The current rules for Patent Term Adjustment (PTA) are confusing at best, and at worst inconsistent traps costing applicants valuable patent term. For this reason, it is important for practitioners to be aware of the PTA consequences before each filing with the Patent and Trademark Office (PTO).

In the recently decided Gilead v. Lee, Docket No. 2014-1159 (Fed. Cir. Feb. 26, 2015), an applicant was deemed to have failed to "engage in reasonable efforts to conclude processing or examination of an application" resulting in a loss of 57 days of patent term for simply filing a letter informing the examiner of two co-pending related applications. 

During prosecution of U.S. Patent Application Serial No. 12/036,124, the PTO issued a Requirement for Restriction/Election to which the applicant filed a Response.  Then 57 days later, the applicant filed the letter informing the examiner of the two co-pending related applications that were filed after the '124 Application.  When the PTO issued U.S. Patent No. 8,148,374 from the '124 Application, the PTO identified 616 days of office delay but reduced the office delay by 57 days of applicant delay under 37 C.F.R. section 1.704(c)(8).  As a result of the letter filed after the Response, the '374 Patent issued with a reduced total of 559 days of PTA. 

Section 1.704(c)(8) states that:

Circumstances that constitute a failure of the applicant to engage in reasonable efforts to conclude processing or examination of an application also include . . . [s]ubmission of a supplemental reply or other paper . . . after a reply has been filed, in which case the [office delay] shall be reduced by the number of days . . . beginning on the day after the date the initial reply was filed and ending on the date that the supplemental reply or other such paper was filed.

In this instance, the Response was the reply and the letter was deemed an "other paper" thus constituting applicant delay with its filing after the Response.

On appeal at the Federal Circuit, Gilead (the "Patentee") proffered two arguments on why the PTO's interpretation of 35 U.S.C. section 154(b)(2)(C)(2)(ii) in section 1.704(c)(8) was unreasonable and overbroad.  The first argument was that, when read in the context of the surrounding statutory language, "reasonable efforts to conclude prosecution of the application" requires applicant behavior to result in an actual delay to reduce days of PTA.  The Court dismissed this argument noting that the Patentee failed to cite support from the statute, regulations, or legislative history that defined "reasonable efforts" of an applicant.  Moreover, the Court noted that the Patentee incorrectly parsed the statute by focusing on "conclude processing" rather than the entire requirement of the statute of "reasonable efforts to conclude processing."  Accordingly, the Court held that section 1.704(c)(8) was a reasonable interpretation of the statute in light of the mandated four months the PTO has to respond to a reply filed by an applicant under 35 U.S.C. section 132. 

The second argument put forth by the Patentee was that the Restriction/Election Requirement was not a first action on its merits and thus, that the Response was not a response under section 1.704(c)(8).  The Court cited section 132 which states that "[w]henever, on examination, any claim for a patent is rejected, or any objection or requirement made, the Director shall notify the applicant thereof." (Emphasis added).  In addition, the Court noted that the Response to the Restriction Requirement requires the PTO to respond to the applicant within four months under 35 U.S.C. section 154(b)(2)(A) before office delay begins to accumulate.  Accordingly, the Court held that the Restriction/Election Requirement was a first action on its merits.  Thus, the Court rejected the contention that section 1.704(c)(8) is an overbroad and unreasonable interpretation of section 154(b)(2)(C)(ii).

Gilead, is a useful illustration of how a seemingly innocuous decision during prosecution of an application can ultimately result in a loss of patent term and how complying with the rules to avoid a loss of patent term may result in a delay of information being submitted to an examiner.  For example, had the applicant held references and submitted the references in a response to a subsequent office action, the applicant would not have been assessed the 57 days of applicant delay.  However, such action would have resulted in a delay in informing the examiner of the existence of the co-pending applications.

Another similar scenario is waiting to be litigated relating to the inconsistencies of 37 C.F.R. section 1.97 and 37 C.F.R. section 1.704(d).  The PTO drafted 37 C.F.R. section 1.704(d) to provide an exception to section 1.704(c)(8) for filing an IDS citing relevant art to a pending application.  A reasonable argument can be made that the PTO drafted section 1.97 to define what the PTO considers to be "reasonable efforts to conclude processing or examination of an application" to have an Information Disclosure Statement (IDS) considered by the examiner.  However, the timing requirements of section 1.97 are currently inconsistent with the timing requirements of section 1.704(d).  One of these inconsistencies between section 1.97 and 1.704(d) is that section 1.97 allows an applicant three months after becoming aware of a reference to submit the reference or allows the applicant to submit the reference with the payment of a fee, $180, after the three months has expired to file an IDS.  In contrast, section 1.704(d) only provides an applicant with 30 days to submit the reference to avoid loss of patent term.

The courts have yet to decide on whether this and other inconsistencies are a reasonable interpretation of the statute, section 154(b)(2)(C)(ii), or whether the inconsistencies result in an "arbitrary and capricious" interpretation of the statute.  Eventually a party will step forward to challenge the inherent conflicts in these regulations.

Until such a challenge is completed, it is important for practitioners to consider the PTA consequences before each filing with the PTO to maximize the term of the patents granted to their clients and to avoid lengthy court proceedings challenging the inconsistencies between section 1.97 and section 1.704.