Decision: Supernus v. Iancu, --F.3d__, 2019 WL 286925 (Fed. Cir. Jan. 23, 2019)

Background: By statute, the USPTO has authority to extend a patent term to account for delays caused by the USPTO. See 35 U.S.C. §§154(b)(1)(A)-(C). Delays caused by the applicant may reduce the amount of extension to which a patent owner is entitled, in particular delays caused by "the applicant fail[ing] to engage in reasonable efforts to conclude prosecution of the application.". See 35 U.S.C. §154(b)(2). The USPTO rules at 37 C.F.R. §1.704 outline the circumstances that constitute such a failure.

The below chart (not to scale) represents a timeline of events providing the facts of the case:

On August 21, 2012, the EPO notified Supernus's European counsel of a Notice of Opposition in a counterpart European application. On September 11, 2012, European counsel notified Supernus of the Opposition and, on November 29, 2012, Supernus submitted a supplemental IDS citing the European Opposition to the USPTO. The dispute between Supernus and the USPTO centers on the 646 days between the filing of the RCE on Feb. 22, 2011, and the filing of an IDS disclosing a European opposition on Nov. 29, 2012. Supernus conceded that 100 of those days were appropriately subtracted for failing to engage in reasonable efforts to further prosecution (from the EPO notification on Aug. 21, 2012 to Supernus's submission of the IDS on Nov. 29, 2012), but argued that it was entitled to the 546 days from its filing of the RCE to the EPO notification of the Sandoz Opposition.

The PTA of 1,260 days was calculated by the USPTO as follows: Type A delay 1,656 days plus Type B delay 665 days minus overlap of Type A and Type B of 175 days minus 886 days for applicant delay. Of the 886 days of applicant delay, 646 days were assessed for the period between filing of the RCE and the submission of the IDS. In response to a Request for Reconsideration, the USPTO added to the PTA the time between allowance and issuance, such that the total PTA was determined to be 1386 days.

The USPTO, however, refused to subtract from the calculated applicant delay any time based on the submission of IDS after the RCE. According to the USPTO, the rationale of Gilead Sciences, Inc. v. Lee, 778 F.3d 1341 (Fed. Cir. 2015), and 37 C.F.R. § 1.704(c)(8), submission of an IDS after the filing of a RCE "'interferes' with the [USPTO's ability] to process an application because the examiner may be forced to go back and review the application again." Rule 1.704(c)(8) provides that submission of a supplemental paper after a reply has been filed will result in a reduction by the number of days from when the initial reply was filed and ending on the date that the supplemental paper was filed. In Gilead, the patent owner was tolled the 57 days between the filing of an initial reply to a restriction requirement and its subsequent submission of a supplemental IDS.

Supernus appealed to the Eastern District of Virginia for summary judgment that 37 C.F.R. § 1.704(c)(8) and § 1.704(d)(1) were arbitrary, capricious, and contrary to the statute. 37 C.F.R. § 1.704(d)(1) allows a 30-day grace period between notification of a communication regarding a foreign counterpart application and filing an IDS. Supernus also argued that it should not have been penalized 546 days—i.e., the period between its filing of the RCE (Feb. 22, 2011) and the EPO notification of the Sandoz Opposition (Aug. 21, 2012). Supernus pointed out that there were no efforts it could have undertaken during this time to further prosecution; there was no way for it to know about any filings in the EPO earlier than Aug. 21, 2012.

The district court granted judgment in favor of the USPTO and held that the decision in Gilead v. Lee "foreclosed, as a matter of law, Supernus's statutory interpretation arguments that 37 C.F.R. §1.704(c)(8) and § 1.704(d)(1) are arbitrary, capricious, and otherwise contrary to the PTA statute."

Issue: Can a reduction in PTA exceed the "time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application"?

Outcome: Reversed and remanded.

According to the Federal Circuit, Gilead does not apply and "Gilead does not foreclose Supernus's statutory interpretation argument" because Gilead didn't address whether there was a failure to engage in reasonable efforts. "Gilead ruled only that the regulation reasonably drew no line between actual and potential delay[.]" In Gilead, the patent applicant could have submitted the information in its supplemental IDS when it submitted its response to the restriction requirement. Just because there was no actual delay caused did not excuse the patent applicant.

In this case, however, Supernus could not have engaged in reasonable efforts to concluded prosecution for the 546 days between filing the RCE and the EPO's notification of the Sandoz opposition. Therefore, the days counted against Supernus exceeded the "time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application."

According to the Federal Circuit, the applicable analysis is the Chevron framework. "The precise question at issue in this 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.'" Under step one of Chevron, review of the statutory language, the court found the PTA statute is "plain, clear, and conclusive": "the USPTO may not count as applicant delay a period of time during which there was no action that the applicant could take to conclude prosecution of the patent.  Doing so would exceed the time during which the applicant failed to engage in reasonable efforts." "[N]either [37 C.F.R. §§ 1.704(c)(8) nor (d)(1)] empowers the USPTO to exceed its statutory authority as it has done in these circumstances by assessing a PTA reduction that exceeds the statutory limitations."

35 U.S.C. § 154(b)(2)(C)(i) reads: (i) The period of adjustment of the term of a patent under paragraph (1) shall be reduced by a period equal to the period of time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application. (emphasis in opinion).

The Federal Circuit applied "widely understood" meanings of "equal" and during" to conclude that "PTA reduction cannot exceed the period of time during which an applicant failed to engage in reasonable efforts... if there is no period of time the applicant could have but failed to engage in reasonable efforts, there can be no reduction to the PTA."

[T]here was no action Supernus could have taken to advance prosecution of the patent during the 546-day period, particularly because the 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.

at *18. 

The Federal Circuit accorded no deference to the USPTO's interpretation of the regulation at issue because it was inconsistent with the plain language of the statute:

[t]he USPTO's interpretation of the PTA statute applied in these circumstances exceeds the statutory limitations for PTA reduction and therefore, the USPTO actions are "in excess of statutory . . . authority."


Prosecution Takeaway:

This opinion serves as a reminder to all patent owners to review the USPTO's PTA calculation and, if you disagree, act quickly to preserve your rights. After a patent issues, a request for reconsideration in USPTO must be made within 2 months. If you still disagree, file a district court case within 180 days of issuance of reconsideration decision.

Check PTAs awarded in recently issued cases to determine whether your facts match those of Supernus and whether days that were docked do not in fact stem from a "failure to engage in reasonable efforts."

Timely file Information Disclosure Statements before the first office action or with a reply and try to submit any communication from a foreign patent office within 30 days of receipt.

The statutory period of PTA reduction must be (and can only be) the same number of days as the period from the beginning to the end of the applicant's failure to engage in reasonable efforts to conclude prosecution.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.