Patent Law

Nabbed

By Gary Odom and Jordan Kuhn

However one may wish the USPTO well, they certainly are stingy bastards, seemingly bent on cheating their constituency, inventors, at every turn. Herein, Wyeth has to fight all the way to the CAFC to get their patent legally extended because the patent office was tardy in allowing a grant. This episode is a sad comment on David Kappos, early in his tenure at the helm of the agency.

Wyeth and Elan Phara v. David J. Kappos, Under Secretary of Commerce for IP and Director, USPTO (CAFC 2009-1120) precedential

There's no more concise way to put this than how the court did, other than to say that the PTO came up with curmudgeonly formulaic interpretation of the law, which was ridiculous, then stubbornly insisted on it.

On summary judgment, the United States District Court for the District of Columbia held that plaintiffs Wyeth and Elan Pharma International Ltd. (collectively, "Wyeth") were entitled to extended patent term adjustments under 35 U.S.C. § 154(b) due to the Patent and Trademark Office's (the "PTO's") delay in prosecuting their patent applications. Because section 154(b) expressly permits this legal relief, this court affirms.

In 1994, the law changed the effective term of a patent from seventeen years commencing from issuance to twenty years from filing. See Pub. L. No. 103-465, § 532, 108 Stat. 4809, 4984 (1994). With the change came new ways of compensating patentees for PTO-caused delays during prosecution. Under the previous seventeen-year regime, PTO-caused delays could not affect patent terms because the term commenced upon issuance after any delays during patent acquisition. Under the twenty-year term, however, those delays consumed the effective term of a patent.

In 1999, the American Inventors Protection Act amended 35 U.S.C. § 154(b) to address this new problem. The new Act promised patent applicants a full patent term adjustment for any delay during prosecution caused by the PTO. This promise took the form of three distinct "guarantees" in 35 U.S.C. § 154(b)(1):

(A) Guarantee of prompt Patent and Trademark Office responses.--Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to [meet deadlines specified in clauses (i)-(iv)] . . .

the term of the patent shall be extended 1 day for each day after the end of the period specified in clause (i), (ii), (iii), or (iv), as the case may be, until the action described in such clause is taken.

(B) Guarantee of no more than 3-year application pendency.--Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the United States Patent and Trademark Office to issue a patent within 3 years after the actual filing date of the application in the United States . . .

the term of the patent shall be extended 1 day for each day after the end of that 3-year period until the patent is issued.

(C) Guarantee or adjustments for delays due to interferences, secrecy orders, and appeals.--Subject to the limitations under paragraph (2) . . .
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.

(emphases added). To summarize, paragraph A (the "A guarantee" or "A clause") promises "prompt [PTO] responses" by extending the term of the patent one day for each day the PTO does not meet certain examination deadlines in subdivisions (i)-(iv). Id. § 154(b)(1)(A). One of these deadlines, for instance, requires a first response to a filed application within fourteen months. See id. § 154(b)(1)(A)(i). Paragraph B (the "B guarantee" or "B clause") extends the term of the patent one day for each day issuance is delayed due to the PTO's failure "to issue a patent within 3 years after the actual filing date of the application in the United States." Id. § 154(b)(1)(B). Last, paragraph C allows for adjustments relating to delays resulting from interference proceedings, secrecy orders, and appeals. Id. § 154(b)(1)(C). At issue in this case are the A and B guarantees.

Both the A and B clauses are expressly subject to paragraph 2's "In general" limitation:

In general. To the extent that periods of delay attributable to grounds specified in paragraph (1) overlap, the period of any adjustment granted under this subsection shall not exceed the actual number of days the issuance of the patent was delayed.

Id. § 154(b)(2)(A) (emphasis added). In other words, this limitation restricts the period of adjustment when any of the "periods of delay" "overlap." This case asks this court to interpret and enforce the guarantees in the face of an "overlap" and "periods of delay" under section 154(b)(2)(A).

Almost every law offers opportunity for vagaries by its enforcer, as does this one.

Section 154(b)(3) of the statute directs the PTO to "prescribe regulations establishing procedures for the application for and determination of patent term adjustments under this subsection." Id. § 154(b)(3) (emphasis added). Under the guise of that authority, the PTO promulgated 37 C.F.R. § 1.703(f) in 2000: "To the extent that periods of adjustment attributable to the [guarantees] overlap, the period of adjustment granted under this section shall not exceed the actual number of days the issuance of the patent was delayed." (emphasis added). Other than adding the term "periods of adjustment," this language repeated the text of section 154(b)(2)(A). The regulations later defined "periods of adjustment" as "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 . . . ." 37 C.F.R. § 1.703(b) (2000). The regulation supplied no explanation about implementation or application of these rules.

The PTO pulled a shenanigan that left applicants sometimes holding the short straw.

In 2004, the PTO amended the regulation to replace "periods of adjustment" with "periods of delay." 69 Fed. Reg. 21706 (2004). The PTO contended that this substitution clarified the regulation:

The language of former § 1.703(f) misled applicants into believing that [periods of A-delay] and [periods of B-delay] were overlapping only if the [period of A-delay] occurred more than three years after the actual filing date of the application. If an application is entitled to a [B-]adjustment . . . the entire period during which the application was pending before the [PTO] . . ., and not just the period beginning three years after the actual filing date of the application; is the period of delay under 35 U.S.C. 154(b)(1)(B) in determining whether periods of delay overlap under 35 U.S.C. 154(b)(2)(A).

Id. (emphasis added). Thus, the "period of delay," according to the PTO's new definition, caused the B guarantee to start with the filing of the application, not three years later. Under that interpretation, "overlap" between A adjustments and B adjustments can arise and begin during the pendency of the patent application. For example, if a patent entitled to twenty days of A adjustments issues twenty days after the three year mark, then it is only entitled to a total of twenty days of adjustment. In other words, the entire period of A delay "overlaps" with the entire period of B delay. Using this framework, the PTO uses either the greater of the A delay or B delay to determine the appropriate adjustment but never combines the two.

Wyeth filed suit seeking an extension of 722 days, whereas the PTO only adjusted 492 days.

In district court, the PTO tried to throw its legal weight around, arguing substantive rule making power. That didn't fly. That notwithstanding, the district court found the PTO interpretation nonsensical.

Citing section 154(b)(3) as evidence of a delegation of authority to draft regulations, the PTO sought Chevron deference for its interpretation. See Chevron U.S.A., Inc. v. Natural Resources Def. Council, Inc., 467 U.S. 837 (1984).

The district court sided with Wyeth, finding first that the PTO "does not have the authority to issue substantive rules, only procedural regulations regarding the conduct of proceedings before the agency." Wyeth v. Dudas, 580 F. Supp. 2d 138, 141 (D.D.C. 2008) (citing Merck & Co. v. Kessler, 80 F.3d 1543, 1549-50 (Fed. Cir. 1996)). The district court further found that even if Chevron was applicable, it would have rejected the PTO's interpretation as contrary to the plain language of the statute. As the district court put it: "The problem with the PTO's interpretation is that it considers the application delayed under [the B guarantee] during the period before it has been delayed." Id. at 142 (emphasis in original).

The CAFC affirmed pitching the PTO's calculator, after bending over backwards to accommodate it, as courts are generally wont to do for the government.

Under the PTO's strained interpretation, B delay can occur anytime after the application is filed. To the contrary, the language of section 154(b) does not even permit B delay to start running until three years after the application is filed. The PTO's position cannot be reconciled with the language of the statute.

This court has also examined the legislative history of the 1999 Act but finds nothing to rescue the PTO's cause. In the first place, only a "most extraordinary showing of contrary intentions" by Congress justifies a departure from the plain language of a statute. Garcia v. United States, 469 U.S. 70, 75 (1984). Far from intentions contrary to the meaning of section 154(b), the legislative history generally supports the interpretation required by the statutory language itself.

The CAFC noted that the statute is at least a bit brain dead too.

Under certain scenarios, both the PTO's interpretation and the statute itself result in some imbalanced treatment of similarly-situated patentees.

Regardless of the potential of the statute to produce slightly different consequences for applicants in similar situations, this court does not take upon itself the role of correcting all statutory inequities, even if it could. In the end, the law has put a policy in effect that this court must enforce, not criticize or correct. See Harbison v. Bell, 129 S. Ct. 1481, 1493-94 (2009) (Thomas, J., concurring) (quoting Eldred v. Ashcroft, 537 U.S. 186, 222 (2003) ("Even if the proper interpretation of a statute upholds a 'very bad policy,' it 'is not within our province to second-guess' the 'wisdom of Congress' action' by picking and choosing our preferred interpretation from among a range of potentially plausible, but likely inaccurate, interpretations of a statute.")).

In the finale -

Section 154(b)'s language is clear, unambiguous, and intolerant of the PTO's suggested interpretation.

Affirmed.

Full post as published by The Patent Prospector on January 08, 2010 (boomark / email).