by Dennis Crouch
Exelixis, Inc. v. Mr. David Kappos (as PTO Director), Case No. 1:12cv96 (E.D. Va. November 1, 2012) Download Exelixis_and_Kappos
Judge Ellis recently sided with the patentee Exelixis in ruling that the PTO improperly under-calculated the patent term adjustment due to the patentee. The focus of the case is how the filing of a request for continued examination (RCE) impacts any eventual patent term adjustment (PTA). The judge does a nice job of clearly spelling out the holding:
In sum, the plain and unambiguous language of [35 U.S.C. § 154(b)(1)(B)] requires that the time devoted to an RCE tolls the running of the three year clock if the RCE is filed within the three year period. And, put simply, RCE's have no impact on PTA if filed after the three year deadline has passed. The PTO's arguments to the contrary are not persuasive and, accordingly, the PTO's interpretation of subparagraph (B) must be set aside as "not in accordance with law" and "in excess of [its] statutory . . . authority."
This holding further extends the scope of patent term adjustments beyond the prior enhancement identified in Wyeth v. Kappos, 591 F.3d 1364 (Fed. Cir. 2010). I am estimating that this newest change impacts about 10% of recently issued patents — particularly those whose first RCE filing was more than three years after the application's actual US filing date. Up to now, the PTO has been cutting-off further PTA beyond the RCE filing date and now those applicants are eligible to seek a greater term adjustment. In many cases, the re-adjusted PTA will extend the term by more than one year.
Client Alert Now to Avoid Malpractice: Patents issued within the past 180 days are eligible for a recalculation. However, that recalculation will likely require the filing of a lawsuit in the Eastern District of Virginia. 35 U.S.C. § 154(b)(4)(A). "An applicant dissatisfied with a determination made by the Director under paragraph (3) shall have remedy by a civil action against the Director filed in the United States District Court for the Eastern District of Virginia within 180 days after the grant of the patent." For patents issued within the past two months, the PTA can be corrected via a request for reconsideration under 37 C.F.R. 1.705(d). Attorneys should beware to not simply assume that their clients are not interested in the work associated with obtaining an adjustment. The second action point here is, moving forward, applicants should not file an RCE before the three-year date without first fully considering the major PTA implications.
Judge Ellis begins the opinion with the simple question presented:
Whether 35 U.S.C. § 154(b)(1)(B) requires that an applicant's PTA be reduced by the time attributable to an RCE, where, as here, the RCE is filed after the expiration of AIPA's guaranteed three year period.
The text of section 154(b)(1)(B) begins with the headline of a "guarantee of no more than 3-year application pendency." The section provides that, subject to some caveats:
[I]f the issue of an original patent is delayed due to the failure of the [USPTO] to issue a patent within 3 years after the actual filing date of the application in the United States, not including—(i) 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.
In reading the statute, Judge Ellis found that the caveat for continued examination (RCE filing) modifies only the calculation of the original three-year timeline. An RCE filing prior the three-year mark will permanently toll the running of that clock. However, once the three-year delay is reached, the statute requires a 1-for-1 patent term adjustment from the three year mark through patent issuance.
Thus, subparagraph (B) essentially describes two calculations. The first is a description of the calculation of the three year period: The three year clock beings to run on the date the application is filed and, except for three specific potential tolling events, including the filing of an RCE, the clock runs continuously until the three year period ends. In other words, the "not including" portion of subparagraph (B), followed by (i), (ii), and (iii), clearly and unambiguously modifies and pertains to the three year period and does not apply to, or refer to, the day for day PTA remedy. Subparagraph (B)'s second calculation is simply a day for day addition to the PTA for every day beyond the end of the three year clock until the patent issues.
By implication, the result here is "that once the three year clock has run, PTA is to be awarded on a day for day basis regardless of subsequent events."
Up to now, the PTO has cut-off further type-B PTA at the point of an RCE filing – regardless of whether that RCE was filed after the three-year period. In its argument to the district court, the PTO asked that deference be given for its expert-agency interpretation of the statute. See Skidmore v. Swift & Co., 323 U.S. 134 (1944). The court rejected that argument. Basically, Skidmore deference comes about when there is some amount of ambiguity or lack of clarity in the statute. Here, however, the court found this question unambiguous and thus "that Skidmore deference is unwarranted."
Moving forward and except for continuation applications and delayed PCT applications, this ruling essentially guarantees that newly issued patents will be given a term of at least 17-years from issuance. This result substantially subverts a primary goal of the 20-year-from-filing term to eliminate the applicant incentive to keep an application pending for a long period of prosecution prior to issuance.
The USPTO has not yet announced whether it will appeal to the Federal Circuit.