Fed Circuit Watch: USPTO Botched Patent Term Adjustment Calculation

fed circuit watch patent PTA

On January 23, 2018, the Court of Appeals for the Federal Circuit decided Supernus Pharmaceuticals, Inc. v. Iancu,[1] in which the Fed Circuit found defective the USPTO’s calculation of patent term adjustment (PTA) under 35 U.S.C. §154(b), a rather unexciting and mostly mechanical aspect of patent prosecution.

Supernus Pharmaceuticals owns U.S. Patent No. 8,747,897 (‘897) for “Osmotic drug delivery system.”  The ‘897 patent’s original application was filed April 27, 2006 as Serial No. 11/412,100 (‘100 application), and issued on June 10, 2014.  The USPTO initially calculated a PTA under §154(b) of 1,260 days, or nearly 3½ years.  Utility and plant patents (not design patents) filed on or after May 29, 2000 are eligible PTA (MPEP 2710).[2]  PTAs were originally codified as a legislative way to discourage slow prosecution pendency of applications at the USPTO.  While having statutory authority under §154(b), PTAs have procedural authority under 37 C.F.R. §1.702 and §1.703 (PTA determination) (MPEP 2730, 2731) and §1.704 (PTA reduction) (MPEP 2732), which delineate what events qualify as delays for purposes of calculating PTA.  Because §154(b) specifies USPTO delays in prosecuting an application can extend patent term, while applicant delays can reduce the PTA, §§1.702-1.703 note the specific events which qualify as a USPTO delay and §1.704 specify those events that qualify as an applicant delay.

The ‘100 application was prosecuted uneventfully until a final rejection was mailed August 20, 2010.  Supernus then filed a request for continued examination (RCE) (MPEP 706.07(h)) on February 22, 2011.  The intervening event which gave rise to this litigation was the result of a copending PCT application also filed on April 27, 2006.  A corresponding European regional phase was subsequently entered, and European Patent No. EP2010189 (‘189) was granted on October 13, 2011 by the EPO.  On August 21, 2012, the EPO issued a notice of opposition filed against the ‘189 patent, citing 10 documents.  On September 11, 2012, Supernus received notification from its European associate of the Notice of Opposition.  On November 29, 2012, Supernus filed a supplemental information disclosure statement (IDS) (MPEP 609) attaching the notice and its 10 cited documents with the USPTO.  A first office action was mailed on September 10, 2013, in response to the RCE.  Supernus then filed a response on January 10, 2014.  Then, on February 4, 2014, the USPTO mailed a Notice of Allowance.

In calculating the PTA, the USPTO determined 2,321 days to USPTO delays under §1.702(a)-(b), and reduced 886 days under §1.704 due to Supernus’ delays (e.g., delays for failing to file appropriate responses to USPTO notices or office actions within a 3-month period under §1.704(b)), resulting in a 1,260 PTA calculation.  Supernus’ case specifically deals with 646 days of the 886 applicant delays which were attributed to the filing of the supplemental IDS citing the European opposition documents, which was filed November 29, 2012, or 646 days after the filing of the RCE on February 22, 2011.  More specifically, Supernus objected to the reduction of PTA due to the IDS filing, which was not something Supernus could have known about or was in its control at the time of the RCE filing.  Hence, the issue on appeal.

Supernus filed a request for reconsideration of PTA with the USPTO, but it was rejected by the USPTO.  Supernus then filed for judicial review in federal district court, but the district court granted summary judgment for the USPTO.  Supernus appealed, arguing that the USPTO’s, and the district court’s, decisions were arbitrary, capricious and contrary to the federal statutes in question (§1.704(c)(8) and §1.704(d)(1)).

The Fed Circuit panel was composed of Judges Dyk, Schall, and Reyna, with Judge Reyna writing for a unanimous court.  Judge Reyna immediately drew comparisons, and contrasts, with the court’s decision in Gilead Sciences, Inc. v. Lee,[3] which also dealt with PTA calculation.

In Gilead, [] Gilead brought an action challenging the USPTO’s assessment of a 57-day applicant delay in calculating PTA deduction, based on Gilead’s delay during examination between its initial reply to a restriction requirement and its submission of a supplemental IDS disclosing two other co-pending Gilead patent applications.  [T]his court concluded that Congress did not address the precise question at issue, i.e., “whether a failure to engage in reasonable efforts requires conduct that actually causes delay,” and that Congress expressly delegated authority to the USPTO to prescribe regulations establishing circumstances that constitute a failure of an applicant to engage in reasonable efforts to conclude examination . . . . We conclude that Gilead does not foreclose Supernus’s statutory interpretation argument.

He reasoned that:

Gilead ruled only that the regulation reasonably drew no line between actual and potential delay and could include a supplemental IDS.  Id did not hold the regulation was reasonable in reducing PTA for periods during which there was not failure to engage in reasonable efforts to conclude prosecution.

Therefore, because Gilead constituted a different set of facts and different legal issue, it was not controlling precedent on this case.  Here, he noted, the PTA statute is “plain, clear, and conclusive.”

On the basis of the plain language of the statute, we hold that the USPTO may not count as applicant delay a period of time during which there was no action that the applicant could take to conclude prosecution of the patent.

In other words, it would be unreasonable to assess applicant delays due to events outside of the applicant’s control.  While Supernus conceded it did not perform reasonable efforts for 100 days of the 646-day applicant delay assessment, Judge Reyna further noted:

The facts indicate that there was no action Supernus could have taken to advance prosecution of the patent during the 546-day period, particularly because the EPO notice of opposition did not yet exist.

As such, the Fed Circuit panel rejected the USPTO’s contention that its PTA calculation under §1.704(c)(8) was reasonable, and therefore found the district court erred in grant of summary judgment in the USPTO’s favor, reversing and remanding the decision.

As a practice note, Supernus establishes some bright lines (along with Gilead) demarcating statutory definitions of PTA under §154(b) and §§1.702-1.704.  Events during prosecution which could constitute applicant delay might include failure to timely cite co-pending applications (e.g., Gilead), whereas failing to timely cite foreign documents because the citing document had not yet been filed would not (e.g., Supernus).

[1] ___F.3d___ (Fed. Cir. 2019) (slip op.), reversing and remanding, Supernus Pharm., Inc. v. Lee, No. 1:16-CV-00342, 2016 WL 8739331 (E.D. Va. Oct. 18, 2016).

[2] Utility and plant patents issued on or after June 8, 1995, but before May 29, 2000, are eligible for patent term extension (PTE) under the old §154(b) provisions.

[3] See 778 F.3d 1341 (Fed. Cir. 2015).