Wyeth v. Kappos: Appellate Panel Confirms that PTO Is Miscalculating (Undercalculating) Delays in Prosecution and the Corresponding Patent Term Adjustment

Wyeth and Elan Pharma v. Kappos (as USPTO Director) (Fed. Cir. 2009)

The Federal Circuit has decided an important case involving the length patent term adjustments (PTAs) that are granted due to PTO delays in patent prosecution.  Many if not most newly issued patents will be positively impacted by the decision. Those patents will be enforceable for an additional period of protection tacked to the end of the standard 20–year term that is in addition to the previously calculated PTA.

Prior to 1995, US patents were enforceable for 17–years from the date of issuance. The new rule changed the patent term to 20–years from the filing date.  In order ensure that the change did not adversely impact patentees, Congress created several patent term guarantees that are codified in 35 U.S.C. 154(b)(1)(A)-(C).

  • Part A guarantees “prompt” PTO responses.  The section identifies specific types of PTO delays and the patent term is adjusted one-day for each day of PTO delay.
  • Part B guarantees “no more than 3–year application pendency.” The section indicates that the patent term should be adjusted one-day for each day from the end of the three-year pendency until the patent issues.
  • Part C guarantees that the patent term not be reduced based on interferences, secrecy orders, or appeals.

Several provisions limit these adjustment by reducing the patent term based on patent applicant actions (or delays) that unjustifiably lengthen prosecution. 

Overlap Limitation: Parts (1)(A) and (B) are also subject to an overlap limitation: “To the extent that periods of delay attributable to grounds specified in paragraph (1) overlap, the period of any adjustment granted under this subsection shall not exceed the actual number of days the issuance of the patent was delayed.”

The fight in this case centered around the calculation of when “periods of delay . . . overlap.” USPTO’s interpretation of the statute is that the overlap is property avoided when the term is adjusted only by the greater of guarantee (A) or (B).  Wyeth, on the other hand, argues that the guarantees only overlap when the PTO-delays identified in (A) occur after the first-three-years of prosecution have passed.

Both the DC District Court and the Federal Circuit have agreed with Wyeth’s statutory interpretation:

This court detects no ambiguity in the terms “periods of delay” and “overlap.” Each term has an evident meaning within the context of section 154(b). The limitation in section 154(b) only arises when “periods of delay” resulting from violations of the three guarantees “overlap.” 35 U.S.C. § 154(b)(2)(A). Significantly, the A and B guarantees expressly designate when and for what period they each respectively apply. Thus, this court can easily detect any overlap by examining the delay periods covered by the A and B guarantees.

At oral arguments, Judge Moore was sympathetic to the PTO’s policy position and the opinion reflects that same concern.  However, the panel held that the language of the statute should prevail.

Regardless of the potential of the statute to produce slightly different consequences for applicants in similar situations, this court does not take upon itself the role of correcting all statutory inequities, even if it could. In the end, the law has put a policy in effect that this court must enforce, not criticize or correct.

Deference: The Federal Circuit gave no deference to the PTO’s interpretation of the statute — holding that “[b]ecause the language of the statute itself controls this case and sets an unambiguous rule for overlapping extensions, this court detects no reason to afford special deference to the PTO’s interpretation.”

Affirmed. The PTO must now revise its PTA calculations.  Patentees should consider whether they are eligible for a recalculation of their PTA adjustment.

Note: Dozens of parallel cases are pending in DC & VA district courts. Many of these have been stayed pending outcome of this appeal.

Example: I pulled up recently issued patent number 7,640,000.  The application was filed on November 28, 2006 and was issued December 9, 2009.  It turns out that patent was issued on a first-office-action-allowance. That NOA was mailed October 6, 2009.  Under Part (A), the PTO was required to issue a Rejection or NOA within 14–months.  The 617 days beyond those 14–months formed the Part (A) adjustment.  Under Part (B), we look at how many days beyond three-years it took the patent to issue. Here, that calculation is 11 days.  Under the old calculation, the PTA would be 617 days because that is greater than 11 days. Under the new calculation, the PTA would be 617 + 11 = 628 days (since the Part (A) delay did not overlap with the Part (B) delay).

41 thoughts on “Wyeth v. Kappos: Appellate Panel Confirms that PTO Is Miscalculating (Undercalculating) Delays in Prosecution and the Corresponding Patent Term Adjustment

  1. 41

    If a patent attorney in charge of a case fails to correct a PTA mistake made by the USPTO, wouldn’t this be grounds for an inequitable conduct claim? I think so.

  2. 40

    Mr. Burns,

    How is it wrong that the PTO doesn’t consider the pendency of the international phase in the PTA calculation? It’s not clear how the PTO could be attributed to delaying the issue of an application that has yet to be filed as a US application that may undergo examination. Any loss of enforcable patent term by going the PCT/371 route is purely Applicant’s own doing.

  3. 39

    I thought this was a useful analysis by Rick Neifeld:
    “WHICH PATENTS ARE AFFECTED [by this decision]?
    This issue affects any patent:
    (1) that issued from an application filed on or after May 29, 2000 and
    (2) that did not receive a first office action within 14 months from date of filing, or
    (3) that, during the first three years of pendency, did not receive an office action within 4 months of date of the applicant’s response to a prior office action.
    WHAT IS THE IMPACT ON ENFORCEABLE PATENT TERM?
    It is unclear whether a court would discount the USPTO’s determination of patent term adjustment in determining if a patent was in force on a particular day. Since that issue would only arise in a court near the end of the term of a patent, it may be years before any case law arises to provide guidance.
    WHAT ACTIONS CAN YOU TAKE TO OBTAIN A CORRECTED PATENT TERM ADJUSTMENT?
    For allowed applications, review the USPTO’s determination of patent term adjustment provided with the notice of allowance. If in error, file an application for patent term adjustment prior to or along with paying the issue fee. 37 CFR 1.705(b).
    For newly issued patents, for which you filed a 37 CFR 1.705(b) application, file a request for correction within 2 months of issuance. 37 CFR 1.705(d). If the USPTO does not issue a correction within 180 days from issuance, sue the USPTO in the District Court for the District of Columbia. 35 USC 154(b)(4).
    For patents issued for more than 180 days, U.S. law provides no specific remedy. For those patents, it still might be possible to obtain relief by filing a suitable petition or request for certificate of correction. The only other procedural avenue would be petitioning Congress for legislative redress.
    Rick Neifeld”

  4. 38

    Red: Sorry I imputed to you something you didn’t say. But, appreciate the compliments. Thanks.

  5. 37

    “Why would it be necessary to correct a wrong PTA that appeared on the record?”

    Because waiting until litigation or licensing to correct a known faulty PTA determination could be deemed to create a waiver or estoppel. Mind you, in view of the procedures set forth in 35 USC 154(b)(3) for determining PTA, it may be doubtful whether a faulty PTA determination by the PTO can be corrected more than 180 days after the patent grant (which is why Wyeth and Elan Pharma had to file their suits when they did).

  6. 36

    MaxDrei

    Who said I was in a hurry to get a grant from the EPO? All I just said it was smart of them (at least from a revenue point of view) to charge annuities while the patent is still pending.

    Compare it with the PTO system. Other than the one-time filing fee (and perhaps some scattered other fees), the PTO earns nothing while the patent is pending. The next time the PTO earns revenue is at issue, and then at 5, 10 and 15 years after.

    In the the EPO system: every pending application yields revenue once a year. From the point of view of earning revenue, it’s great. It’s as if you had to stand in line for a show, and every five minutes someone from the theater comes out and collects money just for the privilege of standing in line.

  7. 35

    Monkey, concerning annuities due at the EPO before issue, think on this:

    1) After issue, you have got yourself a bundle of national patent rights in up to 40 countries. In each such country, maintenance in force depends on paying the Patent Office of that country an annuity.

    2) In the European Patent Convention Art 67, you can get “compensation” for acts committed by an infringer after WO publication and before issue.

    3) While the app is pending at the EPO you can i) sculpt the claims to the emerging infringement and ii) file a divisional, directed to anything disclosed in the WO.

    4) The EPO does an accelerated exam program called PACE. No reason needed, no fee need be paid. Hardly anybody uses it so, when an Applicant does actually request it, it’s “Action This Day”. Why doesn’t anybody ask for it though?

    So, tell me again, the reasons why you are in such a hurry to get a grant certificate out of the EPO.

  8. 34

    Don’t forget that the USPTO is hosing PCT applicants, b/c PTO calculates the 3 years from national phase entry rather than the PCT filing date. That’s wrong too

    Why?

  9. 33

    AYM,

    You are absolutely correct that filing of an RCE destroys the Applicant’s rights under the 3 year rule.

  10. 32

    @Freehly and @step back: My understanding is that the PTO interprets the rule in such a manner that the filing of an RCE ends any possible patent term extension for failure to complete prosecution in 3 years.

    Your understanding is correct.

  11. 31

    @Freehly and @step back: My understanding is that the PTO interprets the rule in such a manner that the filing of an RCE ends any possible patent term extension for failure to complete prosecution in 3 years.

  12. 30

    Just got a dismissal of the application for PTA that was filed within two months after the issue (not to confuse with a request that is files with an issue fee) – I called the petitions attorney and her response was that filing a request for reconsideration may be a possibility.

    Any thoughts?

  13. 29

    Why would it be necessary to correct a wrong PTA that appeared on the record? (Petition to Director, C of C, etc.)

    The law states what the PTA is or should be. In infringement litigation or license negotiation, one of the issues will be checking the PTA, and correcting if necessary.

    There’s no need to correct a wrong PTA now, based on this decision.

  14. 28

    I think maintenance fees are measured from date of issue. So if a patent takes 12 years in prosecution, unless there is PTA, the PTO will never be able to collect the 15 year fee. At best it will collect the much smaller 5 year fee.

    In the European system, annuities are measured from the filing date. That’s a good deal for them because they can collect even from patents that have no chance to reach issue. And it also means they don’t care about delay because the annuities will come in no matter what.

  15. 27

    Don’t maintenance fees end at 11.5 years? PTA won’t generate more income that way unless they add another maintenance fee.

    This just in: a 15.5 year maintenance fee proposal has just been introduced into Congress. The PTO has estimated that this additional maintenance fee will allow them to hire and additional 32.2 former examiners, which will decrease the backlog by 2.4%.

    6 is taking the rest of the day off in celebration.

  16. 26

    Just realized that the PTO will ding you if you file an IDS pretty much any time after first action unless it was within 1 month of receiving the disclosed materials from a foreign patent office. So now, if you are sent something from the PTO in the prosecution of related case A that you want to disclose in case B, but you filed a response in case B 4 months ago, you’ll get a 4 month reduction of PTA for “failure to prosecute”. Does that even begin to make any sense whatsoever to anyone? One more reason to go to the European model and get rid of IDSs. It seems like European examiners quite competently do their jobs without needing applicants to supply prior art.

  17. 24

    “patent terms after PTA’s should be printed on all patents?”

    curious,

    Printing the PTA period on the patent would be a good idea, instead having to fish it out of file wrapper. But printing the patent term may not as you still have to pay maintenance fees to keep the patent in force for that term.

  18. 21

    Unless you are in the pharmaceutical industry, does 11 days (or 30 days or even 60 days) matter?

    I have heard outside counsel argue we should track these things, but as long as the errors are not egregious, why should I care?

  19. 20

    This is probably the tip of an iceberg.

    The USPTO often cheats or gets it wrong (always in their favor) when it comes to calculating PTA.

    For example, if an examiner cites as 102(e) art and in a first Office action, something that does not qualify under 102(e) and the Applicant has to go all the way through appeal to get the ab initio error corrected, where does the counting for PTA begin?

    I say it begins with the PTO missing their 14 month deadline for giving a legitimate first Office action.

    It wouldn’t surprise me that the PTO sees it very differently.

    ——————
    Excellent point up thread by Freehly about RCEs. An RCE is not a filing of a continuation. It does not start a new 14 month clock going. We’re still at T minus 4 months and counting under the statute.

  20. 19

    OMG. In the military this would certainly fall under the current classification of a Charlie Foxtrot (Cluster F) or as you who have watched Saving Private Ryan, such situations have historically been classified by the military as FUBAR (we all know what that stands for). This is what happens when you take a perfectly good bright line rule (17 years for issue) and allow it to be subject to interpretation (patent term is 20 from priority plus or minus what it takes to make the USPTO look like it is doing a good job). But hey all things considering . . . I say the USPTO is probably the best out of all segments of the government. I mean at least they didn’t enslave the next five generations of americans to pay for the greed of the banking class, like the Treasury department.

  21. 18

    Pharmaceutical patents become important many years after filing and there are patent term extensions avaiable. I believe that these adjustments should run concurrently with the extensions. Otherwise the delicate balance between an incentive to develop new medicines and public access to affordable medicine becomes distorted.

  22. 17

    “Please supply your collection of links on this topic. I want to update my ever-expanding collection of links where, once again, you were wrong in your analysis.”

    For some reason my response doesn’t appear to have made it to the topic.

    I don’t have any links related to this case, but in the previous posts I believe you will find that I said that this case could go either way. Due specifically to the subjectivity of, the judges, in this case Rader, Plager and Moore, making the determination that there was no ambiguity. Furthermore, I never really cared enough to look in depth on this issue. There were a lot of statues to read and I don’t believe I read most of them.

    However, upon perusal, if this goes En banc and the En banc court decides to read the law then this decision will be overturned.

    This:

    (2) LIMITATIONS. —
    (A) IN GENERAL. — To the extent that periods of delay attributable to
    grounds specified in paragraph (1) overlap, the period of any adjustment granted
    under this subsection shall not exceed the actual number of days the issuance of the
    patent was delayed.

    is pretty fin clear that when they’re talking about the three PERIODS OF DELAY that means the “imprompt pto office responses” and “application pendency” as well as “interferences etc” because those are the three “periods of delay attributable to grounds in paragraph (1)” which can overlap. Just as, I believe, the PTO is saying. Now whether or not the PTO’s A or B interpretation is correct from that point on, I don’t give enough of a sht to look about, but I imagine that it is because that seems to be what the case is turning on. What, specifically, are the periods of delay? in B 2 A?

    If it doesn’t go En banc and the director cares at all then I wouldn’t be suprised to see congress move within the next few years to correct the court.

    “This court detects no ambiguity in the terms “periods of delay””

    Yeah, they shouldn’t have, it is explicitly refering to the three periods I just mentioned above. However, they seem to have failed at reading this go round.

    If congress wanted to say for the PTO to do what some would have the PTO do then 2 A limitations would read:

    To the extent that periods of delay attributable to grounds specified in the (sub) sections under paragraph (1) overlap, the period of any adjustment granted under this subsection shall not exceed the actual number of days the issuance of the patent was delayed.

    “To the contrary, the language of section 154(b) does not even permit B delay to start running”

    That’s correct, it doesn’t “run” but the “period of delay” starts specfically when

    “(B) GUARANTEE OF NO MORE THAN 3-YEAR APPLICATION PENDENCY.”

    says it does. During application pendency.

    I ha te to poo poo Rader, but I gotta here :( Perhaps he had a headache that day, didn’t feel like reading, and felt generous.

    I hear you brother, too much of this mess will drive you insane. And the PTO could just let the applicants have it right? Right?

    Well tbh, I couldn’t care less either way so I’m probably technically trolling. But it is interesting to look at.

    Nevertheless, looking at what the PTO apparently argued, no wonder they lost.

    “The PTO defends its interpretation by arguing that A delays during the first three years of prosecution ultimately lead to B delays after the three-year mark from filing.”

    Um, who cares? Sure, not a bad argument, but you should have led off by showing the judges how statutes are written and what the Limitations section was citing to in the statute first thing, front and center.

    “For example, the language of section 154(b) presents a slight imbalance in the following hypothetical: suppose Applicant 1 receives a patent 3 years and 30 days after filing an application. In prosecuting the application, Applicant 1 incurred 30 days of A delay before the three-year mark. In the same hypothetical situation, suppose Applicant 2 also receives a patent 3 years and 30 days after filing an application but incurred no A delay during prosecution. Notably, both patents issued the same amount of time from filing—3 years and 30 days. Nonetheless, Applicant 1 would receive a 60 day adjustment whereas Applicant 2 would only receive a 30 day adjustment meaning Applicant 1’s effective term would be 30 days longer than Applicant 2.”

    Um, yeah, that’s why they put in the Limitation.

    Then after the next example:

    “Despite the fact each applicant incurred the same A delay, under the PTO’s interpretation, Applicant 1’s effective term would be a full year greater than Applicant 2’s effective term.”

    Um yeah, I’m pretty sure that congress was not necessarily interested in assuring everyone the same “effective term” and more in ensuring that they got prompt action, no more than 3 year pendency, and adjustments for interferences etc.

    In any event, from what the judges said the PTO apparently missed its opportunity to present the correct argument. Oh well, that’s gov. lawyers for ya I suppose :(

    “While the PTO’s argument on this point is unclear, that language does not provide any support for its interpretation.”

    Hah, it’s unclear because they forgot to preface it with the correct portion of what “periods of delay” is referring to.

    Su cks to be the guy that wrote this brief I bet.

    O well. Maybe they’ll do better in a petition for rehearing.

    Maybe they’ll read my post and get their acts together.

  23. 16

    Speaking of PTA, what’s up with the new PTO policy of putting RCEed cases on examiners’ special new docket that doesn’t have a time deadline? Is there some reason that that delay isn’t going to create more PTA, or does the PTO just think that 3+ year pendency doesn’t give applicants enough PTA and they need more?

  24. 15

    patent terms after PTA’s should be printed on all patents?

    any reason why they shouldn’t be?

  25. 14

    “what about a petition to the director under 1.181?”

    MM,

    Not a bad thought. What have you got to lose by doing that?

  26. 13

    Amusingly, I just received a dismissal (not denial) of a petition for reconsideration of PTA. The reasoning from the petitions branch is almost word-for-word what the Fed. Cir. trashed. As far as what options people have, what about a petition to the director under 1.181?

  27. 12

    “The real question is how to get the term corrected on already issued patents.”

    Would Certificate of Correction under 35 USC 254 be possibility? It’s a bit of a stretch, but it’s the only thing I see off the top that might work.

    I also looked at reissue under 35 USC 251. No hope there that I can see.

  28. 11

    Don’t forget that the USPTO is hosing PCT applicants, b/c PTO calculates the 3 years from national phase entry rather than the PCT filing date. That’s wrong too, but it doesn’t seem to be part of this decision.

  29. 10

    Here’s the deal (straight from the PTA “helpdesk” a few months ago)… the PTA calculated in the Notice of Allowance does NOT consider B delay, only A delay (and possibly C). Applicants may request reconsideration for the A delay calculation up until the payment of the issue fee.

    The B delay was never considered by the PTO until there was an actual issue date (which of course is required for accurate calculation of B delay). Up until now, the PTA listed on the issue notification was the greater of A or B (but not A + B), and Applicants could request reconsideration for errors in B delay up to two months after issuance. The request for reconsideration window for A+B delay will also the 2 months after issuance. After that, your out of luck- can’t get a CoC either.

    For more details, see MPEP 2735 and 37 CFR 1.705. The important thing to know is when you can (and cannot) request reconsideration for the different delay types.

  30. 9

    Since someone may now finally need to consider a much simpler and better PTA to achieve the same intent, here’s a starter suggestion to kick around:
    “The term of a patent shall be the longer of 20 years from its first filing date, or,
    17 years from its issue date minus the sum of all applicant response times in excess three months.”

  31. 7

    This mess is not surprising. The current PTA is badly so overcomplicated that it can be difficult to even calculate. Most of the blame for that can go to a particular CA Congressman who was obsessed with making sure no one could ever got less than 17 years of patent protection from issue dates [even with a 20 year from filing date system] but was OK if they got a lot more, by piling on the “patches” in pending legislation rather than providing a coherent and simple patent term system that would compensate for PTO delays but not reward excessive applicant delays.
    Time to start over and do it right.

  32. 6

    you petition to correct the PTA as being incorrect before you pay the IF.

    The real question is how to get the term corrected on already issued patents, and IF you can. When we reviewed this, we weren’t sure that there would be a way to since you didn’t object to it during pendency.

  33. 4

    what should a practitioner do for current allowances that include the PTA determination? include a paper that the Applicant does not subscribe to the PTO determination and may be entitled to more PT

  34. 3

    6,

    Please supply your collection of links on this topic. I want to update my ever-expanding collection of links where, once again, you were wrong in your analysis.

  35. 1

    Haven’t read the decision yet, but one wonders how much time and money the PTO spent making their flimsy argument.

    What is the PTO’s interest in this matter?

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