Chapter §11.05 Patent Term Adjustment

• Jurisdiction: United States

§11.05 Patent Term Adjustment

[A] Generally

Due to certain types of delays that may have occurred while a patent application was pending in the USPTO, the term of the resulting patent may be adjusted under 35 U.S.C. §154(b).¹⁴¹,¹⁴² In accordance with the American Inventors Protection Act of 1999 (AIPA), term adjustment is available for patents that issue from original applications filed on or after May 29, 2000. The possibility of extending a patent's term due to USPTO delays was implemented due to the change, effective June 8, 1995, to a patent term that ends twenty years after a patent applicant's earliest effective filing date.¹⁴³ Under the pre-AIPA 17-years-from-issue system of computing patent term, USPTO-caused delays did not consume any portion of a patent's enforceable life. Because such delays now potentially prejudice the patentee, patent term adjustment (PTA) provisions were added to U.S. patent law.¹⁴⁴ In some cases PTA can extend a patent's term significantly.¹⁴⁵

PTA may result from three main types of delay: (1) the failure of the USPTO to take certain actions within specific timeframes set forth in 35 U.S.C. §154(b)(1)(A), such as excessive delay in providing an office action (i.e., more than 14 months after filing¹⁴⁶) or in responding to an applicant's reply;¹⁴⁷ (2) the failure to issue a patent within three years of its actual U.S. filing date in accordance with 35 U.S.C. §154(b)(1)(B), but not including time consumed by RCEs, interferences, appeals to the USPTO Board or federal court, or extensions of time requested by the applicant;¹⁴⁸ or (3) delays falling under 35 U.S.C. §154(b)(1)(C), which include interferences, secrecy orders, and appellate review that reversed an adverse determination of patentability.¹⁴⁹ The USPTO will reduce any term adjustment that accrued in a patent application by the length of time it determines that the applicant "failed to engage in reasonable efforts to conclude prosecution of the application."¹⁵⁰

As a procedural matter, a patent applicant will be notified of any term adjustment when she receives a notice of allowance.¹⁵¹ The USPTO will print an initial PTA value on the notice of allowance, and print a final PTA value on the front of the issued patent. If she disagrees with the initial PTA value determined by the USPTO, the applicant can request reconsideration thereof if she does so no later than the date she pays the issue fee.¹⁵²,¹⁵³ If the applicant is dissatisfied with the USPTO's final PTA determination, she may challenge it by filing a civil action against the USPTO Director in federal district court. That court's decision may be appealed to the Federal Circuit, as in Wyeth v. Kappos, discussed in the following section.¹⁵⁴,¹⁵⁵

[B] Overlap Limitation

All three types of delay included in 35 U.S.C. §154(b)(1), referred to in shorthand form as "(A) delay," "(B) delay," and "(C) delay," are subject to an "overlap" limitation requiring that "[t]o the extent that periods of delay attributable to grounds specified in paragraph (1) overlap, the period of any adjustment granted under this subsection shall not exceed the actual number of days the issuance of the patent was delayed."¹⁵⁶ Affirming the U.S. District Court for the District of Columbia's judgment in favor of a pharmaceutical patentee, the Federal Circuit rejected the USPTO's "strained" interpretation of this provision in its 2010 decision, Wyeth v. Kappos.¹⁵⁷ The agency had erroneously employed a "greater of (A) or (B)" rubric in which it used either the greater of the delay period under §154(b)(1)(A) (delays in meeting examination deadlines) or §154(b)(1)(B) (issuing patent more than three years after filing date) to determine the appropriate adjustment, but never combined the two.¹⁵⁸ In particular, the USPTO had interpreted the (B) guarantee as starting with the filing of a patent application, not three years later; thus, "overlap" between (A) adjustments and (B) adjustments could arise and begin during the pendency of the patent application. The applicant got credit for (A) delay or for (B) delay, whichever was larger, but never A plus B.

The Federal Circuit seconded the district court's conclusion in Wyeth that "the problem with the PTO's interpretation is that it considers the application delayed under [the B guarantee] during the period before it has been delayed."¹⁵⁹ Under the correct reading of the statute, "[b]efore the three-year mark, no 'overlap' can transpire between the A delay and the B delay because the B delay has yet to begin or take any effect."¹⁶⁰ Applying this reading, the Federal Circuit affirmed the district court's grant of summary judgment to the patentee, awarding for one patent a total of 756 days of PTA rather than the 462 days determined by the USPTO, and for a second patent a total of 722 days of PTA rather than the 492 days determined by the USPTO.¹⁶¹

[C] Treatment of Continued Examination

In its 2014 decision, Novartis AG v. Lee,¹⁶² the Federal Circuit considered aspects of PTA resulting from "(B) delay," that is, the agency's failure to issue a patent within three years of its actual U.S. filing date in accordance with 35 U.S.C. §154(b)(1)(B), but not including time consumed by RCEs, interferences, appeals to the USPTO Board or federal court, or extensions of time requested by the applicant.¹⁶³ In particular, the Novartis AG court dealt with challenges by patentee Novartis to the USPTO's PTA computation as it concerned the requests for continued examination (RCEs) filed by Novartis in certain of its patent prosecutions. According to commentators, the Circuit's decision in Novartis AG means that "the vast majority of recently issued patents that include an RCE in the file history are due additional patent term adjustment (PTA)."¹⁶⁴

Siding in part with the USPTO's position, the Federal Circuit held firstly in Novartis AG that "any time consumed by continued examination" as referenced in 35 U.S.C. §154(b)(1)(B)(i), no matter when initiated, does not count toward depleting the allotment of three years the USPTO has before any adjustment time begins to accrue. In other words, "no adjustment time is available for any time in continued examination, even if the continued examination was initiated more than three calendar years after the application's filing."¹⁶⁵ The Circuit instructed that "the patent term adjustment time should be calculated by determining the length of the time between application and patent issuance, then subtracting any continued examination time (and other time identified in (i), (ii), and (iii) of (b)(1)(B)) and determining the extent to which the result exceeds three years." This reading of the statute "ensure[d] that applicants recover for any 'delay[s] due to the failure of the [PTO],' without allowing the applicant to recover for 'any time consumed by continued examination,' as the statute [35 U.S.C. §154(b)(1)(B)] requires."¹⁶⁶

Second, the Federal Circuit in Novartis AG agreed with Novartis's position that the "time consumed by continued examination," for which no PTA is available, should run only until allowance of the application, not its later issuance as a patent.¹⁶⁷ The "time consumed by continued examination" is limited to the time before allowance, the court concluded, so long as no later examination actually occurs. Time after allowance, until issuance, is not "time consumed by continued examination," and thus should not be excluded from term adjustments given to the patentee. Because a patent application's "examination" presumptively ends at allowance, "[t]he 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."¹⁶⁸

Although the USPTO identified certain circumstances in which affirmative action might be taken to resume examination after allowance, such as the withdrawal of a patent from issue and return of the application to examination based on new information submitted to fulfill an applicant's continuing duty to disclose information material to patentability under 37 C.F.R. §1.56, the Federal Circuit in Novartis AG termed these circumstances "exceptional." In the court's view, the possible existence of these exceptional cases did not support a general rule excluding time between allowance and issuance.¹⁶⁹ Should such exceptional cases occur, the USPTO can make "an appropriate adjustment" at that time.¹⁷⁰

[D] What Constitutes USPTO Fault for A-Type Delay

Examiner-made errors in an Office Action that cause delay in patent issuance do not necessarily gain an applicant PTA. So long as the action provides adequate notice under 35 U.S.C. §132 of the basis for rejection (or objection or requirement) and allows the applicant to respond, delays caused by examiner mistakes will not count in the applicant's favor.

Illustrative is the Federal Circuit's 2016 decision in Pfizer, Inc. v. Lee.¹⁷¹ There the appellate court affirmed the Eastern District of Virginia's grant of summary judgment in favor of the USPTO in a case involving the computation of "A-type delay" under 35 U.S.C. §154(b). Although a USPTO examiner admittedly erred in issuing an initial, incomplete restriction requirement that he later corrected, the examiner's error was not of a character that failed to put the applicant on notice of the "broad statutory basis" for the restriction requirement as required by case law interpreting 35 U.S.C. §132. Accordingly, the applicant was not entitled to a PTA credit for the 197 days that elapsed between the issuance of the initial, incorrect restriction requirement and the subsequent, corrected restriction requirement.

Wyeth Holdings Corp., a wholly owned subsidiary of Pfizer, Inc., owned U.S. Patent No. 8,153,768 ('768 patent), directed to pharmacological methods of cancer treatment. In 2003, Wyeth filed the application that ultimately issued in 2012 as the '768 patent. In 2005, well after the fourteen month deadline for...