Federal Circuit Corrects USPTO on Reasonable Efforts When Calculating Patent Term Adjustment

01/25/2019
Client Alert

The Federal Circuit ruled on January 23, 2019, that the United States Patent and Trademark Office (“PTO”) erred in reducing the term of a patent owned by Supernus Pharmaceuticals by 546 days, during which time the company could not have furthered prosecution of the application. The Patent Term Adjustment (“PTA”) statute explains that the length of a patent term may be reduced by the number of days that an applicant fails to engage in reasonable efforts to conclude prosecution of an application.[1] Thus, the PTO cannot subtract from a patent term any time during which an applicant is incapable of making reasonable efforts to conclude prosecution. The Court’s decision highlights the importance of recognizing whether a patent applicant is capable of making efforts to further the patenting process.

How the USPTO Calculates Patent Term

Under U.S. law, the term of a patent is twenty years from the filing of the earliest non-provisional U.S. or PCT patent application.[2] To discourage delays in the prosecution of patent applications, Congress passed the PTA statute in 1999.[3]  The statute allows for patent term adjustment to account for delays caused by the PTO, a patent applicant, or both.

The statute codifies three types of delays – A, B, and C – caused by the PTO. These types of delays can result in an increase to patent term, compensating a patent owner for delays caused by the PTO. Type A delay is caused by the PTO failing to timely provide a notification under Section 132 or a notice of allowance under Section 151. Type B delay occurs when a patent is issued by the PTO more than three years after its filing date. Finally, type C delay deals with adjustments due to derivation proceedings, secrecy orders, and appeals.

The PTA statute further allows for a reduction in patent term for applicant-caused delays. The patent term is to be reduced by “a period equal to the period of time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application.”[4] Within certain limits, the term of a patent is generally extended by the days of delay caused by the PTO, less the days of delay caused by the applicant.

The ’897 Patent and Term Adjustment

Supernus owns U.S. Patent 8,747,897 directed to an “Osmotic Drug Delivery System,” which resulted from U.S. Patent Application 11/412,100. Supernus filed the ’100 application in 2006 and received a final rejection in 2010. On February 22, 2011, Supernus filed a Request for Continued Examination (“RCE”) with the PTO, which ultimately led to the ’897 patent.  Supernus also filed a related international PCT application on the same day it filed the ’100 application in the U.S., which eventually gave rise to a European patent. On August 21, 2012 – 546 days after Supernus filed an RCE in the ’100 application – a Notice of Opposition was filed against the European patent.  Supernus subsequently gave the PTO notice of the Opposition filed against its European patent.

In calculating the PTA of the ’897 U.S. patent, the PTO determined that the time that passed between Supernus filing the RCE and notifying the PTO of the Notice of Opposition in a supplemental IDS counted as applicant delay. The Office reasoned that notification of the Opposition after filing of the RCE could force the Examiner to review the application again.[5]

The District Court Incorrectly Applied Gilead to Uphold the USPTO’s PTA Determination

Supernus appealed the Office’s PTA determination, arguing that it was “arbitrary, capricious, and contrary to the PTA statute.”[6] The company claimed that it was entitled to the 546 days that passed between filing the RCE in the ’100 application and the filing of the Opposition against the European patent. Simply put, Supernus argued that it could not have notified the PTO of the Opposition before the Opposition was filed, and therefore it did not “fail to engage in reasonable efforts to conclude prosecution.” 

The PTO pointed to the Federal Circuit’s decision in Gilead to justify reducing the patent term of the ’897 patent.[7]  In that case, Gilead’s patent term was reduced by 57 days to account for the delay between the company replying to a restriction requirement and notifying the Office of two co-pending Gilead patents.[8] Gilead held that the PTA statute covered “not only applicant conduct or behavior that result in actual delay, but also those having the potential to result in delay irrespective of whether such delay actually occurred.”[9] Applying this reasoning, the District Court affirmed the PTO’s decision to reduce the term of the ’897 patent.

The Federal Circuit Holds That Gilead is Not Controlling in this Situation

On appeal at the Federal Circuit, the Court distinguished the instant situation from Gilead .[10]  Unlike Gilead, which could have notified the PTO of the co-pending applications at the time it responded to the restriction requirement, Supernus could not have notified the Office of the Opposition at the time it filed its RCE request.

Instead, the Federal Circuit asked “whether the USPTO may reduce PTA by a period that exceeds the ‘time during which the applicant failed to engage in reasonable efforts to conclude prosecution.’”[11] The Court easily concluded that “the USPTO may not count as applicant delay a period of time during which there was no action that the applicant could take to conclude prosecution of the patent.”[12] Any other conclusion would allow an entity to cause a patent applicant loss of patent term simply by filing an Opposition.

Conclusion

While the Federal Circuit stated that its decision in Gilead was not controlling in the instant case, Gilead still remains in full force. Therefore, the term of a patent can be reduced not only for applicant actions that cause delay, but for applicant actions that have the potential to cause delay. Critically, Supernus dictates that the time during which an applicant is incapable of taking action to conclude prosecution may not be counted against patent term. Together, the Gilead and Supernus cases underscore the need for a nuanced understanding of the effects various applicant actions can have on PTA in order to optimize the life of a patent.


[1] 35 U.S.C. § 154(b)(2)(C).

[2] 35 U.S.C. § 154(a)(2). 

[3] 35 USC § 154(b).

[4] 35 U.S.C. § 154(b)(2)(C)(i). 

[5] Supernus Pharm., Inc. v. Iancu, 2019 WL 286925 at *8 (Fed. Cir. Jan. 23, 2019).

[6] Supernus Pharm., Inc. v. Lee, No. 1:16-CV-00342, 2016 WL 8739331, at *4 (E.D. Va. Oct. 18, 2016).

[7] Gilead Scis., Inc. v. Lee, 778 F.3d 1341 (Fed. Cir.  2015).

[8] Id. At 1345-46. 

[9] Id. at 1349-50.

[10] Supernus v. Iancu at *13. 

[11] Id

[12] Id. at 14.

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