On January 15, 2014, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a decision that changed the calculation of Patent Term Adjustment (PTA) for an application that included a Request for Continued Examination (RCE). In that decision, Novartis AG v. Lee, No. 2013-1160, -1179 (Fed. Cir. 2014), the CAFC determined that, for an application whose prosecution includes an RCE filing, the amount of “B-delay” used to calculate PTA includes the time between allowance and issuance.

The statute governing PTA provides for extension of the term of a patent where the United States Patent and Trademark Office has failed to issue a patent within three years of the filing date of an application. See 35 U.S.C. § 154(b)(1)(B). The amount of delay attributable to this failure is known as "B-delay." The amount of B-delay, however, does not include “any time consumed by continued examination of the application requested by the applicant under section 132(b).” 35 U.S.C. § 154(b)(1)(B)(i). The USPTO and the courts have generally regarded “continued examination” to include prosecution pursuant to an RCE. Under USPTO regulations, the “time consumed by the continued examination” started with the filing of an RCE and continued until the issuance of the patent. 37 C.F.R. § 1.703(b)(1). In accordance with the regulations, once an RCE was filed, an application could no longer accrue B-delay.

The CAFC rejected the USPTO’s position that the time from issuance of a notice of allowance until the patent issues is “time consumed by continued examination.” The court reasoned that, under § 154(b)(1)(B), “[a]n ‘examination’ presumptively ends at allowance, when prosecution is closed and there is no further examination on the merits in the absence of a special reopening [of prosecution].”

On the same day the Novartis decision was issued, the CAFC vacated and remanded an appeal by Exelixis, Inc., which was also challenging the calculation of B-delay used in patent term adjustment.Exelixis, Inc. v. Lee, No. 2013-1175, -1198 (Fed. Cir. 2014). The Exelixis decision rejected the position that an RCE filed after more than three years of pendency failed to cut off any accumulation of PTA, including the period prior to mailing of a notice of allowance, but followed the Novartis decision with respect to the period after mailing of a notice of allowance.

Following the Novartis decision, an application that was pending for more than three years before issuance in which an RCE was filed may now be entitled to additional PTA. The exact amount of PTA will depend on the details of the prosecution, but the typical additional amount of PTA available should include the period from mailing a Notice of Allowance to the date of issuance. It is important to note that patents that were issued recently may also be eligible for a recalculation of PTA. Also, the new method for calculating B-delay will not be retroactively applied to all patents automatically, so patentees should determine which patents might be eligible and act quickly to take advantage of this change in the PTA calculation.

A patentee dissatisfied with a PTA determination must file an application for PTA in the USPTO within two months of the patent issuance, a period that can be extended by up to five months. See 37 CFR § 1.705(b). Accordingly, reconsideration of PTA can be requested up to seven months after issuance, but extension fees will accrue after the first two months. There is also the option to file a lawsuit to correct the calculation of PTA. See 35 U.S.C. § 154(b)(4)(A). For patents granted before January 14, 2013, the PTA statute requires that a civil action be filed within 180 days after patent grant. For patents granted on or after January 14, 2013, a civil action to challenge PTA must be preceded by an unsuccessful administrative challenge to the Patent Office. Then, the period for filing a civil action is within 180 days after the date of the Patent Office's decision in response to the post-issuance application for PTA.