Volume 10 Issue 1 | January 2013
INTELLECTUAL PROPERTY REPORt
Exelixis v. Kappos: Recent Developments Relating To Patent Term Adjustment
Recent case law has impacted how the U.S. Patent and Trademark Office (PTO) calculates Patent Term Adjustment (PTA) and when an applicant or patentee can challenge the PTO’s calculation of PTA.1 U.S. patent applicants are entitled to statutory protections against undue delay by the PTO that might otherwise limit the useful term of their patents once issued. Any additional patent term that is accrued based on PTO delay is reduced by particular actions by the Applicant that are considered Applicant delay.
35 U.S.C. § 154(b)(1) of the Patent Act governs the determination of PTA and describes three types of delays by the PTO resulting in an extension of patent term:
- “A” delays - when the PTO fails to carry out certain acts during examination of the patent application within prescribed time frames.
- “B” delays - addition of one day for each day after the end of the three-year period beginning on the date the patent application was filed.
- “C” delays, addition on a day-for-day basis for each day of the pendency of an interference or appeal or for each day that the application is subject to a secrecy order.
There have been several decisions in recent years which have changed the manner in which PTA is calculated, leading to significantly increased patent terms in many instances. In its 2010 decision in Wyeth v. Kappos,2 the Federal Circuit considered the appropriate method to calculate PTA under § 154. The Federal Circuit held that PTA was properly calculated as follows:
- The number of days of A Delays, plus
- The number of days of B Delays, less
- The number of days of overlap between the A Delay and the B Delay, and less
- The number of days of applicant delay reflecting the failure to diligently conclude prosecution of the application.3
In other words, A and B delays are to be aggregated, in contrast to the PTO’s previous policy of simply choosing the greater of A delay and B delay.4
In a more recent case relating to a different aspect of the calculation of PTA, Exelixis v. Kappos,5 the Eastern District of Virginia determined that the PTO improperly reduced PTA in patents where the applicant filed a Request for Continued Examination (RCE) more than three years after the original patent application filing date. In particular, the court held that the PTO should not deduct any time from an applicant’s PTA if the applicant files the RCE more than three years after the patent application was filed.6
Exelixis filed an RCE after its patent application had been pending for three years.7 In calculating Exelixis’ PTA with respect to “B” delay, the PTO deducted the number of days following the filing of Exelixis’ RCE from the number of days from the expiration of the three-year period.8 Exelixis argued that the PTO improperly calculated the B delay by reducing its PTA by the time attributable to Exelixis’ RCE.9 The PTO argued that the time attributable to an RCE is always excluded from the PTA calculation for B delay, regardless of when the RCE is filed.10
The district court agreed with Exelixis and held that § 154(b)(1)(B) does not require an applicant’s PTA to be reduced by the time used to process an RCE that is filed after the end of the three-year application pendency period.11 The court found that Section 154(b)(1)(B) does not address or refer to an RCE filed after the three-year period ends.12 The statute only addresses the situation where an RCE is filed within the three-year window.13 In that case only, the RCE tolls the three-year guarantee deadline.14 The court thus concluded that subparagraph (B) was construed in such as way as to punish Exelixis for filing the RCE, even though there is no basis for this construction.15 As a result, the court set aside the PTO’s calculation of Exelixis’ B delay award.16
There are specific provisions governing when a challenge to a PTA calculation can be filed by an applicant or patentee. Recent cases have addressed the issue of when such a challenge to the PTO’s determination of PTA must be filed with a federal district court. Under 35 U.S.C. § 154(b)(3), the PTO must make an initial determination of PTA and provide the applicant an opportunity to request reconsideration. Under the PTO’s rules, that request for reconsideration must be filed no later than the payment of the issue fee or within two months of the date the patent issued (depending on whether there is a revision to PTA indicated in the notice of allowance).17 An applicant dissatisfied with the PTO’s determination of PTA may file a civil action against the Director of the PTO in the Eastern District of Virginia (formerly District of Columbia)18 within 180 days after the grant of the patent.19
In Bristol-Meyers Squibb Co. v. Kappos,20 the District of Columbia considered whether the time that a request for reconsideration is pending at the PTO tolls the 180-day limitation period for judicial review. Bristol-Meyers Squibb (BMS) had filed requests for reconsideration of PTA with the PTO for several patents.21 When the Wyeth case was resolved by the Federal Circuit, more than 180 days had passed since the grants of BMS’s patents.22 However, BMS filed a civil action challenging the PTA decision with the District of Columbia within 180 days of the PTO’s denial of the requests for reconsideration and argued that the 180-day limitation period should be tolled for the time that the PTO was considering the petitions for reconsideration.23 The district court noted that federal courts “nearly universally” have held that a timely filed petition to a U.S. agency tolls the limitation period and that there was no evidence of congressional intent that the normal tolling rule should not apply to § 154.24 Thus, the district court held that the limitation period was tolled during the time that the request for reconsideration was pending at the PTO, and that BMS’s civil action was timely filed.25
The PTO filed a motion for reconsideration with the district court, which the court denied.26 In its motion for reconsideration, the PTO focused on the text of § 154 and argued that “the grant of a patent is an event distinct from the PTA determination.”27 The district court disagreed, finding that the patent itself embodies the PTA, and the trigger for the limitation period should not be decoupled from the final agency determination of PTA.28 The court noted that the provisions of § 154 relied on by the PTO were “more easily understood as ensuring that the issuance of a patent will not be delayed solely because a party is challenging [a PTA] calculation prior to the issuance of a patent.”29 The district court also noted that the “application of the tolling rule to patent term adjustment determinations is correct in terms of policy and efficiency.”30 The PTO had until November 19 to appeal the district court’s decision, but no such appeal was filed.31
In a similar case, Novartis AG v. Kappos,32 the District of Columbia held that the patentee could benefit from “ordinary tolling” but not “equitable tolling” in its efforts to obtain additional PTA for 23 patents.33 For one of the patents, Novartis had timely filed a request for reconsideration with the PTO regarding its PTA calculation.34 After the PTO denied the request, Novartis filed a complaint in federal district court within 180 days of the PTO’s decision but not within 180 days of the patent grant.35 The district court decided that the “ordinary tolling” rule applied to the timing for filing a suit for PTA adjustment. The district court’s decision cited to—and was consistent with—Bristol-Meyers Squibb.36 Notably, the court criticized the PTO for not calculating PTA for the patent consistently with Wyeth even though it had issued two months after the Wyeth decision.37
For 19 of the patents, Novartis did not seek reconsideration at the PTO and did not file its claim within 180 days of the patent grant.38 Novartis sought equitable tolling of the 180-day limitation period for these patents, arguing that changes in the law resulting from Wyeth and Exelixis warranted tolling the limitation period.39 The district court explained that equitable tolling is applied on a case-by-case basis when a petitioner “has been diligent in pursuing his rights, but . . . some extraordinary circumstance stood in the way and prevented timely filing.”40 The court went on to reject Novartis’ arguments, stating that Novartis was free to raise the same issues as those in the Wyeth and Exelixis case within the limitation period, and noting that a change in the law is not an “extraordinary circumstance” that would justify equitable tolling.41 For the three remaining patents, tolling was not necessary because a challenge to the PTO’s PTA calculation was not time-barred.42 For these three patents, the PTA issue was of the same type as in Exelixis.43 The court announced that it found the Exelixis decision persuasive and applied its reasoning to the three patents.44
A number of PTA cases remain pending in the District of Columbia and the Eastern District of Virginia,45 including some cases that were stayed pending the resolution of some of the cases discussed above.46 At least two new cases have been filed in the wake of the Exelixis decision,47 and more may be expected.48 Furthermore, at least one of those cases, Eli Lilly & Co. v. Kappos, also relies on Bristol-Meyers Squibb for the proposition that its action was timely filed even though it was not within 180 days of the patent issuing because it was within 180 days of the PTO’s decision on Eli Lilly’s request for reconsideration of PTA.49
The PTO has appealed the district court’s ruling in Exelixis to the U.S. Court of Appeals for the Federal Circuit.50 However, since this decision will have a significant impact on patent term for many cases, until the Federal Circuit overrules the district court, applicants and patentees should consider the district court’s decision when evaluating PTA. In particular, applicants and patentees should consider reviewing their patent portfolio to identify any important patents that have recently been allowed or issued where the PTA was based on the PTO’s currently improper calculation for B delays. In those cases, patentees can consider filing a challenge to the PTO’s PTA calculation.
1 Courtenay C. Brinckerhoff, District Court Stands by Patent Term Adjustment Tolling Decision, Martindale.com (Sept. 27, 2012), [hereinafter Brinckerhoff, BMS]; Courtenay C. Brinckerhoff, District Court Denies Equitable Tolling, Fifth Amendment Taking In Novartis Patent Term Adjustment Case, PharmaPatents (Nov. 20, 2012), [hereinafter Brinckerhoff, Novartis].
2 591 F.3d 1364 (Fed. Cir. 2010).
3 Adam P. Daniels, Court Holds that Statutory Deadline to File Suit Challenging Patent Term Adjustment Calculation is Tolled by Petition for Review in PTO, Martindale.com (Feb. 17, 2012),
4 Do Not Delay in Challenging the PTO’s Patent Term Adjustment Determination, ANDA Advisors (Dec. 2, 2012), [hereinafter Do Not Delay].
5 No. 1:12-cv-00096 (E.D. Va. Nov. 1, 2012).
6 Id. at 16.
7 Id. at 3.
8 Id. at 4.
9 Id. at 4-5.
10 Id. at 9.
11 Id. at 16.
12 Id. at 13.
16 Id. at 16.
17 37 C.F.R. § 1.705.
18 35 U.S.C. § 154 (effective Nov. 2, 2002 to Sept. 15, 2011).
19 35 U.S.C. § 154 (2012).
20 No. 1:09-cv-01330 (D.D.C. Jan. 27, 2012).
21 Daniels, supra note 3.
26 1:09-cv-01330 (D.D.C. Sept. 20, 2012).
27 Brinckerhoff, BMS, supra note 1.
31 28 USC § 2107; see also Brinckerhoff, Novartis, supra note 1.
32 No. 1:10-cv-01138 (D.D.C. Nov. 15, 2012).
33 Brinckerhoff, Novartis, supra note 1. The court also rejected the patentee’s arguments based on the Takings Clause of the Fifth Amendment, U.S. CONST. amend. V, and on the so-called “discovery rule,” which provides that a cause of action accrues when the injured party discovers that it has been injured. Brinckerhoff, Novartis, supra note 1.
34 Brinckerhoff, Novartis, supra note 1.
46 See, e.g., Schering Corp. v. Kappos, No. 1:11-cv-00457 (D.D.C. Mar. 1, 2011) (stayed pending resolution of Novartis).
47 Eli Lilly & Co. v. Kappos, No. 1:12-cv-01396 (E.D. Va. Dec. 6, 2012); MicuRx Pharmaceuticals, Inc. v. Kappos, No. 1:12-cv-01286 (E.D. Va. Nov. 9, 2012); see also Courtenay Brinckerhoff, MicuRx Sues PTO For Patent Term Adjustment, PharmaPatents (Nov. 15, 2012), [hereinafter Brinckerhoff, MicuRx].
48 Brinckerhoff, Novartis, supra note 1.
49 Complaint at 3, Eli Lilly, No. 1:12-cv-01396.
50 Notice of Appeal, Exelixis v. Kappos, No. 1:12-cv-00096 (E.D. Va. Dec. 31, 2012).
*William Passodelis is a Law Clerk in the New York office, awaiting admission to the Bar.