Readjusting Patent Term Adjustment

By Dennis Crouch

Novartis v. Lee (Fed. Cir. 2014); Exelixis v. Lee (Fed. Cir. 2014)

This case results in a minor shift in patent term adjustment (PTA) for patents whose prosecution included an RCE filing. The basic change is exemplified with the diagram above. Up-to-now, the USPTO has only looked at the Pre-RCE Period when determining the amount of PTA to award associated with the 3-year examination guarantee. Following this decision, the USPTO must add together both the Pre-RCE Period and the Post-Allowance Period. The law has strict 180 day post-issuance time-limit for filing a civil action for a PTA modification.

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A patent's term generally begins at the date of patent issuance and continues 20 years from the date that the application was filed. As a practical matter, the time between filing and issuance is lost to the applicant because the patent is not enforceable during that time. Because of the very real patent office delays, Congress created a system of Patent Term Adjustment (PTA) that adds additional time to the patent term based upon unreasonable delays in issuing the patent rights that would have otherwise shortened the effective patent term. PTA is defined in Section 154(b) of the Patent Act. Unfortunately, that provision is poorly drafted and subject to potential alternative interpretations.

PTA typically falls into three "patent term guarantees":

  1. Prompt responses from the PTO;
  2. No more than 3-year application pendency; and
  3. Compensation for delays due to appeals, secrecy orders and derivation proceedings.

35 U.S.C. §154(b)(1)(A)-(C).

The appeal here focuses on part (B) that guarantees "no more than 3-year application pendency." The three-year guarantee further states that it does not include: "(i) any time consumed by continued examination of the application requested by the applicant under section 132(b)." Here, the continued examination is prompted by a request for continuation (RCE).

The PTO and Novartis propose two different interpretations of the provision. The PTO argues that no part-B term adjustment should be awarded following the filing of an RCE. On the other hand, Novartis argues that the RCE cutoff only applies if the RCE is filed prior to the three year deadline.

In the appeal, the Federal Circuit has sided largely with the PTO (with slight modification):

The provision indicates that the "3 years" (the goal for issuance) does "not includ[e]" time identified in three enumerated categories. . . .

The better reading of the language is that the patent term adjustment time should be calculated by determining the length of the time between application and patent issuance, then subtracting any continued examination time (and other time identified in (i), (ii), and (iii) of (b)(1)(B)) and determining the extent to which the result exceeds three years. Such a reading ensures that applicants recover for any "delay[s] due to the failure of the [PTO]," without allowing the applicant to recover for "any time consumed by continued examination," as the statute requires. Id. § 154(b)(1)(B)(i).

The slight modification to the PTO's position is the Court's finding that the period between allowance and issuance should not be counted as being consumed by the continued examination and thus counts "toward the PTO's three-year allotment."

The end result here is that there will be a few weeks of PTA added to tens of thousands of patents and pending applications. Anyone with a recently issued patent or soon-to-issue patent should take immediate steps to make take advantage of this change.

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You may note the case caption: Novartis v. Lee, indicating that Michelle K. Lee is now deputy director of the PTO and Acting-as-Director until President Obama nominates a replacement for David Kappos and that nomination is confirmed by the Senate. 

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

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