Exelixis, Inc. v. Kappos

• Decision Date: 06 November 2012
• Docket Number: Case No. 1:12cv96.
• Citation: 906 F.Supp.2d 474
• Parties: EXELIXIS, INC., Plaintiff, v. Hon. David J. KAPPOS, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

906 F.Supp.2d 474

EXELIXIS, INC., Plaintiff,

v.Hon. David J. KAPPOS, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Defendant.

Case No. 1:12cv96.

United States District Court,

E.D. Virginia,

Alexandria Division.

Nov. 1, 2012.

As Amended Nov. 6, 2012.

Houda Morad, Steptoe & Johnson LLP, Washington, DC, for Plaintiff.

Julie Ann Edelstein, U.S. Attorney's Office, Alexandria, VA, for Defendant.

MEMORANDUM OPINION

T.S. ELLIS, III, District Judge.

In the 1990's, Congress twice significantly altered the patent law landscape. First, in 1994, Congress enacted the Uruguay Round Agreements Act, ¹ which (i) required the term of a patent to be measured from the date of application, (ii) extended a patent term from 17 to 20 years, and (iii) created patent term adjustment (“PTA”), extending the length of a patent term in the event that certain delays occurred in the processing of the application. Second, in 1999, Congress again altered the patent landscape by enacting the American Inventors Protection Act of 1999 (“AIPA”),² which significantly amended the PTA provisions and provided for a Request for Continued Examination (“RCE”), which permits an applicant to request additional examination of the patent application. Predictably, these alterations in the patent law landscape spawned substantial litigation, of which this case is a recent example.

Presented here is the following, as yet unresolved, question concerning the application of AIPA's PTA provision:

Whether 35 § 154(b)(1)(B) requires that an applicant's PTA be reduced by the time attributable to an RCE, where, as here, the RCE is filed after the expiration of AIPA's guaranteed three year period.

For the reasons that follow, § 154's plain language neither addresses nor requires that an applicant's PTA be reduced by the time required to process an RCE that is filed after the expiration of the three year period.³

I.

Exelixis, Inc. (“Exelixis”), a Delaware corporation with its principal place of business in San Francisco, California, is the owner of United States Patent No. 7,989,622 (“the '622 patent”). This patent—entitled “Phosphatidylinositol 3–Kinase Inhibitors and Methods of their Use”—coverscertain molecules that inhibit an enzyme associated with certain cancers that may be useful for the treatment and prevention of those cancers.

The administrative record reflects the various events that occurred in the course of the prosecution and examination of the application that led to the issuance of the patent. Only a few of these events—those pertinent to the PTA calculation and hence to the question presented—merit mention here.

First, the record reflects that the application for the '622 patent⁴ was filed on January 15, 2008. The record shows that the next event of PTA significance occurred on February 22, 2010, when the United States Patent and Trademark Office (“PTO”) issued a “Restriction and/or Election Requirement,” its first notice pursuant to 35 U.S.C. § 132. This filing came approximately 25 months after the application was filed. The timing of this PTO filing is important to the PTA calculation inasmuch as § 154(b)(1)(A) requires the PTO to provide at least one § 132 notice (or alternatively, a notice of allowance) not later than 14 months after the application is filed, and to the extent the § 132 misses this 14 month deadline, the applicant receives a day for day credit toward the PTA.

The next event with PTA significance occurred, as the record reflects, on March 9, 2011, approximately 38 months after the application filing date, when the PTO issued a Final Rejection of the application. Barely a month later, Exelixis, on April 11, 2011, filed the RCE at issue here. This RCE modified and supplemented the application as follows: (i) claims 1–12, 14, 15, and 17–33 were cancelled, (ii) claims 13 and 16 were amended, (iii) claims 34–38 were added, and (iv) additional support was provided for the amended and added claims.

Thereafter, the PTO, with commendable, if, with respect to this application, uncharacteristic alacrity, responded less than three weeks later by mailing to Exelixis a “Notice of Allowance & Fees Due” with respect to the application. This Notice advised Exelixis (i) that “prosecution on the merits has closed,” (ii) that the application “is allowed for issuance as a patent,” and (iii) that the PTA for the '622 patent was calculated as 283 days, meaning that the ' 622 patent term would extend 20 years plus 283 days from the date of the patent application.

The record next shows that on April 28, 2011, Exelixis paid the issue fee, but then for reasons not disclosed in the record, the PTO did not mail the “Issue Notification” to Exelixis until July 17, 2011. The '622 patent issued thereafter on August 2, 2011. The Issue Notification included the PTO's final PTA calculation for the patent,⁵ totaling 368 days, consisting of (i) 344 days for PTA attributable to the PTO's failure to file a § 132 notification within 14 months of the patent application date, as required by § 154(b)(1)(A) (“A delay”), (ii) 85 days of PTA attributable to the PTO for the failure of a patent to issue within 3 years of the application date, as required by § 154(b)(1)(B) (“B delay”), (iii) 0 days of PTA pursuant to § 154(b)(1)(C) (“C delay”), and (iv) a 61 day PTA reduction attributable to Exelixis' delay pursuant to § 154(b)(2)(C) (“C reduction”).

Exelixis does not dispute the PTO's calculation of A delay, C delay, or C reduction; instead, the parties' dispute focuses sharply on the PTO's B delay calculation. The PTO contends that the 85 days of B delay is arrived at by subtracting the number of days attributable to the RCE, 114 days (April 11, 2011 to August 2, 2011), from 199 days (the number of days from the expiration of the three year period—January 15, 2008 to January 15, 2011—to the issuance of the patent on August 2, 2011). Exelixis disagrees with the PTO's decision to reduce the PTA by the RCE and argues instead that the proper B delay calculation is 199 days, the number of days between the end of the § 154(b)(1)(B) guaranteed three year period (January 15, 2011) and the issuance of the patent (August 2, 2011). The following time line illustrates the ' 622 patent's path to issuance and the parties' competing B delay calculations:

IMAGE

As the timeline shows, the PTO's notice of rejection, Exelixis' RCE, the PTO's notice of allowance, and the issuance of the patent all occurred after the expiration of the three year period that commenced on the application filing date. And as the timeline also makes clear, the question that divides the parties on these facts is whether § 154(b)(1)(B) requires that, or even addresses whether, any PTA be reduced by time attributable to an RCE where, as here, the RCE is filed after the expiration of the three year guarantee period specified in that statute.

II.

Resolution of this question is informed by a brief overview of AIPA's PTA provisions. The starting point in this overview is to note that Congress, in 1994, in order to implement international agreements, amended the patent laws to extend the length of a patent term to 20 years, measured from the date of the patent application.⁶ Prior to this amendment, a patent term was 17 years, measured not from the application date, but from the date of the patent issuance. Recognizing that the examination and prosecution phase might result in delays in the issuance of a patent, Congress in the 1994 amendment provided for adjusting the patent term to account for delays that might occur owing to “interference delay,” “secrecy orders,” or “appellate review.” ⁷ Then, in 1999, Congress again amended these provisions to add the PTA provisions now found in § 154(b).⁸ Taken as a whole, the clear goal and purpose of these provisions is to provide a successful applicant with a patent that can be enforced against putative infringers for approximately 17 years—20 years from the date of application less the three years for prosecution and examination—and to reach this goal by providing applicants with day for day patent term extensions for delays attributable to the PTO and day for day reductions of the patent term extension for delays attributable to an applicant's failure to act with alacrity in certain circumstances.

A. The Patent Application Process

In order to patent an invention, a person must apply to the PTO for a patent. 35 U.S.C. § 111. A PTO patent examiner then determines whether the “applicant is entitled to a patent under the law,” and, if so, the PTO issues a patent. 35 U.S.C. § 131. If the patent examiner makes a contrary finding, then the PTO will issue a notice of rejection that puts forth “the reasons for such rejection.” 35 U.S.C. § 132(a). If the applicant receives a rejection notice, the applicant may continue to pursue the issuance of the patent as is, or may make an amendment to the patent application. On the second, or any subsequent, examination of the patent application, the patent examiner may determine that the rejection is final. 37 C.F.R. § 1.113. The applicant's options are then limited to an “appeal in the case of rejection of any claim” or “to [an] amendment” of the application. Id. The RCE is one such amendment. Once a final rejection has issued, the applicant generally has up to six months to file an RCE before the application is abandoned. See37 C.F.R. § 1.135. An RCE, which may consist of (but is not limited to) “an information disclosure statement, an amendment to the written description, claims, or drawings, new arguments, or new evidence in support of patentability,” functions to continue the examination of the current application by reopening the prosecution. 37 C.F.R. § 1.114(b).

Once the PTO determines that the application contains patentable claims, the PTO will issue a “Notice of Allowance” that informs the applicant that he “is entitled to a patent under the law[.]” 37 C.F.R. §...