USPTO Proposes Revised Patent Term Adjustment Rules for RCEs Under Novartis

The USPTO has published proposed rules for calculating Patent Term Adjustment (PTA) for applications in which a Request for Continued Examination (RCE) has been filed, after the Federal Circuit held in Novartis v. Lee that the USPTO’s original rules were not consistent with the PTA statute. While the proposed rules appear to follow the Federal Circuit decision for applications which proceed directly to grant, they go further than Novartis by addressing what happens when prosecution is reopened after allowance. The USPTO will consider written comments on the proposed rules received by August 18, 2014. 

The Statute at Issue

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) ….

Under the USPTO’s original interpretation of the statute, once an RCE was filed, the patent no longer accrued “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 this issue and the PTA framework.)

The Federal Circuit Decision in Novartis v. Lee

In Novartis v. Lee, the Federal Circuit held:

We reject the PTO’s view that the time after allowance, until issuance, is “time consumed by continued examination” and so is excluded from adjustments given to the patentee. Such time from allowance to issuance undisputedly would count toward the PTO’s three-year allotment in a case not involving a continued examination. There is no basis for distinguishing a continued examination case.

As already noted, the PTO has explained that § 154(b)(1)(B) is best understood as making distinctions based on whether certain delays are attributable to the PTO. …. By the same token, allowance-to-issuance time is not to be distinguished according to whether there is a continued examination in a prosecution. Either way such time is plainly attributable to the PTO.

The language of “examination” used in § 154(b)(1)(B) reflects that underlying principle. An ”examination” presumptively ends at allowance, when prosecution is closed and there is no further examination on the merits in the absence of a special reopening. …. The common-sense understanding of “time consumed by continued examination,” 35 U.S.C. § 154(b)(1)(B)(i), is time up to allowance, but not later, unless examination on the merits resumes.

The PTO identifies several circumstances in which affirmative action is taken to resume examination after allowance, perhaps based on new information submitted by applicants in fulfillment of their continuing duty to disclose information material to patentability ….The possible existence of these exceptional cases does not support a general rule excluding time between allowance and issuance. In the present case, time after allowance was not time caused by the continued examination.

The Proposed Rules

The proposed patent term adjustment rules revise 37 CFR § 1.703(b)(1) to read as follows:

(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 U.S.C. 111(a) or the national stage commenced under 35 U.S.C. 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 U.S.C. 132(b) was filed and ending on the date of mailing of a notice of allowance under 35 U.S.C. 151, unless prosecution in the application is reopened, in which case the period of adjustment under § 1.702(b) also does not include the number of days, if any, in the period or periods beginning on the date on which a request for continued examination of the application under 35 U.S.C. 132(b) was filed or the date of mailing of an action under 35 U.S.C. 132, whichever occurs first, and ending on the date of mailing of a subsequent notice of allowance under 35 U.S.C. 151;

The first clause of revised § 1.703(b)(1)  (up to the “unless …”) appears to follow the Federal Circuit decision, as it only excludes as “time consumed by continued examination” the time from the filing of an RCE to the issuance of a notice of allowance.

The second clause (beginning with “unless …”) addresses circumstances that were not at issue in Novartis, when prosecution is reopened after the notice of allowance that followed the RCE. As proposed, this rule excludes all post-allowance examination time as “time consumed by continued examination,” even if it is the USPTO, and not the applicant, who reopens prosecution, and even if the post-allowance examination is not conducted pursuant to another RCE.

The proposed rules also revise 37 CFR § 1.704 to add a new type of applicant delay:

(12) Submission of a request for continued examination under 35 U.S.C. 132(b) after a notice of allowance under 35 U.S.C. 151 has been mailed, 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 date of mailing of the notice of allowance under 35 U.S.C. 151 and ending on the date the request for continued examination under 35 U.S.C. 132(b) was filed.

This means that filing an RCE after allowance not only will prevent the accrual of B delay until the application is allowed again, it also will result in a deduction from the total PTA award corresponding to the number of days between the (first) notice of allowance and the (subsequent) RCE. According to the Federal Register Notice, this rule will prevent applicants from “obtain[ing] multiple periods of adjustment …[after allowance] as a consequence of delaying issuance .. by filing [RCEs] after a notice of allowance.”

Do the Proposed Rules Comport With the Statute?

The Federal Register Notice repeatedly cites Novartis as holding that “the time consumed by continued examination does not include the time after a notice of allowance, unless the Office actually resumes examination of the application after allowance.” However, the court was not faced with a case where prosecution was reopened after allowance, and did not hold that “time consumed by continued examination” always includes all post-allowance examination time. Rather, the court cautioned:

The possible existence of these exceptional cases does not support a general rule excluding time between allowance and issuance. In the present case, time after allowance was not time caused by the continued examination.

The proposed rules that address what happens when prosecution is reopened after allowance do not adhere to the guiding principle behind the PTA statute of “making distinctions based on whether certain delays are attributable to the PTO.” Instead, the proposed rules would treat the time consumed by examination after allowance the same regardless of whether it was requested by the applicant via a further RCE, necessitated by the applicant’s citation of a new reference in an Information Disclosure Statement, or conducted pursuant to the USPTO’s own initiative.

How can “time consumed by continued examination of the application requested by the applicant under section 132(b)” include post-allowance examination time that was not, in fact, requested by the applicant via an RCE?

The USPTO appears to not want to award B delay for post-allowance examination time necessitated by a post-allowance Information Disclosure Statement that did not require an RCE, but 35 USC § 154(b)(1)(B)(i) simply does not provide a basis for such an exclusion. Still further, the USPTO has not offered any justification for not awarding B delay for post-allowance examination time conducted pursuant to the USPTO’s own initiative.

It strikes me that the proposed rules create a distinction surrounding post-allowance examination similar to the “time-of-initiation” distinction that the USPTO argued against in Novartis. Under the proposed rules, if an RCE has been filed, any post-allowance examination time does not earn B delay. On the other hand, if no RCE has been filed, all post-allowance examination time can earn B delay (if it occurs more than three years after the application was filed). There is no basis in either the PTA statute or Novartis for treating post-allowance examination time so differently on that basis.

Submit Your Comments

As noted above, the USPTO will consider written comments on the proposed rules received by August 18, 2014.  Comments may be sent

by email to [email protected]

by postal mail addressed to

Mail Stop Comments—Patents
Commissioner for Patents
P.O. Box 1450
Alexandria, VA 22313–1450
Attention:  Kery Fries, Senior Legal Advisor, Office of Patent Legal Administration, Office of the Deputy Commissioner for Patent Examination Policy

or by email via the Federal eRulemaking Portal.