The Federal Circuit, in Wyeth v. Kappos , Rejects the “Overlap” Position of the U.S. Patent and Trademark Office Regarding Calculation of Patent Term Adjustment — Additional Patent Term Adjustment Granted to Patentees

On January 7, 2010, the U.S. Court of Appeals for the Federal Circuit affirmed a decision by the U.S. District Court for the District of Columbia that will cause the United States Patent and Trademark Office (PTO) to fundamentally change the manner in which patent term adjustment, under 35 U.S.C. § 154, is to be calculated. Wyeth v. Kappos, __ F.3d __, 93 U.S.P.Q. 2d 1257 (Fed. Cir. 2010), aff'g, Wyeth v. Dudas, 580 F. Supp. 2d 138, 88 U.S.P.Q.2d 1538 (D.D.C. 2008).

In 1999, the American Inventors Protection Act (AIPA) amended 35 U.S.C. § 154(b) to provide inventors with patent term adjustments to compensate for losses in patent term caused by PTO delays. This change in the law was implemented as a consequence of the change in patent term from 17 years from the date a patent was issued to 20 years from the date of filing. The adjustments set forth in 35 U.S.C. § 154(b)(1), as a result of the AIPA amendment, provide three guarantees as follows: (A) guarantee of prompt PTO responses; (B) guarantee of no more than three-year application pendency; and, (C) guarantee or adjustments for delays due to interferences, secrecy orders, and appeals.  

The (A) guarantees include the following: (i) that the PTO will provide a first action on the merits of an application within 14 months of filing; (ii) that the PTO will provide a response to an applicant reply within four months; (iii) that the PTO will act on an application within four months after the date of a decision of the Board of Patent Appeals and Interferences; and, (iv) that the PTO will issue an application within four months of the payment of the issue fee and all other requirements are satisfied. The term of a patent is adjusted one day for each day of PTO delay under the (A) guarantee until the requisite action is taken by the PTO.  

The (B) guarantee provides one day of additional term "for each day after the end of [the] three-year period until the patent is issued" not including any time after a request for continued examination. Time consumed by an interference, appeal, or secrecy order is also excluded from the (B) guarantee as those delays are addressed the (C) guarantee.

The (A) and (B) adjustments are subject to limitations set forth in 35 U.S.C. § 154(b)(2). The limitation at issue in the Wyeth case is that "[t]o the extent that periods of delay attributable to grounds specified in [35 U.S.C. § 154(b)(1)] overlap, the period of any adjustment granted under this subsection shall not exceed the actual number of days the issuance of the patent was delayed." The position of the PTO in this regard had been as follows:

[T]he Office has consistently taken the position that if an application is entitled to an adjustment under the three-year pendency provision of 35 U.S.C. 154(b)(1)(B), the entire period during which the application was pending before the Office (except for periods excluded under 35 U.S.C. 154(b)(1)(B)(i)-(iii)), and not just the period beginning three years after the actual filing date of the application, is the relevant period under 35 U.S.C. 154(b)(1)(B) in determining whether periods of delay ‘‘overlap'' under 35 U.S.C. 154(b)(2)(A).

69 Fed. Reg. 34283 (2004). That is, any period of delay under the (B) guarantee of not more than a three-year pendency was considered to overlap with any and all periods of delay under the (A) guarantees. A patentee would only be entitled to count such days once.

Wyeth and Elan Pharma are the owners of two U.S. patents that relate to the treatment of Alzheimer's disease. During the prosecution of each of their respective patent applications, the PTO caused delays that gave the applicants entitlement to adjustments under both A and B guarantees. Wyeth disagreed with the PTO's position on "overlap" as applied to its two patents, and challenged the patent term adjustment granted by the PTO. Wyeth first by filed petitions for reconsideration of the adjustments with the PTO and then by filed suit against the PTO in the District Court for the District of Columbia. In the lawsuit, Wyeth sought an order directing the PTO to grant an adjustment according to a construction of 35 U.S.C. § 154(b) in which A delays occurring in the first three years of pendency are not overlapping with B delays beginning after the three-year period has expired. Both parties filed motions for summary judgment. On summary judgment, the district court sided with Wyeth. In its decision, the district court pointed out the error in the PTO's position:

The problem with the PTO's construction is that it considers the application delayed under §154(b)(1)(B) during the period before it has been delayed. That construction cannot be squared with the language of §154(b)(1)(B), which applies "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 three years." (Emphasis added.) "B delay" begins when the PTO has failed to issue a patent within three years, not before.

Wyeth v. Dudas, 580 F. Supp. 2d at 142, 88 U.S.P.Q.2d at 1541. The Federal Circuit cited this reasoning of the district court with "affirming approval." Wyeth v. Kappos, 93 U.S.P.Q. 2d at 1260.

That is, the Federal Circuit's decision in Wyeth now means that the PTO will be required to grant one day of patent term adjustment for each day of delay under the (A) guarantees that occurs in the first three years of pendency in addition to one day of adjustment under the (B) guarantee for each day of pendency after three years.¹ The PTO has announced that neither it nor the Justice Department will seek further review of the Federal Circuit decision in Wyeth. See The USPTO and DOJ Will Not Seek Review of Wyeth v. Kappos, http://www.uspto.gov/patents/announce/wyeth_v_kappos.jsp (last visited Jan. 27, 2010).  

The PTO has indicated that it is preparing guidance for expediting requests for recalculation of patent term adjustment in light of the Wyeth decision, which will be issued as soon as possible. Id. In the meantime, if an applicant is not satisfied with the patent term adjustment that has been calculated by the PTO, there are three opportunities to seek review and reconsideration of the patent term adjustment.  

The PTO issues an estimate of patent term adjustment with each notice of allowance. Thus, the first window for review and reconsideration arises under 37 C.F.R. § 1.705(b), whereby "any request for reconsideration of the patent term adjustment indicated in the notice of allowance must be by way of an application for patent term adjustment …  filed no later than the payment of the issue fee … "  

The second window for review and reconsideration arises under 37 C.F.R. § 1.705(d), whereby "if the patent indicates or should have indicated a revised patent term adjustment, any request for reconsideration of the patent term adjustment indicated in the patent must be filed within two months of the date the patent issued." This second window cannot be used to raise issues that should have been raised at the time that the issue fee was raised.

Thus, for example, if a patent is entitled to a B time adjustment that is dependent on the actual date of issuance, and the PTO has not, or does not, correctly calculate the adjustment on the face of the patent, then a petition under 35 U.S.C. § 1.705(d) within two months of the issue date that raises an issue related to the calculation of the B time adjustment should be timely. The estimated patent term adjustment provided with the notice of allowance purports to be based upon a projected issue date. In the past, the PTO has returned petitions filed at the time the issue fee was paid that raised an issue of B time adjustments based upon the projected issue date as premature and indicated that the appropriate time to raise such issues is the time period set forth in 37 C.F.R. § 1.705(d). However, if a patent is entitled to a B time adjustment, but that adjustment is not dependent on the date of issue because a request for continued examination in the application has cut off accrual of B time, then the PTO may consider a request for reconsideration of the patent term adjustment under 37 C.F.R. § 1.705(d) after the issuance of the patent to be untimely. For applications in which the issue fee was paid prior to the Wyeth v. Kappos decision, it may be appropriate to argue that a petition which depends on that decision could not have raised that issue at the time the issue fee was paid.

The third and final window for seeking review of the PTO calculation of patent term adjustment expires 180 days after the issue date of the patent. Under 35 U.S.C. § 154(b)(4)(A), "an applicant dissatisfied with a determination made by the [PTO] shall have remedy by a civil action against the Director filed in the United States District Court for the District of Columbia within 180 days after the grant of the patent."  

In view of the decision in Wyeth v. Kappos, applicants may wish to consider whether they would benefit from recalculation of the patent term adjustment for any recently allowed application or any patent issued within the last 180 days.