ArQule, Inc. v. Kappos, 793 F. Supp. 2d 214 (D.D.C. 2011)

By Sherri
Oslick —

A few years ago we had provided some cautionary
advice relating to the dichotomy between a timely filed response in accordance
with 35 U.S.C. § 21(b), and a delayed
response pursuant to 37 C.F.R. § 1.704(b).  35 U.S.C. § 21(b) allowed an applicant
to take an extra day or two or three (until the next business day) to file a
response to a 3-month action without requiring an extension of time fee, yet
under 37 C.F.R. § 1.704(b), those extra days would be regarded as applicant
delay for patent term adjustment ("PTA") purposes (see "Patent Term Adjustment: 37 C.F.R. § 1.704(b)'s Three-Month Provision").  For example, if the USPTO issued a non-final
rejection, and the 3-month response deadline fell on a Saturday, the applicant
could still timely file the response on the following Monday, but those extra two
days would be counted against any PTA awarded for the patent.  And so, we cautioned that it would be wise to
pay close attention to the true 3-month deadline date, and respond by then, in
order to maximize patent term adjustment.

Fast forward,
and our advice has changed.  Now we
recommend that you enjoy your weekend and/or holiday, and not worry about
filing the response until the next business day.  Under ArQule
v. Kappos, those extra days will not be regarded as applicant delay for the
purposes of a patent term adjustment determination.

In ArQule, the plaintiff had been awarded a
PTA of 1,127 days for U.S. Patent No. 7,713,969 ("the '969 patent,"
entitled "Compositions and Methods for Treatment of Cancer") due to
USPTO delay.  The total of "A"
+ "B" delay, less overlap, was 1,128 days, but ArQule was charged
with one day of applicant delay, based on a response that was filed 3 months
and 1 day after its mailing date, the 3-month deadline falling on Veterans Day
(with the response being timely filed the next day).  At that time, the USPTO, in calculating PTA,
followed the literal language 37 C.F.R. § 1.704(b), which incorporates the
language of 35 U.S.C. § 154(b)(2)(C)(ii) and
states that "an applicant shall be deemed to have failed to engage in
reasonable efforts to conclude processing or examination of an application for the cumulative total of any periods of time
in excess of three months that are taken to reply to any notice or action
by the Office making any rejection, objection, argument, or other request"
(emphasis added).

Its petitions
with the USPTO to correct the PTA (to remove the one-day applicant delay) having
been denied, ArQule filed suit in the
District Court of the District of Columbia (the appropriate court under 35
U.S.C. § 154 as it stood at the
time).  On cross motions for summary
judgment, ArQule argued that the
provisions of 35 U.S.C. § 21(b) ("[w]hen the
day, or the last day, for taking any action or paying any fee in the United
States Patent and Trademark Office falls on Saturday, Sunday, or a Federal
holiday within the District of Columbia, the action may be taken, or fee paid,
on the next succeeding secular or business day") were to be applied to 35
U.S.C. § 154(b)(2)(C)(ii), and the
USPTO took the opposite position.  The Court granted ArQule's motion for summary judgment and denied the USPTO's, finding
the meaning of 35 U.S.C. § 154(b)(2)(C)(ii) to be
plain and clear in referring to an action that applicants must take, and as
such, the "any action taken" provision of 35 U.S.C. § 21(b) applied to this aspect of PTA
calculations.  The USPTO did not appeal
the District Court's finding.

For its part,
the USPTO has been largely silent on the implications of this case (the sole
reference to the ArQule case on the USPTO website is within a recent Federal
Register publication on the revision of PTA provisions relating to appellate
review),
which indicates that ArQule will be
followed for those provisions.  However,
a discussion had by this Patent Docs contributor with a representative from the
Office of Patent Legal Administration (OPLA) confirmed that the Office is
indeed applying ArQule to its PTA
determinations — sort of.  The OPLA representative was not sure if the
software used by the USPTO to calculate PTA had been updated to reflect the ArQule holding, and a cursory review of
a small sampling of recently issued patents suggests that is has not.  Therefore, in the example noted at the start
of this post, the applicant would likely receive a PTA calculation that reflected
a deduction of 2 days of PTA due to applicant delay.  In order to have those days of PTA rightfully
reinstated, it would be necessary to file a petition for reconsideration of the
patent term adjustment, citing the ArQule
case.  The OPLA representative advised
that such a petition would be granted.

In some
instances, it may not be worth the effort and expense to petition for the
additional one or two or three days of patent term.  But in others, recapturing those days could
translate into significant revenue.  For
example, according to an IMS Health report entitled "Top U.S
Pharmaceutical Products by Spending," sales
of Pfizer's Lipitor® in the U.S. amounted to $7.7 billion dollars in 2011.  Doing some simple math, that translates to
approximately $21M in sales daily.  When
viewed in that light, one or two or three days of additional patent term would
have a significant impact, and would be well worth the pursuing.