In Abraxis Bioscience, LLC v. Kappos, Civil Action No. 1:11-cv-00730., (D.D.C. Jan. 08, 2014), Judge Howell of the U.S. District Court for the District of Colombia upheld the USPTO’s interpretation of the Patent Term Adjustment (PTA) statute that relates to the impact that a Request for Continued Examination (RCE) has on a PTA award.  This decision is aligned with the district court decision in Exelixis II, and at odds with the district court decisions in Exelixis I and Novartis AG v. Kappos.  Those three cases are on appeal at the Federal Circuit, which heard oral arguments in November of 2013.

The Statute At Issue

As in Exelixis I, Exelixis II, and Novartis, the statute at issue in this case is 35 USC § 154(b)(1)(B)(i), which provides:

(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, not including
(i) any time consumed by continued examination of the application requested by the applicant under section 132(b) ….

The USPTO’s interpretation of this provision is set forth in 37 CFR § 1.703(b)(1):

(b) The period of adjustment under § 1.702(b) is 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 under 35 USC 111(a) or the national stage commenced under 35 USC 371(b) or (f) in an international application and ending on the date a patent was issued, but not including the sum of the following periods:
(1) The number of days, if any, in the period beginning on the date on which a request for continued examination of the application under 35 USC 132(b) was filed and ending on the date the patent was issued ….

Thus, under the USPTO’s interpretation, once an RCE is filed, the patent no longer accrues “B” delay, although it might still accrue “A” delay and/or “C” delay. (Please see my article on Exelixis I for a more detailed discussion of the PTA framework.)

Abraxis argued for the interpretation adopted by Judge Ellis, III in Exelixis I, or the “alternative” interpretation discussed in Novartis. Under Exelixis I, an RCE has no impact on PTA as long as it is filed more than three years after the application filing date. Under the “alternative” interpretation, the filing of an RCE temporarily stops the accrual of “B delay,” but B delay accrues again once a Notice of Allowance is issued.

The District Court’s Analysis

Judge Howell reviewed the decisions in Exelixis I, Exelixis II and Novartis, and also reviewed the statue de novo. Judge Howell noted that all three previous decisions had found that the statute was silent on the precise issue, but only Judge Brinkema’s decision in Exelixis II found that the statute was ambiguous on the issue. Judge Howell agreed with Judge Brinkema and, like Judge Brinkema, determined that the USPTO’s interpretation is entitled to Skidmore deference.

Judge Howell considered the USPTO’s interpretation of the statute to be “persuasive” for several reasons:

  1. The USPTO’s interpretation “is long-standing and formally adopted contemporaneously with the AIPA.”
  2. The USPTO’s interpretation “of the end-date for ‘Continued Examination’ [e.g., that it runs until the patent is granted] is consistent with other statutory provisions and regulations,” which indicate that “examination” activities may occur after a Notice of Allowance has issued.
  3. The USPTO’s interpretation “does not undercut AIPA ‘guarantees’,” because, for example, a patent still can earn PTA for B delay before an RCE is filed, and for A delay after an RCE is filed.
  4. The USPTO’s interpretation “does not treat similarly-situated applicants differently,” because applications granted after a successful appeal are not “similarly situated” to applications granted after an RCE.
  5. The USPTO’s interpretation “is reasonable in [the] context of the statute.”

Thus, the district court concluded:

For the reasons explained above, the Court concludes that the two provisions in the Patent Act at issue in this lawsuit, 35 U.S.C. § 154(b)(1)(B) and its clause (i), are ambiguous but that the USPTO’s regulation, 37 C.F.R. § 1.703(b)(1), which is challenged by the plaintiff, provides a reasonable and persuasive interpretation of the provision. Accordingly, USPTO’s Motion for Summary Judgment is granted and the plaintiff’s Renewed Motion for Summary Judgment Regarding the Calculation of Part B Delay for the United States Patent No. 7,820,788 is denied.

 Waiting For The Federal Circuit To Weigh In

I find it interesting that Judge Howell rendered a decision in this case when the Federal Circuit decision in the pending appeal likely is imminent. On the other hand, this decision gives more consideration than the other district court decisions to the issue of whether B delay should accrue again once a Notice of Allowance is issued. The Federal Circuit seemed interested in that issue during oral argument, and may take notice of Judge Howell’s reasoning if it hasn’t already reached its decision.