In a decision issued September 20, 2012, in Bristol Meyers Squibb Co. v. Kappos, the U.S. District Court for the District of Columbia denied the USPTO’s motion for reconsideration of the court’s January 27, 2012 decision that found that the statutory deadline for bringing a civil action to challenge the Patent Term Adjustment (PTA) awarded by the USPTO is tolled when the patentee pursues reconsideration of the agency decision. This ruling is significant, because the 180-day statutory period often occurs before the USPTO issues its decision on a request for reconsideration.
Patent Term Adjustment
The PTA statute (35 U.S.C. § 154) extends the term of a patent beyond its base 20-year term (which is measured from its earliest U.S. priority date) to compensates for USPTO delays during prosecution. The statute provides “guarantees” against three different types of PTO delay:
A Delay: when the USPTO fails to act in accordance with set timeframes (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: when the USPTO fails to issue a patent within three years of the actual filing date of the patent application.
C Delay: when the application is involved in an interference or appeal, or is subject to a secrecy order.
The USPTO provides its preliminary PTA calculation with the Notice of Allowance, and provides its final PTA calculation when the patent issues.
The statute provides for two different avenues of review of a PTA award.:
(b)(3) PROCEDURES FOR PATENT TERM ADJUSTMENT DETERMINATION.-
(A) The Director shall prescribe regulations establishing procedures for the application for and determination of patent term adjustments under this subsection.
(B) Under the procedures established under subparagraph (A), the Director shall-
(i) make a determination of the period of any patent term adjustment under this subsection, and shall transmit a notice of that determination with the written notice of allowance of the application under section 151; and
(ii) provide the applicant one opportunity to request reconsideration of any patent term adjustment determination made by the Director. . . . .
(b)(4) APPEAL OF PATENT TERM ADJUSTMENT DETERMINATION.-
(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 District of Columbia within 180 days after the grant of the patent. Chapter 7 of title 5 shall apply to such action. Any final judgment resulting in a change to the period of adjustment of the patent term shall be served on the Director, and the Director shall thereafter alter the term of the patent to reflect such change.
The USPTO rules (37 CFR § 1.705) provide that a request for reconsideration under § 154(b)(3) must be filed no later than the Issue Fee payment or within two months of the patent grant date (depending on the ripeness of the PTA issue at allowance). When the USPTO issues its decision on a request for reconsideration, a patentee usually has two months to request reconsideration of the decision. It is usually the decision on that (second) request for reconsideration that is designated as a “final” agency decision. Indeed, the PTA award and/or rationale often changes between the first decision and the second decision.
The BMS Case
The BMS case stemmed from the PTA issue resolved in Wyeth v. Kappos, regarding the calculation of “B” delay. BMS had a number of patents for which the 180-day period for bringing a civil action had expired by the time the Wyeth case was resolved, but which had not received a “final” USPTO determination of PTA (e.g., the requests for reconsideration were still undergoing agency review). When BMS brought a civil action to correct the PTA awards consistent with Wyeth, the USPTO moved to dismiss the complaint with regard to the patents for which the 180-day period had expired. In response, BMS argued that the 180-day period should be tolled until the USPTO issues its final agency decision. (I wrote previously about the tolling issue for patents in similar situations.)
The District Court’s Original Decision
In its original decision, the district court agreed with BMS, applying the “general rule” that
Judicial review of agency actions is ordinarily tolled until the agency action is final.
Indeed, the court noted that, “In the absence of a final agency action, this Court lacks jurisdiction.”
The court held:
The time for filing the petition for review is tolled until all proceedings before the agency have been completed.
The District Court’s Decision on Reconsideration
The USPTO’s motion for reconsideration was based on the argument that “the clear and unambiguous language of the statute shows that Congress intended the 180-day limit to apply regardless of any pending motions for reconsideration.” In support of this assertion, the USPTO cited 35 USC § 154(b)(3)(D), which states:
The Director shall proceed to grant the patent after completion of the Director’s determination of a patent term adjustment under the procedures established under this subsection, notwithstanding any appeal taken by the applicant of such determination.
Thus, the USPTO argued that “the grant of a patent is an event distinct from the PTA determination.”
The district court disagreed, finding
[T]he patent itself embodies the agency’s final patent term adjustment determinations …. Rather than decoupling the final agency action (the PTA determination) from the trigger for the limitation period (the grant of the patent), the time period for appeal runs specifically from the PTO’s final definitive statement on the PTA determinations: the patent.
The court disagreed with the USPTO’s main argument, which was that the “plain and unambiguous language” of the statute indicates Congressional intent that tolling not to apply. The court reasoned that “the ‘notwithstanding’ clause in § 154(b)(4)(A) is more easily understood as ensuring that the issuance of a patent will not be delayed solely because a party is challenging [a PTA] calculation prior to the issuance of a patent.
The court also emphasized that “application of the tolling rule to patent term adjustment determinations is correct in terms of policy and efficiency.” Indeed, the court stated:
The PTO asks the Court to find that Congress affirmatively intended to impose a rather inefficient and confusing process without having made that process clear in the statute.
- Under the USPTO’s position, patentees must appeal PTA decisions in court, without providing the USPTO an opportunity to first revisit its decision.
- The USPTO’s position forecloses the possibility that the USPTO might modify its PTA decision on reconsideration “in a way that would obviate the need for judicial intervention.”
- Under the UPSTO’s position, courts and the PTO must simultaneously consider the PTA decision, which is an inefficient use of judicial resources.
The court also noted that there is little need “for an urgent, immediate decision” on PTA, because “any adjustments to [a patent’s] term become relevant only at the end of that term, which is somewhere in the realm of seventeen years after the grant of the patent.” Thus, there is “no need to create a risk of duplicative review of [PTA].”
Not Just a Wyeth Issue
Although the Wyeth case triggered a number of PTA civil actions, the court’s decision here is not limited to cases filed in the wake of Wyeth. To the contrary, this case will keep the court doors open for any patent holder who disagrees with the USPTO’s PTA award, but wants to try to resolve the dispute with the USPTO in the first instance.