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Intra-Cellular Therapies, Inc. v. Matal

United States District Court, E.D. Virginia, Alexandria Division

February 13, 2018

JOSEPH MATAL, Defendant.



         THIS MATTER comes before the Court on Plaintiff's Motion for Summary Judgment and Defendant's Cross Motion for Summary Judgment. This action arises from Plaintiff's challenge of the United States Patent and Trademark Office's ("USPTO") patent term adjustment determination for United States Patent No. 8, 648, 077 (the "'077 patent").

         When calculating the term of a patent, the USPTO is required to account for statutorily enumerated delays in the USPTO's examination of the patent application as well as any amount of time "during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application." 35 U.S.C. § 154(b) (2) (C) (i). To prevent a patent term's loss of time due to delay caused by the USPTO, the statutory 20-year patent term is to be extended by the sum of USPTO delay time minus applicant delay time. This calculation is referred to as a patent term adjustment ("PTA").

         Plaintiff Intra-Cellular Therapies, Inc. is the owner and assignee of all right, title, and interest in thex077 patent. Thev07 7 patent was issued on February 11, 2014. In calculating the PTA for the '077 patent, the USPTO issued a Final Decision on January 9, 2017, maintaining a determination of 264 days of PTA. This PTA calculation was based in part on a finding of 142 days of Applicant's delay during the prosecution. This 142 day delay period was the sum of four distinct periods of Applicant's delay: (1) a 90-day period of delay under 37 C.F.R. § 1.704(b); (2) a 10-day period of delay under 37 C.F.R. § 1.704(c)(10); (3) a 21-day period of delay under 37 C.F.R. § 1.704(c) (10); and (4) a 21-day period of delay under 37 C.F.R. § 1.704(b). In this action, Plaintiff challenges only the fourth period of Applicant's delay. This 21-day period of delay was calculated under 37 C.F.R. § 1.704(b) with respect to Plaintiff s responses to the USPTO's Final Office Action of April 17, 2013 (the "Final Office Action"), and Advisory Action of July 26, 2013 (the "Advisory Action") .

         The dispute between the parties revolves around whether the Plaintiff properly "replied" to the USPTO's final rejection of the '077 patent application, which was communicated in the Final Office Action. The USPTO determined that Plaintiff failed to properly "reply" within the statutorily-defined three month period allowed for reply. Plaintiff, conversely, contends that it did submit a timely and proper reply on July 17, 2013 (the "July 17, 2013 submission"), and that the USPTO erred when it determined that the July 17, 2013 submission was not a proper reply. The USPTO argues that the July 17, 2013 submission was not a proper reply because it failed to place the '077 patent application in condition for allowance, or, in the alternative, because it was a "reply having an omission, " and thus the USPTO's decision to assess applicant delay until Plaintiff corrected the omissions present in the July 17, 2013 submission was not arbitrary and capricious.

         Plaintiff filed this case on July 7, 2017, under 35 U.S.C. § 154(b)(4)(A), the Administrative Procedures Act, and the Fifth Amendment of the U.S. Constitution. Plaintiff then filed a Motion for Summary Judgment on October 2, 2017, arguing that there is no dispute of material facts as to the dates or content of the relevant office actions and responses thereto, and therefore the only issues to be resolved are issues of law. The USPTO filed a Cross Motion for Summary Judgment on October 25, 2017, arguing that because the APA "confines judicial review of executive branch decisions to the administrative record of proceedings before the pertinent agency[, ] . . . there can be no genuine issue of material fact in an APA action, and the legal questions presented in [an APA] action are therefore ripe for resolution on cross-motions for summary judgment." Genetics & IVF Inst, v. Kappos, 801 F.Supp.2d 497, 502 (E.D. Va. 2011).

         Under Federal Rule of Civil Procedure 56, a court should grant summary judgment if the pleadings and evidence show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In reviewing a motion for summary judgment, the court views the facts in the light most favorable to the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Once a motion for summary judgment is properly made, the opposing party has the burden to show that a genuine dispute of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). The Court finds there is no genuine dispute of material fact and this case is ripe for summary judgment.

         Under the APA, a "reviewing court shall . . . hold unlawful and set aside agency action, findings, and conclusions found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5. U.S.C. § 706(2) (A). This standard "is the most deferential of the APA standards of review, and is only met where a reviewing court can conclude with definite and firm conviction that a clear error of judgment or a mistake has been committed." President & Fellows of Harvard Coll. v. Lee, 589 Fed.Appx. 982, 984 (Fed. Cir. 2014).

         The statute relevant to PTA calculation is 35 U.S.c. § 154(b). This statute defines applicant delay as "the period of time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application." 35 U.S.C. § 154(b) (2) (C) (i) . One such failure to engage in reasonable efforts occurs when an applicant takes longer than three months to respond to a notice from the USPTO. Id. § 154 (b) (2) (C) (ii) . Further, the statute instructs the USPTO Director to "prescribe regulations establishing procedures for the application for and determination of patent term adjustments." Id. § 154(b)(3)(A). The Director is instructed to "prescribe regulations establishing the circumstances that constitute a failure of an applicant to engage in reasonable efforts to conclude processing or examination of an application." Id. § 154(b) (2) (C)(iii). The USPTO has accordingly promulgated regulations pursuant to that authority. 37 C.F.R. §§ 1.702-04.

         Two of these regulations, §§ 1.702 and 1.703, describe the grounds for assessing examination delay. Id. at §§ 1.702-03. Section 1.704(a) then provides for PTA to be reduced by any period of applicant delay, and § 1.704(b) explains that any period of time in excess of three months taken by the applicant to reply to any notice or action by the USPTO making any rejection, objection, argument, or other request is assessed as applicant delay. Id. at § 1.704. Finally, § 1.7 04(c) provides a list of "exemplary circumstances that constitute" applicant delay, noting that the USPTO could also reduce the period of adjustment on a case-by-case basis for "conduct that interferes with the Office's ability to process or examine an application . even if such conduct is not specifically" listed in 1.704 (c) . Id.

         On April 17, 2013, the USPTO issued a final action rejecting the application for the '077 patent. Specifically, of the thirty-one claims that were still pending in the application, ten claims were withdrawn, thirteen claims were objected to, and eight claims were rejected. No claims were allowed. Admin. R. at 281-97 (Dkt. No. 12}.

         On July 17, 2013, exactly three months after the issuance of the USPTO's final action, Plaintiff filed an amendment in response to the final action. Id. at 306-29. Plaintiff amended the majority of the claims in an effort to overcome the examiner's objections and rejections; however, it also presented arguments as to certain of the examiner's objections and rejections, and it added one new claim. Id. at 319-20.

         On July 26, 2013, the USPTO issued an Advisory Action, which indicated that the July 17, 2013 submission failed to overcome all of the rejections of record. Five claims remained rejected, Claim 34 was objected to based on an informality, and seventeen claims remained objected to based on their dependency on a rejected claim. The Advisory Action stated that the time period in which to file a compliant reply to the final rejection continues to run from the mailing date of the final rejection. Id. at 331-32.

         On August 7, 2013, Plaintiff filed a supplemental amendment, which cancelled and further amended claims to finally overcome all of the examiner's outstanding objections and rejections. Id. at 334-65. On August 20, 2013, the USPTO issued a Notice of Allowance regarding the application for the '077 ...

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