Genetics & IVF Inst. v. Kappos

• Decision Date: 21 July 2011
• Docket Number: No. 1:10cv996 JCC/TRJ.,1:10cv996 JCC/TRJ.
• Citation: 801 F.Supp.2d 497,100 U.S.P.Q.2d 1114
• Court: U.S. District Court — Eastern District of Virginia
• Parties: GENETICS & IVF INSTITUTE, Plaintiff, v. David KAPPOS, Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office, et al., Defendants.

100 U.S.P.Q.2d 1114

801 F.Supp.2d 497

GENETICS & IVF INSTITUTE, Plaintiff,

v.David KAPPOS, Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office, et al., Defendants.

No. 1:10cv996 JCC/TRJ.

United States District Court, E.D. Virginia,Alexandria Division.

July 21, 2011.

Joshua David Rogaczewski, McDermott Will & Emery, Washington, DC, for Plaintiff.

Dennis Carl Barghaan, Jr., United States Attorney's Office, Alexandria, VA, for Defendant.

MEMORANDUM OPINION

JAMES C. CACHERIS, District Judge.

This matter is before the Court on the parties' cross-motions for summary judgment. For the following reasons, the Court will deny Plaintiff's motion, [Dkt. 13], and will grant Defendants' motion, [Dkt. 15].

I. Background

A. The Parties and the Case

Plaintiff Genetics & IVF Institute (“Plaintiff” or “GIVF”) brings this action against defendants the United States Patent and Trademark Office (the “USPTO”) and David Kappos, in his official capacity as Under Secretary of Commerce for Intellectual Property and Director of the USPTO (together with the USPTO, “Defendants”). Under the Administrative Procedure Act, 5 U.S.C. §§ 551–706 (the “APA”), Plaintiff seeks to set aside the denial of an application made under the Drug Price Competition and Patent Term Restoration Act, popularly known as the “Hatch–Waxman Act,” Pub.L. No. 98–417, 98 Stat. 1585 (Sept. 24, 1984), to extend the term of a U.S. patent, as further described below. (Complaint (“Compl.”) [Dkt. 1] ¶ 1.)

B. Overview of Relevant Patent Law

Under the Patent Act, 35 U.S.C. § 100 et seq. (the “Patent Act”), a United States patent expires after a certain term, generally 20 years from the date on which the patent application was filed. See 35 U.S.C. § 154(a)(2). For patents claiming certain drug and medical devices, some or all of the patent term may be consumed by the (often lengthy) Food and Drug Administration (“FDA”) approval process for products utilizing that patent. See 35 U.S.C. § 156; 21 U.S.C. § 355(a).

Recognizing this, the Hatch–Waxman Act provides patent holders with “interim” extensions for patents utilized by products that remain under FDA review when the relevant patent term is set to expire. These extensions, however, are not automatic. The first time a patent holder seeks an interim patent term extension (an “Extension”), the relevant statute, 35 U.S.C. § 156(d)(5)(A), provides that the holder must file an application with the USPTO “during the period beginning [six] months, and ending 15 days, before [the patent term] is due to expire.” Then, “[i]f the [USPTO] Director determines that, except for permission to market or use the product commercially, the patent would be eligible for an extension of the patent term under this section ... [the Director] shall issue to the applicant a certificate of interim extension” for a maximum length of one year. 35 U.S.C. § 156(d)(5)(B).

Patent law permits patent holders to apply for additional, “subsequent,” Extensions. On that front, the statute provides that

[t]he owner of record of a patent, or its agent, for which an interim extension has been granted under subparagraph (B), may apply for not more than 4 subsequent interim extensions under this paragraph, except that, in the case of a patent subject to subsection (g)(6)(C), the owner of record of the patent, or its agent, may apply for only 1 subsequent interim extension under this paragraph. Each such subsequent application shall be made during the period beginning 60 days before, and ending 30 days before, the expiration of the preceding interim extension.

35 U.S.C. § 156(d)(5)(C) (emphasis added). It is this statute, particularly the emphasized language, which is relevant here.

C. Factual Background

i. The '759 Patent

On August 4, 1992, the USPTO issued U.S. Patent No. 5,135,759 (the “'759 Patent”) to the United States Department of Agriculture (“USDA”). (Plaintiff's Memorandum in Support (“P. Mem.”) [Dkt. 14] at 3.) The '759 Patent is entitled a “Method to Preselect the Sex of Offspring” and claimed a method of preselecting the sex of offspring by sorting sperm into X and Y chromosome bearing sperm. (Defendants' Memorandum in Support (“D. Mem.”) [Dkt. 16] at 7.)

The USDA and GIVF entered into a private agreement under which the USDA granted GIVF an exclusive license to obtain regulatory approval for products created under the '759 Patent and to market any such products in the United States. (P. Mem. at 3.) GIVF has applied to the FDA for approval of products under the '759 Patent and has commenced clinical studies. Id. GIVF has not yet received FDA approval. Id.

ii. The 2009 Extension

The '759 Patent was set to expire on August 4, 2009. Id. Because GIVF had not received FDA approval, the USDA timely filed, on June 5, 2009, an application with the USPTO for a first Extension. (D. Mem. at 7.) On July 28, 2009, the USPTO granted the first Extension, thereby extending the term of the '759 Patent for one year, to August 4, 2010. Id. The order granting the Extension was published in the Federal Register on August 4, 2009. Id.

iii. The 2010 Extension

As of July 2010, the GIVF's FDA application was still pending. (P. Mem. at 4.) With the '759 Patent set to expire on August 4, 2010, the USDA filed a request for a second Extension with the USPTO on July 27, 2010. Id.

Under 35 U.S.C. § 156(d)(5)(C), however, the request for the second Extension was due on July 6, 2010, so the USDA's application was untimely. Id. GIVF was responsible for drafting the second Extension application and engaged counsel to do so. (D. Mem. at 8.) “On or about” July 19, 2010, GIVF's counsel discovered that the application was due on July 6. (P. Mem. at 4.)

GIVF's counsel used a computer program to track patent-filing dates, and the program did not provide a reminder that the application for the second Extension was due. (D. Mem. at 8.) The program's failure was not a malfunction, however; the program was not capable of tracking filing dates for Extension applications, though GIVF's counsel was unaware that the program lacked this capability. Id.

Along with its July 27, 2010 application for a second Extension, the USDA petitioned the USPTO, pursuant to 37 C.F.R §§ 1.182 and 1.183, for a suspension of the applicable USPTO rule. (P. Mem. at 4.)

iv. Effect of the Late Application

On August 2, 2010, the USPTO denied the USDA's petition and request for a second Extension. Id. The USPTO deemed this denial a final agency action under the APA. Id. On August 4, 2010, the '759 Patent expired. Id.

D. Agency Review

Plaintiff claims that the USPTO's decision was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” (Compl. ¶ 37 (quoting 5 U.S.C. § 706(2)(A))). Because this is a review under the APA of the USPTO's decision denying the USDA's petition for a second Extension, a brief overview of the USPTO's decision is helpful.

The USPTO reasoned that, over fifteen years prior to the USDA's petition, it promulgated formal regulations that provided its interpretation that the timing provisions found in § 156(d)(5)(C) are mandatory. (D. Mem. at 10; Administrative Record (“AR”) [Dkt. 11–2] at 90.)

The USPTO further found that “[a]ny analysis of a statute begins with the language of the statute itself” and that through the use of, and plain meaning of, “shall,” Congress “indicate[d] an imperative duty.” (D. Mem. at 10; AR at 89.) The USPTO also reasoned that since another provision of § 156, § 156(a), which dictates when the USPTO “shall” provide a patent holder with an Extension, like § 156(d)(5)(C) uses “shall,” the term should be interpreted the same way in both instances. (D. Mem. at 10; AR at 91–92.)

The USPTO's decision also explained that the timing provisions for Extensions serve an important purpose, namely the “timely publication of the notice that a patent was being extended based on the ongoing regulatory review of a product claimed by the patent.” (D. Mem. at 10; AR at 93.) The USPTO also determined that because the Patent Act included various provisions that vested the USPTO with discretion to excuse errors, but did not include this discretion in § 156(d)(5)(C), “it speaks volumes that Congress provided no avenue to allow the USPTO to accept a late subsequent [Extension] application.” (D. Mem. at 10; AR at 93.)

E. Procedural Background

Plaintiff filed this case on September 1, 2010. [Dkt. 1.] The parties filed an agreed order, entered by this Court, submitting the case to a decision based on the administrative record before the USPTO and the parties' cross dispositive motions, on the papers and without a hearing. [Dkt. 12.] Plaintiff filed its motion for summary judgment on April 13, 2011 [Dkt. 13], and Defendants filed their motion for summary judgment on May 5, 2011 [Dkt. 15]. Plaintiff replied on May 18, 2011 [Dkt. 17], and Defendants replied on May 27, 2011 [Dkt. 18]. The parties' motions are before the Court.

II. Standard of Review

“Under the APA, agency action may be set aside if the court finds that the agency action was ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’ ” PhotoCure ASA v. Dudas, 622 F.Supp.2d 338, 343 (E.D.Va.2009) (quoting 5 U.S.C. § 706(2)(A)). Although this is an APA action, “the ordinary standard for summary judgment applies.” Tafas v. Dudas, 541 F.Supp.2d 805, 810 (E.D.Va.2008) (vacated in part by Tafas v. Doll, 559 F.3d 1345 (Fed.Cir.2009), rehearing en banc granted and opinion vacated by Tafas v. Doll, 328 Fed.Appx. 658 (Fed.Cir.2009)) (citing Star Fruits S.N.C. v. United States, 393 F.3d 1277, 1281 (Fed.Cir.2005)). Under the “ordinary” and well-settled standard, summary judgment is appropriate only if the record shows “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct....