The law provides patent applicants an adjustment in patent term to compensate for USPTO delays during prosecution. In particular, the patent act, at 35 U.S.C. § 154(b) provides for adjustments to patent term when: (A) the USPTO fails to take action within certain time frames; (B) the USPTO fails to issue a patent within three years from filing; or (C) the application is involved in an interference, secrecy order, or appeal.

Exelixis sued arguing that the USPTO improperly reduced patent term adjustment based on a Request for Continued Examination (RCE) filed during prosecution of its patent application. RCE’s are commonly used by patent applicants to request additional examination of a patent application, for instance where the applicant and the USPTO Examiner are unable to agree on the outcome for a patent application.

The three year provision of § 154(b) works to adjust the term of a patent if the USPTO does not issue the patent within three years of the application filing date. Under the provision, patent term is extended on a day for day basis for each day from the three year deadline until the patent issues, less time for certain events such as applicant delay.

Exelixis filed its patent application in January of 2008 so that the three year issuance deadline was in January of 2011. Exelixis filed an RCE in April of 2011 and the patent issued later that year. The USPTO read 35 U.S.C. § 154(b) to exclude from patent term adjustment any time following an RCE filing. Accordingly, the USPTO calculated patent term adjustment from the three year deadline to the filing of the RCE. Exelixis argued that because the RCE was filed after the three year deadline, the RCE filing cannot be used to discount patent term adjustment.

In Exelixis, Inc. v. Kappos, November 1, 2012, the U.S. District Court for the Eastern District of Virginia concluded that the plain language in subparagraph (B) of 35 U.S.C. § 154(b) is unambiguous and makes clear that while an RCE filed before the three year deadline will toll the deadline clock, an RCE filed after the three year deadline has no impact on patent term adjustment. The court ruled that this reading, compelled by the plain language of subparagraph (B), is supported by § 154(b)’s structure and purpose. The purpose of the statute is to ensure that an applicant is provided patent term adjustment for USPTO delays and to reduce patent term adjustment for applicant delays. The court points out that structurally, the statute does not consider an RCE an applicant delay and that an RCE is not one of the 11 enumerated applicant delays. An RCE is not an occasion to punish a patent applicant; instead it is recognized as a valuable tool for the patent prosecution process.

The USPTO has not yet announced whether it will appeal this decision. Going forward, patent applicants should be aware when filing RCE’s before expiration of the three year deadline. Further, those with issued patents affected by the decision may wish to consider whether to pursue a recalculation of patent term adjustment through the USPTO or a district court proceeding.