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IP Alert: Federal Circuit Clarifies Patent Term Adjustment in Pfizer v. Lee

January 25, 2016

The term of a United States patent expires 20 years from the date on which the application for that patent was filed or claims domestic benefit. To compensate an applicant for undue delays in patent examination in the U.S. Patent and Trademark Office (USPTO), the law awards applicants patent term adjustment (PTA) when there have been such examination delays. As discussed in previous alerts (including here, here, and here), the statute that provides for PTA has left room for interpretation, and this has led to a number of court decisions concerning how PTA should be accorded.

Generally, PTA is awarded for delay that falls into one of three categories, which are denoted “A Delay,” “B Delay,” and “C Delay,” respectively. Usually, A Delay results when the USPTO has failed to act within certain specified examination deadlines. One example is that the USPTO must issue its first office action within 14 months of the filing date of the application. B Delay results when a patent application was pending for more than three years, and C Delay results from delays due to interferences, secrecy orders, and appeals. The total PTA is calculated by adding the A Delay, B Delay, and C Delay (excluding overlaps) and subtracting any days attributable to the applicant.

On January 22, 2016, in Pfizer, Inc. v. Lee, the Federal Circuit considered whether the time between a first but incomplete restriction requirement and a second and complete restriction requirement should be included in the A Delay for a patent. The USPTO issued its first office action 404 days after the 14-month date had passed. The first office action was a restriction requirement, which is a document issued by the USPTO to inform “the applicant that ‘two or more independent and distinct inventions are claimed in one application,’ and that the applicant is required to elect one of the inventions. . . .” A restriction requirement is required to identify the claims that correspond to each distinct invention. Here, however, the restriction requirement failed to address six of the 144 claims that were pending in the application.

After receiving the restriction requirement, the applicant called the USPTO examiner to notify the examiner of this deficiency. The examiner acknowledged that the restriction requirement was not complete and agreed to withdraw the restriction requirement and to issue a corrected restriction requirement. By the time the USPTO issued the corrected restriction requirement, 601 days had passed since the 14-month date.

At issue in Pfizer was whether the time between issuance of the first restriction requirement and the corrected restriction requirement constituted A Delay (a total of 197 days). In other words, was the first restriction requirement, though incomplete, sufficient to be considered a first office action and prevent accrual of additional A Delay? Affirming a decision of the USPTO, the Federal Circuit answered this question in the affirmative.

The court reasoned that for the restriction requirement to be sufficient to be considered a first office action, it had to meet the requirements of Section 132 of the Patent Act. This statute provides that “[w]henever, on examination, any claim for a patent is rejected, or any objection or requirement made, the [USPTO] shall notify the applicant” of the rejection, objection, and/or requirement and provide an explanation of the rejection, objection, and/or requirement. The court considered a 1990 Federal Circuit case, Chester v. Miller, which had held that “Section 132 is violated when a rejection is so uninformative that it prevents the applicant from recognizing and seeking to counter the ground for rejection.” Consequently, so long as the failure to categorize six of the claims in the restriction requirement did not “prevent[] the applicant from recognizing and seeking to counter” the requirement made by the examiner, the incomplete restriction requirement would be sufficient to be considered a first office action.

From this reasoning, the court held that “because the initial [incomplete] restriction requirement placed the applicants on notice of ‘the broad statutory basis for [the rejection of their] claims,’ the restriction requirement satisfied the notice requirement of Section 132.” Accordingly, the court held no A Delay time was accrued between the mailing of the first restriction requirement and the second restriction requirement.

In holding that the incomplete restriction requirement sufficiently informed the applicants of the examiner’s requirement, the court appeared to focus on two facts. First, the groups of inventions remained constant between the first (incomplete) restriction requirement and the second (corrected) restriction requirement (“significantly, the examiner’s defined invention groups remained identical between the two restriction requirements”). Second, the six claims that were omitted from the first restriction requirement were dependent claims (“[a]s for the six claims whose classifications were omitted . . . [the applicant] could have taken direction for their classification from the fact that their respective independent claims were each included in the initial restriction requirement”). Because the second restriction requirement was quite similar to the first, and the six omitted claims were dependent claims, the court reasoned that “it did not require significant guesswork for the applicants to determine where the inadvertently omitted claims belonged.”

The panel decision was 2–1, with a dissent by Judge Newman. She reasoned that “[t]he statutory purpose [of PTA] is clear: when patent issuance is delayed because of proceedings that are not the fault of the applicant, the patent term is extended to compensate for the delay.” In this case, the error was caused by the USPTO (i.e., issuance of an incomplete restriction requirement). She therefore would have counted the time period between issuance of the first restriction requirement and the second in the calculation of A Delay. As to the panel majority’s statement that the omission of six claims would not have required “significant guesswork” on the part of the applicants, Judge Newman stated that “[t]he applicant is not required to guess, to fill in the blanks erroneously left by the PTO.”

With the Pfizer case, the Federal Circuit has continued to clarify the law on patent term adjustment. For more information, please contact Fitch Even partner Allen E. Hoover.

--Written by Fitch Even attorney George N. Dandalides

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