Ariad Pharmaceuticals, Inc. v. Matal

          MEMORANDUM OPINION

          T.S. ELLIS, III UNITED STATES DISTRICT JUDGE

         This is an appeal from a decision by the United States Patent & Trademark Office (“PTO”), calculating the patent term adjustment for United States Patent No. 8, 114, 874 (the “'874 Patent”), owned by plaintiff ARIAD Pharmaceuticals (“ARIAD”). Specifically, the PTO determined that the three month period, beginning with the PTO's erroneous conclusion that ARIAD had abandoned its patent application and ending when the PTO rescinded the notice of abandonment, constituted “time consumed by continued examination” pursuant to 35 U.S.C. § 154(b)(1)(B). Accordingly, the PTO excluded this four-month period from the patent term adjustment calculation. ARIAD argues that the PTO erred in excluding this four-month time period from its adjustment calculation because the continued examination had not yet commenced. This dispute has been fully briefed and argued and is now ripe for disposition.

         I.

         Congress in the past quarter century has significantly altered the patent law landscape in a manner particularly pertinent to this appeal. Thus, a brief description of this new landscape provides useful context and aids the analysis.

         The patent process begins when an applicant seeking a United States patent files an application with the PTO. See 35 U.S.C. § 111. The PTO then conducts an examination of that application, reviewing the application first for procedural requirements and then referring the application to an examiner to determine whether the invention meets substantive patentability requirements. Id. §§ 101, 112, 103, 131. If the examiner determines the application does not meet patentability requirements and issues a final rejection, the applicant may file a request for continued examination (“RCE”) of the application pursuant to 35 U.S.C. § 132(b). See 37 C.F.R. § 1.114. When an RCE is filed, the “Technology Center” assigned to the application initially processes the request and verifies that all the threshold requirements for continued examination are satisfied. See Manual of Patent Examining Procedure (“MPEP”) § 706.07(h). If the requirements are not satisfied, the applicant is notified and afforded the opportunity to enter amendments. Id. Once the requirements are satisfied, the PTO will withdraw the finality of the preceding rejection and forward the RCE to the patent examiner for review. See 37 C.F.R. § 1.114(d).

         If, at the end of this process, a patent issues, the patent term will last for twenty years from the date the initial patent application was filed. Prior to 1994, patent terms were seventeen years from the date the patent issued. In 1994, Congress changed the patent term to twenty years from the date the application was first filed. In changing the start date of the patent term to the date when the application was first filed, Congress noted that PTO delays in the processing of applications would now consume some portion of the patent term. Accordingly, to account for these delays, Congress passed the American Inventors Protection (“AIPA”) of 1999, requiring the PTO to grant several patent term adjustments based on delays in the application processing attributable to the PTO. See 35 U.S.C. § 154(b). Specifically, there are three types of delays for which patentees are entitled to term adjustments: “A Delay;” “B Delay;” and “C Delay.” “A Delay” extends the patent term one day for each day the PTO fails to meet prescribed deadlines for certain events during the processing and prosecution of the patent application, including deadlines for mailing notices of allowance, responding to replies under § 132, and issuing the patent after payment of the required fees. See 35 U.S.C. § 154(b)(1)(A). “B Delay” provides a guarantee of no more than three-years of application pendency from the time the application is filed to issuance of the patent. Id. § 154(b)(1)(B). “C Delay” extends the patent term one day for each day of the pendency of an interference proceeding, a secrecy order, or successful appellate review by the Board, or a Federal court. Id. § 154(b)(1)(C). Most relevant to this case is the PTO's calculation of “B Delay.” As described above, “B Delay” accounts for delays “due to the failure of the [PTO] to issue a patent within [three] years after the actual filing date of the application . . . “ Id. § 154(b)(1)(B). The statute excludes certain time periods from the calculation of that three-year period of time, including “any time consumed by continued examination of the application requested by the applicant under section 132(b).” Id. § 154(b)(1)(B)(i).

         In addition to establishing these categories of delay, the statute delegates to the PTO Director the authority to “prescribe regulations establishing procedures for the application for and determination of patent term adjustments . . . .” Id. § 154(b)(3)(A). Pursuant to this authority, the PTO promulgated a rule calculating the “time consumed by continued examination requested by the applicant” in 35 U.S.C. § 154(b)(1)(B)(i) to include:

(1) The number of days, if any, in the period beginning on the date on which any request for continued examination of the application under 35 U.S.C. 132(b) was filed and ending on the date of mailing of the notice of allowance under 35 U.S.C. 151; 37 C.F.R. § 1.703(b)(1). At the same time, the PTO promulgated a regulation enabling the Director to suspend or waive “[i]n an extraordinary situation, when justice requires, any requirement of the regulations in this part which is not a requirement of the statutes … .” 37 C.F.R. § 1.183.

         II.^[1]

         Plaintiff in this case, ARIAD Pharmaceuticals (“ARIAD”), is a Delaware corporation and the owner of the United States Patent No. 8, 114, 874 (the “'874 Patent”), relating to an invention designed to treat abnormal protein kinase activity. ARIAD filed the application that culminated in the issuance of the ‘894 patent on December 22, 2006, ARIAD filed United States patent application number 11/644, 849 (“'849 Application”), the patent application for what would become the '874 Patent. After reviewing the application, on August 3, 2009, the PTO sent ARIAD a final Office action rejecting the '849 Application. Thereafter, on February 3, 2010, ARIAD filed a timely request for continued examination pursuant to 35 U.S.C. § 132(b), along with the required fee. PTO received the request for examination on February 12, 2010 but failed to process the request at the time it was received. Instead, one week later-on February 19, 2010-the PTO sent ARIAD a notice of abandonment in error, suggesting that because the PTO had not received a response from ARIAD, ARIAD had abandoned its application. ARIAD subsequently filed a petition to withdraw the notice of abandonment on February 25, 2010, arguing that ARIAD had, in fact, timely filed a request for continued examination. Three months later, on May 13, 2010, the PTO granted ARIAD's request and withdrew the notice of abandonment. Specifically, the PTO concluded the notice of abandonment was issued in error because a “review of Office records reveal[ed] that the Office received the reply on February 12, 2010.” Administrative Record 418 (Petition Decision (05-13-10)). The PTO also stated in the decision withdrawing the notice of abandonment that the application “will be referred to Technology Center Art Unit 1624 for processing of the reply, and for continued examination in the normal course of business.” Id. at 419 (Petition Decision 05-13-19). Accordingly, on June 10, 2010, the PTO issued a notice of rescinded abandonment, entered the RCE, and forwarded the application to an examiner. Id. at 3 (PTA summary document of ARIAD's ‘849 Application).

         The PTO subsequently mailed a notice of allowance on October 13, 2011, and issued the “'874 Patent” on February 14, 2012 with a calculated patent term adjustment of 0 days under 35 U.S. § 154(b). In 2014, the Federal Circuit held that “time consumed by continued examination” does not include time between the notice of allowance and issuance. Novartis v. Lee, 740 F.3d 593, 602 (Fed. Cir. 2014). Accordingly, the PTO recalculated the period of “B Delay” to exclude the time from the filing of the RCE until the notice of allowance, not the time from the filing of the RCE until issuance of the patent. Despite this recalculation, the PTO again concluded that the patent term adjustment was 0 days. Specifically, the PTO determined that the time consumed by continued examination was 609 days, beginning on February 12, 2010 when ARIAD filed its RCE and ending on October 13, 2011 when the PTO mailed the notice of allowance. Accordingly, the PTO excluded that time from the “B Delay” calculation, which yielded a total “B Delay” of 175 days.^[2] In other words, the PTO determined that “time consumed by continued examination” included time when the PTO erroneously considered the patent application to be abandoned. The PTO also added 203 days of “A Delay” for the time beyond four months that it took the PTO to respond to ARIAD's request for continued examination, resulting in a total “A” and “B” delay of 378 days. Because the PTO determined the amount of delay attributable to the applicant was 463 days, the PTO determined that the amount of “A, ” “B, ” and “C” delay did not exceed the number of days attributable to applicant delay and awarded 0 days of adjustment to the patent.

         ARIAD subsequently sought reconsideration of this “B Delay” calculation, and on March 9, 2017, the PTO upheld its decision reasoning that the applicant was not entitled to “B Delay” during the pendency of an RCE. After exhausting its administrative appeals, ARIAD filed the instant action on June 26, 2017, pursuant to 35 U.S.C. § 154 and the Administrative Procedure Act (“APA”), contending that the PTO's calculation of ARIAD's “B Delay” was based on an improper construction of the statute. Specifically, ARIAD alleges that the total “B Delay” should be 293 days, not 175 days, and accordingly, that ARIAD should receive a patent term adjustment of 33 days, not 0 days.

         The parties subsequently filed the cross-motions for summary judgment at issue here. The PTO contends that “time consumed by continued examination” includes any time after the filing of an RCE, which occurred in February 2010, and as such, the time from February to June was properly excluded. ARIAD counters by arguing that time during which the PTO erroneously considered the application abandoned and therefore did not ...