On January 23, 2019, the Federal Circuit in Supernus Pharmaceuticals, Inc. v. Iancu, reversed the Eastern District of Virginia’s grant of summary judgment that the USPTO’s calculation of the patent term adjustment for the patent at issue (the ‘897 patent) was correct because the USPTO’s calculation of the patent term adjustment was inconsistent with statutory language in 35 U.S.C. § 154(b).

Section 154(b) provides for adjustments to the term of a patent, extending the patent term where the USPTO fails to take certain actions during patent prosecution within prescribed time periods, and reducing the patent term “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.” (emphasis added). The statute directs the USPTO to prescribe regulations establishing procedures for calculating patent term adjustments, and these regulations have been prescribed in 37 C.F.R. § 1.704. The regulations provide, in relevant part, that “an applicant shall be deemed to have failed to engage in reasonable efforts to conclude” prosecution of an application in certain enumerated circumstances, including under subsection (c)(8), where an applicant submits a supplemental reply or “other paper,” other than expressly requested by the examiner, after a “reply” has been filed. Although subsection (c)(8) does not use the term “information disclosure statement (IDS)” or “request for continued examination (RCE),” an IDS qualifies as an other paper and an RCE as a reply under this section. However, subsection 1.704(d)(1) provides an exception to subsection (c)(8), such that submission of an IDS based on a communication received from the USPTO or a foreign patent office will not be considered a failure to engage in reasonable efforts to conclude prosecution of the application if the IDS is filed within 30 days of receipt of the communication from that patent office.

During the prosecution of the application for the ‘897 patent, the applicant, Supernus, on August 21, 2012, received a notice from the European Patent Office that an opposition has been filed against its counterpart European patent, and on November 29, 2012, Supernus submitted a supplemental IDS to the USPTO disclosing the opposition. It was undisputed that Supernus could not have filed the IDS prior to the August 21, 2012 notice. However, in reliance on 37 C.F.R. § 1.704(c)(8), the USPTO reduced the patent term adjustment by the number of days between February 22, 2011, when Supernus submitted its RCE filing, through November 29, 2012, when Supernus submitted its IDS. The USPTO concluded that Supernus’s submission of its IDS after filing an RCE fell within subsection (c)(8), and that Supernus had missed the 30-day deadline under Section 1.704(d)(1) that, if met, would have excluded the delay in filing the IDS from the reduction mandated by subsection (c)(8).

In reversing, the Federal Circuit held that “the USPTO may not count as applicant delay a period of time during which there was no action that the applicant could have taken to conclude prosecution of the patent” because counting such time would be contrary to the “equal to” limitation of 35 U.S.C. § 154(b). The Federal Circuit explained that patent term adjustment decisions of the USPTO are reviewed in accordance with the Administrative Procedure Act, and that under that Act, the USPTO’s determination should be set aside if found to be “in excess of statutory jurisdiction, authority, or limitations,” or “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” When reviewing an agency’s statutory interpretation, the Federal Circuit applies the two-step Chevron analysis, i.e., step one, if the statute unambiguously addresses the issue, then the unambiguous meaning controls, and step two, if the statute is ambiguous, then the court determines whether the agency’s interpretation of the ambiguous provision is based on a permissible construction. The Federal Circuit found that because Section 154(b) addresses “the precise question at issue,” its inquiry ends at step one.