Online Exclusive: Calculation Concerns

It appears, at first glance, to be only a small victory. After fighting in court for two-and-a-half years, all the plaintiffs in Wyeth v. Kappos managed to obtain was about nine additional months of protection for their patents.

But this modest patent term adjustment could produce billions in additional revenue for the companies involved, because the two patents at the heart of this case relate to bapineuzumab, a potentially revolutionary treatment for Alzheimer’s disease.

The disease afflicts up to 4.5 million people in the U.S. and 24 million people worldwide, according to the U.S. National Institutes of Health and the World Health Organization, respectively. Those numbers are expected to rise dramatically as the population ages.

A handful of popular drugs mitigate some symptoms of Alzheimer’s, but they don’t stop the disease from inexorably crippling then killing its victims. There is no cure.

Until perhaps now. Bapineuzumab has cured Alzeheimer’s in mice. If an ongoing clinical trial shows the drug accomplishes the same feat in humans, bapineuzumab could become the biggest selling medication ever. Annual sales could exceed $13 billion, according to many analysts. So obtaining nine extra months of patent protection on bapineuzumab may be worth a lot to the patentees.

The patentees’ legal victory, moreover, has broad ramifications. The Federal Circuit’s January ruling in Wyeth v. Kappos requires the U.S. Patent and Trademark Office (USPTO) to alter the way it calculates patent terms. As a result, approximately half of the patents it issues will receive longer terms, William Jenks, associate solicitor at the USPTO, said in a statement. The ruling could even be used to extend the term of already issued patents, according to some experts.

“The decision is a boon for patent owners that want additional time for their patents,” says Alton Hornsby, of counsel at Merchant & Gould.

The As and Bs

The Wyeth decision has its roots in a 1994 law that altered the patent term from 17 years (commencing on the patent’s issuance) to 20 years (commencing on the filing of the patent application). But because of USPTO delays, many patents were issued more than three years after their applications were submitted–so the patents received a shorter period of protection than under the previous law. A large number of patentees complained.

Congress responded in 1999 by providing “patent term adjustments” that kick in whenever the USPTO fails to act on a patent application in a timely fashion. If the USPTO fails to meet deadlines for taking certain actions, such as making an initial decision on an application, each day it exceeds the deadline will add one additional day to the term of the resulting patent. The delays that trigger these patent term adjustments are commonly called “A delays.”

Congress also provided patent term adjustments for so-called
“B delays.” The law provides that, generally, if the USPTO fails to issue a patent within three years of the filing date, each day of delay will result in an additional day being added to the term of the resulting patent.

The adjustments for B delays are unnecessary, according to some experts. “If A delays cover all possible delays caused by the USPTO, then there’s no need for B delays. But when the statute was written, Congress adopted a belt-and-suspenders approach to make sure that all patents received at least 17 years of protection,” says Michael Siekman, a shareholder in Wolf, Greenfield & Sacks.

This cautious approach, however, created a problem. Some delays are counted twice.

Clear Terms

Here’s how it works. A delay in the examination process typically delays the patent’s issuance. If an examiner’s initial response to an application is 90 days late, the resulting patent could well be issued 90 days late. This would create a 90-day A delay and a 90-day B delay. The total patent term extension would be 180 days, even if the A delay caused the B delay.

Congress tried to prevent such double-counting by mandating, “To the extent that periods of delay … overlap, the period of any adjustment … shall not exceed the actual number of days the issuance of the patent was delayed.”

The USPTO interpreted this to mean a patentee should get a patent term adjustment equal to the larger of the A delay or B delay, not the combined amount of the two delays. This prevents unfair double-counting, the USPTO told the Federal Circuit in Wyeth.

The court didn’t care. It held that the terms of the statute were clear and that neither the USPTO nor the courts could ignore it. The statute states that B delays begin three years after a patent application is filed. So any A delays that occur prior to this three-year deadline do not overlap B delays–and to the extent that A and B delays do not overlap, the patent owner is entitled to an adjustment equal to the sum of these A and B delays.

The ruling highlights a problem with the statute. “It was clearly written by people who didn’t understand the patent system,” Siekman says. “But the statutory language is clear, and the USPTO doesn’t have the power to alter the statute.”

Decision Stands

The Federal Circuit admitted in Wyeth that the ruling will produce some anomalous results. The decision, however, will stand. The USPTO is not appealing Wyeth and is revising its method of calculating patent term adjustments.

Not all patents are eligible for recalculation. Every patent issued after March 2 will automatically have its term adjusted pursuant to Wyeth, the USPTO announced. For any patent issued during the six-month period prior to March 2, the agency has agreed to revise the term if the patentee submits a simple, one-page form within 180 days of the patent’s issuance. The agency has no plans to adjust any other patents, leaving many owners of older patents stuck with pre-Wyeth patent terms.

Owners of older patents could ask the courts for relief, but federal law gives a patentee just 180 days to challenge the USPTO’s calculation of a patent term adjustment. If the patent owner fails to sue before this period elapses, the patentee has to live with the USPTO’s determination.

Or maybe not. In at least two recent cases, General Hospital Corp. v. Dudas and Idera Pharmaceuticals, Inc. v. Kappos, plaintiffs have argued that the 180-day limit on challenges should be equitably tolled as a result of the USPTO’s decision to ignore the district court’s summary judgment in Wyeth.

Moreover, several statutes may empower the USPTO to correct the terms of older patents. For instance, one statute authorizes the agency to issue a certificate of correction, at no charge, “[w]henever a mistake in a patent … [is] incurred through the fault of the Patent and Trademark Office.” Wayne Keown, of counsel at Preti Flaherty Beliveau & Pachios, expects to present this argument to the USPTO on behalf of several clients.

“There’s got to be some remediation of what happened,” Keown says. “The USPTO needs to create a do-over for patentees who were denied the correct term of protection because of the USPTO’s own mistakes.”