• The Federal Circuit Rejects PTO’s Interpretation of Federal Statute Determining Patent Term Adjustment 
  • December 27, 2010
  • Law Firm: Roylance, Abrams, Berdo & Goodman, L.L.P. - Washington Office
  • A three-judge panel of the United States Court of Appeals for the Federal Circuit, in Wyeth v. Kappos (as Director of the U.S. Patent and Trademark Office (“the PTO”) ) refused to accord deference to the PTO’s interpretation of the federal statute governing the determination of patent term adjustment (PTA), upholding the lower court’s ruling that the plain language of the statute accords a patentee a PTA combining adjustments resulting from violations of more than one type of statutory guarantees aiming to remedy PTO-caused delays incurred during patent acquisition.

    After the United States changed the effective term of a patent from seventeen years commencing from issuance to twenty years from filing, the Congress enacted the American Inventors Protection Act (“the AIPA”), which promised a patentee a full patent term adjustment under the provisions of 35 U.S.C. §154 (“the statute”), as a way to compensate loss of patent term due to any PTO-caused delays incurred during patent acquisition. The patent term adjustment took the form of three distinct types of “guarantees” codified in the first paragraph of 35 U.S.C. §154(b): (A) guarantee of prompt PTO responses; (B) guarantee of no more than 3-year application pendency; and (C) guarantee for delays due to interference, secrecy orders, and appeals.

    If there are violations of more than one type of the codified guarantees, the PTA accorded to a patentee is subject to the second paragraph of 35 U.S.C. §154(b), which further provides that “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”.

    The issue central to the Wyeth case is whether, under 35 U.S.C. §154(b), the period of delay attributable to the “B guarantee” is the entire period during which the application is pending before the PTO, as contended by the PTO, or the period beginning three years after the filing date of the application, as argued by Wyeth.

    Under the PTOs interpretation, the entire period of delay attributable to the “A guarantee” (“the A delay”) inevitably overlaps the entire period of delay attributable to the “B guarantee” (“the B delay”), and as a result, a patentee is only entitled to a PTA equal to the greater of the A delay or the B delay, but not entitled to a PTA combining the A delay and the B delay. Conversely, under Wyeth’s interpretation, the A delay and the B delay only overlap when the A delay occurs after the three-year mark, thus entitling a patentee, in various scenarios, to a PTA combining the A delay and the B delay.

    The lower court sided with Wyeth, particularly noting that “[T]he problem with the PTO’s interpretation is that it considers the application delayed under [the B guarantee] during the period before it has been delayed.” The Federal Circuit affirmed the lower court’s ruling, holding that “[T]his court detects no ambiguity in the terms ‘periods of delay’ and ‘overlap’”, and “the PTO’s position cannot be reconciled with the language of the statute.”

    The PTO contended that because A delays during the first three years of prosecution ultimately lead to B delays, the Wyeth’s interpretation would cause double counting of A delays incurred during the first three years of prosecution, creating in various scenarios windfall PTAs for some patentees but not for other similarly situated patentees. While acknowledging the PTO’s inequity claim directed at the Wyeth’s interpretation as true, the Federal Circuit pointed out that the PTO’s interpretation may in other scenarios likewise result in imbalanced treatment of similarly situated patentees. Ultimately rejecting the PTO’s use of inequity as a justification for adopting its interpretation, the Federal Circuit held that “[R]egardless of the potential of the statute to produce slightly different consequences for applicants in similar situations, this court does not take upon itself the role of correcting all statutory inequities, even if it could. In the end, the law has put a policy in effect that this court must enforce, not criticize or correct.”

    The PTO also referred to the second clause of the second paragraph of 35 U.S.C. §154(b), namely “the period of any adjustment granted under this subsection shall not exceed the actual number of days the issuance of the patent was delayed”, as support for its interpretation. Noting that the second clause “only takes effect upon satisfaction of the first clause [of the same paragraph] (‘To the extent that periods of delay attributable to grounds specified in paragraph (1) overlap¿’)”, the Federal Circuit rejected the PTO’s argument, holding that “the actual number of days the issuance of the patent was delayed” in the second clause refers to each day covered by a “period of delay” in the first clause with no such delay counted twice.

    The Federal Circuit further rejected the PTO’s resorting, in making its case, to the legislative history surrounding the enactment of the AIPA. First, the Federal Circuit noted that the PTO’s interpretation would effectively create a seventeen-year cap of patent term whereas the legislative context suggested “a very different goal of supplying adequate protection will often be ‘considerably more’ than the PTO’s effective cap.” Next, the Federal Circuit discounted the addition of the B guarantee into section 154(b), a legislative event which the PTO highlighted in supporting its case, as hardly amounting to a “most extraordinary showing of contrary intentions.” In the end, the Federal Circuit concluded that the legislative history did not provide any “extraordinary showing of contrary intentions” that would otherwise give reason to depart from the language of 35 U.S.C. §154(b) by adopting the PTO’s interpretation.

    Last, the Federal Circuit rejected the PTO’s contention that its interpretation is entitled to deference under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), holding that because “the plain language of the statute itself controls this case and sets an unambiguous rule for overlapping extension, this court detects no reason to afford special deference to the PTO’s interpretation.”

    In rejecting the PTO’s interpretation of 35 U.S.C. §154(b) and upholding the lower court’s ruling siding with the Wyeth’s interpretation of the statute, the Federal Circuit prohibited the PTO from seeking to correct inequities that the statute may create by enforcing its own interpretation contrary to the plain language of the statute. In the process, the Federal Circuit also made it clear that, since the plain language of the statute is unambiguous as to its meaning, the court’s role is to enforce the policy that the statute has clearly put forth, rather than to correct statutory inequities.