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Patent Term Adjustment...Adjusted Again - Lower Court Decisions on Patent Term Adjustment (PTA) Favor Certain RCE Filings

November 29, 2012

Hamilton Brook Smith Reynolds Alert

  • Two district courts rule PTA still accrues in applications where a first Request for Continued Examination (RCE) was filed after a three-year pendency.
  • We suggest a prompt review of PTA for recently issued patents where a first RCE was filed after the underlying patent application had been pending for at least three years.

On November 1, 2012, the district court in Exelixis, Inc. v. Kappos, No.12-cv-00096 (E.D. Va. Nov. 1, 2012) ruled that the United States Patent & Trademark Office (PTO) improperly calculated the number of days due under a PTA in an application where a request for continued examination (RCE) had been filed after the subject patent application had been pending longer than three years. Two weeks later, another district court, in Novartis v. Kappos, No.10-cv-1138 (D.D.C. Nov. 15, 2012) agreed and cited the Exelixis decision as well-reasoned and persuasive.
When the patent term was changed from "17 years from issuance" to "20 years from filing," PTO prosecution typically lasted more than three years.  This change brought with it concern over potential loss of valuable patent term.  In response, Congress amended the patent laws to guarantee patentees a minimum patent term of 17 years, provided that business before the PTO was conducted without delay.  The PTA at issue in Exelixis is controlled by 35 U.S.C. § 154(b)(1)(B) and is commonly referred to as "B" delay PTA.  "B" delay provides adjustment of term if the Patent Office fails to issue a patent in three years, not including "any time consumed by continued examination of the application requested by the applicant." 
The question presented to the lower court in Exelixis was "whether 35 U.S.C. § 154(b)(1)(B) requires that an applicant's PTA be reduced by the time attributable to an RCE, where, as here, the RCE is filed after the expiration of AIPA's guaranteed three-year period."  According to the PTO, filing of an RCE at any point during the application's pendency eliminated accrual of "B" delay after the RCE filing.  For applications still in the first three years of pendency, an RCE filing meant the PTO awarded no "B" delay.  Likewise, for applications that were pending after the three-year date, the filing of the RCE eliminated any further gain.  The PTO's interpretation was struck down by the Exelixis court as contrary to the structure and purpose of the provision.
The Exelixis court found that the plain language of the statute clearly contemplated the filing of an RCE as applicant delay in prosecution when filed in the first three years of pendency. However, the statute did not address the case where the filing of a first RCE was outside of the initial three years of pendency, and therefore compensable time delays of the PTO would be recognized.  In the court's analysis, eliminating "B" delay accrual under the latter circumstances would punish the applicant for filing an RCE.

Filing an RCE after three years of pendency without halting "B" delay is a welcome option, particularly in the biotechnology and pharmaceutical arts where prosecution can be unusually lengthy.  RCE practice had largely been treated as a last resort by many due to the potential loss of term.

Although the PTO may seek an appeal of these rulings, a review of recently issued patents with a first RCE filing after the three-year pendency is suggested to determine if a petition for reconsideration of PTA calculation should be filed.  For patents beyond the petition period (more than two months after issuance), but within six months of the issuance, filing suit may be the only option to regain term.  Please contact us if you would like us to conduct such a review.

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