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MAKING SENSE OF THE COMPLEXITIES OF PATENT TERM ADJUSTMENT

by Tom Scherer

Historically, U.S. patent terms ended 17 years from the date of issuance. That is, a patent’s term ran for a set period of time from an uncertain grant date. Accordingly, some patentees chose to keep patent applications pending for long periods and would permit issuance only at an opportune time in the marketplace for assertion of the patent. These “submarine patents” caused great hardship for participants in various industries.

In 1995, the Uruguay Round Agreements Act changed the patent term from 17 years from the date of issuance of a patent to 20 years from the earliest filing date of the patent application. This effectively addressed “submarine patents” because, after the change, any delay by an applicant in issuing a patent directly shortened the term of the patent. However, this raised a new problem that examination delays by the United States Patent and Trademark Office (“USPTO”) also shortened a patent’s term.
In 1999, to counteract this new problem, the American Inventors Protection Act (“AIPA”) set time goals for action by USPTO and established a system of Patent Term Adjustment (“PTA”). PTA extends a patent’s term by the number of days, if any, that the USPTO exceeds the set time goals for action. Furthermore, these additional days are offset by days of applicant delay, if any. Thus, as long as an applicant acts reasonably promptly, a fair patent term could be maintained in spite of any backlog that may exist in a particular group art unit at the USPTO.

Congress defined the conditions under which PTA is granted in Section 154 of Title 35 of the United States Code (“U.S.C.”), codified by the AIPA. First, 35 U.S.C. 154(b)(1)(A) sets the specific time goals for USPTO action and provides term adjustments accordingly. This first type of PTA is typically referred to as the “14-4-4” goal because the USPTO is required to issue a first office action within 14 months from the filing date of any patent application, take responsive action within 4 months of the filing date of an applicant’s reply, and issue a patent within 4 months of the payment of the issue fee. Second, 35 U.S.C. 154(b)(1)(B) sets a goal of no longer than three years of prosecution for any patent application. Finally, under 35 U.S.C. 154(b)(1)(C), the patent term is adjusted for delays caused by an interference, secrecy order, or successful appeal.

Any PTA due to a patent is reduced pursuant to 35 U.S.C. 154(b)(2). Specifically, 35 U.S.C. 154(b)(2)(A) states that PTA due under any section that overlaps another is only counted once such that the total PTA does not exceed the actual delay in the issuance of the patent. Further, 35 U.S.C. 154(b)(2)(B) reduces any due PTA in view of the filing of a terminal disclaimer. Lastly, under 35 U.S.C. 154(b)(2)(C), PTA is offset by any delays on the part of the applicant.

In 2000, under the authority of the AIPA, the USPTO revised the Code of Federal Regulations (“C.F.R.”) to include sections relating to PTA. Namely, 37 C.F.R. §§1.701-1.705 set forth the specific grounds for adjustment of a patent term based on USPTO delay and the reduction of any due adjustment based on applicant delay. The rules promulgated by the USPTO are fairly explicit as to the exact dates used in calculating extensions, reductions, and overlapping periods. Recently, however, challenges to the rule-making authority of the USPTO and regarding the accuracy of the interpretation of PTA requirements by the USPTO have started to become more commonplace.

In the most famous example, the District Court of Washington D.C. granted Wyeth’s appeal of the USPTO calculation of PTA based on the argument that, under the law as written, the delay periods from 35 U.S.C. 154(b)(1)(A) and 35 U.S.C. 154(b)(1)(B) should be counted cumulatively with only the specific calendar days of such total delay that overlap counted once. Wyeth et al. v. Dudas, 580 F.Supp.2d 138 (D.D.C. 2008). That is, the Court in Wyeth has stated that any days of PTA due to USPTO delays occurring prior to 3 years from the filing date of a patent application necessarily cannot overlap with any days of PTA due for prosecution taking longer than 3 years because the latter days of delay only occur after 3 years has passed from filing.

The Federal Circuit recently upheld the District Court’s ruling in Wyeth. Accordingly, the USPTO now must calculate PTA based on this interpretation of the rules and, in situations where USPTO delay only occurs within the first 3 years but the total prosecution time exceeds 3 years, the sum of the days of delay in the first 3 years and the days of delay after 3 years from filing should be afforded. The USPTO expects to begin properly calculating term adjustments under Wyeth as of March 2, 2010. In the meantime, if a PTA calculation is received from the USPTO that uses their previous strict calculation, a Request for Reconsideration should be filed pointing out that reduction in days as USPTO error. To make this process easier, the USPTO has created a new form, Form PTO/SB/131, for use with any patents issued in the 180 days before March 2, 2010, which allows patentees to request reconsideration without a fee or petition.

Another theory of USPTO error with respect to PTA involves an interpretation of the statutory wording of 35 U.S.C. 154(b)(1)(B), which affords PTA “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…” (emphasis added). In contrast, 37 C.F.R. §1.702(b) explicitly states that “the 3 year guarantee runs from 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.” The theory is that, because of the wording of the law, the USPTO exceeded its rule-making authority by denying that a PCT application designating the United States is an application filed in the United States. Instead, the law appears to require that the 3 year guarantee run from the international filing date of the PCT application as that would be the actual filing date in the United States.

At present, this theory is untested in any known case. However, Conference Report 106-464 (November 9, 1999), at 126, states that the language of the statute “was intentionally selected to exclude the filing date of an application under the Patent Cooperation Treaty (PCT).” Thus, the USPTO has reasonable basis for its interpretation, and appeal on such grounds may be met with greater skepticism than Wyeth’s challenge.

Finally, 35 U.S.C. 154(b)(2)(C) states that the PTA shall be reduced by the duration of time that the applicant failed to engage in reasonable efforts to conclude prosecution of the application and authorizes the USPTO director to define the circumstances that constitute such a failure. The USPTO has established appropriate timing requirements in 37 C.F.R. §1.704. Under 37 C.F.R. §1.704(b), any applicant reply later than three months from the mailing date of an office action will be deemed as a failure to engage in reasonable efforts and will reduce any due PTA. Further, under 37 C.F.R. §1.704(c), other specific circumstances that constitute applicant delay and corresponding PTA reductions are set forth.
In addition to defining unreasonable conduct, 37 C.F.R. §1.704 establishes reasonable conduct. Under 37 C.F.R. §1.704(d), an information disclosure statement (IDS) filed in compliance with §§ 1.97 and 1.98 will not be considered a failure to engage in reasonable efforts to conclude prosecution, so long as it is accompanied by a statement that:
“each item of information contained in the information disclosure statement was first cited in any communication from a foreign patent office in a counterpart application and that this communication was not received by any individual designated in § 1.56(c) more than thirty days prior to the filing of the information disclosure statement.”

The USPTO has interpreted the rule to require the verbatim inclusion of this statement. That is, any IDS based on a foreign search report, even if filed within 30 days of the mailing date of the foreign search report, will be counted as applicant delay absent the statement above. Moreover, because the USPTO has considered this a verbatim requirement, it is insufficient to make the statement under 37 C.F.R. §1.97(e)(1), which recites the same language except with “three months” rather than “thirty days,” together with a statement that adds “Pursuant to 37 C.F.R. §1.704(d), the communication was not received more than thirty days prior to the filing of the information disclosure statement.” Accordingly, if applicable, it is advisable to include both the paragraph under 37 C.F.R. §1.97(e)(1) and 37 C.F.R. §1.704(d) in their entirety in any IDS filed.

Proper calculation of PTA is an important part of patent prosecution. This is particularly true for patents that may have value late in their term. However, even for patents in which the first maintenance fee is not paid, it is still important to correctly determine the appropriate patent term due and identify any errors made by the USPTO in calculating that term. Indeed, regardless of whether a patent remains in force for its whole term, it is vital to understand the complexities of PTA and test different theories challenging current PTA interpretation in order to ensure that a patent not only is afforded all due patent term, but also, properly indicates that term to the public.
 

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