paragraph (b)(3) . . . addresses all patent term adjustment determinations, not just some."  According to the Court, Novartis' reading of the statute:

[W]ould use one provision to contradict the broad language of several other provisions and produce the senseless result that the detailed judicial-review provision of paragraph (b)(4) -- with its 180-day rule and its confinement of venue to one district court -- would apply to review only of provisional, but not final, adjustment determinations.  In the end, the statutory language on which Novartis relies is a flaw in drafting that cannot reasonably support the construction Novartis advances.

In addition to rejecting Novartis' construction of § 154(b)(4), the Court also determined that Novartis had failed to demonstrate why the 180-day rule should be equitably tolled, stating that "[a]t a minimum, nothing stood in the way of Novartis's timely pressing the very claim Wyeth pressed," adding that "[a] fortiori equitable tolling is unavailable where, as here, there is no reason even to doubt that the litigant knew the legal theory, but just waited until another person secured a favorable ruling on the theory in another case."  The Court further found no merit to Novartis' argument that its property was taken, in violation of the Fifth Amendment, stating that "[f]or the patents as to which it did not timely file suit under § 154(b)(4), it was only Novartis's failure to comply with reasonable filing deadlines that prevented it from securing any patent term adjustment authorized by Wyeth."

As for the three patents at issue for which Novartis timely challenged the Office's PTA determinations, and which involved the impact of an RCE filing on the calculation of B Delay, the Federal Circuit agreed with the Office that "no [patent term] adjustment time is available for any time in continued examination, even if the continued examination was initiated more than three calendar years after the application's filing" (in other words, for an RCE filed more than three years after the application filing date).  However, the Court agreed with Novartis "that the 'time consumed by continued examination' should be limited to the time before allowance, as long as no later examination actually occurs."  As a result of the Court's determination that the Office's interpretation of § 154(b)(1)(B) was only partly correct, the Court remanded for a redetermination of proper PTA determinations in accordance with the Court's opinion.

In view of its decision in Novartis AG v. Lee, the Federal Circuit also issued an opinion in Exelixis, Inc. v. Lee, vacating judgments by the District Court for the Eastern District of Virginia as to PTA determinations for two Exelixis patents, and remanding for a redetermination of the proper adjustments in accordance with the Court's Novartis decision.

Novartis AG v. Lee (Fed. Cir. 2014)
Panel: Circuit Judges Newman, Dyk, and Taranto
Opinion by Circuit Judge Taranto

Exelixis, Inc. v. Lee (Fed. Cir. 2014)
Panel: Circuit Judges Newman, Dyk, and Taranto
Per curiam opinion

 

Topics:  Novartis, Patent Litigation, Patent Term Adjustment, Patent Terms, Patents

Published In: Civil Procedure Updates, Intellectual Property Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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