Novartis v. Lee: The Unfortunate and Unintended Impact of the PTA Statute on Continuation Practice

There’s an old expression that Murphy (of Murphy’s Law fame) “was an optimist.”  That expression certainly applies to the recent Federal Circuit panel decision in Novartis AG v. Lee, as well as the companion decision in Exelixis, Inc. v. Lee on the meaning of the Patent Term Adjustment (PTA) Statute (35 U.S.C. § 154(b)), and particularly what’s called the “B period” portion (i.e., 35 U.S.C. § 154(b)(1)(B)) of PTA.  In Novartis, this Federal Circuit panel (opinion by Judge Taranto, joined by Judges Newman and Dyk) ruled that the second exclusion from PTA in the “B period” portion (i.e., 35 U.S.C. § 154(b)(1)(B)(ii)) excludes from PTA any time consumed by a Request for Continued Examination (RCE), even if that RCE is filed more than 3 years after the “actual filing date” of the patent application.  Not only is this ruling a questionable interpretation of 35 U.S.C. § 154(b)(1)(B)(ii) for reasons I’ll discuss below, but it creates an unfortunate, and surely unintended impact on RCEs specifically, as well as continuation practice generally.  And the more I dig into the PTA statute, the more problematical this ruling in Novartis becomes.

Novartis also addresses another thorny issue of when a patent applicant dissatisfied with the PTA determination by the USPTO may timely challenge such a determination (i.e., 35 U.S.C. § 154(b)(4)(A) (and which also went against the patentee, Novartis), but I’m going to focus solely on the B period exclusion issue.  I’m also going to provide here a summary of the PTA statute as it relates to these 3 periods used for determining the cumulative PTA that the patent applicant gets.  See the 2012 Eastern District of Virginia’s decision in Exelixis, Inc. v. Kappos which was vacated by the Federal Circuit’s companion decision to Novartis, and provides a nice, concise explanation of how these 3 periods work for determining the cumulative PTA owed the patent applicant.

The 3 periods used to determine PTA are commonly referred to as the “A period” (i.e., 35 U.S.C. § 154(b)(1)(A)), the previously mentioned B period, and the “C period” (i.e., 35 U.S.C. § 154(b)(1)(C)).  These 3 periods were added in 1999 by Congress to the existing PTA statute to essentially address situations where patent term consumed during patent prosecution which was caused by delays not directly attributable to the patent applicant would be restored once the patent application was allowed and later issued.  The overall “goal” addressed by PTA, both originally (and by these 1999 amendments) was to try to assure the patent applicant did not lose more than 3 years of patent term during patent prosecution.  That reflects the change (effective in 1995) in patent term going from 17 years from issue date to 20 years from the earliest effective filing date.


The A period (the “guarantee of prompt responses by the USPTO”) essentially addresses delays caused by the USPTO failing to:  (1) issue a substantive Office Action (e.g., a restriction requirement or rejection) within 14 months of the filing date of the application; (2) respond to a reply by the patent applicant under 35 U.S.C. § 132 (e.g., an amendment in response to an Office Action) or an appeal under 35 U.S.C. § 134 (to the Patent Trademark Trial and Appeal Board, or PTAB); (3) if there are allowable claims, act on the application within 4 months after the PTAB enters a decision under 35 U.S.C. § 134, or a federal court enters a decision under any of 35 U.S.C. §§ 141, 145, or 146; and (4) issue a patent within 4 months after the date the issue fee is paid under 35 U.S.C. § 151.  Any such A period delay causes the patent term to be adjusted “day for day” (e.g., 20 days of A period delay causes a 20 day PTA to be tacked onto the “20 year from filing date” term of the issued patent).

The B period (i.e., the guarantee of no more than a 3-year application pendency) essentially addresses delays caused by the USPTO where the application does not issue within 3 years of the “actual filing date” of the application.  I refer to this B period provision as the “3-year pendency” window.  Like A period delay, such B period delay also causes the patent term to be adjusted “day for day.”

The C period essentially addresses delays caused by the USPTO due to patent interferences, secrecy orders, and appeals (to the PTAB or to federal court).  Like the A period and B period delay, such C period delay also causes the patent term to be adjusted “day for day.”

The PTA for the A period, B period, and C period is cumulative, meaning the PTA for each of these periods is added together to determine the final (total) PTA for the patent.  Even so, to the extent the cumulative PTA includes an “overlap” between any of these 3 periods (i.e., 35 U.S.C. § 154(b)(2)(A)), any such “overlap” period is subtracted from the total PTA calculation (i.e., no “double counting” of PTA is permitted).  See 2010 Wyeth v. Kappos decision (opinion by Chief Judge Rader, joined by Judges Plager and Moore) which ruled that the B period did not start with the filing date of the application, but only 3 years after that filing date (thus contrary to the USPTO’s view that PTA was allowed for the greater of the A period or the B period, but not both).  For example (and consistent with the ruling Wyeth), delay in the A period would only “overlap” with delay in the B period at the point that the application has been pending for at least 3 years, i.e., after the “3-year pendency” window closes.

There are other “exclusions” from the amount of total PTA permitted, but the only other one important to my discussion of the Novartis case are the 3 exclusions relating to the B period (i.e., 35 U.S.C. § 154(b)(1)(B)(i-iii)).  These 3 exclusions provide that PTA does not include:  (i) “any time consumed by [a RCE]”; (ii) “any time consumed by an [interference], an order under [a petition under 35 U.S.C. § 181]”; or (iii) “any time in the processing by the [USPTO] requested by the applicant except [for example, a successful appeal to the PTAB or federal court as provided for in 35 U.S.C. § 154(b)(3)(C)].”  But the “$64,000” question addressed by Novartis is when do these 3 exclusions in the B period provision apply?  And that’s where this B period provision may get a bit “fuzzy.”

In view of the earlier Federal Circuit ruling in Wyeth, many (including me) believed that these B period exclusions were triggered only if, for example, the RCE was filed less than 3 years after the application filing date, i.e., within the “3-year pendency” window of the A period.  And apparently, that is also what the patentee in Novartis believed (and argued) as well.  (Although not stated when or how in Novartis, it’s pretty clear that the patentee filed at least 1 RCE more than 3 years after the filing date for at least 1 of the 23 patents involved in this suit.)  Indeed, and also in view of the earlier Wyeth decision, the District Court of the District of Columbia agreed with the patentee’s position that these B period exclusions only applied if, for example, the RCE was filed within the “3-year pendency” window.

But the Federal Circuit panel instead sided with the USPTO’s view that a RCE, no matter when it’s filed, triggered this second exclusion from PTA in the B period:  “The better reading of the language is that the [PTA] time should be calculated by determining the length of the time between the application [filing date] and patent issuance, and then subtracting any [RCE time period] and determining the extent to which result exceeds three years.”  While siding with the USPTO on subtracting from PTA all time consumed by the RCE, this Federal Circuit panel did agree with the patentee that this RCE period ended with the Notice of Allowance, thus counting (for B period purposes) additional PTA for the time between the Notice of Allowance and the issuance of the patent.

While the Federal Circuit panel’s reading in Novartis of when the B period exclusions apply may be a “plausible” reading of 35 U.S.C. § 154(b)(1)(B)(i-iii), it is not, in my opinion, the “best” reading, and especially the correct reading of when these B period exclusions apply.  Instead, as ruled (correctly in my opinion) by the Eastern District of Virginia in the companion Exelixis case, these B period exclusions are not triggered until after the “3-year pendency” window closes.  And even more significantly, the Federal Circuit panel’s reading in Novartis of when these B period exclusions apply is in at least implicit (if not explicit) conflict with how the earlier Wyeth case interpreted how this “3-year pendency” window works for the B period of the PTA statute.

In saying that its construction of this B period provision on when these 3 exclusions apply “is supported by the statutory purpose and other aspects of the statutory structure,” the Federal Circuit panel in Novartis focuses on only one aspect of that purpose:  no PTA for “delays not attributable to the [USPTO].”  But (besides failing to heed what was implicitly/explicitly said in the earlier Wyeth case), the Federal Circuit panel in Novartis completely glosses over the overall purpose of the PTA statute:  that patent term not be consumed due to delays clearly attributable to the USPTO.  That includes delays in the A period attributable to the failure of the USPTO to timely respond to RCEs.  Indeed, the Federal Circuit panel in Novartis reads the introductory “not including” phrase to these B period exclusions very oddly, and out of context to what the B period provision primarily addresses, i.e., delays attributable to the USPTO in issuing the patent within the “3 year pendency” window.


If you read the introductory “not including” language of the B period provision in appropriate context, these exclusions all relate to actions taken by the applicant (i.e., are not attributable to the USPTO) that would potentially delay issuance of the patent beyond this “3-year pendency” window.  That’s very apparent from the third exclusion relating to “any delay in the processing of the application by the [USPTO] requested by the applicant.”  In other words, if, for example, the applicant filed an RCE within that “3-year pendency” window, that would be treated presumptively as a “delay by applicant” that caused the patent to not issue within 3 years of the application filing date.”  In fact, and again using the example of the RCE, you might also interpret these B period exclusions to be tolled (as the Federal Circuit panel apparently did in Novartis) once the RCE period ends (e.g., there is a Notice of Allowance).

Another startling aspect of the ruling in Novartis is that Judge Newman joined Taranto’s opinion.  In the past, Newman has not hesitated to challenge (as well as vociferously chastise) her Federal Circuit colleagues when interpreting the patent statutes in an odd and patent applicant-adverse manner.  See CAFC Says “Patented Invention” Does Not Include Methods where a dissenting Newman strenuously protested the en banc majority’s interpretation of the meaning of the term “patented invention” in 35 U.S.C. § 271(f) in the 2009 Federal Circuit case of Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc.  But for whatever reason, Newman remained silent in Novartis.

I would expect the patentee (Novartis) to request a rehearing en banc by the Federal Circuit of this panel decision.  I would also not be surprised if there would be some significant amicus support for Novartis’ request for rehearing en banc, both from pharma specifically, as well as other organizations interested in IP generally.  And I would also hope that the Federal Circuit would at least review the question of “when do the B period exclusions apply?” en banc because:  (a) there is at least an implicit (if not explicit) conflict with its earlier Wyeth decision; (b) this question has significant impact on the continuing vitality of RCEs specifically, as well as the efficient operation of continuation practice generally; and (c) there is more than “reasonable doubt” that the Federal Circuit panel’s reading in Novartis of “when do the B period exclusions apply?” is correct.

So what happens (cringe) if this ruling by the Federal Circuit panel in Novartis stands unchanged?  Most likely, RCEs will go the way of “means plus function” claims under paragraph 6 of 35 U.S.C. § 112:  little, if ever used anymore.  And that would be truly unfortunate.  For example, RCEs previously have served an important role in allowing submissions of Information Disclosure Statements (IDSs) when relevant art references show up late in the prosecution process, often due to international prosecution, especially through the Patent Cooperation Treaty (PCT).  RCEs have also allowed prosecution to be renewed where it left off, often because an amendment after final (AAF) was refused entry by the Examiner.  By filing of an RCE, the patent applicant could then force the Examiner to deal with (and respond to) AAF.

Now, to avoid a potential loss of PTA in view of this Novartis ruling, the only options available will be to file either a continuation or divisional application.  (Continuations and divisionals are not subject, at least explicitly, to these B period exclusions.)  But the trouble with filing continuations and divisionals is that you are now, in essence, starting the prosecution all over again.  That will usually mean concurrently filing an extensive preliminary amendment to bring the prosecution back to where it left off which, in my opinion, is very inefficient, and also risks having a “disconnect” as to where the earlier prosecution ended, and this new prosecution begins.  And using continuations/divisionals to file those IDSs to cite art references uncovered/discovered late in the earlier prosecution (as mentioned above) is particularly inefficient and wasteful.

There is also a view that, rather than file RCEs, you should almost always appeal.  And yes, if you “succeed” in that appeal, 35 U.S.C. § 154(b)(1)(C)(iii) does provide for PTA if the patent issues “under a decision [by the PTAB or a federal court] reversing an adverse determination of patentability.”  But what constitutes a “reversing an adverse determination of patentability”?  Does that mean a partial reversal or only complete reversal?  Does that also include the PTAB issuing a new ground of rejection that dismisses the patent examiner’s reasoning?  (Supposedly there is a “policy” by the USPTO that a partial affirmance on appeal qualifies, but such a “policy” could be changed later, and is certainly not binding on the courts, including the Federal Circuit.)

Even more significant, an appeal to the PTAB is not cheap and is definitely not certain to succeed in partial, much less complete reversal if that is what is required by 35 U.S.C. § 154(b)(1)(C)(iii).  And any time consumed by an “unsuccessful” appeal (most likely to be at least 2 years) is clearly excluded from PTA by the B period exclusion of 35 U.S.C. § 154(b)(1)(B)(ii).

So if an RCE is currently pending, or a patent applicant chooses to file an appeal, how does the patent applicant keep the USPTO’s “feet to the fire” to avoid having such RCEs or appeals fall into a “black hole,” and thus consume inordinate amounts of patent term?  The only answer I see are provisions (2) and (3) of the A period noted above (i.e., 35 U.S.C. § 154(b)(1)(A)(ii-iii)) which require the USPTO (within 4 months):  (2) to respond to a reply under 35 U.S.C. § 132 (as noted above, I’m assuming that a “reply” would include an RCE coupled with an amendment, an RCE that requested consideration of an unentered amendment (e.g., an AAF), or the submission of an IDS); and (3) after a decision by the PTAB, to “act on the application.”  But even if provisions (2) and (3) of the A period might apply, that may be little solace to a patent applicant frustrated by the failure of the USPTO to promptly “reply” to the RCE (or move forward with prosecution of the application after the PTAB’s decision) once this “4-month” window expires.  And trying to secure such A period PTA will likely require resort to the courts, again at additional expense to the patent applicant, as well as the further uncertainty of the courts agreeing that the USPTO should include such additional A period PTA.

The problematic ruling by the Federal Circuit panel in Novartis practically “begs” for a legislative solution to address how the PTA statute unfortunately and unintendedly impacts patent prosecution continuation practice, especially that involving RCEs.  In fact, if the ruling by Federal Circuit panel in Novartis stands, there may be an effort by pharmaceutical companies (such as Novartis) and other pharma organizations (e.g., BIO) to get relief from Congress as this ruling most definitely affects them the most when patent term is consumed prior to marketing approval by the FDA.  But given the passage of the AIA (the Abominable Inane Act), as well as the passage of HR 3309 (the Goodlatte so-called “anti-patent troll” bill) and the impending passage of S. 1270 (the companion Leahy bill), I’ve got very faint hope for any legislative solution to this problem in the PTA statute by Congress.  In the meantime, and until we get relief from either an en banc Federal Circuit ruling (or less likely and much later from Congress), we’ll need to switch to filing continuations/divisionals to do what RCEs have previously done for us.  That’s certainly a less efficient way to run patent prosecution system.

*© 2014 Eric W. Guttag.  Posted January 23, 2014 on


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