AIA Opportunities for New Patent Term Strategies
There is no denying that patent protection is an essential aspect of running a successful business. Recent changes in the patent laws, through the America Invents Act, have created an opportunity for businesses to develop new patenting strategies that promote and enhance the value patents provide to the company. For instance, one area of value generation comes from extending the enforceable lifespan of a patent.
Patent term adjustments (PTAs) are extensions to the life of a patent made by the U.S. Patent and Trademark Office in certain situations. This particular area of patent reform is currently experiencing a flurry of activity. In terms of the statute, a technical amendment to the America Invents Act made on January 14, 2013, has had a major impact on the patent term adjustment provisions.
The amounts of money at stake are considerable: A blockbuster drug that generates $1 billion in revenue per year is worth $2.7 million dollars a day! Needless to say, the patent for that blockbuster drug holds incredible value to the patent owner. This magnitude of capitalization potential is a huge incentive to maximize the life of the patent beyond the statutorily provided 20 years. Each day that the patent is in force is an additional day of income derived from the patent.
There are certain situations that may arise during the prosecution of a patent application that can result in a PTA that favors the applicant by extending the life of the patent once it issues. Adjustments to the life of a patent can be made when the PTO takes longer than the decreed amount of time guaranteed by the Patent Term Guarantee Act of 1999, codified as 35 U.S.C. § 154(b), for certain actions during prosecution. There are three types of delays for which adjustments to patent term are made: A-Delays, B-Delays, and C-Delays.
The Patent Term Guarantee Act provides that the PTO will provide prompt responses during prosecution of a patent application. In the event that the PTO does not provide the applicant with at least one notification within 14 months of filing the application, or if the PTO does not respond within four months of other actions during prosecution, an A-Delay accrues for each day beyond the PTOs deadline to respond until a response is made.
Similarly, the Patent Term Guarantee Act provides that a patent application will not spend more than three years time in pendency. For any time that accrues after the three year pendency mark, the applicant will earn B-Delay PTA. B-Delay does not include time that is consumed by secrecy orders, court review, interference proceedings, or requests for continued examination, and also excludes any delay that results from the request of the applicant. In the event of secrecy orders, successful appellate review and interference proceedings, the applicant can accrue a C-Delay PTA.
Adding together the A-, B-, and C-Delays indicates how much PTA resulted from the PTOs actions. If, for one reason or another, there is an overlap of delays (i.e., A-Delay and B-Delay are accruing at the same time because the conditions for both are met) only one of the delays will go toward the PTA accrualthere is no doubling up on delay accruals. Also, any undue delays brought about by the applicants actions are subtracted from the accrued PTA total.
The rules for calculating PTA, however, are not crystal clear. Two recent cases before the Eastern District of Virginia, Exelixis I and Exelixis II, have created a kerfuffle concerning the impact that an applicants request for continued examination (RCE) has on B-Delay accrual. After a final rejection from the PTO, many applicants choose to continue examination proceedings by filing a RCE, which allows for more prosecution to occur in an effort to get the patent application allowed and the patent issued. Prior to the Exelixis cases, if an applicant filed an RCE while accruing a B-Delay, the accrual would terminate.
Exelixis I was decided in November 2012, by Judge T. S. Ellis. Judge Ellis took the position that the PTO had been under-calculating PTA by terminating the applicants accruals prematurely when applicants filed an RCE while the application was accruing a B-Delay. Judge Ellis explained that the plain and unambiguous language of [35 U.S.C. § 154(b)(1)(B)] requires that the time devoted to an RCE serves to toll the running of the three year clock, if the RCE is filed within the three-year period . . . RCEs have no impact on the PTA after the three-year deadline has passed and subparagraph (B) clearly provides no basis for any RCEs to reduce PTA. The PTO immediately appealed the case to the U.S. Court of Appeals for the Federal Circuit.
Exelixis was also involved in a second case, Exelixis II, which was based on a different patent but the same facts as Exelixis I, before the Eastern District of Virginia. In January of this year, Judge Leonie Brinkema handed down an opinion that took the opposite position from Judge Elliss in Exelixis I. Judge Brinkema affirmed the PTOs calculation of PTA 35 U.S.C. § 154(b)(1), indicating that a reasonable interpretation of the statute and its legislative history support the conclusion that there is no reason to treat RCEs differently upon when they were filed, and that accordingly, the PTOs regulation deserves . . . deference because it is a reasonable conclusion as to the proper construction of the statute. Exelixis will likely appeal the Exelixis II decision to the Federal Circuit.
In light of the conflicting Exelixis outcomes, there is now no clear consensus on the impact RCEs have on a B-Delay after a three-year pendency. As such, the only guidance applicants have to go by is the 2013 technical amendment to the America Invents Act. The amendment requires those applicants that are dissatisfied with a PTA determination made by the PTO to first petition the PTO for a recalculation. If the applicant is still dissatisfied, the applicant may file a civil action in the Eastern District of Virginia within 180 days.
If Exelixis II is appealed, the Federal Circuit will likely consolidate the two Exelixis cases and hear them together. However, this is unlikely to occur any sooner than late 2013. In the meantime, applicants should take measures to protect their rights and seek PTA recalculations if applicable. By doing so, after the PTO has issued a recalculation decision, the applicant can file a civil action within 180 days. Once the applicants case is before the district court, the applicant can stay the proceedings or consolidate it with other cases awaiting the Federal Courts decision regarding Exelixis. Regardless of how the Exelixis cases play out, companies with intellectual property at stake will need to remain alert to the opportunities patent term adjustments offer in protecting and enhancing the companys revenue stream.
John C. Donch Jr., a shareholder at Volpe and Koenig, concentrates his practice on securing, licensing, and enforcing intellectual property rights. His technical experience includes wireless communications, computers, computer software, semiconductors, and electronics. John is admitted to practice before the United States Patent and Trademark Office and the United States District Courts of New Jersey and the Eastern District of Pennsylvania. He can be contacted at JDonch@vklaw.com. Amber R. Stiles is a law clerk at Volpe and Koenig. She earned an MBA from Drexel University's LeBow College of Business and is a third-year law student at Drexel University's Earle Mack School of Law. Amber is admitted to practice before the United States Patent and Trademark Office. She can be contacted at AStiles@vklaw.com.