Patent Term Adjustment (PTA) extends the length of a U.S. patent’s term to compensate for certain delays by the U.S. Patent & Trademark Office (USPTO) during examination of the U.S. patent application. In Exelixis, Inc. v. Kappos, the United States District Court for the Eastern District of Virginia recently held that the USPTO has been undercalculating the PTA for certain U.S. patents in which a Request for Continued Examination (RCE) was filed during examination.¹  Because an RCE is filed in nearly sixteen percent of all U.S. patent applications,² and because the RCE backlog is steadily growing,³ the district court’s decision has the potential to impact thousands of issued U.S. patents, as well as how hundreds of thousands of pending U.S. patent applications are prosecuted. Under Exelixis, such issued U.S. patents may be entitled to additional PTA, and the filing date of a first RCE is such pending U.S. patent applications takes on additional importance with respect to the calculation of PTA.

THREE CATEGORIES OF USPTO PTA DELAYS

Under 35 U.S.C. § 154(b), a patent’s PTA is the sum of three categories of USPTO delays—“A,” “B,” and “C” Delays—less certain overlap and less certain applicant delay. Specifically:

• “A” Delays are caused by the USPTO’s failure to promptly respond to certain submissions, such as responses to USPTO Actions.⁴
• “B” Delays are caused by the USPTO’s failure to issue a patent within three years of the filing date of the patent application.⁵
• “C” Delays are caused by the time consumed by interferences, secrecy orders, and successful appeals.⁶

THE USPTO UNDERCALCULATES “B” DELAYS

In calculating “B” Delays, the USPTO has been interpreting the filing of an RCE as cutting off any subsequent accrual of “B” Delays. Thus, under this interpretation, no “B” Delays accrue if a first RCE is filed within three years of the filing date of a patent application. If the first RCE is instead filed after three years from the filing date of the patent application, “B” Delays start accruing the day after three years from the filing date of the patent application and stop accruing the day before the filing date of the first RCE.⁷

Exelixis, Inc. filed suit to challenge the USPTO’s interpretation of § 154(b)(1)(B) and, specifically, to challenge the USPTO’s calculation of “B” Delays for U.S. Patent No. 7,989,622. According to Exelixis’ interpretation of § 154(b)(1)(B), the filing of an RCE does not cut off any subsequent accrual of “B” Delays. Under Exelixis’ interpretation, if a first RCE is filed after three years from the filing date of a patent application, “B” Delays start accruing the day after three years from the filing date of the patent application and stop accruing on the issue date of the patent.

As shown in the figure below, the application from which the ‘622 Patent issued was filed on Jan. 15, 2008; a first RCE was filed on April 11, 2011; and the ‘622 Patent issued on Aug. 2, 2011. Under the USPTO’s interpretation, “B” Delays started accruing on Jan. 16, 2011 (i.e., the day after three years from the filing date), and stopped accruing on April 10, 2011 (i.e., the day before the filing of the first RCE), resulting in “B” Delays of 85 days. Under Exelixis’ interpretation, “B” Delays started accruing on Jan. 16, 2011, (i.e., the day after three years from the filing date), and stopped accruing on the issue date of Aug. 2, 2011, resulting in “B” Delays of 199 days. Thus, in this case, Exelixis’ interpretation of § 154(b)(1)(B) would result in 114 more days of “B” Delays than the USPTO’s interpretation and, therefore, result in a longer patent term.

The district court agreed with Exelixis, finding that § 154(b)(1)(B) does not mandate cutting off any subsequent accrual of “B” Delays following the filing of a first RCE. First, the district court held that “the plain and unambiguous language of [§ 154 (b)(1)](B) requires that . . . . RCE’s have no impact on PTA if filed after the three year deadline has passed.”⁸ Thus, under the district court’s interpretation of § 154(b)(1)(B), if a first RCE is filed after three years from the filing date of the patent application, “B” Delays start accruing the day after three years from the filing date of the patent application and stop accruing on the issue date of the patent.

Second, the district court found that if a first RCE is filed within three years of the filing date of the patent application, no “B” Delays will accrue, albeit using a different reading of § 154(b)(1)(B) than the USPTO. The district court found that a first RCE filed within three years of the filing date of the patent application modifies how those three years are measured.⁹  The district court held that, in such cases, the calculation of three years from filing begins on the filing date, is suspended on the day the first RCE is filed, and does not subsequently restart.¹⁰ The district court noted that “B” Delays do not accrue in such cases because the statutory three year period is not met, not because § 154(b)(1)(B) forbids the accrual of “B” Delays following the filing of a first RCE (as argued by the USPTO).¹¹

THE USPTO’S STANCE ON THE DISTRICT COURT’S HOLDING

The USPTO has not yet revised its procedures for calculating PTA based on the district court’s ruling, and may appeal the decision to the Federal Circuit. We have been in contact with the USPTO, and the USPTO recommended that applicants and patentees consider acting in accordance with the district court’s decision while the USPTO considers its options.

IMPLICATIONS OF THE DISTRICT COURT’S HOLDING

Under the district court’s ruling, a first RCE filed within three years of the filing date of a patent application still results in no accrual of “B” Delays. Conversely, according to the district court’s decision, a first RCE filed after three years from the filing date of a patent application no longer stops the accrual of “B” Delays. Rather, in such a case, “B” Delays start accruing the day after three years from the filing date of the patent application and stop accruing on the issue date of the patent.

An applicant of a pending patent application may want to consider the implications of filing a first RCE within three years of the filing date of the patent application. As explained by the district court, a first RCE filed a day before three years from the filing date of the patent application would result in the inability to accrue “B” Delays, while a first RCE filed a day after three years from the filing date of the patent application would result in the accrual of “B” Delays. Thus, filing a first RCE on the wrong side of the three-year date could result in the potential loss of patent term extension.

With respect to issued patents, there are two remedies that patentees can use to request that the USPTO reconsider its PTA calculations in light of the district court’s decision. A patentee can request reconsideration of a patent’s PTA by petitioning the USPTO pursuant to 37 C.F.R. § 1.705(d) within two months of the issue date of the patent or file a civil action against the Director in the Eastern District of Virginia within 180 days of the issue date.¹²

_{1 No. 1:12cv96, 2012 U.S. Dist. LEXIS 157762 (E.D. Va. Nov. 1, 2012).}

_{2 Mark A. Lemley & Bhaven Sampat, Examining Patent Examination, 2010 STAN. TECH. L. REV. 2 (2010).}

_{3 The RCE backlog has more than doubled from August 2010 to August 2012. Request for Continued Examination (RCE) Backlog, U.S. Patent & Trademark Office Data Visualization Center, http://www.uspto.gov/dashboards/ patents/kpis/kpiBacklogRCEDrilldown.kpixml.}

_{4 35 U.S.C. § 154(b)(1)(A).}

_{5 Id. § 154(b)(1)(B).}

_{6 Id. § 154(b)(1)(C).}

_{7 Exelixis, 2012 U.S. Dist. LEXIS 157762 at *12–14; 37 C.F.R. § 1.703(b)(1).}

_{8 Exelixis, 2012 U.S. Dist. LEXIS 157762 at *26 (emphasis added). Although not explicitly addressed by the district court, its interpretation of § 154(b)(1)(B)(i) may potentially be applied to §§ 154(b)(1)(B)(ii) and (iii) such that interferences, secrecy orders, appeals, and certain delays requested by the applicant may potentially be treated similarly to the district court’s treatment of RCEs with respect to the calculation of "B" Delays.}

_{9 Id. at *16–18, *20, *26.}

_{10 Id. However, the district court explicitly left open the question of whether the calculation of three years from filing may subsequently restart during prosecution, such as upon the issuance of a Notice of Allowance. Id. at *2 n.3. Should the calculation of the three-year date restart, "B" Delays may accrue for a patent in which an RCE was filed before the three-year date.}

_{11 Id. at *16–18, *20, *26.}

_{12 35 U.S.C. § 154(b)(4)(A).}