Federal Circuit: §154(b) does not require clairvoyance
Supernus Pharmaceuticals, Inc., et al. v. Andrei Iancu, et al.
Decided: January 23, 2019
35 USC §154(b) explains that a patent’s term may be increased to compensate for the PTO’s prosecution delays; this is known as a patent term adjustment (PTA). The statute also says this period of adjustment must be reduced by the “time during which the applicant failed to engage in reasonable efforts to conclude prosecution.”
After §154(b) became law, the PTO issued regulations (in 37 CFR §1.704) that identify specific applicant-caused delays that justify a reduction in a patent term adjustment. These delays include seeking extensions of time to reply to Office Actions, and—at issue here—submitting a supplemental Information Disclosure Statement (IDS) after filing a Request for Continued Examination (RCE).
In 2006, Supernus Pharmaceuticals filed a U.S. patent application titled “Osmotic drug delivery system;” later, the company filed a corresponding application in the European Patent Office.
The U.S. Patent Office issued a final rejection in late 2010; to remove this rejection, Supernus filed a Request for Continued Examination in early 2011. Supernus’s related European application issued as a patent later that year.
About 19 months after the RCE was filed, the pharmaceutical company Sandoz challenged the validity of Supernus’s issued European patent. A few weeks later, Supernus received notice of this from its European patent counsel; and approximately 22 months after filing its RCE, Supernus filed a supplemental IDS identifying the prior art references Sandoz had asserted in the European proceeding.
Several months later, the U.S. Patent Office issued a first Office Action in response to the RCE application; and on June 10, 2014, a patent issued, reflecting a PTA of 1,260 days—meaning that the Patent Office had added 1,260 days to the patent’s twenty-year term. In making its PTA calculation, the USPTO had followed 37 CFR §1.704 and subtracted out nearly 22 months to adjust for the “delay” between the time Supernus filed its RCE and the time it submitted its supplemental IDS.
In a petition to extend its Patent Term Adjustment, Supernus argued that although it had filed a supplemental IDS long after it filed its RCE, this supplemental filing was prompted by the European opposition proceeding, which is an event that they could not have predicted. The PTO’s 22 month offset under 37 CFR §1.704 was therefore improper under 35 USC §154(b), because Supernus had not “failed to engage in reasonable efforts to conclude prosecution” during 19 months of that time. The PTO denied this petition.
Supernus then appealed to the U.S. District Court for the Eastern District of Virginia, which concluded that the Federal Circuit’s earlier decision in the Gilead case—which held that a PTA reduction under 37 CFR §1.704 was not inconsistent with 35 USC §154(b)—compelled it to grant summary judgment in favor of the Patent Office.
The Federal Circuit reversed, explaining that although the Gilead case held that filing a supplemental IDS could result in a PTA reduction under 37 CFR §1.704, it did not address the precise issue here: whether the Patent Office may reduce a patent term adjustment by a period that exceeds the “time during which the applicant failed to engage in reasonable efforts to conclude prosecution,” as recited in 35 USC §154(b)(2)(C)(i).
The Court of Appeals then applied the two-step framework from the Supreme Court’s 1984 Chevron case to determine whether the PTO’s interpretation of the statute was proper; the first step in this framework is to “ask whether [§154(b)’s] plain terms ‘directly addres[s] the precise question at issue.’” In view of the statute’s plain language, the Court held that the Patent Office “may not count as applicant delay a period of time during which there was no action that the applicant could take to conclude prosecution of the patent,” because this would exceed the time during which the applicant “failed to engage in reasonable efforts to conclude prosecution.” Click here for the PDF