Court Case on Patent Delays Holds Appeal for Industry

In certain business sectors, particularly the medical device, pharmaceutical, and biotechnology spaces, extending the term of a patent by a year or even by a few months can dramatically improve the bottom line. This is particularly true where sales are thriving as the successful medical device or drug is about to come off patent—just when generics manufacturers and other industry players prepare to enter the field and snatch market share.

By law, the term of a U.S. patent is “adjusted” to compensate for certain delays by the Patent and Trademark Office (PTO) during prosecution. The PTO's adjustment calculation methodology was found to be flawed in the recent case of Wyeth v. Dudas, where the district court ruled that PTO delays during the first three years of patent prosecution are eligible for term adjustment.¹
The PTO appealed the Wyeth decision and, despite widespread criticism, continues to measure term adjustment in the same fashion that was frowned upon by the district court. Pending the appellate ruling, a company must take steps to preserve the supplemental term countenanced in Wyeth. Indeed, a growing number of companies have filed suit against the PTO seeking, in many cases, more than a year of additional patent life.
PTA Explained
In 1995, the United States Congress changed the calculation of the term of a U.S. patent to 20 years from the date of filing. Previously, the term was 17 years from the date of issue. This change in measurement of the patent life harmonized the U.S. approach with the rest of the industrialized world, and the modification was not expected to be controversial given the assumption that a patent normally would issue in less than three years. Thus, under the new filing rule, the term of an issued patent was expected to be at least 17 years or more if prosecution took less than three years.
But the PTO was not as efficient as Congress had anticipated. Many patents took longer than three years to issue, meaning the effective life span of the patent was less than under the prior law. For example, if it took five years for the PTO to issue a patent, that patent would be in force for only 15 years— two years less than the 17-year term that would have applied under the old rules.
To address the concern over truncated patent terms, and to compensate for prosecution delays attributed to the PTO, Congress enacted the 1999 American Inventors Protection Act (AIPA.) In part, the AIPA provided a means to adjust patent terms shortchanged by PTO delays, a mechanism known as patent term adjustment (PTA). PTA is now determined for each allowed application using a complex set of rules relating to timing and deadlines, but the general strategy involves adding up delays by the PTO and subtracting delays caused by the patent applicant. If the result is greater than zero, the difference is added to the term of the issued patent.
PTA seems like a good plan, but there is a problem in its implementation. In the AIPA legislation, Congress mandated that the PTO and the applicant should be diligent in prosecution to avoid delay, and that the PTO should issue a patent within three years of its filing date. Although Congress set the rules for PTA calculation forth, it was left to the PTO to interpret and implement the rules. The Wyeth case confronted the PTO's methodology for determining patent term adjustment.
Categories of Delay
PTO delays for PTA purposes are calculated based on several categories of delay, including “A” delays, which result from the PTO missing deadlines for actions during prosecution, and “B” delays, which include days in excess of three years from filing of the application to the date the patent issues. (There are also “C” delays that don't factor into most PTA determinations.)
It was clear from the AIPA legislation that each day of delay by the PTO is to be counted only once, with no double counting of overlapping PTO delays. The PTO essentially interprets the requirement to avoid double-counting of “A” and “B” delays to mean that a patent receives PTA credit for either “A” delays or “B” delays—whichever is longer but does not receive credit for both.

The Wyeth case centers on this interpretation of the term overlap and the manner of calculating PTA from “A” and “B” delays. Figure 1 provides an example of the calculation timelines under the PTO's interpretation.
In this example, the patent takes six years to issue, and the PTO twice misses its deadlines to act (the “A” delays)—once during the first three years, and once during the second three years. To determine which delay periods overlap, the PTO considers the “B” delay as beginning at the filing date of the application. Thus, both “A” delays overlap with the “B” delay. To calculate the PTA, the PTO takes the six years it took to issue the patent and subtracts the three years the PTO is allowed to issue the patent, resulting in three years of PTA. No days, under the PTO's interpretation, are added for either of the two “A” delay periods in this example, as they are said to overlap with the “B” delay period.

Fig. 2 illustrates the interpretation of “A” and “B” delays as determined in Wyeth.
Under Wyeth, a “B” delay cannot start until the three-year date has passed, so the “A” delay that falls in the first three years does not overlap the “B” delay period. The court also addressed the statute's prohibition on double counting and determined that if the delays did not occur on the same day, they do not overlap and can be added for PTA. Because the first “A” delay does not overlap with the “B” delay, it is included in the total PTA. Adding the one year of “A” delay to the three years of “B” delay results in four years of PTA, a year more than the PTA granted by the PTO.
Why does the Wyeth interpretation matter? If, as widely expected, Wyeth is upheld and the PTO's interpretation is rejected, many patents that undergo prosecution for more than three years will benefit from significantly longer life spans. Assuming little or no applicant delay, the calculation of PTA under the reasoning of Wyeth can exceed the PTO calculation, in certain cases, by as much as 22 months.
Because of the PTO backlog, numerous cases do not even begin substantive examination for two to three years–or more– after filing, so many cases go beyond the three-year pendency rule. For these patents, affirmance of Wyeth will mean longer patent protection.
Preserving Your Rights
In the meantime, however, the PTO continues to calculate PTA using the methodology the district court rejected in Wyeth. While the Wyeth appeal is pending, your company can take steps to preserve its right to additional patent term—whether by requesting reconsideration by the PTO or by appealing the PTA determination to the district court.
Filing Suit Against the PTO. You can challenge the PTA calculation for your issued patent by filing suit in the United States District Court for the District of Columbia. The deadline to file such a suit is 180 days after the issue date of the patent. If the 180-day period ends without filing of a lawsuit, your potential for additional patent term is forfeited—even if the PTO loses its appeal in Wyeth.
Many lawsuits have been filed against the PTO in the wake of Wyeth. The PTO has not aggressively defended these actions but, instead, has requested a stay of the lawsuit pending appellate review of Wyeth. Accordingly, there is minimal investment for your company to pursue the litigation route against the PTO. If the PTO loses the Wyeth appeal, your company will be eligible for the additional patent term. If the PTO prevails, the litigation can be terminated.
Requesting a PTO Review. The PTO performs the PTA calculation at the time of the notice of allowance. By accessing the PTO's PAIR (Patent Application Information Retrieval) Web site—which displays information regarding patent application status—you can check the days of delay attributed to the PTO and to the applicant. You can also learn the projected patent term adjustment based on an estimated issue date for the patent.
There may be significant errors in the PTA calculations. Some mistakes to watch for include the use of an incorrect filing date in applications entering the U.S. via the Patent Cooperation Treaty (PCT), improperly categorized papers filed in response to an examiner's request, and errors in dates entered for actions during prosecution. Fortunately, there are mechanisms available to request that the PTO correct the PTA determination.
A request for reconsideration of PTA can be filed between the mailing date of the notice of allowance and the payment of the issue fee. The request can be directed at any errors, no matter when they occurred during prosecution. A request for reconsideration of PTA also can be filed within two months of the issuance of the patent, but the scope of the reconsideration is limited to errors that occurred between the date the issue fee was paid and the date the patent issues. If a PTA calculation is not challenged during these two request periods, there is no additional mechanism before the PTO to rectify the PTA determination.
Remember, however, that the PTO continues to calculate PTA using the methodology rejected in Wyeth. Thus, the PTO routinely rejects requests for reconsideration on that basis. Importantly, an applicant can still appeal on the basis of Wyeth by filing suit, and there is no requirement in the statute that the applicant first request reconsideration by the PTO before filing such a suit. Indeed, several companies have filed such suits without having first requested reconsideration by the PTO.
Maximizing Prosecution Strategies
As mentioned above, excess PTO delays are offset by applicant delays for PTA determination. Therefore, a strategy to maximize PTA may include minimizing your delays throughout prosecution. Of course, any practices to maximize PTA must also meet your business goals and patent strategies. For example, if you need additional data or an outside declaration to strengthen an argument in a response, taking one or more extensions of time, regardless of the impact on PTA, may make sense for your business.
The following are examples of practices that can minimize applicant delays and help maximize PTA:
•Try to respond within three months of any action or notice from the PTO.•File preliminary amendments as soon as possible after application filing.•Avoid filing supplemental papers unless expressly requested by the examiner.•Avoid filing many types of post-allowance papers.•File papers electronically or via Express Mail because certificate-of-mailing dates are not valid for PTA determination.•If the examiner requests a paper, include a statement to that effect in, or with, the filed paper.
In addition to the above actions, you should use the PAIR database on the PTO Web site to monitor dates and actions during the pendency of your application. This monitoring activity may help you to identify errors such as an incorrect document code or mailroom date posted in your application's image file wrapper.
The PTO often makes errors in calculating PTA. At least one survey found errors in 42% of the patents examined. By requesting correction of such errors during prosecution, you may reduce the likelihood of an erroneous PTA calculation when the application has been allowed.
PTA can significantly lengthen a patent's term. Strategies minimizing prosecution delays can help maximize your PTA, and PTA calculations can be challenged within the PTO and in court. For each option, you must assess your patent portfolio and business needs and determine steps best suited to maximize your PTA. If you don't act, you risk losing term for your patents and value for your business.
Reference

1. Wyeth v. Dudas, 580 F.Supp.2d 138, 88 U.S.P.Q.2d 1538 (D.D.C. Sep 30, 2008.

Jason M. Honeyman is a shareholder and MaryDilys Anderson is an associate at the intellectual property firm of Wolf, Greenfield & Sacks, P.C., in Boston. Honeyman can be reached at [email protected], and Anderson can be reached at [email protected].

© 2009 Canon Communications LLC