Wyeth v. Kappos (Fed. Cir. Jan. 7, 2010)
Today, the Federal Circuit held that extended patent term adjustments under 35 U.S.C. § 154(b) due to PTO delay in prosecution applies on an "A delay + B delay - overlap" basis contrary to the PTO's "greater-of-A-or-B" rubric.
At issue in the case were two Wyeth patents. Both patents were granted patent term adjustment by the PTO of 462 days and 492 days, respectively under the PTO's interpretation of 154(b). Wyeth disagreed with the PTO's calculations and argued that the respective adjustments should instead have been 756 days and 722 days.
35 U.S.C. § 154(b) provides for patent term adjustments for certain delays by the PTO. "A delays" extend the term of the patent one day for each day the PTO does not meet certain examination deadlines (for example, providing a first response to a filed application within fourteen months). "B delays" extend the term of the patent one day for each day issuance of the patent 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." "C delays" occur due to delays resulting from interference proceedings. Section 154 also, as described by the Federal Circuit, "restricts the period of adjustment when any of the 'periods of delay' 'overlap.'" At issue in this case was the correct way to determine when "A delays" and "B delays" overlap for purposes of the statute.
The PTO had promulgated rules essentially finding that the entire period of "A delay" overlaps with the entire period of "B delay." Under this interpretation, the PTO had a practice of using "greater-of-A-or-B" rubric wherein the PTO would calculate the "A delay", calculate the "B delay", then use the greater of "A" or "B" delays in its patent term adjustment calculations. Wyeth disagreed with the PTO's interpretation of the statute, arguing that under the PTO's interpretation, "B delay" actually starts upon the filing of the patent application and not three years after the filing date, as specifically set forth in 35 U.S.C. § 154(b). In Wyeth's interpretation, "A delay" and "B delay" can only overlap once the "B delay" clock has started (i.e. three years after filing of the patent application).
Despite the PTO's argument that Chevron deference applied to its interpretation of 154(b), the district court held that Chevron was inapplicable and sided with Wyeth's interpretation of the statute. Further, the district court found that even if Chevron applied, it would have rejected the PTO's interpretation as contrary to the plain language of the statute.
The Federal Circuit affirmed, finding that the terms "periods of delay" and "overlap" in the statute contained no ambiguity and that "this court can easily detect any overlap by examining the delay periods covered by the A and B guarantees." The Federal Circuit further stated that 154(b) "makes it clear that no 'overlap' happens unless the violations occur at the same time … [and] [b]efore the three-year mark, no 'overlap' can transpire between the A delay and the B delay because the B delay has yet to begin or take any effect. If an A delay occurs on one day and a B delay occurs on a different day, those two days do not 'overlap' under section 154(b)(2)."
The PTO argued that "A delays" inherently cause "B delays" (as a delay early in prosecution may result in the patent not being granted in three years) and therefore the PTO's use of "greater-of-A-or-B" in its patent term adjustment calculations was proper as Wyeth's interpretation may cause "double counting" of days. The Federal Circuit responding by stating that it "perceives potential perverse results as well under the PTO's suggested interpretation … [however] [r]egardless 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."
The Federal Circuit also agreed with the district court that Chevron deference to the PTO was not applicable here as "the language of the statute itself control this case and sets an unambiguous rule for overlapping extensions, this court detects no reason to afford special deference to the PTO's interpretation."
It will be interesting to see how the PTO responds to this decision for pending requests for patent term adjustment and how this decision affects patent application strategies given how the PTO is treating Requests for Continued Examination (see PTA Strategies: Wyeth, RCE's and the PCT by C. Edward Polk, Courtenay C. Brinckerhoff and Harold C. Wegner).