Federal Circuit Upholds Patent Term Adjustment Deduction for IDS Filed After Restriction Requirement

02 March 2015 PharmaPatents Blog

In Gilead Sciences, Inc. v. Lee, the Federal Circuit upheld the USPTO’s interpretation of the Patent Term Adjustment (PTA) statute as permitting the USPTO to charge “Applicant Delay” when an Information Disclosure Statement (IDS) is filed after a response to a Restriction Requirement has been filed. While I am not surprised by this decision, it seems to rest on assumptions regarding examiner workflow that do not reflect reality. The decision also ignores the fact that Gilead could have submitted the IDS at a later stage of prosecution without risking any deduction under the PTA statute.

Patent Term Adjustment

The PTA statute (35 USC § 154(b)) was created to compensate for delays in the patent examination process that can eat away at the effective term of the patent, now that patent term is measured from the earliest U.S. priority date rather than the patent grant date. The statute provides “guarantees” against different types of USPTO delays, and requires a day-for-day deduction of Applicant delays against USPTO delays.

“A” delay accrues when the PTO fails to act in accordance with set time frames (such as issuing a first Office Action within 14 months, issuing a second action or allowance within 4 months of a response, and issuing a patent within 4 months of the Issue Fee payment).

“B” delay accrues when the PTO fails to issue a patent within three years of the actual filing date of the patent application.

“C” delay accrues when the application is involved in an interference or appeal, or is subject to a secrecy order.

The PTA statute also provides for a deduction from PTA “equal to the period of time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application” (35 USC § 154(b)(2)(C)) and expressly delegates to the USPTO the authority to “prescribe regulations establishing the circumstances that constitute a failure of an applicant to engage in reasonable efforts to conclude processing or examination of an application.”

In this case, Gilead challenged one such regulation–37 CFR § 1.704(c)(8)–as arbitrary, capricious and contrary to law.

The Prosecution History

The relevant events in the prosecution history of the application at issue are outlined below:

February 22, 2008 — application filed

November 18, 2009 — restriction requirement issued

February 18, 2010 — response to restriction requirement filed with IDS

April 16, 2010 — additional IDS filed (57 days after the February 18, 2010 submission)

May 13, 2010 — substantive office action issued

The USPTO awarded 651 days of PTA for its “A” delay and “B” delay, but deducted 57 days of “applicant delay” for the IDS filed April 16, 2010.

The PTA Challenge

Gilead challenged the interpretation of 35 USC § 154(b)(2)(C) set forth in 37 CFR § 1.704(c)(8):

Circumstances that constitute a failure of the applicant to engage in reasonable efforts to conclude processing or examination of an application also include the following circumstances, which will result in the following reduction of the period of adjustment set forth in § 1.703 to the extent that the periods are not overlapping:


(8) Submission of a supplemental reply or other paper, other than a supplemental reply or other paper expressly requested by the examiner, after a reply has been filed, in which case the period of adjustment set forth in § 1.703 shall be reduced by the number of days, if any, beginning on the day after the date the initial reply was filed and ending on the date that the supplemental reply or other such paper was filed;

In particular, Gilead argued that the rule was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law and in excess of statutory jurisdiction, authority, or limitation,” because it provides for a PTA deduction even if the reply does not actually cause any delay in the examination process.

The District Court Decision

The district court reviewed the rule under a two-step Chevron analysis, determined that Congress did not speak to the precise question at hand, and determined that the USPTO’s interpretation and application of the statute was permissible. (I wrote more about the district court decision in this article.)

The Federal Circuit Decision

The Federal Circuit decision was authored by Judge Wallach and joined by Judges Dyk and Hughes.

Although the Federal Circuit reviewed the district court decision de novo, it followed the same analysis and reached the same conclusion.

First, the Federal Circuit rejected Gilead’s argument that the PTA statute required applicant conduct to “result[] in actual delay” in order to warrant a deduction under § 154(b)(2)(C). Rather, the court found “nothing in the plain language of the statute … requires the applicant’s behavior to have an effect on when the prosecution ends.” The court also found no support for Gilead’s position in the legislative history of the PTA statute.

Next, the Federal Circuit determined that the rule at issue was a reasonable interpretation of the statute, based on the “broad” delegation of authority in § 154(b)(2)(C):

[T]his court finds that a reasonable interpretation of the statute is that Congress intended to sanction not only applicant conduct or behavior that result in actual delay, but also those having the potential to result in delay irrespective of whether such delay actually occurred.

In reaching this conclusion, the court accepted the USPTO’s arguments to the effect that even if an applicant’s conduct does not delay examination of its application, it could delay “the processing and examination of other applications before the examiner.” The court also agreed with the district court that “the conduct penalized under the regulation interferes with the PTO’s ability to conclude the application process because of significant time constraints faced by the PTO,” based on the assumption that “any relevant information received after an initial response to a restriction requirement ‘interferes with the [PTO’s] ability to process an application.’” It is these aspects of the decision that do not line up with my understanding of examiner workflow, as discussed in more detail below.

Having found the USPTO’s construction of the statute reasonable, the Federal Circuit affirmed the district court’s decision that had granted summary judgment in favor of the USPTO.

The Realities of Patent Prosecution

I am not surprised by this decision, but I am concerned that it was influenced by a view of patent prosecution and examiner workflow that does not line up with reality.

Examiners generally examine applications in the order that they appear on their dockets, which is largely based on application filing date and status (e.g., new application, first response filed, after-final response filed, etc.). Moreover, examiners are allotted hours, not days or weeks, to examine an application. Thus, the fact that the examiner of Gilead’s application did not issue an office action between the February response and the April IDS indicates that Gilead’s application was not yet at the top of the examiner’s docket. The lag between the April IDS and the May office action further supports such a scenario. Additionally, the fact that the examiner still was able to issue an office action within 4 months of the February response suggests that Gilead’s application was examined in accordance with a normal workflow, within USPTO guidelines, and was not impacted by the timing of the IDS. (Indeed, Gilead did not earn any PTA for USPTO Delay for the time period between the February response and the May office action.)

If I were Gilead, I might have pressed the argument that this scenario should be treated under (or by analogy to) 37 CFR § 1.704(c)(6), which relates to “preliminary” papers, rather than 37 CFR § 1.704(c)(8), which relates to “supplemental” papers.  Rule 704(c)(6) provides for a deduction for Applicant Delay based on

(6) Submission of a preliminary amendment or other preliminary paper less than one month before the mailing of an Office action under 35 U.S.C. 132 or notice of allowance under 35 U.S.C. 151 that requires the mailing of a supplemental Office action or notice of allowance …

Because Gilead’s IDS did not require “the mailing of a supplemental Office action,” no deduction would have been made under this rule.

In reaching its decision, the Federal Circuit agreed with the district court finding that “[a] supplemental IDS, such as the one that Gilead submitted, [may] force[] an examiner to go back and review the application again, while still trying to meet his or her timeliness obligations under § 154,” but the same could be said for “preliminary” papers, and the USPTO only deducts for Applicant Delay if such papers actually cause delay by requiring a supplement office action.

If I were Gilead, I also might have emphasized (as Gilead did in its original PTA petition) that applying § 1.704(c)(8) to an IDS submitted after a response to a restriction requirement and before a substantive office action discourages prompt disclosure of potentially relevant information. This is because Gilead would not have been charged with a PTA deduction if it waited to submit the IDS until after the substantive office action was issued (although it would have had to pay a $180 fee). Penalizing applicants who submit IDSs sooner rather than later seems to undermine the USPTO’s goals of promoting quality examination and compact prosecution, and the statute’s goal of encouraging applicants to “engage in reasonable efforts to conclude … examination.”

Stepping back from Gilead, I have a hard time understanding how an IDS (or other “supplemental” paper) submitted in one application could delay examination of another application. If you understand this rationale, please enlighten me in the comments!

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