How the “American Inventor Protection Act of 1999” Will Affect Patent Terms

April 1, 2000 – Firm News

New Laws Affecting Patent Terms

Regarding the "American Inventor Protection Act of 1999," (the "Act"), we are pleased to provide comments and recommendations regarding the effect of the Act with respect to patent term extensions.

In the next few months, the U.S. Patent and Trademark Office (USPTO) will establish new rules implementing the changes in the law. At the American Bar Association meeting of February 7, 2000, entitled "Getting to Know the New Patent Legislation", held in Arlington VA, Mr. Kunin, Deputy Assistant Commissioner for Patent Policy and Projects at the USPTO, indicated that the USPTO would release the new rules in packages, one for each major topic covered by the changes in the law. One of the first packages will address the new patent term guarantees. First, a set of proposed rules will be published in March or April 2000, followed by a sixty day comment period, then the rules will be finalized around December 2000.

The new rules should further clarify how the changes in law will affect U.S. patent practice. Until the rules are finalized, we can only make educated guesses as to how the changes in the law will affect the every day practice of U.S. patent prosecution. However, today we can already foresee a number of new strategies on how to maximizing the new patent term guarantees in favor of patent applicants. The purpose of this letter is to inform the readers of the changes in the law and to recommend the new strategies. Of course, we will inform our readers as the new USPTO rules become finalized and of any adjustments in strategy that the rules may justify.

As discussed below, we strongly recommend, when possible, responding to Office Actions within the non-extended period set in the Office Action,1 and avoiding filing extensions of time. Most extensions of time requested by the applicant will result in a non-recoverable loss of patent term.2 This means that if a client is planning to send instructions to a U.S. practitioner for responding to USPTO rejections, the clients' instructions should be sent early, e.g., five business days before the end of the period for response, so that the U.S. practitioner can properly prepare and file a timely response.

Provisions for patent term extensions are not new to U.S. patent laws. Section 35 U.S.C. § 154(b) provides for two kinds of extensions: 1) for delays due to interferences and secrecy orders, and 2) delays due to successful appeals to the Board of Appeals and Interferences (the "Board"). Effective May 29, 2000, new 35 U.S.C. § 154(b)(1) will provide applicants three patent terms guarantees: 1) the "Prompt Response" guarantee, 2) the guarantee of no more than a three year pendency of patent applications, and 3) the guarantee of adjustment for delays resulting from interferences, secrecy orders and successful appellate review.

1) The "Prompt Response" provision guarantees the following:

a) The USPTO will mail a rejection, objection, restriction or an allowance within 14 months from the U.S. filing date, i.e. the filing date under 111(a) or the date of entry in the U.S. national stage.

b) The USPTO will respond to an applicant's reply to an Office Action withing 4 months. This presumably includes an Examiner's response to an appeal brief filed at the Board.

c) The USPTO will act within 4 months after a decision from the Board or from a federal court in cases in which allowable claims remain in the application.

d) The USPTO will issue a patent within 4 months of the date on which the issue fee was paid.

2) The "three year pendency" provision guarantees that the issuance of an original patent (i.e., not a reissue patent) will not be delayed more than three years from the "actual" filing in the United States. However, time consumed by a continued examination of the application, as provided by new 35 U.S.C. § 132(b), will not be included in the three year calculation.3 Furthermore, the three year calculation does not include time occurring during interferences, secrecy orders, or time on appeal to the Board. Finally, and most importantly, the three years will not include any delay in the processing of the application requested by the applicant, unless the applicant can show that, in spite of all due care, the applicant was unable to respond within the non-extended period set by the USPTO. For example, the three year calculation will not include extensions of time obtained by the applicant in order to respond to an Office Action, which usually set a 3-month non-extended period to respond. Any extension beyond the first three months will thus not be included in the three year calculation. Consequently, most extensions of time obtained to respond to an Office Action will result in a non-recoverable loss of patent term.4

3) The last guarantee, the "Guarantee or Adjustments for Delays Due to Interferences, Secrecy Orders, and Appeals" is a similar provision to the old 35 U.S.C. § 154(b) extension provision. However, the new provision leaves out the five year limit on the extension.

The above guarantees are restricted by important limitations listed under new 35 U.S.C. § 154(b)(2). First the total number of days extended cannot, due to overlap of the extension provisions, exceed the actual number of days the issuance of the patent was delayed.5 However, without the USPTO rules in place, it is somewhat speculative to predict how the exact calculations of term extension will be performed. It is however clear that the new statute provides for the USPTO to be in charge of calculating the term extension for each issued patent and of indicating the calculated term extension on the Notice of Allowance. The applicant will then have the opportunity to challenge the calculation of the USPTO. This means that a careful review of each patent prosecution file must be made to check the accuracy of the USPTO's term calculation, adding somewhat to the cost of patent prosecution. No patent shall be extended beyond the expiration date specified in a terminal disclaimer.

Accordingly, the Act now provides for reasonable adjustments of patent terms due to delays created by the USPTO, although a patent term extension will generally not be granted for delays created by the applicant. Consequently, we recommend avoiding, whenever possible, relying on extension of times when responding to Office Actions. This means sending client instructions early, so that they reach the U.S. practitioner at least five business days before the date on which a response is due to be filed. Finally, we recommend that Notices of Allowance be carefully reviewed to ensure that the patent term extension calculated by the USPTO is accurate. The U.S. practitioner can conduct such a review for his clients. If the term extension is significantly less than the extension to which the applicant is entitled, then we recommend requesting reconsideration of the extension calculation, and if necessary appealing the USPTO calculation to the U.S. District Court for the District of Columbia.

We hope that the above recommendations are helpful to your practice and business needs. If you have any questions or comments regarding the above explanations, please do not hesitate to contact us at any time.

APPENDIX

New 35 U.S.C. § 154(b))

(b) ADJUSTMENT OF PATENT TERM—

            (1) PATENT TERM GUARANTEES—

(A) GUARANTEE OF PROMPT PATENT AND TRADEMARK OFFICE RESPONSES.—Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to—

(i) provide at least one of the notifications under section 132 of this title or a notice of allowance under section 151 of this title not later than 14 months after—

(I) the date on which an application was filed under section 111(a) of this title; or

(II) the date on which an international application fulfilled the requirements of section 371 of this title;

(ii) respond to a reply under section 132, or to an appeal taken under section 134, within 4 months after the date on which the reply was filed or the appeal was taken;

(iii) act on an application within 4 months after the date of a decision by the Board of Patent Appeals and Interferences under section 134 or 135 or a decision by a Federal court under section 141, 145, or 146 in a case in which allowable claims remain in the application; or

(iv) issue a patent within 4 months after the date on which the issue fee was paid under section 151 and all outstanding requirements were satisfied, the term of the patent shall be extended 1 day for each day after the end of the period specified in clause (i), (ii), (iii), or (iv), as the case may be, until the action described in such clause is taken.

(B) GUARANTEE OF NO MORE THAN 3-YEAR APPLICATION PENDENCY.—Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the United States Patent and Trademark Office to issue a patent within 3 years after the actual filing date of the application in the United States, not including—

(i) any time consumed by continued examination of the application requested by the applicant under section 132(b);

(ii) any time consumed by a proceeding under section 135(a), any time consumed by the imposition of an order under section 181, or any time consumed by appellate review by the Board of Patent Appeals and Interferences or by a Federal court; or

(iii) any delay in the processing of the application by the United States Patent and Trademark Office requested by the applicant except as permitted by paragraph (3)(C), the term of the patent shall be extended 1 day for each day after the end of that 3-year period until the patent is issued.

(C) GUARANTEE OR ADJUSTMENTS FOR DELAYS DUE TO INTERFERENCES, SECRECY ORDERS, AND APPEALS.—Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to—

(i) a proceeding under section 135(a);

(ii) the imposition of an order under section 181; or

(iii) appellate review by the Board of Patent Appeals and Interferences or by a Federal court in a case in which the patent was issued under a decision in the review reversing an adverse determination of patentability, the term of the patent shall be extended 1 day for each day of the pendency of the proceeding, order, or review, as the case may be.

(2) LIMITATIONS —

(A) 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.

(B) DISCLAIMED TERM.—No patent the term of which has been disclaimed beyond a specified date may be adjusted under this section beyond the expiration date specified in the disclaimer.

(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.

(ii) With respect to adjustments to patent term made under the authority of paragraph (1)(B), an applicant shall be deemed to have failed to engage in reasonable efforts to conclude processing or examination of an application for the cumulative total of any periods of time in excess of 3 months that are taken to respond to a notice from the Office making any rejection, objection, argument, or other request, measuring such 3-month period from the date the notice was given or mailed to the applicant.

(iii) The Director shall 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.

(3) PROCEDURES FOR PATENT TERM ADJUSTMENT DETERMINATION.—

(A) The Director shall prescribe regulations establishing procedures for the application for and determination of patent term adjustments under this subsection.

(B) Under the procedures established under subparagraph (A), the Director shall—

(i) make a determination of the period of any patent term adjustment under this subsection, and shall transmit a notice of that determination with the written notice of allowance of the application under section 151; and

(ii) provide the applicant one opportunity to request reconsideration of any patent term adjustment determination made by the Director.

(C) The Director shall reinstate all or part of the cumulative period of time of an adjustment under paragraph (2)(C) if the applicant, prior to the issuance of the patent, makes a showing that, in spite of all due care, the applicant was unable to respond within the 3-month period, but in no case shall more than three additional months for each such response beyond the original 3-month period be reinstated.

(D) The Director shall proceed to grant the patent after completion of the Director's determination of a patent term adjustment under the procedures established under this subsection, notwithstanding any appeal taken by the applicant of such determination.

(4) APPEAL OF PATENT TERM ADJUSTMENT DETERMINATION.—

(A) An applicant dissatisfied with a determination made by the Director under paragraph (3) shall have remedy by a civil action against the Director filed in the United States District Court for the District of Columbia within 180 days after the grant of the patent. Chapter 7 of title 5, United States Code, shall apply to such action. Any final judgment resulting in a change to the period of adjustment of the patent term shall be served on the Director, and the Director shall thereafter alter the term of the patent to reflect such change.

(B) The determination of a patent term adjustment under this subsection shall not be subject to appeal or challenge by a third party prior to the grant of the patent."

 ENDNOTES

 1 This non-extended period is usually set at one month for responding to a Restriction Requirement, and at three months for responding to claim rejections.

2 For the purpose of this paper, the non-extended patent term is defined as the period "beginning on the date on which the patent issues and ending 20 years from" the earliest effective date, as provided by 35 U.S.C. § 154(a)(2).

3 We note that Mr. Kunin of the USPTO indicated that the new continued examination of applications will replace the Continued Prosecution Applications (CPA) as of May 29, 2000.

4 Extensions of time may be included in the three year calculation by "a showing that, in spite of all due care, the applicant was unable to respond within the 3-month period," (see new 35 U.S.C. § 1154(b)(3)(C)).

5 For example, if an Examiner's Answer is mailed six months after the applicant's reply brief, a 2-month extension is provided under the "Prompt Response" provision. If a 12-month appeal is successful, a 12-month extension is provided under the "Guarantee or Adjustments for Delays Due to Interferences, Secrecy Orders, and Appeals" provision. However, the applicant will benefit from a 12-month extension only, not a 14-month extension, because the guarantee provisions overlap and the application was only actually delayed for 12 month.