The Patent Term Adjustment Pendulum Swings the Other Way

29 January 2013 PharmaPatents Blog

On January 28, 2012, Judge Brinkema of the U.S. District Court for the Eastern District of Virginia issued a decision in a different Exelixis v. Kappos Patent Term Adjustment (PTA) case (1:12cv574) (Exelixis II) that affirms the USPTO’s interpretation of 35 USC § 154(b)(1)(B)(i). Judge Brinkema’s decision in Exelixis II is in direct conflict with the decision issued by her colleague, Judge Ellis, III, in Exelixis v. Kappos (1:12cv96) (Exelixis I) on November 1. 2012. As I wrote previously, the USPTO already has appealed Exelixis I. I expect Exelixis to appeal Exelixis II.

The Statute at Issue

As in Exelixis I, the statute at issue is 35 USC § 154(b)(1)(B)(i), which provides:

(B) GUARANTEE OF NO MORE THAN 3-YEAR APPLICATION PENDENCY.- Subject to the limitations under paragraph (2), if 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-

(i) any time consumed by continued examination of the application requested by the applicant under section 132(b)…

The USPTO’s interpretation of this provision is set forth in 37 CFR § 1.703(b)(1):

(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 under 35 USC 111(a) or the national stage commenced under 35 USC 371(b) or (f) in an international application 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 USC 132(b) was filed and ending on the date the patent was issued

Thus, under the USPTO’s interpretation, once an RCE is filed, the patent no longer accrues “B” delay, although it might still accrue “A” delay and/or “C” delay. (Please see my article on Exelixis I for a more detailed discussion of the PTA framework.)

Skidmore Deference

In reaching the decision in Exelixis I, the court did not give the USPTO “Skidmore deference,” because the court found that the statute was “unambiguous.” The court in Exelixis II, saw it differently, and disagreed that “the statute’s silence as to RCEs filed after the three-year period expresses ‘plain and unambiguous congressional intent.’”  Instead, the court found:

[T]he PTO’s regulation deserves Skidmore deference because it is a ”reasonable conclusion as to the proper construction of the statute.”

The court found that “Congress gave the PTO broad discretion to regulate how PTA is determined and RCEs are processed,” citing 35 USC § 154(b)(3)(A). The court noted that the PTO “used its discretion to promulgate 37 CFR § 1.703(b),” and found that the rule is “consistent with abundant evidence of congressional intent concerning the effect of an applicant filing an RCE on the award of B-delay PTA.” In particular, the court found that the PTO’s interpretation was consistent with congressional intent that an applicant “should…not benefit when the delay was ‘requested by’ or otherwise attributable to the applicant.”

Minimizing Manipulation

The court in Exelixis II also found that the PTO’s interpretation of 35 USC § 154(b)(1)(B)(i) is consistent with concerns that applicants could “manipulate procedural devices to prolong the PTO’s examination,” and is more true to “[t]he decision to measure the term of a patent from the date of filing instead of the date of issuance.” In this regard, the court noted:

Availability of unlimited RCEs creates the potential for the very abuses that spurred reform of the laws on patent terms in the first place.

The court reasoned that the PTO’s interpretation “avoids the absurd result of treating an RCE filed before the termination of the three-year period differently than one that is filed after the three-year period.

The filing of an RCE…is…applicant-initiated delay whether filed before or after the three-year period has run.

The court pointed out that the PTO’s interpretation “prevent[s] an applicant from using its control over the initiation of  ‘continued examination’ to extend the term of a patent. (Indeed, as I wrote in this article, for most applications it would not be difficult to ensure that a first RCE is not filed until after the three-year period has run.)

The Post-Allowance Period

The court in Exelixis II also addressed the narrower question of whether B-delay should accrue after a Notice of Allowance is issued, because the time between allowance and grant is not “consumed by continued examination.” (Please see this article for a more detailed discussion of this interpretation of the statute.) The court gave no credence to this argument:

The filing of an RCE opens a body of proceedings that may occasion additional processing delay, but as the PTO clearly indicated in its notice-and-comment rulemaking over a decade ago, such delay emanates solely from an applicant’s original failure to file an application fit for a notice of allowance.


The court also draws a sharp line between cases allowed after an appeal to the Board, and cases allowed after an RCE:

[A]n applicant’s successful appeal…implies no such applicant-related deficiency, but rather that the delay resulted from error by the PTO. Consistent with this distinction, the PTO duly awards B-delay PTA for the consequences of its own error…

The court therefore concludes:

When the applicant decides not to appeal a rejection…but instead takes advantage of the RCE process…all proceedings following the RCE filing…are “by virtue of the continued examination…” and are ineligible for B-delay PTA.

The Federal Circuit Fulcrum

As noted above, the USPTO already has appealed Exelixis I, and I expect Exelixis to appeal Exelixis II. Thus, the Federal Circuit likely will have the final say on the meaning of 35 USC § 154(b)(1)(B)(i). In the meantime, applicants who would be eligible for additional PTA under Exelixis I should file Requests for Reconsideration of PTA with the USPTO to preserve their rights in the event that Exelixis I is affirmed.

(Now that HR 6621 has become law, the deadline for bringing a district court civil action should be tolled while a Request for Reconsideration is pending at the USPTO.)

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