What is Patent Term Adjustment and Why Does It Matter?

by Perkins Coie
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For patents granted on applications filed on or after June 8, 1995, the enforceable patent term begins on the day the patent issues and generally expires 20 years from the earliest effective filing date of the application.  Because the expiration date is calculated from the date of filing—rather than the date of issuance—delays in prosecuting the patent application reduce the enforceable term of the patent.  As a result, a patent applicant can maximize patent term by avoiding delays in prosecution.

But what happens when the U.S. Patent and Trademark Office (USPTO) delays prosecuting an application and thus potentially reduces the valuable patent term through no fault of the applicant?  To compensate for such patent office delays, 35 U.S.C. § 154 provides Patent Term Adjustment (PTA) that extends the term of a patent on a day-by-day basis. 

The A, B, Cs of PTA Calculations

Section 154 provides three different categories of PTA.  In particular, an applicant may receive A-Type (delayed response) PTA for: 1) each day after 14 months from the filing date of the application until the USPTO issues a first Office Action, and 2) each day after four months from the filing of certain actions by the applicant until the USPTO responds to such actions.  The applicant may receive B-Type (overall delay) PTA for each day after three years from the earliest effective filing date of the application until a patent is granted.  Likewise, the applicant may receive C-Type (other delay) PTA for each day of delay due to interferences, secrecy orders and successful appeals.  The total amount of PTA is calculated by adding the A-, B- and C-Type PTAs, and then subtracting any delay that is attributable to the applicant, e.g., each day beyond three months that it takes the applicant to respond to an Office Action.  The term of an issued patent is extended by the calculated total days of PTA.

Recent Case Law Regarding PTA

An interesting aspect of calculating PTA arises when an applicant files a first Request for Continued Examination (RCE) during prosecution.  Before November 1, 2012, the USPTO calculated PTA by stopping accrual of B-Type PTA after an applicant filed a first RCE.  On Nov. 1, 2012, the U.S. District Court for the Eastern District of Virginia decided Exelixis v. Kappos (Exelixis I) and held that accrual of B-Type PTA should be stopped only when the first RCE was filed within three years of the filing date of the patent application.  This meant that additional PTO should be added for the many applications where a first RCE was filed after the three-year mark.  Exelixis I was significant as it added several hundred days of PTA in some cases.

In January 2013, a subsequent decision by a different judge in the Eastern District of Virginia disagreed with the Exelixis I ruling, and in this subsequent ruling (Exelixis II) the court held that the USPTO’s previous method of cutting off B-Type PTA after the first RCE, no matter when it was filed, was correct.  Thus, there was a split in the court.

In January 2014, the Federal Circuit resolved this split in Novartis v. Lee (Novartis) in favor of Exelixis II.  The Federal Circuit held that any RCE, irrespective of when the RCE is filed, cuts off accrual of B-Type PTA.  However, the Federal Circuit also found that, contrary to the USPTO's then practice, B-Type PTA should resume accruing once a Notice of Allowance is mailed.  In June 2014, the USPTO is implementing new PTA calculation procedures to conform to Novartis.  The effect of the new procedures will be that "the time consumed by continued examination does not include the time after a notice of allowance, unless the Office actually resumes examination of the application after allowance."  (79 FR 34681, June 18, 2014)

Tips for Maximizing PTA

  • Appeal Before a First RCE

    Often during the prosecution of a patent application, an applicant will go through several rounds of Office Actions, possibly including filing multiple RCEs in response to Final Office Actions, before resorting to appealing a rejection.  In evaluating whether an appeal is an appropriate next step, applicants should consider the potential PTA benefits of appealing before filing a first RCE when the claims and evidence of record are in good condition for a successful appeal.  As discussed above, filing an RCE cuts off accrual of B-Type PTA for the remainder of prosecution until a Notice of Allowance is mailed.  By appealing before filing an RCE, when more than three years have elapsed since the filing of an application, an examiner's reopening of prosecution, either in response to an appeal brief or in response to a successful appeal, will resume accrual of B-Type PTA.  In many cases appealing before filing an RCE may result in months or years of extra PTA being added to the patent term. On the other hand, applicants are also wise to consider the competing concerns that may influence a decision to appeal before a first RCE.  Particularly with respect to patent applications in the biotechnology and pharmaceutical arts, care should be taken to avoid prematurely appealing a case, e.g., before resolving factual disputes over cited art.  The added expense of the appeals process, compared to the expense of continuing regular prosecution, may also weigh against a decision to appeal before a first RCE.
  • Fight Terminal Disclaimers

    During prosecution, the patent office may reject one or more claims in an application based on obviousness-type double patenting.  In most circumstances the applicant can overcome such a rejection by filing a terminal disclaimer, which provides that the patent that issues from the pending application must: 1) expire at the same time as the patent that is the basis of the double patenting rejection, and 2) cannot be assigned separately from the patent that is the basis of the double patenting rejection.  

    Upon filing a terminal disclaimer, an applicant should keep in mind that the common expiration date is mandatory, regardless of whether PTA would have otherwise extended the patent term of the disclaimed patent.  Therefore, applicants who opt to file a terminal disclaimer to overcome an obviousness-type double patenting rejection should carefully weigh the corresponding damage to the enforceable term of the disclaimed patent.  As an alternative to filing a terminal disclaimer, the applicant may wish to fight the rejection with substantive arguments, if any exist, or the applicant may wish to simply cancel the rejected claims and pursue them in a continuation application, if desired, and prosecute the remaining claims to allowance.
  • Do Not Fight Restriction Requirements

    During prosecution, the patent office may determine that an applicant’s claims are directed to more than one invention.  In these instances, the patent office may issue a restriction requirement that requires the applicant to select only one of the inventions for examination.  The applicant may respond by either: 1) selecting a single invention for examination (i.e., retaining only those claims directed to the selected invention and withdrawing the remaining claims), or 2) traversing the restriction requirement (i.e., arguing that all of the claims are directed to a single invention).

    The advantage of the traversing-the-restriction requirement is that all claims will stay in a single application that could issue at the same time in a single patent.  The significant disadvantage, however, is that the patent office may allow certain claims and reject others.  If the applicant decides to let the allowed claims proceed to issuance and then pursue the rejected claims in a continuation application, the applicant would then be vulnerable to an obviousness-type double patenting rejection.  As discussed above, the applicant would then be faced with the decision of whether to file a terminal disclaimer that may cut off valuable patent term, or fight the terminal disclaimer.

    Rather than traversing the restriction requirement, the applicant should consider accepting the restriction.  The applicant could then elect for examination only the claims that are drawn to a single invention, and then file one or more divisional applications to pursue the non-elected claims.  An advantage of this approach is that the patent office is barred from subsequently issuing an obviousness-type double patenting rejection in the divisional applications based on the parent application.  As a result, the applicant could avoid the filing of a terminal disclaimer, thereby maximizing the term of any patents that issue from the divisional applications.

Conclusion    

By adjusting prosecution strategies, including appealing rejections before the first RCE where appropriate and avoiding terminal disclaimers, additional PTA may accrue into years of extra patent term.  Also, when patent applicants review PTA decisions, they should pay particular attention to whether, in accordance with Novartis, the USPTO added any additional B-Type PTA that accrued after the Notice of Allowance was mailed.  When applicants discover that the patent office's PTA calculation is incorrect, they must quickly submit a request for recalculation prior to paying the issue fee.

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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