The Federal Circuit Court of Appeals has issued a ruling that interprets and applies patent-law provisions that extend “patent terms to compensate  for certain application-processing delays caused by the PTO [U.S. Patent and Trademark Office].” Novartis AG v. Lee, Nos. 2013-1160, -1179 (Fed.Cir., decided January 15, 2014). Its decision distinguishes between delays attributable to the applicant and those attributable to PTO.

The law allows PTO three years to process a patent application and extends the patent term one day for each day that PTO fails to issue the patent after the end of the three-year period, subject to certain exclusions, including requests for continued examination (RCE). 35 U.S.C. § 154(b). It also provides applicants with a 180-day window to seek judicial review of the PTO director’s patent-term adjustment determination. Here, Novartis filed four lawsuits claiming that, for 23 of its patents, the PTO director improperly determined the amount of the patent-term adjustment. Novartis argued that the determinations were based on flawed statutory interpretations as they applied to an applicant’s RCE.

The Federal Circuit initially disagreed with Novartis that filing an RCE should render the 180-day limitation inapplicable, finding the company’s interpretation too narrow and based on an unreasonable inference. The court also disagreed that “once three calendar years from the application- filing date have come and gone, time spent in the PTO after that date must be added to the patent term even if it is time spent on a continued examination requested after that date.”To the contrary, the court determined that the patent-term adjustment “should be calculated by determining the length of time between application and patent issuance, then subtracting any continued examination time [and other exclusions] and determining the extent to which the result exceeds three years.”

The court disagreed with PTO that “any time up until the patent issues, even after allowance, should be excluded from the adjustment awarded to the patentee,” stating, “The common-sense understanding of ‘time consumed by continued examination,’ 35 U.S.C. § 154(b)(1)(B)(i), is time  up to allowance, but not later, unless examination on the merits resumes.” Accordingly, the court affirmed the district court’s rulings as to the untimeliness of the reviews Novartis filed for 15 patents and remanded the patent-term adjustments for three patents to the district court for a redetermination.