By Donald Zuhn —

In an opinion issued
earlier this month, Judge Ellen Segal Huvelle of the U.S. District Court for
the District of Columbia determined that Novartis AG and Novartis Vaccines and
Diagnostics, Inc. had not satisfied the 180-day limitation of 35 U.S.C. §
154(b)(4)(A) for timely challenging patent term adjustment (PTA) determinations
of the U.S. Patent and Trademark Office with respect to nineteen of twenty-three patents at issue, and further, that the 180-day limitation
should not be equitably tolled.  For
three of the four patents for which Novartis had timely challenged the Office's
PTA determinations, the District Court adopted the rationale in Exelixis, Inc. v. Kappos,
and for the lone remaining patent, the Court determined that the Office erred
in not applying the Federal Circuit's decision in Wyeth v. Kappos.

In July 2010, Novartis
brought suit against U.S. Patent and Trademark Office Director David Kappos
under 35 U.S.C. § 154 and the Administrative Procedure Act (APA), alleging that
the Patent Office improperly determined the amount of patent term adjustment to
which eleven of Novartis' patents were entitled (see "Novartis Challenges USPTO's Interim Procedure for
Requesting PTA Recalculations").  In its complaint, Novartis argued that the Patent
Office improperly refused to apply the Federal Circuit's decision in Wyeth v. Kappos
to patents granted prior to September 2, 2009 (which the opinion refers to as
the Wyeth claim).  Novartis also challenged the Patent Office's interpretation
of the effect of filing a Request for Continued Examination (RCE) on the
determination of B Delay (which the opinion refers to as the RCE claim).  The District Court subsequently consolidated
the instant case with three other Novartis cases that raise similar issues,
bringing the number of Novartis patents at issue in the consolidated action to twenty-three.

With respect to Novartis' Wyeth claim, the opinion notes that the
Patent Office's method of determining the extent of any overlap between A Delay
(PTA accrued as a result of the Office's failure to take certain specified
actions within fixed windows of time) and B Delay (PTA accrued as a result of
the Office's failure to issue a patent within three years of the filing of the
application) changed in response to the Federal Circuit's decision in Wyeth v. Kappos.  In particular, the Federal Circuit determined
that A Delay and B Delay should be aggregated so long as that aggregation did
not require counting the same calendar day twice.  Following the Federal Circuit's decision in Wyeth, the Office announced that it
would implement the Court's interpretation of A/B Delay overlap for patents
issued on or after March 2, 2010, and that it would permit recalculation of PTA
for patents issued within 180 days of the Office's announcement.

With respect to Novartis'
RCE claim, the opinion notes that the Office has promulgated two rules (37
C.F.R. §§ 1.702(b) and 1.703(b)) interpreting the proper calculation of B Delay
under § 154(b)(1)(B).  The effect of
these rules is that patentees cannot accrue B Delay for time consumed by an
RCE, regardless of when the RCE was filed, and that the "time consumed
by" an RCE includes all of the time from the filing of the RCE to the
issuance of the patent.

In assessing the Office's
determination of PTA for each of the twenty-three Novartis patents at issue, the opinion
begins by noting that challenges of the Office's PTA determinations are
governed by 35 U.S.C. § 154(b)(4)(A), which provides that:

An applicant dissatisfied with a
determination made by the Director under paragraph (3) 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 a footnote, the opinion
indicates that for complaints filed on or after September 16, 2011, the U.S.
District Court for the Eastern District of Virginia now has jurisdiction over
actions under 35 U.S.C. § 154(b), a change brought about by passage of the
Leahy-Smith America Invents Act.)  For
three of the twenty-three Novartis patents at issue (U.S. Patent Nos. 7,807,155; 7,968,518;
and 7,973,031), the Office acknowledged that Novartis' complaints were timely
filed.  However, the Office argued that
for the remaining patents, Novartis' complaints were filed more than 180 days
after those patents were issued, and therefore, that Novartis was foreclosed
from seeking additional PTA for those patents. 
Novartis countered that the 180-day limitation of § 154(b)(4)(A) did not
apply to its claims because § 154(b)(4)(A) applies to determinations "under
paragraph (3), and therefore only applies to determinations of A Delay.  According to Novartis, determinations of B
Delay and A/B overlap can be challenged within the general six-year statute of
limitations set forth in the APA (28 U.S.C. § 2401(a)).

In siding with the Patent
Office with respect to the 180-day limitation of § 154(b)(4)(A), the District
Court states that:

In addition to being consistent with the
plain meaning of the statute, [the Patent Office's] interpretation avoids
absurd results.  Congress clearly
intended to include strict controls on judicial review of PTA
determinations.  Under Novartis'
interpretation, only Pre-Issuance Determinations [i.e., determinations of A Delay] would be subject to those
controls, while the final, complete PTA determinations that accompany an issued
patent would not.  Instead, a patentee
would have 180 days in which to challenge the calculation of A Delay but six
years in which to challenge B Delay and A/B Delay Overlap.

However, while agreeing
with the Office on this issue, the District Court disagreed with the Office
that Novartis was foreclosed on all of the remaining patents at issue.  In particular, the Court noted that Novartis
had filed a petition for PTA reconsideration for U.S. Patent No. 7,470,792 within
two months of issuance, as required under 37 C.F.R. § 1.705(d), and had filed a
complaint within 180 days of the Office's denial of reconsideration (but more
than 180 days after the patent issued). 
In response to Novartis' argument that the 180-day limitation period
should have been tolled by its filing of a petition for reconsideration, the
District Court determined that "[b]ecause the Court holds that the general
tolling rule applies, and because Novartis filed its complaint with respect to
the ’792 patent within 180 days after the denial of its petition for
reconsideration, Novartis' claim with respect to that patent was timely filed."

Novartis next sought
equitable tolling of the 180-day limitation of § 154(b)(4)(A) for the remaining nineteen patents at issue.  With respect
to its Wyeth claim. Novartis argued
that it lacked knowledge of this claim until the Federal Circuit's decision in Wyeth v. Kappos changed the law with
respect to A/B Delay overlap, and therefore, that the 180-day limitation should
have been equitably tolled until the Office's January 20, 2010 announcement
that it would not seek further appellate review of the Federal Circuit's Wyeth decision.  With respect to its RCE claim, Novartis
argued that because no court had ruled on the viability of this claim (prior to
Exelixis, Inc. v. Kappos),
the statute of limitations had not yet begun to run for that claim.

The District Court,
however, found Novartis' arguments to be unpersuasive and determined that
"the facts in this case do not justify the application of the equitable
tolling doctrine to Novartis' nineteen untimely complaints."  Explaining that "[e]quitable tolling is
available to a petitioner who has been diligent in pursuing his rights, but for
whom some extraordinary circumstance stood in the way and prevented timely
filing," the Court noted that "Novartis was free to raise the same
issues that Wyeth and Abbott Laboratories raised in their lawsuits within the
180 days after their patents were granted," and stated that "contrary
to Novartis' argument, a change in law is not such an extraordinary circumstance
as to justify the application of equitable tolling."

Turning to the four patents
for which PTA determinations were found to have been timely challenged, the opinion notes that three of
the patents concern the same issue decided by the Eastern District of Virginia
in Exelixis, Inc. v. Kappos, namely "whether §
154(b)(1)(B) requires that, or even addresses whether, any PTA be reduced by
time attributable to an RCE where, as here, the RCE is filed after the
expiration of the three year guarantee period specified in that statute."  After discussing the decision in Exelixis, the Court noted that it found "Judge
Ellis' well-reasoned opinion to be persuasive," and "therefore adopt[ed]
his rationale for concluding that the PTO's interpretation [of the statute] is
contrary to the plain and unambiguous language of § 154(b)(1)(B), and that it
contravenes the structure and purpose of the statute."

For the lone remaining
patent — the '792 patent — the District Court determined that the Office "erred
in not applying either this Court's or the Federal Circuit's Wyeth decision."  The Court noted that the '792 patent issued
on December 30, 2008, two months after the District Court decision in Wyeth, that Novartis sought reconsideration
of its PTA determination in February 2009, based in part on the District Court's
Wyeth ruling, and that the Office
nevertheless declined to apply the Wyeth
method of calculating overlap to the '792 patent.  The Court stated that "[t]his was erroneous," and that the Office "abused its discretion by refusing to calculate Novartis' patent consistently with the method adopted in Wyeth"

Novartis AG v. Kappos (D.D.C. 2012)
Memorandum Opinion by Judge Ellen Segal Huvelle