On January 9, 2015, the United States Patent and Trademark Office (USPTO) published its final rules implementing changes to patent term adjustment (PTA), in view of the United States Court of Appeals for the Federal Circuit (Federal Circuit) decision in Novartis v Lee.1
The final rules particularly impact those patents in which a request for continued examination (RCE) was filed during the prosecution of the patent.
Patent Term Adjustment
The change in United States patent term, from 17 years from the date of issuance to 20 years from the first application filing or national stage entry date, prompted the creation of a system of patent term adjustment to compensate patentees for certain processing delays at the USPTO.
In general, under 35 U.S.C. 154(b)(1) of the United States Patent Act (Patent Act), the term of a patent may be extended in instances when the issuance of a patent was delayed due to:
- Failure by the USPTO to: issue a first Office Action or notice of allowance within 14 months, provide a response within four months of a response by the applicant, or issue a patent within four months after the date on which the issue fee was paid (A delay);
- Failure by the USPTO to issue a patent within three years of the actual filing date or national stage entry of an international application (B delay), not including "any time consumed by continued examination" requested by the applicant; or
- An appeal, secrecy order, or derivation proceeding (C delay).
However, in accordance with 35 U.S.C. 154(b)(2)(C), the period of adjustment may 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" and expressly delegates to the USPTO the authority to "prescribe regulations establishing the circumstances that constitute a failure of an applicant to engage in reasonable efforts to conclude processing or examination of an application".
The Federal Circuit Decision in Novartis
On January 15, 2014, the Federal Circuit issued its decision in Novartis, concerning the effect of an RCE on patent term. At issue was whether the USPTO had incorrectly interpreted Section 154(b)(1)(B) of the Patent Act with regard to B delay calculations, in instances in which an RCE was submitted during prosecution.
Novartis challenged the USPTO's interpretation on two grounds: that an RCE was only meant to limit the B delay when filed within the first three years of prosecution; and that the time consumed by continued examination was limited to the time between the filing of the RCE and the allowance of the application.
The Federal Circuit partially upheld and partially reversed the USPTO's interpretations. The Court agreed with the USPTO in that no adjustment of time would be available during the time consumed by continued examination, even when initiated more than three years after the filing date of the application. On the second ground, the Federal Circuit agreed with Novartis and held that examination presumptively concludes at allowance, as prosecution is closed and there is normally no further examination on the merits. Thus, unless examination was resumed, the period of time between allowance and issuance would be eligible for consideration under B term delay.
USPTO Final Patent Term Adjustment Rules
On January 9, 2015, the USPTO issued final rules implementing changes to the way in which PTA is calculated, in view of Novartis.
Revised 37 CFR 1.703(b)(1), effective January 9, 2015, reads as follows:
(b) The period of adjustment under § 1.702(b) is the number of days, if any, in the period beginning on the day after the date that is three years after the date on which the application was filed under 35 U.S.C. 111(a) or the national stage commenced under 35 U.S.C. 371(b) or (f) in an international application and ending on the date a patent was issued, but not including the sum of the following periods:
(1) The number of days, if any, in the period beginning on the date on which a request for continued examination of the application under 35 U.S.C. 132(b) was filed and ending on the date of mailing of a notice of allowance under 35 U.S.C. 151
Consequently, the final rules clarify that patentees are entitled to PTA credit that includes the time between notice of allowance and the issue date of the patent. Of note, however, is that the mailing date of the notice of allowance is excluded from the B delay adjustment.
The final rules also create a new type of deduction from PTA for “applicant delay” in instances when an RCE is filed after a notice of allowance.
37 CFR § 1.704(c)(12), effective for RCE’s filed after March 10, 2015, reads as follows:
(12) Submission of a request for continued examination under 35 U.S.C. 132(b) after any notice of allowance under 35 U.S.C. 151 has been mailed, in which case the period of adjustment set forth in § 1.703 shall be reduced by the number of days, if any, beginning on the day after the date of mailing of the notice of allowance under 35 U.S.C. 151 and ending on the date the request for continued examination under 35 U.S.C. 132(b) was filed.
Consequently, the filing of an RCE after a notice of allowance can result in PTA loss between the date of the notice of allowance and the date of the RCE filing.
The final rules issued by the USPTO implement changes to PTA adjustments in view of the Federal Circuit decision in Novartis.
Patents in which an RCE was filed during prosecution may be entitled to a longer term as the period of time between allowance and issuance may be considered in calculation of a PTA award. However, the final rules also create a new type of deduction from PTA for applicant delay in instances in which an RCE was filed after a notice of allowance.
Accordingly, it may be prudent for patent applicants to evaluate the impact that the new rules may have in instances where an RCE was filed during patent prosecution.