Securing Additional Patent Life Beyond The Statutory Defined Time Limit
The time it takes to receive a first office action on the merits from the United States Patent & Trademark Office (USPTO) averages around 18-24 months from the filing date. Depending on the art unit, this time can reach well over 3 years. Moreover, the average time it takes for a patent to grant from the date of filing is 3 ½ years. While such timing can be a source of frustration to a patent owner, the Patent Laws provide a mechanism for extending the life of a patent beyond the statutory defined time limits. Such mechanism is known as Patent Term Adjustment (PTA). By law, the standard term for a patent will be extended by the United States Patent & Trademark Office (USPTO) to compensate for certain delays in the examination and issuance of the patent. However, this extension of term will be reduced by the USPTO for any period during which the Applicant “failed to engage in reasonable efforts to conclude prosecution of the application,” referred to as Applicant delay. A recent decision by the United States District Court, Eastern District of Virginia has changed the manner in which the PTA is calculated, thereby making some patent owners eligible for additional patent term.
Patent Term Adjustment (PTA)
Patent Term Adjustment (PTA) is a process of providing the patentee adjustment to the 20 year term in response to prosecution delays (35 U.S.C. § 154). Prior to the current 20 year patent term, U.S. Patent Law provided a patent term of 17 years from the date of issue. The ability of the patentee to enforce their rights for the duration of the patent term would not be in jeopardy as a result of prosecution delays because the term was measured from the date the patent issued. In order to comply with international treaties, the Patent Laws were amended to provide a 20 year patent term measured from the date on which the application was first filed. Concerned that prosecution related delays would be disadvantageous to patentees, Congress provided day-for-day credits, or adjustments, to the 20 year term as a result of USPTO prosecution-related delays. For some industries, the full 20 year patent term may not be important as the technology is so dynamic that patentees obtain most of the financial benefits early in the life of the patent term. For those patents that provide market dominance or for technologies which obtain financial benefits deeper into the 20 year patent term, extending the competitive advantage for longer than the 20 year patent term would be beneficial.
While the USPTO is under an obligation to act within a timely manner, any PTA awarded is subject to reduction by a period equal to the period of time during which the applicant delays. What constitutes Applicant delay? There is no exhaustive list and according to USPTO there exists a "myriad of actions or inactions that occur infrequently” which could result in prosecution delay. In practice, however, there are a range of actions during prosecution which have been clearly defined as Applicant delay. Such actions include delays in filing replies to Office Actions, filing supplemental responses or preliminary amendments, or filing amendments after notice of allowance. Avoiding these actions and others should ensure maximum PTA allowed.
PTA is calculated by subtracting Applicant delays from USPTO related delays known as “A-delays” (adjustments based on USPTO failure to act in certain situations ), “B-delays” (adjustments based on application pendency greater than three years), and “C-delays” (adjustments for delays due to interferences, secrecy orders, and appeals). Negative PTA is not allowed. Therefore, if there are no USPTO delays or more delays than USPTO related delays, PTA cannot be utilized by the USPTO to take away any portion of the 20 year statutory patent term.
Exelixis, Inc. v Kappos
The manner in which the USPTO determined B-delays was challenged in the Federal Courts, Exelixis, Inc. v Kappos, case No. 1:12cv, E.D. Va. November 1, 2012. Under B-Delays, applications pending more than three years after the actual filing date of the U.S. application or entry into the U.S. national stage of an international application are entitled to one day for each day PTA until the patent issues. Certain events are excluded in calculation, including time consumed by continued examination of the application requested by the applicant (RCE) or applicant’s requested delay. RCEs are typically filed after the Applicant receives a final rejection but desires to continue prosecution. Prior to the Exelixis case, the PTO excluded any time consumed by the RCE, regardless when filed, in calculating B-delays. Under this interpretation, whenever the Applicant filed an RCE, such effect resulted in tolling of PTA calculation. The plaintiffs challenged the USPTO interpretations of the law, arguing that PTA extension under B-delays should be granted for the time consumed by the RCE after the three year period. In analyzing the statutory language, the Court determined that time committed to RCEs tolls the running of the three year clock if the RCE is filled within the three year period. However, the Court stated that RCEs have no impact on PTA if filed after the three year B-delay period deadline has ended.
While the case may be subject to appeal by the USPTO or the statutory language may be amended by Congress, patent owners of recently issued patents have been afforded an opportunity to be eligible for additional patent term adjustment. The court ruling in Exelixis limits eligibility to those cases that filed an RCE after three years from the original filing date. For cases currently pending which require the filing of an RCE, consideration must be given as to delaying the RCE filing until after the three year date. For applications which have filed an RCE after the three year period, several actions may be prudent. For any application having a notice of allowance but have not paid the issue fee, review of the USPTO’s PTA determination should be considered and filing of a petition under 37 CFR 1.705(b) to obtain additional PTA based on Exelixis should be done prior to or at the time of paying the issue fee. For any patentee that has already paid the issue fee and a patent has issued within the last two months, a determination of whether or not to file a petition under 37 CFR 1.705(d) must be made within that two month time period. Should the petition under 37 CFR 1.705(d) be denied or not resolved, the patentee would be required to file a lawsuit in the U.S. District Court for the Eastern District of Virginia within 180 days of issuance. For patentees past these time periods, the path of obtaining additional PTA is not clear or settled by the Courts. The USPTO may provide for such procedure at a later date. Alternatively, it may be up to the patentee to file a lawsuit, relying on an equitable relief argument.
The Exelixis case is not the only case where the Federal Courts have overturned USPTO interpretations of PTA calculations, see for example Wyeth v Dudas, dealing with a challenge to USPTO determination of A-delay and B-delay overlap, or Arqule v Kappos, dealing with a challenge to USPTO interpretation that the PTA statute is not subject to grace periods when due dates fall on weekends or holidays. While it is difficult to predict the value of a patent in the later years of its term, particularly during the early stages of product research and development, obtaining additional patent term may be important. Not all situations require the need to pursue additional patent term. Accordingly, patentees must decide whether or not it is cost effective to review USPTO PTA determination for eligibility for additional adjustments, particularly in light of Exelixis, as well as take the necessary steps to obtain such time.
By David J. Zelner
Registered Patent Attorney