Supernus Pharmaceuticals, Inc. v. Iancu
Opinion
Supernus Pharmaceuticals, Inc. and United Therapeutics Corp. appeal the entry of summary judgment by the U.S. District Court for the Eastern District of Virginia. The district court determined that, based on this court's decision in Gilead Sciences, Inc. v. Lee , the U.S. Patent and Trademark Office's calculation of the patent term adjustment for the patent at issue was correct, and that summary judgment was warranted as a matter of law. We reverse the district court's grant of summary judgment because the patent term adjustment in this case went beyond the period during which the applicant failed to undertake reasonable efforts and thereby exceeded the limitations set by the patent term adjustment statute.
BACKGROUND
I.
The life of a patent, the period of time during which the exclusive nature of a patent is in effect, is measured in years and days and is referred to as the "term" of the patent or "patent term." Prior to June 8, 1995, the term of a patent was seventeen years, measured from the date that the patent issued to its expiration date seventeen years later.
See
Merck & Co. v. Kessler
,
When the United States entered the World Trade Organization, it assumed certain obligations and commitments under
*1353
the terms of the World Trade Organization Agreement on Trade Related Aspects of Intellectual Property Rights.
See
Agreement on Trade-Related Aspects of Intellectual Property Rights, 33 I.L.M. 1197 (1994). As a result, Congress changed the patent term from seventeen years to twenty years, measured from the filing date of the earliest United States non-provisional application for the patent.
See
Pub. L. No. 103-465, § 532,
In addition to extending the patent term from seventeen years to twenty years, Congress passed the patent term adjustment ("PTA") statute in 1999 in an effort to discourage delay in the patent application process.
See
Pub. L. No. 106-113, § 1000(a)(9),
Section 154(b)(1) outlines three types of delays caused by the USPTO, known as Types A, B, and C, that can result in a PTA. Adjustments for a Type A delay apply when the USPTO fails to provide a notification under
As noted above, the statute recognizes that conduct by the applicant may also cause delay in the examination or prosecution of the application. Section 154(b)(2)(C) authorizes the USPTO to reduce the total amount of PTA for Type A, B, and C delays by deducting the number of days equal to the period of time that "the applicant failed to engage in reasonable efforts to conclude prosecution of the application."
The Director of the USPTO has promulgated such regulations:
Submission of a supplemental reply or other paper, other than a supplemental reply or other paper expressly requested by the examiner, after a reply has been filed, in which case the period of *1354 adjustment set forth in § 1.703 [that extends the patent's term due to USPTO delay] shall be reduced by the number of days, if any, beginning on the day after the date the initial reply was filed and ending on the date that the supplemental reply or other such paper was filed ....
Id .
The USPTO has also promulgated regulations that permit an applicant to file an information disclosure statement ("IDS") up to the end of the patent examination process, while providing incentives for an applicant to submit any necessary IDS promptly.
II.
The relevant facts in this case are not in dispute. Appellant Supernus Pharmaceuticals, Inc. ("Supernus") is the owner and assignee of the patent at issue,
On April 27, 2006, Supernus filed U.S. Patent Application No. 11/412,100 ("the '100 application"). On August 20, 2010, the USPTO issued a final rejection. On February 22, 2011, Supernus filed an RCE, which removed the finality of the rejection and permitted the examiner to consider additional information submitted by Supernus.
On the same day it filed the '100 application, Supernus filed international application PCT/US2007/009969, claiming priority from the '100 application. The international application gave rise to European Application No. 07755989.6. On October 13, 2011, the European Patent Office ("EPO") issued the European application as European Patent EP2010189 ("the EP patent"). On August 21, 2012, the EPO notified Supernus's European patent counsel that a Notice of Opposition was filed by Sandoz AG to the EP patent, citing 10 documents ("the Sandoz Opposition").
On September 11, 2012, Supernus received a letter from its European patent counsel disclosing the EPO notification and the Sandoz Opposition. Seventy-nine days later, or 100 days from the EPO notification of the Sandoz Opposition, Supernus submitted a supplemental IDS on November 29, 2012, informing the USPTO
*1355 of the Sandoz Opposition and providing the documents cited in the Sandoz Opposition, the Sandoz Opposition itself, the EPO notification, and the letter from Supernus's European patent counsel. 2
On September 10, 2013, the USPTO issued a first Office Action responding to Supernus's RCE. On January 10, 2014, Supernus filed a response. On February 4, 2014, the USPTO issued a Notice of Allowance. On June 10, 2014, the USPTO issued the '897 patent, reflecting a PTA of 1,260 days, meaning that the USPTO had added 1,260 days to the patent's twenty-year term.
In calculating the PTA, the USPTO attributed 2,321 days to USPTO delay: 1,656 days for Type A delays (for the USPTO's failure to meet the mandated statutory response deadlines), and 665 days for Type B delays (for the USPTO's failure to issue the patent within three years of the application's filing date). See J.A. 80. Next, the USPTO reduced the PTA of 2,321 days by 175 days to account for overlapping Type A and Type B delays, and by 886 days for applicant delay to arrive at the total 1,260-day PTA. Relevant here, of the 886 days attributed to applicant delay, 646 days were assessed for the period between the February 22, 2011 filing of the RCE and the November 29, 2012 submission of the IDS. This appeal focuses on this 646-day reduction in the PTA due to purported applicant delay.
Supernus filed a request for Reconsideration of Patent Term Adjustment on grounds that the deduction of the 646-day period was improper.
3
Supernus argued that "
The USPTO rejected the request for reconsideration. The USPTO determined that under this court's decision in
Gilead
, submission of an IDS after the filing of a response to an election or restriction requirement is subject to a reduction under
Supernus appealed to the U.S. District Court for the Eastern District of Virginia and filed a motion for summary judgment on the grounds that
The district court granted summary judgment in favor of the USPTO.
Id
. at *8. The district court concluded that the USPTO did not err in the PTA calculation for the '897 patent and that this court's decision in
Gilead
foreclosed, as a matter of law, Supernus's statutory interpretation arguments that
Supernus timely filed this appeal. We have jurisdiction pursuant to
DISCUSSION
I. Standard of Review
This court reviews a district court's grant of summary judgment under the law of the regional circuit, in this case, the Fourth Circuit.
See
Mohsenzadeh v. Lee,
II. Gilead
As a preliminary issue, we note that this court has grappled with the reasonableness of
In
Gilead
,
the patent owner Gilead brought an action challenging the USPTO's assessment of a 57-day applicant delay in calculating PTA deduction, based on Gilead's delay during examination between its initial reply to a restriction requirement and its submission of a supplemental IDS disclosing two other co-pending Gilead patent applications.
Id
. at 1345-46. The district court granted summary judgment in favor of the USPTO, and we affirmed.
Id
. at 1346, 1350-51. Engaging in the
Chevron
analysis, this court concluded that Congress did not address the precise question
*1357
at issue,
i.e.
, "whether a failure to engage in reasonable efforts requires conduct that actually causes delay," and that Congress expressly delegated authority to the USPTO to prescribe regulations establishing circumstances that constitute a failure of an applicant to engage in reasonable efforts to conclude examination.
See
id
. at 1349-50. At step two of
Chevron
, we recognized that we give deference to the agency where Congress explicitly left a gap to fill and held that a reasonable interpretation of the PTA statute was that "Congress intended to sanction not only applicant conduct or behavior that result in actual delay, but also those having the potential to result in delay irrespective of whether such delay actually occurred."
We conclude that
Gilead
does not foreclose Supernus's statutory interpretation argument. Supernus's argument is that any reduction in PTA may not exceed the "time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application."
In Gilead , Appellant Gilead had two other co-pending patent applications that it disclosed in the supplemental IDS. Gilead could have submitted the supplemental IDS disclosing its co-pending applications when it filed its response to the restriction requirement. Gilead , therefore, involved a period of time during which the applicant could have taken identifiable efforts to conclude prosecution but did not. Gilead focused on whether the statute required the applicant's failure to take reasonable efforts to have resulted in actual delay, as opposed to the potential to cause delay, to count towards reduction of PTA.
In contrast, this case is not about whether efforts taken by Supernus, or those it could have taken, resulted in actual or potential delay. Supernus contends, and the USPTO does not dispute, that Supernus could not have undertaken any efforts to conclude prosecution of the '100 application during the 546-day period between the filing of the RCE on February 22, 2011, and the EPO's notification of the Sandoz Opposition on August 21, 2012. J.A. 552-53; Appellant Br. 7 n.3; Appellee Br. 16-17.
In addition, the precise question addressed in
Gilead
was not the precise question under review in this case. In
Gilead
,
the "precise question" reviewed by the court in its
Chevron
analysis was "whether a failure to engage in reasonable efforts requires conduct that actually causes delay."
Gilead
,
Because
Gilead
involved different facts and a different legal question,
Gilead
is not controlling in this action.
Cf.
Fed. Election Comm'n v. Wis. Right To Life, Inc.
,
III. Chevron Framework
A. The PTA Statute Answers the Precise Question
This case presents a question of statutory interpretation by an agency to which we apply the
Chevron
framework. The first step of our legal analysis, therefore, is to "ask whether the statute's plain terms 'directly addres[s] the precise question at issue.' "
Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs.
,
We begin by looking at the plain language of the PTA statute.
See
United States v. Hohri
,
In this case, the pertinent language of the PTA statute is plain, clear, and conclusive. "Congress has supplied a clear and unambiguous answer to the interpretive question at hand."
Pereira v. Sessions
, --- U.S. ----,
The PTA statute provides in pertinent part:
(b) Adjustment of patent term.-
....
(2) Limitations.-
....
(C) Reduction of period of adjustment.-
(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.
A plain reading of the statute shows that Congress imposed two limitations on the amount of time that the USPTO can use as applicant delay for purposes of reducing PTA. First, the statute expressly requires that any reduction to PTA be equal to the period of time during which an applicant fails to engage in reasonable efforts. Second, *1359 the statute expressly ties reduction of the PTA to the specific time period during which the applicant failed to engage in reasonable efforts.
The PTA statute requires that any PTA reduction be
equal to
the period of time during which an applicant fails to engage in reasonable efforts. The word "equal" is widely understood to mean "the same in amount, number, or size."
E.g.
,
Equal
, Cambridge Dictionary of American English 287 (2000). Stated differently, PTA reduction cannot exceed the period of time during which an applicant failed to engage in reasonable efforts. Thus, if there is no period of time
during which
the applicant could have but failed to engage in reasonable efforts, there can be no reduction to the PTA. The word "during" is similarly understood to mean "from the beginning to the end of (a particular period)" or "at some time between the beginning and the end of (a period)."
E.g.
,
During
, Cambridge Dictionary of American English 267 (2000). The preceding "shall" "generally imposes a nondiscretionary duty."
SAS Inst. Inc. v. Iancu
, --- U.S. ----,
The "equal to" limitation ensures that applicants will be charged the full amount of time corresponding to their own delay.
See
Gilead
,
A period of time including no identifiable efforts that could have been undertaken cannot be "equal to" the period of failure to undertake reasonable efforts under the terms of the statute. To conclude otherwise renders the PTA statute's "reasonable efforts" language superfluous. This understanding of the plain language makes practical sense and is consistent with the legislative history because Congress intended the PTA statute to discourage dilatory conduct by patent applicants *1360 and reward applicants that take action to conclude prosecution of the patent. See H.R. Rep. 106-287, at 49-50.
B. The USPTO's Assessment of Applicant Delay is Inconsistent with the PTA Statute
As shown in the figure below, the USPTO reduced the PTA by 646 days due to applicant delay. Supernus concedes that it failed to engage in "reasonable efforts" for the last 100 days of the 646-day period. It states, however, that there was nothing it could have done during the period of time from the filing of the RCE and original IDS to the EPO communication.
Appellant Br. 8 (reproduced and modified).
We agree with Supernus that there were no efforts that it could have taken in the period of time during the preceding 546 days. The record is silent as to what Supernus could have done to conclude prosecution during the 546-day time period, beginning with the filing of the RCE/IDS on February 22, 2011, and ending on the date of the EPO notification, August 21, 2012. Nor does the USPTO contend that Supernus could have undertaken any "reasonable efforts" during the 546-day time period to conclude prosecution. To the contrary, the facts indicate that there 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. The USPTO's additional 546-day assessment as applicant delay is contrary to the plain meaning of the statute because the 646-day total reduction is not
equal to
a period of time
during which
Supernus failed to engage in reasonable efforts to conclude prosecution of the '897 patent. The 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."
See
This decision is consistent with the intent of Congress. Congress chose to speak plainly to the precise issue by setting limitations on the period of PTA reduction.
See
City of Arlington v. FCC
,
CONCLUSION
The USPTO argues that
We find the USPTO's PTA reduction to be inconsistent with the PTA statute and, as a result, we accord no deference to the USPTO's application of the regulations at issue in these circumstances.
See
Wyeth
,
REVERSED AND REMANDED
COSTS
No costs.
There are various requirements that apply to a submission of an IDS that are independent of the PTA. For example, during prosecution, the applicant generally has a duty of candor and good faith that includes a duty to disclose all information known to the applicant to be material to the patentability of the claims.
See
Supernus did not attempt to invoke the protections of the thirty-day safe harbor established by
Supernus also argued that the USPTO erred in deducting 126 days from the PTA for the period between the time of allowance and the time of issuance, following this court's then recent decision in
Novartis AG v. Lee
,
Supernus concedes that it failed to engage in "reasonable efforts" for the remaining 100 days of the 646-day period: from the EPO notification to Supernus's submission of the supplemental IDS. Appellant Reply Br. 2. On appeal, Supernus only challenges the USPTO's assessment of the preceding 546 days as applicant delay. Appellant Br. 59.
Reference
- Full Case Name
- SUPERNUS PHARMACEUTICALS, INC., United Therapeutics Corporation, Plaintiffs-Appellants v. Andrei IANCU, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Defendant-Appellee
- Cited By
- 17 cases
- Status
- Published