IP Law Daily USTPO erred in reducing drug patent term for applicant delay
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Wednesday, January 23, 2019

USTPO erred in reducing drug patent term for applicant delay

By Brian Craig, J.D.

The USPTO exceeded its statutory authority by assessing a patent term adjustment reduction for a drug patent based on unavoidable delay.

The U.S. Court of Appeals for the Federal Circuit has reversed a decision by the federal district court in Alexandria, Virginia holding on summary judgment that the USPTO properly issued a patent term adjustment (PTA) for a patent covering an osmotic drug delivery system owned by Supernus Pharmaceuticals, Inc. The Federal Circuit determined that the USPTO exceeded its statutory authority by assessing a PTA reduction of 646 days for applicant delay when the vast majority of the delay was unavoidable (Supernus Pharmaceuticals, Inc. v. Iancu, January 23, 2019, Reyna, J.).

Supernus, a pharmaceutical company, owns U.S. Patent No. 8,747,897 (the ’897 patent), entitled "OSMOTIC DRUG DELIVERY SYSTEM." UNuUTC is the exclusive licensee of the ‘897 patent. The USPTO published the ‘897 patent, reflecting a patent term adjustment (PTA) of 1,260 days on the face of the patent. Supernus argued that the PTA reduction of 646 days was improperly characterized as applicant delay, and argued that the ‘897 patent was entitled to an additional 126 days of PTA under 35 U.S.C. §154(b)(1)(B). In response to a request for reconsideration, the USPTO awarded Supernus an additional 126 days of PTA. However, the USPTO rejected the request to eliminate the 646 day deduction of applicant delay. The federal district court in Alexandria granted summary judgment in favor of the USPTO to correct the PTA of the ’897 patent. Supernus appealed to the Federal Circuit.

Gilead analysis. As a preliminary issue, the Federal Circuit analyzed its previous decision in Gilead Sciences, Inc. v. Lee, 778 F.3d 1341, 1343–45 (Fed. Cir. 2015), which served as the basis for the district court’s ruling. In Gilead, the court held that the regulation in 37 C.F.R. § 1.704(c)(8) is a reasonable interpretation of the PTA statute insofar as it includes not only applicant conduct or behavior that result in actual delay, but also those having the potential to result in delay irrespective of whether such delay. But the precise question in the present case is whether the USPTO may reduce PTA by a period that exceeds the "time during which the applicant failed to engage in reasonable efforts to conclude prosecution." 35 U.S.C. § 154(b)(2)(C)(i). Because Gilead involved different facts and a different legal question, Gilead was not controlling in this action.

PTA statutory analysis. The court then analyzed whether the USPTO properly construed the PTA statute. The statute’s plain terms directly address the precise issue whether the USPTO may reduce PTA by a period that exceeds the "time during which the applicant failed to engage in reasonable efforts to conclude prosecution." 35 U.S.C. § 154(b)(2)(C)(i). A plain reading of the statute shows that Congress imposed two limitations on the amount of time that the USPTO can use as applicant delay for purposes of reducing PTA. First, the statute expressly requires that any reduction to PTA be equal to the period of time during which an applicant fails to engage in reasonable efforts. Second, the statute expressly ties reduction of the PTA to the specific time period during which the applicant failed to engage in reasonable efforts. The PTA statute requires that any PTA reduction be equal to the period of time during which an applicant fails to engage in reasonable efforts. The word "equal" is widely understood to mean "the same in amount, number, or size." The "equal to" limitation ensures that applicants will be charged the full amount of time corresponding to their own delay.

Assessment of applicant delay. The Federal Circuit then held that the USPTO’s assessment of applicant delay in this case was inconsistent with the PTA statute. The USPTO reduced the PTA by 646 days due to applicant delay. Supernus concedes that it failed to engage in "reasonable efforts" for the last 100 days of the 646-day period. The Federal Circuit agreed with Supernus that there were no efforts that it could have taken in the period of time during the preceding 546 days. There was no action Supernus could have taken to advance prosecution of the patent during the 546-day period, particularly because a European Patent Office ("EPO") notice of opposition did not yet exist. Here, the USPTO’s interpretation of the statute would unfairly penalize applicants, fail to incentivize applicants not to delay, and fail to protect applicants’ full patent terms. The USPTO’s additional 546-day assessment as applicant delay was contrary to the plain meaning of the statute because the 646-day total reduction was not equal to a period of time during which Supernus failed to engage in reasonable efforts to conclude prosecution of the ’897 patent. The USPTO’s interpretation of the PTA statute applied in these circumstances exceeded the statutory limitations for PTA reduction. Because the USPTO actions were in excess of its statutory authority, the appeals court reversed the decision of the district court.

This case is No. 2017-1357.

Attorneys: DOUGLAS H. CARSTEN (Wilson, Sonsini, Goodrich &Rosati, PC) for Supernus Pharmaceuticals, Inc. Shaun R. Snader (The United Therapeutics Corp.) For United Therapeutics Corp. R. Trent McCotter, Office of the United States Attorney, for Andrei Iancu.

Companies: Supernus Pharmaceuticals, Inc.; United Therapeutics Corp.

MainStory: TopStory Patent FedCirNews

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