USPTO Final Rule Limits a Reduction of Patent Term Adjustment to the Period the Applicant Failed to Undertake Reasonable Prosecution Efforts

On June 16, 2020, the United States Patent and Trademark Office (USPTO) published a final rule revising patent term adjustment under 35 U.S.C. 154(b) in view of Supernus Pharm., Inc. v. Iancu. In Supernus, the Federal Circuit held that a reduction of patent term adjustment must be equal to the period of time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application. The USPTO thus cannot deduct an amount of time beyond the period during which the applicant failed to undertake reasonable efforts to conclude prosecution. The USPTO revised relevant provisions pertaining to reduction of patent term adjustment, aligning the provisions with Federal Circuit law.

Section 154(b)(2)(C) of the Patent Act authorizes the USPTO to reduce the total amount of patent term adjustment for certain delays by deducting the number of days equal to the period of time that “the applicant failed to engage in reasonable efforts to conclude prosecution of the application.” The USPTO implemented this section with 37 CFR § 1.704.

In 2006, Supernus Pharmaceuticals filed patent applications in both the United States and Europe covering an osmotic drug delivery system. In February 2011, Supernus filed a Request for Continued Examination (RCE) in the U.S. application after a final rejection. Supernus’s European application was granted later that year. In August 2012, the European patent was the subject of a third-party opposition. After being notified of the opposition, Supernus filed a supplemental Information Disclosure Statement (IDS) in the U.S. application to provide the USPTO with the documents cited in the European opposition.

In calculating patent term adjustment when the U.S. patent issued, the USPTO deducted 886 days for applicant delay. This period corresponded to the time between filing the RCE and the supplemental IDS. Of these 886 days, 546 days corresponded to the period between the filing of the RCE and notification of the opposition from the European Patent Office (EPO). Supernus could not have undertaken any efforts to avoid delay in filing the IDS in the U.S. during this 546-day period because the EPO notice of opposition did not yet exist. The Federal Circuit thus held that “[t]he USPTO’s additional 546-day assessment as applicant delay is contrary to the plain meaning of the statute” because the “total reduction is not equal to a period of time during which Supernus failed to engage in reasonable efforts to conclude prosecution of the [relevant] patent.”

In its final rule, the USPTO revised 37 CFR § 1.704 to comport with the Supernus holding. Specifically, the USPTO revised the period of reduction of patent term adjustment in the provisions of 37 CFR § 1.704 pertaining to deferral of issuance of a patent, abandonment of an application, submission of a preliminary amendment, submission of papers after a decision by the Patent Trial and Appeal Board or by a federal court, and submission of papers after a notice of allowance under 35 U.S.C. § 151. The relevant periods are revised to specify a period of reduction corresponding to “the period from the beginning to the end of the applicant’s failure to engage in reasonable efforts to conclude prosecution,” rather than corresponding to the consequences to the USPTO of the applicant’s failure to engage in reasonable efforts to conclude prosecution. The final rule also revises 37 CFR § 1.704(c)(10) to exclude after-allowance amendments or other after-allowance papers that are “expressly requested by the Office” from the after-allowance amendments or other after-allowance papers that will result in a reduction of patent term adjustment.

“The changes in this final rule apply to all applications and patents eligible for patent term adjustment in which a notice of allowance was mailed on or after July 16, 2020.” Regarding applications and patents with a notice of allowance mailed before July 16, 2020, the USPTO will decide any timely request for reconsideration of a patent term adjustment determination in such applications and patents eligible for patent term adjustment, consistent with the changes in this final rule, if requested by the patentee.

Gibbons will continue to monitor laws and regulations affecting patent procurement, and provide updates as applicable.

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