The Exelixis Effect
In general, under 35 U.S.C. §154 (2012), every utility patent that issues in the United States expires 20 years from when the patent was filed or, if the patent references an earlier filed application, from the date on which the earlier application was filed. Normally, a patentee cannot apply for post-grant patent term adjustment resulting from U.S. Patent and Trademark Office (herein after “PTO”) delay. However, if an application is delayed during prosecution through no fault of the applicant, then the subsequently issued patent may be eligible for patent term adjustment. Within certain exceptions, 35 U.S.C. §154(b)(1)(B) extends the term of a patent for each day the application is not examined after 36 months from filing due to PTO delay.
Exelixis, Inc. v. Kappos, 2012 US Dist. Lexis 157762, 157762 (ED Va. 2012), recently addressed this issue, specifically focusing on the question of whether §154(b)(1)(B) mandates that a patentee’s patent term adjustment be tolled if an applicant files a Request for Continued Examination (herein after “RCE”) 36 months after filing. Exelixis answered this question holding that §154’s plain language does not require or address whether filing an RCE 36 months after filing should necessarily affect a patent’s adjusted term.
Exelixis argues that the purpose of §154(b)(1)(B) is to provide applicants with remedies for office delays during examination and to reduce a patent’s term resulting from applicant delay. While §154(b)(2)(C) discloses examples of what could constitute delay, absent from that list is filing an RCE. Consequently, rather than penalizing applicants for filing an RCE, Exelixis recognizes an RCE as a “valuable tool in the patent prosecution process” that should not later be used to penalize a patent’s adjusted term. As such, Exelixis conflicts with previous PTO practice by concluding that filing an RCE should only toll a patent’s adjusted term if filed before the termination of the 36 month period. Going forward, this means that an RCE filed 36 months after filing should not impact a patent’s adjusted term.
Because Exelixis conflicts with how the PTO has calculated patent term for many years, it should not be surprising that the PTO has appealed this decision. In any event, until the Federal Circuit weighs in, if your client has a patent that issued since Feb. 25, 2013, with an RCE filed 36 months after filing, then the patent’s term may be corrected by filing a request for reconsideration pursuant to 37 CFR §1.705(d).
Not So April Fools: PTO Releases New Patentee-Friendly Patent Term Adjustment Rules In other patent term news, the PTO published its official rules regarding patent term adjustment on April 1, 2013, as designed by the America Invents Act (herein after “AIA”). These rules were promulgated with the intent to clarify and streamline the process of contesting the PTO’s determinations of patent term adjustment (the Revisions to Patent Term Adjustment, 78 Fed. Reg. 19416 (April 1, 2013)). The new rules significantly change when the PTO must transmit its determination of adjusted patent term and how patentees can contest those determinations.
Under the old rules, if the patentee was dissatisfied with the PTO’s determination of adjusted patent term, the patentee had to file a Request for Reconsideration within two months from the grant date. If the patentee was also dissatisfied with the Director’s answer to the Request for Reconsideration or with the PTO’s initial determination, the patentee’s sole remedy was to file a civil action in the Eastern District of Virginia appealing the PTO’s determination no later than 180 days from the grant date. Essentially, this created a situation where patentees were left to decide between filing the Request for Reconsideration or filing suit in the Eastern District of Virginia from the outset.
The new rules are patently patentee-friendly. Now patentees have an extended period in which to file a Request for Reconsideration: up to seven months from the grant date of the patent. This means that under the new rules patentees have an additional five months to consider whether to contest the PTO’s determination of the adjusted term of their patent. Further, patentees no longer have only 180 days from the grant date to challenge the Director’s decision as to its Requests for Reconsideration through a civil action. Instead, the 180 day period in which to file suit begins only after the Director has decided the Request. As such, patentees need only resort to filing a civil action against the Director to the extent their initial Request is denied. By not having to consider whether to contest the PTO’s adjusted patent term determinations in district court until after their Requests have been decided, patentees will enjoy considerable savings in legal costs.
The final significant change in the new rules relates to the procedure in which a patentee can challenge the PTO’s initial determination of adjusted patent term. Pursuant to §154(b)(3)(i), the PTO will no longer provide its determination of adjusted patent term with the notice of allowance. This change is logical because, until the patentee has paid its issue fee, the grant date has not been established and consequently the adjusted patent term remains unclear. Therefore, it makes sense that the PTO will now wait until the grant date is established to determine the actual adjusted patent term before transmitting its determination to patentees.
Because the process of challenging the PTO’s determination of patent term adjustment remains in two steps only the timing has changed the ultimate accuracy of patent term determinations will improve due to the additional time patentees have to evaluate whether to contest PTO determinations. One obvious drawback under the new rules, however, is that the Director is no longer bound by a deadline in which to issue decisions regarding Requests for Reconsideration. This leaves open the possibility that the Director will take longer to issue decisions. This could potentially lead to increased prosecution costs since practitioners and patentees will be unable to finalize prosecution until the patent term determination is final.