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Client Alerts

Patent Alert - Federal Circuit Decision on Patent Term Adjustment

January 23, 2014

Client Alerts

Patent Alert - Federal Circuit Decision on Patent Term Adjustment

January 23, 2014

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Patent Alert – Federal Circuit Decision on Patent Term Adjustment

On January 15, 2014, the Federal Circuit issued its long-awaited decision in Novartis v. Lee. The case considered the U.S. Patent and Trademark Office’s (USPTO’s) methodology for calculating patent term adjustment (PTA) in cases where a request for continued examination (RCE) has been filed. Based upon the Novartis decision, which found fault with the USPTO’s methodology, many patents in which an RCE has been filed will benefit from an increased PTA. The Federal Circuit also issued a per curiam decision in the companion case, Exelixis v. Lee, instructing that PTA be recalculated in accordance with the Novartis decision.Statute and Regulation at Issue35 USC § 154(b)(1)(B) provides for extension of the term of a patent for failure of the USPTO to issue a patent within three years of the filing date of an application. This type of PTA is referred to as “B Delay.” The statute provides several time periods during the pendency of an application that are to be excluded from B Delay, one of which is “time consumed by continued examination of the application.”

[I]f 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 … 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. 35 USC § 154(b)(1)(B)(i).

The USPTO promulgated 37 CFR § 1.703(b)(1) in 2000, shortly after enactment of the PTA statute, in an effort to implement 35 USC § 154(b)(1)(B)(i).

(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 … 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. (emphasis added)

Fourteen years later, the above regulation has now been rejected as inconsistent with the controlling statute. Novartis challenged the regulation as being over-exclusive due to its exclusion from B Delay of the time from allowance of an application until issuance of the patent. Relying upon the USPTO’s own examination policies and a commonsense understanding of the term “continued examination,” the Federal Circuit agreed with Novartis that the time between allowance and issuance does not constitute continued examination and therefore cannot be excluded from B Delay.Novartis made an alternative, sweeping argument that the proper reading of 35 USC § 154(b)(1)(B) requires that an RCE filed only after an application has been pending for three years has no effect on reducing B Delay. The Federal Circuit rejected this argument as inconsistent with both the statutory language and the statutory purpose.How Much Extra PTA Can a Patent Obtain in View of the Novartis Decision?A patent can potentially benefit from the Novartis decision if an RCE was filed during prosecution and if total application pendency was more than three years. The amount of extra PTA that such a patent can obtain is typically measured from the date of allowance of the application until the date of issuance of the patent. The length of this period will vary between cases, depending upon how quickly the applicant pays the issue fee after receipt of the notice of allowance and how quickly the USPTO issues the patent after the fee is paid. If the applicant takes the full three months to pay the issue fee and the USPTO then issues the patent within a month or two after payment of the fee, this would result in a total of four to five months of extra PTA.Likely Next Step from the USPTOIf neither Novartis nor the USPTO requests a rehearing, the decision will become final and the USPTO will likely have to engage in rulemaking to revise 37 CFR § 1.703(b)(1) in a manner consistent with Novartis. We expect that the USPTO will make some sort of announcement as to its intentions in the near future.Requesting Additional PTA in View of NovartisFish & Richardson has been anticipating this decision for some time, requesting correction of PTA according to the rule ultimately adopted by Novartis for all interested clients for the past three years. In those cases where this issue has been properly preserved by an administrative challenge (and a district court filing, if needed), the USPTO will eventually have to recalculate PTA in a manner consistent with the Novartis decision. It is possible that the USPTO will refrain from recalculating PTA in any cases until it has completed rulemaking to revise 37 CFR § 1.703(b)(1). It may take the USPTO many months to promulgate a new rule, which could then be applied to the backlog of patents seeking this correction.For any patent that has the PTA error identified in Novartis but has not yet sought correction, it is imperative that a timely request for correction be filed with the USPTO. A patentee dissatisfied with a PTA determination must file an Application for PTA within two months after patent grant, a period that is extendable for up to five months. Thus, reconsideration of PTA can be requested up to seven months after issuance, but extension fees will accrue after the first two months.“Late” Filing of a PTA Civil ActionThe Novartis case also considered a separate issue, the timeliness of a civil action filed more than 180 days after patent grant seeking correction of PTA according to the ruling in Wyeth v. Kappos, 591 F.3d 1364 (Fed. Cir. 2010). The pre-2013 version of the PTA statute required that a civil action be filed within 180 days after patent grant. Novartis had many alternative legal theories in support of its request for “late” review, but all were rejected.The statutory PTA civil action filing deadline at issue in Novartis was revised by the AIA Technical Corrections Act of January 14, 2013. Under the “new” law, which applies to patents granted on or after January 14, 2013, a PTA civil action must be preceded by an unsuccessful administrative challenge within the USPTO. The period for filing a civil action under the new law is within 180 days after the date of the USPTO’s decision in response to a post-issuance Application for PTA.Please contact Jack Brennan at brennan@fr.com with any questions.

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