IP Alerts

IP Alert
IP Alert UPDATE: USPTO Files Notice of Appeal in Exelixis v. Kappos

January 9, 2013

UPDATE: The U.S. Patent and Trademark Office has filed a notice of appeal in the Exelixis case, and the case will be reviewed by the Court of Appeals for the Federal Circuit. Fitch Even attorneys will monitor the progress of the appeal and will report when the appellate court has issued its decision.

The original alert on this case follows:

On November 1, 2012, the United States District Court for the Eastern District of Virginia decided Exelixis, Inc. v. Kappos, a case involving the patent term adjustment provisions of the patent statute. The Exelixis court held that patent term adjustment is available after the filing of a request for continued examination (RCE) if the RCE is filed more than three years after the application filing date. Before Exelixis, the U.S. Patent and Trademark Office (USPTO) construed the patent term adjustment statute as disallowing any further patent term adjustment after the filing of any RCE, irrespective of when the RCE was filed. Exelixis thus marks a substantial departure from the USPTO’s established methodology of patent term adjustment calculation.

Exelixis is a district court case, and it is not yet known whether the USPTO will appeal. At least for now, however, the case is of potential significance for patent applicants who are considering the filing of an RCE.

By way of background, patents having a filing date after June 8, 1995, are generally entitled to a natural term of 20 years from the application filing date or domestic priority date. For example, a patent application filed on March 1, 2000, will have a natural term that expires on March 1, 2020, irrespective of the date on which the patent issues. The law recognizes that delays in the USPTO can unfairly penalize patent applicants by reducing the effective patent term. For instance, a patent application filed on March 1, 2000, and issued on March 1, 2001, is entitled to a 19-year natural term, beginning on March 1, 2001, and ending on March 1, 2020. But if the same patent application issued on March 1, 2005, the application would have only a 15-year natural term, which would extend from March 1, 2005, through March 1, 2020.

In recognition of the above, the patent statute provides for the term of a patent to be adjusted for any of the following reasons:

a) if the USPTO fails to issue a first action on the merits within 14 months of the application filing date (“Type A delay”);

b) if the USPTO fails to issue a patent within three years of the application’s filing date (“Type B delay”); or

c) if the application is delayed due to interferences, secrecy orders, or appeals (“Type C delay”)

This term adjustment will be reduced, however, by delays that are caused by the applicant and not by the USPTO. For example, for the application filed on March 1, 2000, and issued on March 1, 2005, although the period of patent term adjustment due to Type B delay may be as much as two years, this adjustment will be reduced in apportion to any delay caused by the applicant.

At issue in Exelixis were Type B adjustments. Exelixis had filed an RCE more than three years after the application filing date, and the USPTO, in accordance with its customary practice, had asserted that Type B delay permanently ceased to accrue after filing of the RCE. The USPTO accordingly refused to award any patent term adjustment to Exelixis after the filing of the RCE. Exelixis disagreed with the USPTO and brought suit, contending that it was entitled to additional Type B delay because the patent had not issued within three years of the filing date, notwithstanding the filing of the RCE.

On a summary judgment motion, the court agreed with Exelixis and held that the USPTO had misapplied the patent statute. The court began with an analysis of subsection B of the term adjustment statute, which states:

[I]f the issue of an original patent is delayed due to the failure of the United States Patent and Trademark Office to issue a patent within 3 years after the actual filing date of the application in the United States, not including: (i) any time consumed by continued examination of the application requested by the applicant under section 132(b);. . . the term of the patent shall be extended 1 day for each day after the end of that 3-year period until the patent is issued.

The court reasoned that “the ‘not including’ portion of sub-paragraph (B), followed by (i), (ii), and (iii), clearly and unambiguously modifies and pertains to the three year period and does not apply to, or refer to, the day for day PTA remedy.” Thus, held the court, the “three year clock begins to run on the date the application is filed and, except for three specific potential tolling events, including the filing of an RCE, the clock runs continuously until the three year period ends.”
Based on this reading of the statute, the court held that the filing of an RCE after the three-year anniversary of the application filing date does not toll the Type B delay period. The court also held that the filing of an RCE did not constitute applicant “delay,” and therefore did not toll the patent statute for this reason. On the other hand, the court observed that an RCE filed before the three-year anniversary does toll the Type B delay period.

The Exelixis decision is potentially significant for Fitch Even clients who prosecute patent applications and who are contemplating the filing of an RCE and the impact of same on the term of the resulting patent. Notably, there appear to be circumstances under which an applicant will benefit by filing the RCE after the three-year anniversary of the application filing date.

This is not the first case that involves the USPTO’s calculation of patent term. In an earlier case, Wyeth v. Kappos (discussed in an earlier alert here), the Court of Appeals for the Federal Circuit held that USPTO had misapplied the statute in determining whether Type A and Type B delays could overlap.

For more information on this case, please contact Fitch Even partner Joseph E. Shipley.

Written by Fitch Even attorney Jonathan C. Hughley

Hosted on the FirmWisesm Platform | Designed by Charette Design