Federal Circuit Modifies the Method for Calculating B-delay in Patent Term Adjustment

The U.S. Court of Appeals for the Federal Circuit (CAFC) issued on Jan. 15, 2014, its decision modifying the method for calculating Patent Term Adjustment (PTA) for an application that included a Request for Continued Examination (RCE). In the case Novartis AG v. Lee, No. 2013-1160, -1179 (Fed. Cir. 2014), the CAFC determined that the amount of “B-delay” includes post-allowance time, i.e., the time between allowance and issuance, for an application whose prosecution includes a RCE filing.

In construing 35 U.S.C. § 154(b)(1)(B), the court explained that B-delay occurs if the issue of a patent is “delayed due to the failure of the U.S. Patent and Trademark Office (USPTO) to issue a patent within 3 years after the actual filing date of the application in the United States.” Further, the amount of B-delay, however, does not include “any time consumed by the continued examination of application requested by the applicant under section 132(b).” And, a “continued examination” included RCEs. Under the USPTO regulations, the “time consumed by the continued examination” started with the filing of an RCE and continued until the issuance of the patent. Following those regulations, once an RCE was filed, an application could no longer accrue B-delay.

The CAFC rejected the USPTO’s position that the time from a notice of allowance until the patent issues is “time consumed by continued examination.” The court decided that under the § 154(b)(1)(B) provision, “an ‘examination’ presumptively ends at allowance, when prosecution is closed and there is no further examination on the merits in the absence of a special reopening [of the prosecution].” Slip op. at 15.

The court also considered whether filing an RCE before or after the 3-year anniversary of the filing date affects the PTA calculation and concluded that it does not. Id. at 14.

The same day, the CAFC vacated and remanded the appeal by Exelixis also challenging the B-delay calculation method of patent term adjustment in accordance with the Novartis decision described above. Exelixis, Inc. v. Lee, No. 2013-1175, -1198 (Fed. Cir. 2014).

Based on the Novartis decision, an application with an RCE filing will be entitled to a potentially longer PTA, if available, than was previously recognized by the USPTO. Although the exact amount will depend on the facts, an application may receive additional PTA based on mail date of the Notice of Allowance and the date of issuance. Recently issued patents may also be eligible for a recalculation of PTA. The new method for calculating B-delay will not be retroactively applied to all patents, so patentees should determine which patents might be eligible and act quickly to take advantage of this change.