District Court Determines that USPTO Improperly Reduces Patent Term Adjustment | Practical Law

District Court Determines that USPTO Improperly Reduces Patent Term Adjustment | Practical Law

In Exelixis, Inc., v. Kappos, the US District Court for the Eastern District of Virginia determined that the US Patent and Trademark Office (USPTO) improperly reduces Patent Term Adjustment (PTA) in patents where the applicant files a Request for Continued Examination (RCE) more than three years after the original patent application filing date. The court held that the USPTO should not deduct any time from an applicant's PTA if the applicant files the RCE more than three years after the patent application was filed.

District Court Determines that USPTO Improperly Reduces Patent Term Adjustment

Practical Law Legal Update 1-522-3453 (Approx. 4 pages)

District Court Determines that USPTO Improperly Reduces Patent Term Adjustment

by PLC Intellectual Property & Technology
Published on 09 Nov 2012 • USA (National/Federal)
In Exelixis, Inc., v. Kappos, the US District Court for the Eastern District of Virginia determined that the US Patent and Trademark Office (USPTO) improperly reduces Patent Term Adjustment (PTA) in patents where the applicant files a Request for Continued Examination (RCE) more than three years after the original patent application filing date. The court held that the USPTO should not deduct any time from an applicant's PTA if the applicant files the RCE more than three years after the patent application was filed.

Key Litigated Issue

The key issue before the US District Court for the Eastern District of Virginia was whether Section 154(b)(1)(B) of the Patent Act requires a Patent Term Adjustment (PTA) for a patent to be reduced by the time attributable to an applicant's Request for Continued Examination (RCE) concerning the application resulting in the patent when the RCE is filed more than three years after the original filing date of the application.

Background

This case arises from a dispute between Exelixis, Inc. and the USPTO over the USPTO's final PTA calculation for one of Exelixis' patents.
Subsection 154(b)(1) of the Patent Act governs the determination and measurement of PTA and describes three broad categories of delays that result in the extension of a patent term:
  • "A" delays, which extend the patent term if the USPTO fails to carry out certain acts during examination of the patent application within prescribed timeframes.
  • "B" delays, which extend the patent term on a day-for-day basis for each day after the end of the three-year period beginning on the date the patent application was filed.
  • "C" delays, which extend the patent term on a day-for-day basis for each day of the pendency of an interference or appeal or is subject to a secrecy order.
(35 U.S.C. 154(b)(1).)
In calculating Exelixis' B delay PTA, the USPTO deducted the number of days attributable to Exelixis' RCE from the number of days from the expiration of the three-year period. Exelixis argued that the USPTO improperly calculated the B delay by reducing its PTA by the time attributable to Exelixis' RCE, which Exelixis filed more than three years after the original patent application filing date. The USPTO argued that the time attributable to an RCE is always excluded from the PTA calculation for B delay, regardless of when the RCE is filed.

Outcome

In its November 1, 2012 opinion, the district court agreed with Exelixis and held that Section 154(b)(1)(B) does not require an applicant's PTA to be reduced by the time used to process an RCE that is filed after the end of the three-year application pendency period.
The court first looked to the statute's purpose, which is to provide successful patent applicants with patents that can be enforced against putative infringers for about 17 years (20 years from the date of the application minus three years for prosecution and examination). This is achieved by both:
  • Providing applicants with day-for-day patent term extensions for delays attributable to the USPTO.
  • Reducing any PTA by delays attributable to the applicant.
The court next considered the plain language of Section 154(b)(1)(B) and determined that it accomplishes the specific goal of guaranteeing a patent application pendency of no more than three years by:
  • Starting a three year clock on the application filing date.
  • Tolling this clock if certain events, including an RCE filing, occur within the three-year period.
  • Adding a day-for-day PTA to the patent term for any delay in the issuance of the patent after the three-year clock expires, minus any tolling.
The court found, however, that Section 154(b)(1)(B) does not address or refer to an RCE filed after the three-year period ends. The statute only addresses the situation where an RCE is filed within the three-year window. In that case only, the RCE tolls the three-year guarantee deadline.
The court concluded that the USPTO construed subparagraph (B) to punish Exelixis for filing the RCE even though there is no basis for this construction. As a result, the court set aside the USPTO's calculation of Exelixis' B delay award.

Practical Implications

The USPTO may appeal the district court's ruling to the US Court of Appeals for the Federal Circuit. However, until that occurs and the Federal Circuit overrules the district court, patentees should consider the district court's decision when evaluating their patents' PTA. In particular, patentees should review their patent portfolio to identify any important patents that have recently issued where the PTA was based on the USPTO's currently improper calculation for B delays. In those cases, patentees should consider filing a challenge to the USPTO's PTA calculation, which must be filed within 180 days after the patent grant date (35 U.S.C. 154(b)(4)(A)).

Court Document