On April 6, 2011, the USPTO announced proposed changes to the Patent Term Adjustment (PTA) rules that would award PTA for USPTO delay when an examiner reopens prosecution after a notice of appeal has been filed. While I have written previously about the gap left by the USPTO's current PTA rules, I am afraid that the new proposal raises more problems than it solves.

The Patent Term Adjustment Statute

The PTA statute (35 USC § 154(b)) compensates applicants for three different types of USPTO delay:

“A” delay accrues when the PTO fails to act in accordance with set timeframes (such as issuing a first office action within 14 months, issuing a second action or allowance within 4 months of a response, and issuing a patent within 4 months of the Issue Fee payment).

“B” delay accrues when the PTO fails to issue a patent within three years of the actual filing date of the patent application.

“C” delay accrues when the application is involved in an interference or appeal, or is subject to a secrecy order.

Patent Term Adjustment & Appeals

PTA for A delay is awarded when the USPTO fails to "respond . . . to an appeal . . . within 4 months after the date on which . . . appeal was taken."

On the other hand, PTA for B delay (also referred to as “3 year” delay) is not awarded for

any time consumed by a [interference] proceeding under section 135(a), any time consumed by the imposition of a [secrecy] order under section 181, or any time consumed by appellate review by the Board of Patent Appeals or Interferences of by a Federal Court.

As noted above, however, PTA for C delay can accrue for the delays that are excluded from B delay. With regard to C delay, however, PTA only accrues for

appellate review by the Board of Patent Appeals and Interferences or by a Federal court in a case in which the patent was issued under a decision in the review reversing an adverse determination of patentability . . . .

If an Applicant appeals a rejection and wins at the Board, B delay will not accrue while the application was on appeal, but C delay will. If an Applicant appeals a rejection and loses at the Board, it is not likely that a patent will grant from that application, so PTA is moot. The proposed rulemaking addresses what happens when an applicant files a notice of appeal and never gets to the Board.

The Post-Notice of Appeal Patent Term Adjustment Gap

Under the USPTO's current rules and interpretations, B delay does not accrue once a notice of appeal is filed, even if it is the examiner that delays the proceedings. The USPTO has justified this interpretation of 35 USC § 154(b)(1)(B) as being parallel to the provisions of 35 USC § 154(b)(1)(C)(iii). The latter section of the statute provides that when prosecution is delayed due to appellate review by the Board

the term of the patent shall be extended 1 day for each day of the pendency of the proceeding, order or review, as the case may be . . . .

The USPTO measures the "pendency of the proceeding" from the date of the notice of appeal.

Under the USPTO's current rules and interpretations, C delay does not accrue unless there is an actual decision by the Board (or a Federal court).

As reflected in the USPTO's discussion of the proposed changes, it is becoming more and more common for an examiner to reopen prosecution "after a notice of appeal has been filed," indicating that "there is some weakness in the adverse patentability determination from which the appeal was taken." Nevertheless, under the USPTO's current rules, PTA is not awarded to account for delays due to post-notice of appeal review by the USPTO, even when that review results in a reversal of the examiner's "adverse determination of patentability."

The Proposed Change to Post-Notice of Appeal Patent Term Adjustment

The USPTO proposes to address this problem by treating an examiner's decision to reopen prosecution after a notice of appeal as a "decision in the review reversing an adverse determination of patentability" under 35 USC § 154(b)(1)(C)(iii). According to the proposal, the PTA award "would equal the number of days in the period beginning on the date on which a notice of appeal . . . was filed . . . and ending on the date of mailing of the Office action under 35 USC § 132 or a notice of allowance under 35 USC § 151."

Looking a Gift Horse in the Mouth

As someone who has considered several different ways in which the USPTO rules and interpretations appear to shortchange applicants on PTA awards, why am I not excited about this proposed change?

My main concern is that the proposal is inconsistent with the plain language of the statute, and so beyond the USPTO's authority. The proposal in effect deems a decision by the USPTO to be a decision of the Board, but this is inconsistent with other USPTO rules and previous USPTO decisions:

  • The USPTO’s own rule, 37 CFR § 41.35, provides that jurisdiction does not pass to the Board until after all briefs and the examiner’s answer have been entered. However, the reopening of prosecution addressed by the proposed change generally would occur before the examiner's answer.
  • A 2003 Commissioner's Decision (In re U.S. Patent No. 6,484,146) refused to award PTA when the "examiner reversed himself in reopening prosecution," because

"this provision [of the statute] requires that the decision reversing the adverse patentability determination be a decision by the Board . . . or by a Federal court. . . . Thus, a decision by the examiner or his or her supervisor to withdraw a rejection on appeal alone is not sufficient to result in the possibility of patent term extension . . . ."

While the USPTO can change its mind about the meaning of the statute, it should have discussed and justified its new interpretation of the statutory language when it announced this proposed change.

Alternative Solutions

The USPTO could close the PTA gap by making changes to one or more other PTA provisions that might be more consistent with the statute:

  • The USPTO could award "A" delay when a decision on a request for pre-appeal brief review is issued more than four months after the request was filed, in accordance with 35 USC § 154(b)(1)(A)(ii).
  • The USPTO could award "A" delay when an Office action or notice of allowance is issued more than four months after a request for pre-appeal brief review, Appeal Brief, or Reply Brief, in accordance with 35 USC § 154(b)(1)(A)(ii).
  • The USPTO could adjust its interpretation of 35 USC § 154(b)(1)(B)(ii) such that "B" delay continues to accrue until jurisdiction is transferred to the Board. This would permit "B" delay to accrue after a notice of appeal, such as when the examiner reopens prosecution.

It is important that the PTA rules and interpretations be consistent with the statute. Although patent holders may enjoy a "windfall" of additional PTA, the benefit will be illusory if a third-party (such as an alleged infringer) can challenge the enforceability of the patent during its extended term because the PTA award is not authorized by the statute.