Novartis AG & Novartis Vaccines & Diagnostics, Inc. v. Lee

• Decision Date: 15 January 2014
• Docket Number: Nos. 2013–1160,2013–1179.,s. 2013–1160
• Citation: 740 F.3d 593
• Parties: NOVARTIS AG and Novartis Vaccines and Diagnostics, Inc., Plaintiffs–Appellants, and Dana–Farber Cancer Institute, Plaintiff, v. Michelle K. LEE, Deputy Director, United States Patent and Trademark Office, Defendant–Cross Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

740 F.3d 593

NOVARTIS AG and Novartis Vaccines and Diagnostics, Inc., Plaintiffs–Appellants,

and

Dana–Farber Cancer Institute, Plaintiff,

v.Michelle K. LEE, Deputy Director, United States Patent and Trademark Office, Defendant–Cross Appellant.

Nos. 2013–1160, 2013–1179.

United States Court of Appeals,Federal Circuit.

Jan. 15, 2014.

Validity Called into Doubt

37 C.F.R. § 1.703(b)(1)Scott S. Christie, McCarter & English, LLP, of Newark, New Jersey, argued for plaintiffs-appellants. With him on the brief was Mark H. Anania.

Division, United States Department of Justice, of Washington, DC, argued for defendant-cross appellant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, and Ronald C. Machen, Jr., United States Attorney. Of counsel on the brief were Bernard J. Knight, Jr., General Counsel, Nathan K. Kelley, Deputy Solicitor, and Brian T. Racilla and Joseph G. Piccolo, Associate Solicitors, United States Patent and Trademark Office, of Alexandria, VA.

David P. Frazier and Jennifer A. Johnson, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, of Washington, DC, for amicus curiae AbbVie Biotherapeutics Inc.

Before NEWMAN, DYK, and TARANTO, Circuit Judges.

TARANTO, Circuit Judge.

Novartis AG, Novartis Vaccines and Diagnostics, Inc., and Novartis Corporation (collectively, Novartis) filed suits that challenged the determinations by the Patent and Trademark Office of how much time to add, under 35 U.S.C. § 154(b), to the otherwise-applicable terms of various Novartis patents. Of the eighteen patents before us, the district court dismissed Novartis's claims regarding fifteen as untimely asserted. For the other three, the court rejected the PTO's construction of the statutory provision that governs patent term adjustment here.

We affirm the district court's ruling on timeliness as to the claims at issue, agreeing with its interpretation of § 154(b)(3) and (b)(4). As to the standards for patent term adjustment, however, we conclude that the PTO was partly correct and partly incorrect in its interpretation of § 154(b)(1)(B). The result is that, for three patents, Novartis is entitled to most, but not all, of the patent term adjustment it seeks.

Background

In 1994, Congress changed the method of measuring the effective term of a patent. Before the change, a patent's term generally ran from the date that the patent issued until the end of a period measured from that date—typically seventeen years, subject to certain extensions ( e.g., those provided by the 1984 Hatch–Waxman Act, 35 U.S.C. § 156). Under the 1994 law, the term still begins on the issuance date, but it generally ends twenty years after the relevant application for that patent was filed. Pub.L. No. 103–465, § 532, 108 Stat. 4809, 4984 (1994) (revising 35 U.S.C. § 154). As a result, delays in processing the application at the PTO now reduce a patent's term.

In 1999, Congress provided for extensions of patent terms to compensate for certain application-processing delays caused by the PTO. SeePub.L. No. 106–113, § 1000(a)(9), 113 Stat. 1501, 1536. Specifically, 35 U.S.C. § 154(b)(1) makes three “[p]atent term guarantees”—“(A) Guarantee of prompt patent and trademark office responses,” “(B) Guarantee of no more than 3–year application pendency,” and “(C) Guarantee of adjustments for delays due to derivation proceedings, secrecy orders, and appeals.” The statute provides that “the term of the patent shall be extended 1 day for each day” that the PTO does not meet certain response deadlines, § 154(b)(1)(A), for each day after the PTO fails to issue the patent within three years, subject to exclusions, § 154(b)(1)(B), and for each day of delay due to an interference, secrecy order, or successful applicant appeal, § 154(b)(1)(C).

This appeal involves § 154(b)(1)(B), which builds on a goal of application pendency of three years, reflecting the replacement of a term of seventeen years from issuance by a term starting at issuance but ending twenty years after application. SeeS.Rep. No. 105–42, at 42. The provision states:

(B) Guarantee of no more than 3–year application pendency.—Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the United States Patent and Trademark Office to issue a patent within 3 years after the actual filing date of the application under section 111(a) in the United States or, in the case of an international application, the date of commencement of the national stage under section 371 in the international application, not including—

(i) any time consumed by continued examination of the application requested by the applicant under section 132(b);

(ii) any time consumed by a proceeding under section 135(a), any time consumed by the imposition of an order under section 181, or any time consumed by appellate review by the Patent Trial and Appeal Board or by a Federal court; or

(iii) any delay in the processing of the application by the United States Patent and Trademark Office requested by the applicant except as permitted by paragraph (3)(C),

the term of the patent shall be extended 1 day for each day after the end of that 3–year period until the patent is issued.

35 U.S.C. § 154(b)(1)(B) (2011).

The PTO regulations call for implementing this provision in two steps. First, “the term of an original patent shall be adjusted if the issuance of the patent was delayed due to the failure of the Office to issue a patent within three years after the date on which the application was filed ..., but not including (1) [a]ny time consumed by continued examination of the application under 35 U.S.C. 132(b)....” 37 C.F.R. § 1.702(b)(1). Second, if an applicant is entitled to an extension, “[t]he period of adjustment ... is the number of days, if any, in the period beginning on the day after the date that is three years after the date on which the application was filed ... and ending on the date a patent was issued, but not including ... (1) [t]he number of days, if any, in the period beginning on the date on which a request for continued examination of the application under 35 U.S.C. § 132(b) was filed and ending on the date the patent was issued....” 37 C.F.R. § 1.703(b)(1).

In 35 U.S.C. § 154(b)(3) & § 154(b)(4), Congress provided administrative and judicial remedies for applicants who are dissatisfied with the PTO Director's determination of a patent term adjustment. First, under § 154(b)(3)(B)(ii), an applicant must have “one opportunity to request reconsideration of any patent term adjustment determination made by the Director.” Second, under § 154(b)(4)(A), in the version applicable here (before recent revisions), “[a]n applicant dissatisfied with a determination made by the Director under paragraph (3) shall have remedy by a civil action against the Director filed in the United States District Court for the District of Columbia within 180 days after the grant of the patent.” Id. The PTO has interpreted the 180–day statute of limitations to apply to all patent term adjustment determinations, including those made under § 154(b)(1)(B)(i).

Between June 2009 and May 2011, Novartis filed four lawsuits in the District Court for the District of Columbia claiming that, for twenty-three of its patents, the Director had improperly determined the amount of patent term adjustment. See, e.g., Second Amended Complaint, ¶ 2, Novartis AG v. Kappos, No. 10–cv–1138 (D.D.C. April 9, 2012), ECF 28. (In two of the cases, the Dana–Farber Cancer Institute was a co-plaintiff, but Dana–Farber has not appeared on appeal.) On February 16, 2012, the district court consolidated the cases.

Novartis claimed that the Director's determinations of the patent term adjustment rested on two mistaken interpretations of § 154(b)(1)(B)(i) as it applies to an applicant's request for continued examination under 35 U.S.C. § 132(b)—a process, authorized by Congress in 1999, through which an applicant may try to persuade an examiner to allow an application after an otherwise-final rejection. First, as previously mentioned, the Director treated time spent in any continuing examination, no matter when initiated by the applicant, as not counting toward the statute's allotment to the PTO of three years before adjustment time begins to accrue. Second, the Director treated as not counting toward the three years both the time from initiation of continued examination to allowance and, in addition, the time from allowance to issuance—even though the latter period is undisputedly counted toward the three years in a case not involving a continued examination. Novartis argued that both interpretations were contrary to § 154(b)(1)(B).

Novartis made two additional claims of relevance here. It claimed that it was entitled to have its patent term adjustments recalculated to conform to this court's decision in Wyeth v. Kappos, 591 F.3d 1364 (Fed.Cir.2010), which held that the Director had taken an incorrect view of how § 154(b)(2) applies when there is “overlap” between “periods of delay” addressed by the statute. It is undisputed that Novartis would have received longer patent terms under the Wyeth standard. Novartis also claimed that denial of the statutorily authorized term adjustments constituted a taking of its property in violation of the Fifth Amendment.

The parties filed cross-motions for summary judgment, and on November 15, 2012, the district court dismissed Novartis's claims with respect to nineteen patents as untimely and granted Novartis relief on its remaining claims. Novartis AG v. Kappos, 904 F.Supp.2d 58, 69 (D.D.C.2012). For the claims dismissed as untimely, the court held that the applicable limitations rule was the 180–day rule of § 154(b)(4) and that nineteen of Novartis's claims—those filed more than 180 days after the PTO denied reconsideration of its adjustment determination—were filed too late under that rule. Id. at 65. The court thus rejected Novartis's contention that the...