Wyeth v. Kappos, 2009-1120.

• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
• Citation: 591 F.3d 1364
• Docket Number: No. 2009-1120.,2009-1120.
• Parties: WYETH and Elan Pharma International Limited, Plaintiffs-Appellees, v. David J. KAPPOS, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Defendant-Appellant.
• Decision Date: 07 January 2010

591 F.3d 1364 WYETH and Elan Pharma International Limited, Plaintiffs-Appellees,
v.
David J. KAPPOS, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Defendant-Appellant. No. 2009-1120. United States Court of Appeals, Federal Circuit. January 7, 2010.

[591 F.3d 1366]

Patricia A. Carson, Kaye Scholer LLP, of New York, NY, argued for plaintiffs-appellees. With her on the brief were Richard G. Greco; and David O. Bickart, of Washington, DC. of counsel were Thomas E. Malone, Elan Pharmaceuticals, of South San Francisco, CA, and Reem F. Jishi, Wyeth, of Madison, NJ.

Christine N. Kohl, Attorney, Appellate Staff, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellant. On the brief were Tony West, Assistant Attorney General, Channing D. Phillips, Acting United States Attorney, and Scott R. McIntosh and Abby C. Wright, Attorneys. Of counsel on the brief were James A. Toupin, General Counsel, and Raymond T. Chen, Deputy General Counsel and Solicitor, United States Patent and Trademark Office, of Arlington, VI.

William G. James, II, Kenyon & Kenyon LLP, of Washington, DC, for amicus curiae Hospira, Inc. With him on the brief was Richard W. Ward.

Jeffrey B. Elikan, Covington & Burling LLP, of Washington, DC, for amicus curiae Pharmaceutical Research and Manufacturers of America, et al. With him on the brief were E. Edward Bruce and James P. Sullivan.

Before RADER, PLAGER, and MOORE, Circuit Judges.

RADER, Circuit Judge.

I.

On summary judgment, the United States District Court for the District of Columbia held that plaintiffs Wyeth and Elan Pharma International Ltd. (collectively, "Wyeth") were entitled to extended patent term adjustments under 35 U.S.C. § 154(b) due to the Patent and Trademark Office's (the "PTO's") delay in prosecuting their patent applications. Because section 154(b) expressly permits this legal relief, this court affirms.

II.

In 1994, the law changed the effective term of a patent from seventeen years commencing from issuance to twenty years from filing. See Pub.L. No. 103-465, § 532, 108 Stat. 4809, 4984 (1994). With the change came new ways of compensating patentees for PTO-caused delays during prosecution. Under the previous seventeen-year regime, PTO-caused delays could not affect patent terms because the term commenced upon issuance after any delays during patent acquisition. Under the twenty-year term, however, those delays consumed the effective term of a patent.

In 1999, the American Inventors Protection Act amended 35 U.S.C. § 154(b) to address this new problem. The new Act promised patent applicants a full patent term adjustment for any delay during prosecution caused by the PTO. This promise took the form of three distinct "guarantees" in 35 U.S.C. § 154(b)(1):

(A) Guarantee of prompt Patent and Trademark Office responses.—Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to [meet deadlines specified in clauses (i)-(iv)] ...

the term of the patent shall be extended 1 day for each day after the end of the period specified in clause (i), (ii), (iii), or (iv), as the case may be, until the action described in such clause is taken.

(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

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filing date of the application in the United States ...

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.

(C) Guarantee or adjustments for delays due to interferences, secrecy orders, and appeals.—Subject to the limitations under paragraph (2) ... the term of the patent shall be extended 1 day for each day of the pendency of the proceeding, order, or review, as the case may be.

(emphases added). To summarize, paragraph A (the "A guarantee" or "A clause") promises "prompt [PTO] responses" by extending the term of the patent one day for each day the PTO does not meet certain examination deadlines in subdivisions (i)-(iv). Id. § 154(b)(1)(A). One of these deadlines, for instance, requires a first response to a filed application within fourteen months. See id. § 154(b)(1)(A)(i). Paragraph B (the "B guarantee" or "B clause") extends the term of the patent one day for each day issuance is delayed due to the PTO's failure "to issue a patent within 3 years after the actual filing date of the application in the United States." Id. § 154(b)(1)(B). Last, paragraph C allows for adjustments relating to delays resulting from interference proceedings, secrecy orders, and appeals. Id. § 154(b)(1)(C). At issue in this case are the A and B guarantees.

Both the A and B clauses are expressly subject to paragraph 2's "In general" limitation:

In general. To the extent that periods of delay attributable to grounds specified in paragraph (1) overlap, the period of any adjustment granted under this subsection shall not exceed the actual number of days the issuance of the patent was delayed.

Id. § 154(b)(2)(A) (emphasis added). In other words, this limitation restricts the period of adjustment when any of the "periods of delay" "overlap." This case asks this court to interpret and enforce the guarantees in the face of an "overlap" and "periods of delay" under section 154(b)(2)(A).

Section 154(b)(3) of the statute directs the PTO to "prescribe regulations establishing procedures for the application for and determination of patent term adjustments under this subsection." Id. § 154(b)(3) (emphasis added). Under the guise of that authority, the PTO promulgated 37 C.F.R. § 1.703(f) in 2000: "To the extent that periods of adjustment attributable to the [guarantees] overlap, the period of adjustment granted under this section shall not exceed the actual number of days the issuance of the patent was delayed." (emphasis added). Other than adding the term "periods of adjustment," this language repeated the text of section 154(b)(2)(A). The regulations later defined "periods of adjustment" as "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. ..." 37 C.F.R. § 1.703(b) (2000). The regulation supplied no explanation about implementation or application of these rules.

In 2004, the PTO amended the regulation to replace "periods of adjustment" with "periods of delay." 69 Fed.Reg. 21706 (2004). The PTO contended that this substitution clarified the regulation:

The language of former § 1.703(f) misled applicants into believing that [periods of A-delay] and [periods of B-delay] were overlapping only if the [period of A-delay] occurred more than three years after the actual filing date of the application. If an application is entitled to a[B-]adjustment ... the entire period during which the application was pending before the [PTO ] ..., and not just the period beginning three years after

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the actual filing date of the application; is the period of delay under 35 U.S.C. 154(b)(1)(B) in determining whether periods of delay overlap under 35 U.S.C. 154(b)(2)(A).

Id. (emphasis added). Thus, the "period of delay," according to the PTO's new definition, caused the B guarantee to start with the filing of the application, not three years later. Under that interpretation, "overlap" between A adjustments and B adjustments can arise and begin during the pendency of the patent application. For example, if a patent entitled to twenty days of A adjustments issues twenty days after the three year mark, then it is only entitled to a total of twenty days of adjustment. In other words, the entire period of A delay "overlaps" with the entire period of B delay. Using this framework, the PTO uses either the greater of the A delay or B delay to determine the appropriate adjustment but never combines the two.

Wyeth and Elan Pharma are the owners of U.S. Patent Nos. 7,179,892 (the "`892 patent") and 7,189,819 (the "`819 patent")—inventions that treat Alzheimer's disease. During the prosecution of each of their respective applications, the PTO undisputedly caused delays that gave the applicants entitlement to both A and B guarantees.

For the '892 patent, the PTO calculated 610 days of A delay and 345 days of B delay. Of the 610 days of A delay, 51 occurred more than three years after the application was filed. During the prosecution, the applicant caused 148 days of delay. Thus, under section 154(b)(2)(C), any adjustment must be reduced by that amount. See 35 U.S.C. 154(b)(2)(C). Under its greater-of-A-or-B rubric, the PTO calculated the total adjustment at 462 days—i.e., 610 (the greater of A or B)— 148 (applicant delay). According to Wyeth, however, the "period of delay" for purposes of the B clause could not have started until three years after the application's filing date. For that reason, the only possible "overlap" was any A delay occurring after the three-year mark. Because only 51 days of A delay occurred after the three year mark for the '892 patent, the adjustment, according to Wyeth, should have been 756 days—i.e., 610 (A delay) + 345 (B delay)—51 ("overlap")—148 (applicant delay).

For the '819 patent, the PTO calculated 336 days of A delay and 827 days of B delay. Of the 336 days of A delay, 106 occurred after the three-year mark. In this case, the applicant caused 335 days of delay. The greater-of-A-or-B rubric yields an adjustment period of 492 days—i.e., 827 (the greater of A or B) — 335 (applicant delay). Wyeth contends the adjustment period should have been 722 days—i.e., 336 (A delay) + 827 (B delay) — 106 ("overlap") — 335 (applicant delay).

After filing petitions for reconsideration of the...