USPTO Files Reply Brief in Exelixis v. Rea

by McDonnell Boehnen Hulbert & Berghoff LLP

USPTO SealAt the end of June, the U.S. Patent and Trademark Office filed its reply brief with the Federal Circuit in Exelixis, Inc. v. Rea.  The appeal involves two decisions by the Eastern District of Virginia involving the impact of a Request for Continued Examination (RCE) on the calculation of patent term adjustment (PTA) for a patent, and in particular, on the amount of B-Delay an applicant can obtain after filing an RCE.  A discussion of the first decision to come out of the Eastern District of Virginia (Exelixis I), which was issued by Judge T. S. Ellis III on October 1, 2012, and which the USPTO has appealed, can be found here.  The opinion for the second decision (Exelixis II) -- which was issued by Judge Leonie M. Brinkema on January 28, 2013, and which Exelixis has appealed, can be found here.

The USPTO brief begins by noting that the Office's issue on appeal is:

[W]hether this Court should uphold the agency's longstanding interpretation of [35 U.S.C. § 154(b)(1)(B)(i)], under which any time consumed by an applicant's request for continued examination ("RCE") is excluded from the calculation of patent term adjustment under subsection 154(b)(1)(B) regardless of when the applicant filed the RCE.

ExelixisWhile Exelixis argues that an RCE filed after the 3-year deadline (i.e., three years after the application was filed) should not impact the amount of B-Delay a patent can accrue, the USPTO argues that regardless of whether an RCE is filed before or after the 3-year deadline, a patent should not accrue B-Delay after the RCE is filed.  The Office summarizes Exelixis' issue on appeal as being:

[W]hether the Court should defer to the USPTO's definition of "any time consumed by continued examination of the application requested by the applicant under section 132(b)" to include all time elapsed between filing of an RCE and issuance of a patent.

In arguing that the Office's interpretation of the statute "avoids absurd results, realizes Congress's intent, and best makes sense of the provision as a whole," the USPTO brief notes that the District Court in Exelixis II "explained[ that] an RCE adds time to the processing of the application but delay after the filing of an RCE 'emanates solely from an applicant's original failure to file an application fit for a notice of allowance.'"  Therefore, the USPTO contends that the filing of an RCE is applicant-caused delay and not PTO-caused delay.  The brief argues that "although the statute is ambiguous, the USPTO's interpretation is by far the better reading of the statute and this Court should defer to it under Skidmore."

With respect to the ambiguity of the statute, the brief states that "the text of 35 U.S.C. § 154(b)(1)(B) is ambiguous," in that "[i]t can be read as providing that time associated with the filing of an RCE is excluded from the B-delay category of PTA, regardless of when the RCE is filed, or it can be read to apply only to RCEs filed within the first three years."  The brief asserts that "[r]eading the statute as a whole, the USPTO's interpretation is by far the better way to resolve this textual ambiguity."  Fearing that Exelixis' interpretation of the statute would permit submarine patents, the brief explains that "an applicant could file an overly broad patent application, repeatedly fail to address the examiner's reasons for rejection, and then narrow it only in a later RCE."

As for Exelixis' issue on appeal, the brief contends that:

The USPTO has discretion under Section 132(b) to define the RCE process and to determine when it is completed.  The USPTO has done so and determined that the RCE process continues until the patent is actually issued because, once an RCE is requested, "any further processing or examination of the application, including granting of a patent, is by virtue of the continued examination."

The brief notes that "Congress left it to the USPTO to define the process for 'continued examination' under Section 132(b), including when that process begins and ends."  And as the brief explains, the Office defined the process to be such that "[o]nce an RCE is requested, 'any further processing or examination of the application, including granting of a patent, is by virtue of the continued examination,'" meaning that "any time following the filing of an RCE is consumed by the RCE."

In response to Exelixis' argument that examination cannot include the period between the issuance of the notice of allowance and the issuance of the patent because the notice of allowance states that the application "has been examined" and no actual examination occurred after that time, the brief counters that:

In the patent context . . . the word "examination" is not limited in such a way.  The period of examination spans the entire time that the application is pending before the USPTO.  See 35 U.S.C. § 131 (indicating that issuance immediately follows examination).  This understanding of the term "examination" is consistent with the USPTO's regulation governing "adjustment of patent term due to examination delay," which includes patent term adjustment for delays in issuing the patent after payment of the issue fee.  See 37 C.F.R. § 1.703(a)(6) (emphasis added).  Likewise, late payment of the issue fee and requests to defer issuance of a patent after payment of the issue fee, both of which must occur after the notice of allowance is issued, represent a failure of the applicant to engage in reasonable efforts to conclude "processing or examination" of the application.

As for Exelixis' argument that it is unfair to deny an applicant PTA for time between the notice of allowance and the issue date because the USPTO controls the time it takes to issue a patent, the brief indicates that:

As an initial matter, this is only partially true.  The USPTO only controls the time after payment of the issue fee and satisfaction of any other outstanding requirements by the applicant.  The applicant controls the time it takes to pay the issue fee and fulfill any other necessary requirements.  In Exelixis II, it took Exelixis almost three months (from July 1 to September 30) to pay the issue fee, accounting for the majority of the time that elapsed between the notice of allowance and the patent issue date.  Even though Exelixis, not the USPTO, was responsible for that time, and Exelixis waited until the last day to pay the issue fee, Exelixis now requests PTA for the entire period and asserts that it is "time consumed by [the USPTO's] administrative delay."

(citation omitted).

The brief also notes that "PTA is . . . available where there are undue USPTO delays in issuing the patent [e.g., when the USPTO takes more than four months to issue a patent after the issue fee is paid]."  Explaining that "PTA is designed to compensate for delays by the USPTO," the brief argues that "[i]t is not punitive to decline to grant PTA for delays that are not due to a failure on the part of the USPTO," and therefore concludes that "[g]iving PTA for '[t]his applicant-caused delay is incompatible with the concept of B-delay PTA, which is fundamentally anchored to PTO-caused delay.'"


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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