Will Challenges to the USPTO's Patent Term Adjustment RCE Carve-Out Gain Traction?

In a complaint filed October 19, 2012, Biogen Idec MA Inc. joined patent holders such as Exelixis, Inc. and Human Genome Sciences, Inc., who are challenging the USPTO’s interpretation of 35 USC § 154(b)(1)(B)(i)). As I wrote previously, I think these challenges may have merit, and patent holders facing similar PTA calculations may want to consider pursuing similar civil actions against the USPTO.

Patent Term Adjustment

The PTA statute (35 USC § 154(b)) was created to compensate for delays in the patent examination process that can eat away at the effective term of the patent, now that patent term is measured from the earliest U.S. priority date rather than the patent grant date. The statute provides “guarantees” against different types of USPTO delays, and requires a day-for-day deduction of applicant delays against USPTO delays.

“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 four months of a response, and issuing a patent within four 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.

The RCE Carve-Out

The filing of an RCE can impact the PTA award for B delay, because the statute (35 USC § 154(b)(1)(B)(i)) excludes “any time consumed” by an RCE from B delay awards:

(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 the RCE carve-out 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 U.S.C. 111(a) or the national stage commenced under 35 U.S.C. 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 U.S.C. 132(b) was filed and ending on the date the patent was issued ….

Under the USPTO’s interpretation of the carve-out, once an RCE is filed, the patent no longer accrues “B” delay, although it might still accrue “A” delay and/or “C” delay.

The Challenge to the USPTO’s RCE Carve-Out

Biogen appears to be the latest patent holder to challenge the USPTO’s RCE carve-out, alleging that it excludes more time than authorized by the statute. In particular, Biogen asserts that the RCE carve-out should end with the mailing of a Notice of Allowance, because once a Notice of Allowance has been issued, the failure to issue the patent within three years is no longer attributable to “time consumed by continued examination of the application,” as provided by the statute. Indeed, substantive examination has come to an end, and the same post-allowance processing steps are required regardless of whether an RCE has been filed.

Hundreds of Days at Stake

According to Biogen’s complaint, its patent will be entitled to an additional 125 days of patent term if the court agrees that the RCE carve-out should end when a Notice of Allowance is mailed. Depending on the circumstances, a patent in which an RCE has been filed could be entitled to an additional 300 days (seven months) of PTA. This is because once the “B” delay clock is running, PTA accrues for every day that passes until the patent grants, even if there is no further “delay” by the USPTO. Thus, when an Issue Fee is timely paid three months after a Notice of Allowance was issued and a patent is timely granted four months after the Issue Fee was paid, a patent accrues seven months of “B” delay during the post-Notice of Allowance timeframe. Biogen argues that this “B” delay should be awarded regardless of whether an RCE has been filed, because the time period at issue is not “consumed by continued examination of the application,” but rather relates to post-examination processing.

Will This Argument Gain Traction?

This is the third case that I am aware of that raises this particular patent term adjustment calculation issue. As far as I know, the other cases remain pending at the district court. Like the Wyeth case that rejected the USPTO’s interpretation of the deduction for “overlapping” periods of delay, these cases have the potential for far-reaching impact. Patent holders with recently granted patents impacted by the RCE carve-out may want to consider raising this issue in their own civil actions against the Patent Office, particularly where several months of additional patent term are at stake and the invention is expected to remain valuable through the end of its patent term.