Rule Review
Don’t Delay: USPTO Wins Patent Term Adjustment Dispute
Generally, a U.S. patent expires twenty years after its earliest filing date. The twenty year patent term, however, can be extended if the United States Patent Office (USPTO) delays in examining a patent application during prosecution (i.e., the time between the application being filed and it issuing as a patent.) The length of the extension depends on whether the delay can be attributed to the USPTO. Thus, the patent term is not extended if it is determined that the delay was caused by the applicant. Hence, a U.S. patent term is more accurately described as follows: U.S. patent term = (twenty years from the earliest filing date) + (USPTO delay) – (applicant delay). This doctrine is known as Patent Term Adjustment (PTA) and is governed by 35 U.S.C. § 154 (the PTA statute). The PTA statute reflects Congress’s acknowledgement that (1) the process of prosecuting U.S. patents takes time, and (2) a patent’s twenty year period of enforcement should not be reduced because of undue delay.
The PTA period of U.S. Patent No. 8,747,897 to Supernus was in dispute in Supernus Pharmaceuticals, Inc. v. Lee, No. 1:16-cv-00342 (E.D. Va. Oct. 18, 2016). While prosecuting the application of the ’897 patent, Supernus filed a request for continued examination (RCE). Supernus was also simultaneously applying for a European patent on the same subject matter as the ’897 patent in the European Patent Office (EPO). Before the ’897 patent issued, the EPO granted Supernus’s European patent, which subsequently became the subject of an opposition proceeding. Supernus received notice of the opposition and accompanying papers about twenty-five months after filing its RCE. Supernus was under a duty to submit the foreign opposition papers to the USPTO in an Information Disclosure Statement (IDS), and did so seventy nine days after receiving notice of the opposition. This period—between Supernus filing an RCE and submitting the supplemental IDS—was at issue in Supernus. Supernus, slip op. at 1.
The USPTO awarded Supernus a PTA of 1,386 days for the ’897 patent. Supernus, however, requested that USPTO reconsider, arguing that the PTA should instead increase to 2,032 days. The USPTO denied Supernus’s request, and Supernus filed suit in the Eastern District of Virginia alleging: (1) the USPTO’s application of 37 C.F.R. § 1.704(c)(8) conflicted with the PTA statute and was arbitrary, capricious, or otherwise no in accordance with the law; (2) the USPTO’s application of 37 C.F.R. § 1.704(d)(1) conflicted with the PTA statute and was arbitrary, capricious, or otherwise not in accordance with the law; and (3) the USPTO’s reduction of its patent term amounts to an unconstitutional taking.
Administrative Deference
Supernus essentially argued that the USPTO misinterpreted the PTA statute in making its rules. As background, challenges to an administrative agency’s rules (or its interpretation of a statute) are governed by Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Under Chevron, the court first asks if an agency’s rule conflicts with the statute that govern it; if not, the court then asks whether the rule is arbitrary, capricious, or otherwise not in accordance with the law. Id. at 842-44. If the answer to either question is yes, the agency’s rule is invalid. This is known as Chevron deference and reflects the court’s general willingness to allow an agency interpret statutes directed towards it. Id. at 844.
37 C.F.R. § 1.704(c)(8)
Returning to Supernus, the PTA statute gives the USPTO authority to create rules that describe what constitutes applicant delay, i.e., a failure to take reasonable efforts to prosecute an application. Under this authority, the USPTO has created, among others, 37 C.F.R. § 1.704(c)(8), which provides that any delay between the time of filing a reply and submitting a supplemental IDS constitutes per se applicant delay. Supernus was subject to this rule because nearly twenty seven months lapsed between filing its RCE and submitting its supplemental IDS. Supernus argued, however, that § 1.704(c)(8) was in conflict with the PTA statute because, in this case, Supernus only came into possession of the foreign opposition papers two years after filing the RCE. The PTA statute, in Supernus’s view, did not intend to punish an applicant’s conduct in this type of situation.
The court disagreed. Applying Chevron deference, it held: (1) Congress intended the PTA statute to sanction applicant conduct and the conduct of others (i.e., a foreign patent authority); and (2) 37 C.F.R. § 1.704(c)(8) was reasonable because submitting a supplemental IDS forced examiners to go back and review the application again, which delayed prosecution. Supernus, slip op. at 9-10. This result seems a little harsh. After all, Supernus was only in receipt of the foreign opposition papers for about two-and-a-half months before filing its supplemental IDS and still lost nearly two years of patent protection. But consider 37 C.F.R. § 1.704(d)(1).
37 C.F.R. § 1.704(d)(1)
37 C.F.R. § 1.704(d)(1) establishes a nonextendable safe harbor provision for similarly situated applicants, providing that no reduction in PTA will result if the applicant submits a supplemental IDS within thirty days of receiving material information from a foreign patent authority. Despite foregoing the thirty day grace period (recall, Supernus filed its supplemental IDS seventy nine days after receiving the foreign opposition papers), Supernus argued that the grace period conflicted with the PTA statute because the USPTO was responsible in part for the delay by not examining the RCE sooner. But again, the Court was not persuaded, holding that: (1) the grace period was reasonable and did not conflict with the PTA statute because it gave applicants an opportunity to maximize their patent term; (2) Supernus’s failure to use the thirty day grace period could not be cured by challenging the grace period’s legality; and (3) Supernus waived this challenge by not making it to the USPTO. Supernus, slip op. at 14-15.
Takings
The court rejected Supernus’s takings argument because an unconstitutional taking cannot be caused by an owner’s neglect, and, in this case, Supernus neglectfully failed to file its supplemental IDS within the thirty day grace period. Id. at 16.
Conclusion/Takeaways
If, while prosecuting a U.S. application, an applicant receives material information from a foreign patent authority, the applicant should disclose that information to the USPTO as soon as possible. The USPTO gives applicants a thirty day grace period to file a supplemental IDS from the time they receive material information from a foreign patent authority. Use it; don’t delay. Otherwise, any delay between filing a reply and submitting a supplemental IDS will be ascribed to the applicant, unenviably reducing the patent term. Because information from a foreign authority may be in a foreign language, and because the USPTO requires non-English IDS documents to be translated, applicants must move quickly to obtain translations of any foreign language documents. Lastly, because of Chevron deference, applicants should not count on challenges of USPTO rules being well received in federal court. So long as a USPTO rule does not conflict with a federal statute and is reasonable, courts afford the USPTO considerable discretion to administer patent statutes.
