Wyeth v. Kappos (Fed. Cir. 2010)

    By Donald Zuhn --

In a decision that will significantly impact the amount of patent term adjustment ("PTA") that many patentees can expect to obtain under U.S. Patent Law, the Court of Appeals for the Federal Circuit determined today that the U.S. Patent and Trademark Office had erred in making PTA calculations for two patents owned by Plaintiffs-Appellees Wyeth and Elan Pharma International Ltd. ("Wyeth").  In Wyeth v. Kappos, the Federal Circuit affirmed an order by the District Court for the District of Columbia granting summary judgment in favor of Wyeth, in which the lower court found that the USPTO had misconstrued 35 U.S.C. § 154(b)(2)(A), and as a result, had denied Wyeth a portion of the patent term to which it was entitled.  In an opinion authored by Judge Rader and joined by Judges Plager and Moore, the panel determined that § 154(b) "expressly permits" the legal relief requested by Wyeth, and that Wyeth was therefore entitled to "extended patent term adjustments" under § 154(b).

The case concerns the interplay between two of the three patent term guarantee provisions of § 154(b)(1), which were introduced into Title 35 as a result of the enactment of the American Inventors Protection Act (AIPA) in 1999.  The two guarantee provisions at issue provide a one-day extension of patent term for every day that issuance of a patent is delayed by a failure of the USPTO to comply with various enumerated statutory deadlines (see § 154(b)(1)(A)) and a one-day extension of patent term for every day greater than three years after the filing date that it takes a patent to issue (see § 154(b)(1)(B)).  The above guarantee provisions (often referred to as A or B delays, periods, or guarantees) are subject to the limitations of § 154(b)(2)(A), which states that "[t]o the extent that periods of delay attributable to grounds specified in paragraph (1) overlap, the period of any adjustment granted under this subsection shall not exceed the actual number of days the issuance of the patent was delayed."

In 2000, the Patent Office promulgated 37 C.F.R. § 1.703(f), which stated that "[t]o the extent that periods of adjustment attributable to the [guarantees] overlap, the period of adjustment granted under this section shall not exceed the actual number of days the issuance of the patent was delayed."  The Office amended § 1.703(f) in 2004 to replace "period of adjustment" with "period of delay" in order to clarify the regulation, explaining that:

The language of former § 1.703(f) misled applicants into believing that [periods of A-delay] and [periods of B-delay] were overlapping only if the [period of A-delay] occurred more than three years after the actual filing date of the application.  If an application is entitled to a [B-]adjustment . . . the entire period during which the application was pending before the [PTO] . . ., and not just the period beginning three years after the actual filing date of the application; is the period of delay under 35 U.S.C. 154(b)(1)(B) in determining whether periods of delay overlap under 35 U.S.C. 154(b)(2)(A).

69 Fed. Reg. 21706 (emphasis and changes by panel).

As Judge Rader writes in his opinion, "the 'period of delay,' according to the PTO's new definition, caused the B guarantee to start with the filing of the application, not three years later," and therefore, "[u]sing this framework, the PTO uses either the greater of the A delay or B delay to determine the appropriate adjustment but never combines the two."

As we noted in our summary of the District Court decision (see "Wyeth v. Dudas (D.D.C. 2008)"), the differences between Wyeth's and the USPTO's perspectives on an exemplary PTA calculation can be represented schematically as follows (using the example presented in District Judge Robertson's opinion):

The USPTO's view (shown above):  the patentee is entitled to three years of PTA.

Wyeth's view (shown above):  the patentee is entitled to four years of PTA.

In affirming the District Court's grant of summary judgment for Wyeth, the Federal Circuit states:

This court detects no ambiguity in the terms "periods of delay" and "overlap" [of § 154(b)(2)(A)].  Each term has an evident meaning within the context of section 154(b).  The limitation in section 154(b) only arises when "periods of delay" resulting from violations of the three guarantees "overlap."  35 U.S.C. § 154(b)(2)(A).  Significantly, the A and B guarantees expressly designate when and for what period they each respectively apply.

In particular, the Court found that "[t]he 'period of delay' for purposes of the A clause therefore runs from the date the PTO misses the specified deadline to the date (past the deadline) of response to the underlying action," and "[t]he 'period of delay' under the express language of the B clause therefore runs from the three-year mark after filing until the application issues."

As for the "overlap," the panel states that it is clear that "no 'overlap' happens unless the violations occur at the same time," adding that "[b]efore the three-year mark, no 'overlap' can transpire between the A delay and the B delay because the B delay has yet to begin or take any effect."  However, "[u]nder the PTO’s strained interpretation, B delay can occur anytime after the application is filed," which the Court determined "cannot be reconciled with the language of the statute (emphasis by panel).

While the USPTO offered several arguments in defense of its interpretation of the statute, the panel found none to be persuasive.  With respect to the Office's double-counting argument (i.e., A delays during the first three years of prosecution ultimately lead to B delays after the three-year mark from filing), the Court responded that "the statute requires as much."  As to the Office's suggestion that its statutory interpretation prevents situations in which one patentee might receive a windfall adjustment while a similarly positioned patentee might receive no adjustment, the Federal Circuit replied that it "perceives potential perverse results as well under the PTO's suggested interpretations."  The Court added:

Regardless of the potential of the statute to produce slightly different consequences for applicants in similar situations, this court does not take upon itself the role of correcting all statutory inequities, even if it could.  In the end, the law has put a policy in effect that this court must enforce, not criticize or correct.

The panel also found nothing in the legislative history of the statute that would support the Office's interpretation, stating that "legislative history -- always a very dull instrument for extracting the essence of statutory meaning -- provides no reason to depart from the language of section 154(b)."  Finally, in response to the Office's assertion that it was entitled to deference under either Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), or Skidmore v. Swift & Co., 323 U.S. 134 (1944), the Court stated that "[b]ecause the language of the statute itself controls this case and sets an unambiguous rule for overlapping extensions, this court detects no reason to afford special deference to the PTO's interpretation."  As a result, the Federal Circuit concluded that:

Section 154(b)'s language is clear, unambiguous, and intolerant of the PTO's suggested interpretation.  For that reason, this court accords no deference to the PTO’s greater-of-A-or-B rubric.

Wyeth v. Kappos (Fed. Cir. 2010)
Panel: Circuit Judges Rader, Plager, and Moore
Opinion by Circuit Judge Rader

For additional information regarding this and other related topics, please see:

• "Patent Term Adjustment: 37 C.F.R. § 1.704(b)'s Three-Month Provision," November 17, 2009
• "USPTO Says Some Requests for PTA Reconsideration Are Premature," September 7, 2009
• "Fish & Richardson Catches Error in Patent Office's PTA Calculation," July 30, 2009
• "More § 154(b)(4)(A) Actions Filed against Director," February 8, 2009
• "Three More Patentees File § 154(b)(4)(A) Actions against Director Dudas," January 12, 2009
• "More Patentees Follow Wyeth's Lead in Seeking Additional PTA," December 3, 2008
• "USPTO to Appeal Wyeth v. Dudas," December 2, 2008
• "Two Patentees Follow Wyeth's Lead in Seeking Additional PTA," November 12, 2008
• "Wyeth v. Dudas (D.D.C. 2008)," October 16, 2008

Comments

[A]

Patent term adjustment calculations are considered time taking and tedious process. Applicants are required to pay a good sum to their attorneys for re-confirming the patent term adjustment calculated by USPTO. Wondering how come the problem remained undetected so far. Should the applicants consider a check on the patent term adjustment a mandatory step to their patent prosecution process? Wondering as of today how many patents out there are affected by the "interpretation" of the relevant provisions.

[EG]

Don,

Nice summary of Wyeth case. Harold Wegner has noted that the PTO may have violated patent term adjustment (PTA) in other ways, giving as an example the actual PCT filing date for the B period, not the national stage entry date as currently in the PTO PTA reg.

[Noise above Law]

Not sure what your beef is A,
"Wondering how come the problem remained undetected so far." - The problem is typically detectable only after the government makes the actual PTA calculation and one only has a very small window afterwards to act on that information.

It is standard practice with me and mine to verify PTA. Always has been.

[A]

Noise above Law, do you charge for verifying PTA?

[Noise above Law]

Yes.

I also charge for answering FAOM's that call up ridiculous art that is generated by key word search of claim terms that have absolutely no other tie to the application than the word is used in a claim.

What of it?

[A]

US, being the only "first-to-invent" country, is the country of choice for a majority of patent applicants all around the world. However, appears that prosecution is taking longer than before, there is an increase in the number of prior arts and a corresponding increase in the number of office actions, RCEs, appeals, costs, and unfortunately, outbursts - both by attorneys and applicants.

May God help us - give us some break.

[Noise above Law]

A,

While prosecution does indeed seem to be taking longer, that effect is not isolated to the US. Check out the pendency statistics for most any patent office and you will see the same thing.

I am not sure what you are trying to say in the rest of your post, but you seem to slant the problems to be applicant/attorney driven. I would hazard a guess that you work at the Office by the way you want to blame the customer for your woes.

[Tamsen Valoir, PhD]

Will the PTO go back and recalculate the incorrect PTA's own their own? Or do we have to file a petition for each case, and if so, can we argue that the deadline gets reset by this case?

[Chris Singer]

Dr. Valoir -
In Don's post of Jan. 21 in which he reported that the PTO and Dept of Justice will not appeal the Federal Circuit's decision, he also noted that the PTO will be publishing guidance concerning PTA calculations and petitions in light of the Wyeth decision.

Until that guidance comes out, it is anybody's guess as to what the PTO will do as far as correcting previously made 'inaccurate' calculations. Maybe something, maybe nothing. In the meantime, it is probably most prudent to continue to handle PTA reconsideration requests under the current deadlines as established by the statute (35 USC 154(b)) and regulations (37 CFR 1.705 et seq).

-Chris

[Tamsen Valoir, PhD]

I spoke with the office today, and they are not sure whether they will auomatically re-calculate PTAs, or provide some 2-6 month grace period in light of the change in interpretation. We will have to watch for their guidance to issue, and until then follow the current deadlines, as you suggest.