The U.S. Patent and Trademark Office (PTO) announced on January 12 that it would begin calculating patent term adjustments under 35 U.S.C. 154(b) in accordance with the recent Federal Circuit decision in Wyeth v. Kappos, No. 2009-1120 (Fed. Cir., January 7, 2010). The decision could extend the term of some issued patents, if a challenge is promptly brought.

Background

The term of a patent is now calculated from a patent application's filing date, rather than a patent's issue date. Patent terms are therefore susceptible to PTO delays during prosecution. However, since passage of the American Inventors Protection Act in 1999, patentees are entitled to a patent term adjustment (PTA) that extends the term of a patent to compensate for PTO delays, less any delays attributable to the applicant. Section 154(b)(1) guarantees prompt prosecution of patent applications according to the guarantees of its paragraphs A and B. "To summarize, paragraph A (the 'A guarantee' or 'A clause') promises 'prompt [PTO] responses' by extending the term of the patent one day for each day the PTO does not meet certain examination deadlines . . . ." Wyeth, slip op. at 3. "Paragraph B (the 'B guarantee' or 'B clause') extends the term of the patent one day for each day issuance is delayed due to the PTO's failure 'to issue a patent within 3 years after the actual filing date of the application in the United States.'" Id. However, Section 154(b)(2)(A) "restricts the period of adjustment" to prevent double-counting of any A-delay that "overlaps" a B-delay. Id.

To determine whether A-delay and B-delay overlap, the PTO previously interpreted B-delay to include the entire period from filing to issuance, rather than only the period more than three years from filing. The PTO refused to grant adjustments that included both A-delay and B-delay because—under the PTO's interpretation—B-delay always overlapped A-delay. The PTO therefore used the greater of A-delay and B-delay to calculate PTA as:

PTA = (Greater of A-delay and B-delay) – (applicant delay)

Wyeth v. Kappos

Wyeth and Elan Pharma (collectively, Wyeth) sued the PTO in the District Court for the District of Columbia for an order requiring the PTO to grant an additional PTA for U.S. Patent Nos. 7,179,892 ('892 patent) and 7,189,819 ('819 patent). Wyeth asserted that the PTO's determination of "overlap" was incorrect because A-delay and B-delay can only "overlap" after the three-year pre-delay period in paragraph B. Because Section 154(b)(2)(A) prohibits double-counting of overlapping delays, Wyeth argued that "overlap" should include only A-delay that occurs more than three years after filing, such that a PTA should be calculated as:

PTA = (A-delay) + (B-delay) – (overlap) – (applicant delay)

The PTO countered that its interpretation was correct and entitled to deference under Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984).

The district court granted summary judgment in favor of Wyeth. It held that the PTO's interpretation was incorrect and not entitled to deference because it considered "delay" under paragraph B "before it has been delayed." Wyeth, slip op. at 6 (citing Wyeth v. Dudas, 580 F. Supp. 2d 138, 142 (D.D.C. 2008)). Under the new interpretation, the district court ordered the PTO to grant 146 days of additional term for the '892 patent and 230 days of additional term for the '819 patent.

On appeal, the Federal Circuit focused its de novo review on whether B-delay (days beyond three years) could "overlap" with A-delay (days of PTO delay) during the 3-year pre-delay period of paragraph B. Id. at 6-7. The court began with the plain language of the statute and noted that Section 154(b)(2) only prohibits overlapping "delays." Id. at 8. The court rejected the PTO's "strained interpretation" because "the language of section 154(b) does not even permit B delay to start running until three years after the application is filed." Id. The Federal Circuit thus approved the district court's (and Wyeth's) interpretation because, to determine "overlap," the PTO improperly included the entire period from filing to issuance as B-delay.

The PTO defended its interpretation by arguing that a PTA should not include both A-delay and B-delay because A-delay causes B-delay, and Wyeth's interpretation would lead to inconsistencies between similarly-situated applicants. Id. at 9. The Federal Circuit rejected the PTO's arguments, noting that even the PTO's interpretation can cause inequities. Id. at 9-10. "Regardless of the potential of the statute to produce slightly different consequences for applicants in similar situations, this court does not take upon itself the role of correcting all statutory inequities, even if it could." Id. at 10. The Court also found that "the legislative history generally supports the interpretation required by the statutory language itself." Id. at 11. Finally, the Court rejected the PTO's claim that the PTO's interpretation was entitled to deference under either Chevron, 467 U.S. 837, or Skidmore v. Swift Co., 323 U.S. 134 (1944). "Because the language of the statute itself controls this case and sets an unambiguous rule for overlapping extensions, this court detects no reason to afford special deference to the PTO's interpretation." Id. at 13 (citation omitted). The Federal Circuit thus affirmed the district court.

PTO Notice & Practical Implications

The PTO announced on January 12 that it "is in the process of changing the manner it will calculate patent term adjustments under Section 154(d) to conform with the Federal Circuit's decision [in Wyeth v. Kappos]."[1] After Wyeth, only A-delay more than three years after filing can "overlap" with B-delay, and PTAs are calculated as:

PTA = (A-delay) + (B-delay) – (overlap) – (applicant delay)

Wyeth's '819 patent illustrates the difference in approach. The '819 patent had 336 days of A-delay, 827 days of B-delay, 106 days of overlap (A-delay more than three years after filing), and 335 days of applicant delay. Under the PTO's prior approach, Wyeth was entitled to a PTA of 492 days = 827 (greater of A- or B-delay) – 335 (applicant delay). Under the new approach, however, Wyeth is entitled to a PTA of 722 days = 336 (A-delay) + 827 (B-delay) – 106 (overlap) – 335 (applicant delay). The Wyeth approach thus results in 230 additional days of patent term.

A PTA typically must be challenged prior to paying the issue fee. 37 C.F.R. § 1.705(b). However, "[i]f the patent indicates or should have indicated a revised patent term adjustment, any request for reconsideration of the patent term adjustment indicated in the patent must be filed within two months of [issuance]." 37 C.F.R. § 1.705(d). Section 1.705(d) also states that a "request for reconsideration under this section that raises issues that . . . could have been raised, in an application for patent term adjustment under paragraph (b) of this section shall be dismissed as untimely as to those issues." Under this language, the PTO may contend that certain PTA issues "could have been raised" prior to Wyeth and thus do not justify reconsideration. However, the PTO's notice may suggest that the PTO is willing to reconsider PTAs for recently issued patents.[2] Another option is to challenge a prior PTA determination "by civil action in the United States District Court for District of Columbia within 180 days after the grant of the patent." 35 U.S.C. § 154(b)(4).[3]

Based on these developments, patentees should work with their counsel to consider whether challenges to PTA determinations are justified, particularly for patents that have issued within the past 180 days.

This article was prepared by Eagle Robinson (erobinson@fulbright.com or 512 536 3083) and Jody C. Bishop from Fulbright's Intellectual Property and Technology Practice Group.