Potential Delay Enough to Reduce PTA

The Federal Circuit recently addressed the issue of whether Patent Term Adjustment (“PTA”) can be reduced under 35 U.S.C. § 154(b)(1)(C) by conduct that does not actually cause delay in the conclusion of prosecution. Section 154(b)(1)(C) provides that PTA “shall be reduced by a period equal to the period of time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application.” The USPTO has interpreted the statute to mean that conduct that did delay or that could potentially delay the examination of a patent applications should be sanctioned. In Gilead Sciences Inc. v. Lee, Gilead Sciences, Inc. (“Gilead”) contested the USPTO’s interpretation and argued that the statue required actual delay in the conclusion of prosecution. The Federal Circuit held that Congress’s intent in enacting the statute was “to sanction not only applicant conduct or behavior that result in actual delay, but also those having the potential to result in delay irrespective of whether such delay actually occurred.”

The timeline of events regarding Gilead’s application for U.S. Patent No. 8,148,374 (the “’374 patent”) is as follows:

  • February 22, 2008 – Gilead filed its application for the ’374 patent;
  • November 18, 2009 – The USPTO issued a restriction requirement;
  • February 18, 2010 – Gilead responded to the restriction requirement;
  • April 16, 2010 – Gilead filed a supplemental information disclosure statement (“IDS”);
  • July 29, 2011 – USPTO issued a notice of allowance;
  • April 3, 2012 – ’374 patent issued.

In calculating PTA, “Category A Delays” extend the term of a patent by one day for each day the USPTO does not meet any of the specified deadlines under the statute. 35 U.S.C. § 154(b)(1)(A). If the patent does not issue within three years of filing, “Category B Delays” extend the term of a patent by one day for each day by which that deadline is exceeded, subject to certain exceptions. 35 U.S.C. § 154(b)(1)(B). In this case, it was undisputed that Gilead was entitled to 245 days of Category A Delay and 406 days of Category B Delay.

The USPTO, however, also deducted thirty-five days for overlapping delay pursuant to 35 U.S.C. § 154(b)(2)(A) and deducted an additional fifty-seven days under 35 U.S.C. § 154(b)(2)(C). The latter was for Gilead’s filing of a supplemental IDS after filing a response to the restriction requirement. Gilead challenged the fifty-seven day deduction, first before the district court and then before the Federal Circuit.

Gilead argued that its filing of the IDS did not cause any actual delay in concluding the prosecution of its application and therefore no time should have been subtracted from its PTA. The USPTO argued that Gilead’s response to the restriction requirement was its reply and that its “filing of a supplemental IDS . . . constituted a failure to engage in a reasonable effort to conclude prosecution.” To support its position, the USPTO cited 37 C.F.R. § 1.704(c)(8), which states:

Circumstances that constitute a failure of the applicant to engage in reasonable efforts to conclude processing or examination of an applications . . . include . . . submission of a supplemental reply or other paper, other than a supplemental reply or other paper expressly requested by the examiner, after a reply has been filed . . . .

The issue is whether filing a supplemental IDS after submitting a reply to a restriction requirement constitutes a failure to engage in reasonable efforts to conclude prosecution of a patent application. The district court agreed with the USPTO and granted its motion for summary judgement. The Federal Circuit applied the statutory interpretation analysis from Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), and also upheld the USPTO’s interpretation.

The first step of Chevron analysis is to determine whether Congress addressed the question at issue. The Federal Circuit held that it did not. The second step requires a determination of whether the agency’s, i.e., the USPTO’s, answer is based on a permissible construction of the statute. Chevron requires that, when Congress explicitly leaves a gap for an agency to fill, the agency’s construction of the statute is given controlling weight unless arbitrary, capricious, or manifestly contrary to the statute. Congress here intended the USPTO to fill in the gaps—35 U.S.C. § 154(b)(2)(C)(iii) specifically grants the Director authority to “prescribe regulations establishing the circumstances that constitute a failure of an applicant to engage in reasonable efforts to conclude processing or examination of an application.” In turn, the USPTO promulgated 37 C.F.R. §1.704(c)(8) (see supra). Therefore, the Federal Circuit affirmed the district court and upheld the USPTO’s interpretation that Congress’s intent in enacting 35 U.S.C. § 154(b)(1)(C) was “to sanction not only applicant conduct or behavior that result in actual delay, but also those having the potential to result in delay irrespective of whether such delay actually occurred.”

Gibbons will continue to monitor developments in calculating Patent Term Adjustment.

Charles H. Chevalier is an Associate in the Gibbons Intellectual Property Department.
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