In Chudik V. Hirshfeld, the Federal Circuit upheld the USPTO’s determination that a Patent Term Adjustment (PTA) award for “C” delay is not available when an examiner reopens prosecution after an Appeal Brief is filed, because an award for “C” delay requires actual appellate review. The court warned of the consequences of filing a Request for Continued Examination (RCE) early in the examination process instead of pursuing an appeal right away, because that prevented an award for “B” delay over the time periods at issue. While not at issue in this case, patent holders may be wondering when the USPTO will start calculating PTA correctly under the 2019 Supernus decision that found error in the USPTO’s approach to calculating “applicant delay.”

The Prosecution History At Issue

The application at issue endured a frustrating course of prosecution. After Chudik filed a Notice of Appeal and Appeal Brief, the examiner reopened prosecution with a new ground of rejection, four times, over three years before the application was allowed. Although the patent was awarded 2,066 days of PTA, because an RCE had been filed before the first Notice of Appeal, there were gaps in the PTA award period amounting to 655 days. 

The PTA Statute At Issue

The PTA statute (35 USC § 154(b)) compensates applicants for three different types of USPTO delay:

“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 4 months of a response, and issuing a patent within 4 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 statutory language for “C” delay is set forth in 35 U.S.C. § 154(b)(1)(C)(iii), which addresses delay due to “appellate review by the Patent Trial and Appeal Board or by a Federal court in a case in which the patent was issued under a decision in the review reversing an adverse determination of patentability.”

This article provides a more comprehensive overview of the PTA statute and discusses “C” delay in more detail.

The Federal Circuit Decision

The Federal Circuit Decision was authored by Judge Taranto and joined by Judges Bryson and Hughes.

The Federal Circuit characterized Chudik’s position as essentially arguing that the “C” delay statute “covers an examiner’s reopening that withdraws a rejection.” The court found that argument “if not linguistically impossible, strained.” The court stated:

The statute’s words, in their most natural meaning when applied to an examiner’s unpatentability ruling, require that the patent issue under a Board decision that reversed the examiner’s unpatentability ruling or under a court decision that reversed a Board unpatentability ruling in the matter.

Because the Board never rendered a decision in Chudik’s application, the court affirmed the USPTO’s denial of PTA for “C” delay.

The Federal Circuit’s Warning

The Federal Circuit took an opportunity to remind applicants of the PTA risks of filing an RCE:

The unavailability of B-delay for nearly two years (655 days) of delay in the PTO illustrates what applicants should understand when deciding whether to request a continued examination rather than take an immediate appeal. The potential benefit of immediate re-engagement with the examiner through such continued examination comes with a potential cost.

This article discusses the impact of an RCE on “B” delay in more detail.

What the judges might not appreciate is that while the PTA costs of filing an RCE are clear, continuing examination can be more economical and less time-consuming than pursuing an appeal.

Speaking of PTA . . .

It has been more than two years since the Federal Circuit issued its decision in Supernus Pharmaceuticals, Inc. v. Iancu, which held that the USPTO cannot deduct for “applicant delay” during a period when the applicant “could have done nothing to advance prosecution.” It has been more than six months since the USPTO issued final rules implementing Supernus. Yet, the USPTO is still calculating PTA incorrectly, requiring patent holders to go through the “request for reconsideration” process and pay a $200 fee to obtain the full PTA award due.

According to the USPTO, it is still “in the process of modifying its patent term adjustment program to implement the changes” in the June 2020 rule, and the fee “partially covers the USPTO’s cost of performing a manual patent term adjustment determination” required to calculate PTA correctly until the program is updated. Never mind the costs to patent holders to obtain the PTA they are entitled to by law for the USPTO’s examination delays.