By
Donald Zuhn —

Last
Thursday, the Federal Circuit determined in Wyeth
v. Kappos that the U.S. Patent and Trademark Office had erred in making PTA
calculations for two patents owned by Wyeth and Elan Pharma International Ltd.
(see Patent Docs report).  Since the appellate court rendered its
decision, many patent practitioners and applicants have been wondering what
steps the Office might take in response. 
The Office provided an initial glimpse when it posted an announcement on its
website regarding the Federal Circuit's decision in the Wyeth case.  The notice states:

On
January 7, 2010, the Federal Circuit issued a decision in Wyeth v. Kappos, No.
2009-1120, regarding the calculation of patent term adjustments under 35 U.S.C.
154(b).  The Federal Circuit's
decision rejects the USPTO's interpretation of the "overlap" limitation
in Section 154(b)(2)(A).  The
Solicitor General will determine whether to seek further review of this
decision.  Pending that
determination, the USPTO is in the process of changing the manner it will
calculate patent term adjustments under Section 154(b) to conform with the
Federal Circuit's decision.

Applicants
and Patent Owners dissatisfied with a patent term adjustment determination by
the agency are reminded of the requirement to seek review of that determination
within 180 days of patent issuance and the time periods set in the implementing
regulations.  See 35 USC 154(b)(4)
and 37 CFR 1.705.

The
Office's notice is interesting in at least two respects.  First, there is the Office's reminder
about the 180-day time limit for seeking review of PTA determinations; under 35
U.S.C. § 154(b)(4)(A), "[a]n applicant dissatisfied with a [PTA]
determination made by the Director . . . 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."  While this reminder is fine for
patentees who have yet to encounter the 180-day deadline for a particular
patent, what about patents for which the deadline has long since passed?

In
February 2009, we discussed an approach that one patentee had tried under such
circumstances (see "More § 154(b)(4)(A) Actions Filed against Director").  In particular, General Hospital Corp.
filed a complaint against the Director on January 16, 2009, requesting
correction of a PTA determination with respect to U.S. Patent No. 7,367,341,
which issued on May 6, 2008.  For a
patent issuing on that date, a complaint should have been filed by November 2,
2008.  Thus, General Hospital
missed the deadline for filing its complaint by 76 days.  Nevertheless, General Hospital contended
in its complaint that "[the District Court for the District of Columbia's]
decision in Wyeth v. Dudas
constituted a change in the law sufficient to invoke the doctrine of equitable
tolling to allow for the filing of this complaint at this time."  The doctrine of equitable tolling
preserves a plaintiff's claims when strict application of the statute of
limitations would be inequitable.

A
recent check of PACER shows that the District Court stayed General Hospital's
case on March 30, 2009, pending the outcome of the Wyeth appeal. 
Therefore, whether the doctrine of equitable tolling will prove useful
in this case remains an open question. 
Interestingly, General Hospital's deadline for filing its complaint was 34
days after the District Court decided Wyeth
v. Dudas.  Therefore, even if
the District Court determines that the doctrine is inapplicable for patentees such as General Hospital, the doctrine still may work where a
patentee relied on the USPTO's 2004 guidance regarding A- and B-delay overlap and
was granted a patent more than 180 days before the District Court issued its decision
in Wyeth v. Dudas.

The
Office's notice is also interesting in that it indicates that the Office will
be changing the manner in which it calculates PTA to conform with the Federal
Circuit's decision.  Again, while
this is fine for patentees who have yet to encounter the deadlines specified in
37 C.F.R. § 1.705(b) and (d), what about applicants for whom these deadlines
have long since passed?  As a
reminder, 37 C.F.R. § 1.705(b) states that:

Any
request for reconsideration of the patent term adjustment indicated in the
notice of allowance, except as provided in paragraph (d) of this section, and
any request for reinstatement of all or part of the term reduced pursuant to §
1.704(b) must be by way of an application for patent term adjustment.  An application for patent term
adjustment under this section must be filed no later than the payment of the
issue fee but may not be filed earlier than the date of mailing of the notice
of allowance.

And
37 C.F.R. § 1.705(d) states that:

If
the patent indicates or should have indicated a revised patent term adjustment,
request for reconsideration of the patent term adjustment indicated in the
patent must be filed within two months of the date the patent issued and must
comply with the requirements of paragraphs (b)(1) and (b)(2) of this
section.  Any request for
reconsideration under this section that raises issues that were raised, or
could have been raised, in an application for patent term adjustment under
paragraph (b) of this section shall be dismissed as untimely as to those
issues.

Neither
the issue fee payment deadline of § 1.705(b) nor the two-months after issuance
deadline of § 1.705(d) are statutory, so it's possible that the Office could waive
these deadlines for patents that were granted before the Wyeth case was decided. 
However, patent practitioners and applicants will have to wait to see how the Office decides to handle patents that issued before Wyeth.

What Does It Tell Us About the Relationship between the Court and the Agency?

    By Kevin E. Noonan —

The Federal Circuit last week affirmed the D.C. District Court's decision contradicting the Patent Office interpretation of 35 U.S.C. § 1.54(b) regarding patent term adjustment (see Patent Docs report).  This decision is worthy of some thought regarding the status and nature of the Federal Circuit's supervisory role over Patent Office rules and decisions, and what motivates the Office when it interprets and implements the patent statutes.

The almost plenary nature of the Federal Circuit's supervisory role over the Patent Office was severely limited by the Supreme Court's Dickinson v. Zurko decision ten years ago.  The Court held that the Federal Circuit's review of factual determinations by the Patent Office was governed by the Administrative Procedures Act, wherein such decisions were reviewed for substantial evidence.  Until today, the only other opportunity for the Federal Circuit to opine on the scope of Patent Office authority was in Tafas v. Doll, where a divided panel found that the infamous claims and continuation rules were procedural in nature and thus within the scope of 35 U.S.C. § 2(b).  In the Tafas decision, only Rule 78 (limiting the number of continuations that could be filed even in currently-pending applications) was held to be outside the scope of Patent Office authority, because it was in direct conflict with 35 U.S.C. § 120.  However, this decision was mooted by joint motion between the Office and GlaxoSmithKline to have the panel opinion vacated.

The Federal Circuit's decision in Wyeth was written by the next Chief Judge (Judge Rader) and joined by a senior status judge (Judge Plager) and the newest member of the Court (Judge Moore), joining together the past, present, and future of the Federal Circuit bench.  In affirming the District Court, the panel agreed with that lower court's succinct characterization of the problem with the Patent Office's approach:  "[t]he problem with the PTO's interpretation is that it considers the application delayed under [the B guarantee] during the period before it has been delayed" (emphasis in original).  The panel held that under the plain meaning of the statute, the "B" delay period cannot begin until three years after an application's filing date, and thus any "A" delay prior to that date cannot overlap with "B" delay and must be added to it in determining the proper length of any patent term adjustment.

The panel focused on the change in interpretation made by the Office in 2004, where the term "period of adjustment" was changed to "period of delay" in the rule (37 C.F.R. § 1.703(b)) implementing the statute.  For applications entitled to periods of "B" adjustment, the Office interpreted the rule to define "overlap" of the "A"-delay and "B"-delay periods to extend from the filing date, rather than from 3 years after the filing date.  As a consequence, beginning in 2004 the Office chose the greater of the "A" delay period or the "B" delay period in determining the length of the PTA period, and defined any "A" delay within the first three years after filing as overlapping (and thus not available for patent term adjustment).

While certainly not particularly noteworthy in outcome, the decision hies back to the time when the Federal Circuit was assertive in deciding "what the law is" when it comes to the patent statute.  There is not a single citation in the opinion to a Supreme Court case on substantive patent law, and the panel forthrightly asserts its interpretation of the statute and its authority to make this determination in the face of a contrary view by the Office.

From the Office's perspective, it may be instructive to assess the reasons behind its parsimonious interpretation of the rule.  According to the panel opinion, the plain language of the statute, as well as the legislative history, evinced a Congressional intention to restore to patent holders term lost as a result of the change in U.S. law implementing the provisions of the GATT treaty.  The legislation implementing the patent provisions of the GATT treaty changed the term of a U.S. patent from 17 years from grant to 20 years from its earliest priority date.  (The opinion quotes the legislative history, that "[t]hus, no patent applicant diligently seeking to obtain a patent will receive a term of less than the 17 years as provided under the pre-GATT standard; in fact, most will receive considerably more," citing H.R. Rep. No. 106-464, at 125 (1994) (emphases added).)  Despite this clear evidence that the purpose of the statute requires an expansive reading, the Office chose (four years after the fact) to implement the rules so that patentees would not receive the benefit of "considerably more" patent term adjustment, by deciding to choose between the greater of the length of "A" delay and "B" delay, rather than adding both types of delay together and subtracting any "A" delay periods that occurred more than three years after the patent filing date (i.e., during the "B" delay period as interpreted by the Court).

Of course, the initial impetus for the Office's interpretation can be understood as a bureaucratic response intended to reduce the extent to which the Office could be criticized for delay in granting patents and prolonged patent application pendency.  Under the statute, "A" delay periods are the direct result of Office failure to meet the timing requirements for promulgating a first substantive Office Action, for responding to Applicant's amendments and arguments submitted in response to Office Actions, and to issue a patent timely after payment of the issue fee.  These periods are set by statute, not by the Office, and thus are not amenable to adjustment by the agency in response to changed conditions.  Indeed, the Office argued that the statute was based on the average patent prosecution pendency times — about 25 months — that existed at the time the statute was enacted into law.  The panel rejected this contention, saying there was no basis for this interpretation in the language of the statute.

In view of the timing of the Office's change in its interpretation of how the statute should be implemented, one would do well to remember the sea change the Office experienced during this period.  Spurred by the influx of patent applications relating inter alia to the Human Genome Project and of business method patents as a result of the Court's State Street decision, the number of patents pending, and the pendency times for those applications, escalated rapidly in the 2000-2004 time period.  This formed the beginnings of the infamous "backlog" of pending applications that motivated productive (large increases in patent examiner hiring) and unproductive (the claims/continuations rules) responses by the Office.  Under these circumstances, the amount of "A" delay accumulating during the first three years of patent pendency also rapidly escalated:  the Office simply did not have the resources to handle the increased number of applications according to the statutory timetable.  Also during these years (2000-2004), Congress continued to raid Patent Office coffers to fund other government programs (including, inter alia, two wars and a large increase in national security-related expenditures in response to the 9/11 tragedy).  Thus, it was understandable (if not justifiable) that the Office bureaucracy would believe that patent term adjustment due to "A" delay was a reflection on its inability to timely prosecute pending applications, and to interpret the statute in a way that would minimize the contribution of "A" delay periods to patent term adjustment times.

There is also a political aspect to the Office's decision to reduce PTA by effectively eliminating "A" delay during the first three years of application pendency.  The years between 2000-2004 coincided with several studies (notably, by the Federal Trade Commission and National Academies of Science) that identified problems and inefficiencies with the U.S. patent system.  In addition, commentators, academics, and the "high technology" community joined in this chorus, contending that the U.S. patent system was "broken" and in need of reform (allegations that prompted the perennial and so far unsuccessful efforts in Congress to pass patent reform legislation).  Also during this time, Jon Dudas became Director, politicizing the Office (recall for example allegations of improper influence by the Canadian government on the NTP v. RIM case and re-examination of the NTP patents) and fostering an "us against them" stance regarding patent practitioners (and their clients, to a large extent).  Under these circumstances, the political motivation to reduce patent term was strong, thus avoiding yet another ground for critics to castigate Office personnel (and more importantly, management) for inefficiency and incompetence.  This motivation also appears to have been sufficient to provide an understandable (if reprehensible) basis for an interpretation of the statute so totally contrary to its plain language.

But all that has changed, of course, with the installation of Director Kappos (evidenced for example by cancellation of the claims and continuation rules and abandonment of the appeal of Tafas v. Kappos to the en banc Federal Circuit, among other things).  That sentiment will face a test of its veracity (or whether it is just wishful thinking) when the Office announces its response to the Federal Circuit's decision in Wyeth.

    By
Donald Zuhn —

In a decision that will significantly impact the amount
of patent term adjustment ("PTA") that many patentees can expect to obtain under
U.S. Patent Law, the Court of Appeals for the Federal Circuit determined today that the U.S. Patent and Trademark Office had erred in making PTA calculations for two patents owned by Plaintiffs-Appellees Wyeth and Elan Pharma
International Ltd. ("Wyeth").  In Wyeth v. Kappos, the Federal Circuit affirmed
an order by the District Court for the District of Columbia granting summary
judgment in favor of Wyeth, in which the lower court found that the USPTO had
misconstrued 35 U.S.C. § 154(b)(2)(A), and as a result, had denied Wyeth a
portion of the patent term to which it was entitled.  In an opinion
authored by Judge Rader and joined by Judges Plager and Moore, the panel
determined that § 154(b) "expressly permits" the legal relief requested by
Wyeth, and that Wyeth was therefore entitled to "extended patent term
adjustments" under § 154(b).

The
case concerns the interplay between two of the three patent term guarantee
provisions of § 154(b)(1), which were introduced into Title 35 as a result of
the enactment of the American Inventors Protection Act (AIPA) in 1999.  The two guarantee provisions at issue provide
a one-day extension of patent term for every day that issuance of a patent is
delayed by a failure of the USPTO to comply with various enumerated statutory
deadlines (see § 154(b)(1)(A)) and a
one-day extension of patent term for every day greater than three years after
the filing date that it takes a patent to issue (see § 154(b)(1)(B)).  The
above guarantee provisions (often referred to as A or B delays, periods, or
guarantees) are subject to the limitations of § 154(b)(2)(A), which states that
"[t]o the extent that periods of delay attributable to grounds specified
in paragraph (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."

In
2000, the Patent Office promulgated 37 C.F.R. § 1.703(f), which stated that
"[t]o the extent that periods of adjustment attributable to the
[guarantees] overlap, the period of adjustment granted under this section shall
not exceed the actual number of days the issuance of the patent was
delayed."  The Office amended
§ 1.703(f) in 2004 to replace "period of adjustment" with
"period of delay" in order to clarify the regulation, explaining that:

The language of former § 1.703(f)
misled applicants into believing that [periods of A-delay] and [periods of
B-delay] were overlapping only if the [period of A-delay] occurred more than
three years after the actual filing date of the application.  If an application is entitled to a
[B-]adjustment . . . the entire period during which the application was
pending before the [PTO] . . ., and not just the period beginning three
years after the actual filing date of the application; is the period of delay
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. 21706
(emphasis and changes by panel).

As Judge Rader writes in his opinion, "the 'period of delay,' according to the PTO's
new definition, caused the B guarantee to start with the filing of the
application, not three years later," and therefore, "[u]sing this
framework, the PTO uses either the greater of the A delay or B delay to
determine the appropriate adjustment but never combines the two."

As
we noted in our summary of the District Court decision (see "Wyeth v. Dudas
(D.D.C. 2008)"), the
differences between Wyeth's and the USPTO's perspectives on an exemplary PTA
calculation can be represented schematically as follows (using the example
presented in District Judge Robertson's opinion):

The
USPTO's view (shown above):  the
patentee is entitled to three years of PTA.

Wyeth's
view (shown above):  the patentee
is entitled to four years of PTA.

In
affirming the District Court's grant of summary judgment for Wyeth, the Federal
Circuit states:

This court detects no ambiguity in the
terms "periods of delay" and "overlap" [of § 154(b)(2)(A)].  Each term has an evident meaning within
the context of section 154(b).  The
limitation in section 154(b) only arises when "periods of delay"
resulting from violations of the three guarantees "overlap."  35 U.S.C. § 154(b)(2)(A).  Significantly, the A and B guarantees
expressly designate when and for what period they each respectively apply.

In
particular, the Court found that "[t]he 'period of delay' for purposes of
the A clause therefore runs from the date the PTO misses the specified deadline
to the date (past the deadline) of response to the underlying action," and
"[t]he 'period of delay' under the express language of the B clause
therefore runs from the three-year mark after filing until the application issues."

As
for the "overlap," the panel states that it is clear that "no
'overlap' happens unless the violations occur at the same time," adding
that "[b]efore the three-year mark, no 'overlap' can transpire between the
A delay and the B delay because the B delay has yet to begin or take any effect."  However, "[u]nder the PTO’s
strained interpretation, B delay can occur anytime after the application
is filed," which the Court determined "cannot be reconciled with the
language of the statute (emphasis by panel).

While
the USPTO offered several arguments in defense of its interpretation of the
statute, the panel found none to be persuasive.  With respect to the Office's double-counting argument (i.e., A delays during the first three
years of prosecution ultimately lead to B delays after the three-year mark from
filing), the Court responded that "the statute requires as
much."  As to the Office's
suggestion that its statutory interpretation prevents situations in which one patentee
might receive a windfall adjustment while a similarly positioned patentee might
receive no adjustment, the Federal Circuit replied that it "perceives
potential perverse results as well under the PTO's suggested interpretations."  The Court added:

Regardless of the potential of the
statute to produce slightly different consequences for applicants in similar
situations, this court does not take upon itself the role of correcting all
statutory inequities, even if it could. 
In the end, the law has put a policy in effect that this court must enforce,
not criticize or correct.

The
panel also found nothing in the legislative history of the statute that would support
the Office's interpretation, stating that "legislative history — always a
very dull instrument for extracting the essence of statutory meaning — provides
no reason to depart from the language of section 154(b)."  Finally, in response to the Office's
assertion that it was entitled to deference under either Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837 (1984), or Skidmore v. Swift
& Co., 323 U.S. 134 (1944), the Court stated that "[b]ecause
the language of the statute itself controls this case and sets an unambiguous
rule for overlapping extensions, this court detects no reason to afford special
deference to the PTO's interpretation."  As a result, the Federal Circuit concluded that:

Section
154(b)'s language is clear, unambiguous, and intolerant of the PTO's suggested
interpretation.  For that reason,
this court accords no deference to the PTO’s greater-of-A-or-B rubric.

Wyeth
v. Kappos (Fed. Cir. 2010)
Panel:
Circuit Judges Rader, Plager, and Moore
Opinion
by Circuit Judge Rader

For
additional information regarding this and other related topics, please see:

•
"Patent Term Adjustment: 37 C.F.R. § 1.704(b)'s Three-Month Provision,"
November 17, 2009
•
"USPTO Says Some Requests for PTA Reconsideration Are Premature,"
September 7, 2009
•
"Fish & Richardson Catches Error in Patent Office's PTA Calculation,"
July 30, 2009
•
"More § 154(b)(4)(A) Actions Filed against Director," February 8,
2009
•
"Three More Patentees File § 154(b)(4)(A) Actions against Director Dudas,"
January 12, 2009
•
"More Patentees Follow Wyeth's Lead in Seeking Additional PTA,"
December 3, 2008
•
"USPTO to Appeal Wyeth v. Dudas," December 2, 2008
•
"Two Patentees Follow Wyeth's Lead in Seeking Additional PTA,"
November 12, 2008
•
"Wyeth v. Dudas (D.D.C. 2008)," October 16, 2008