Appeal Delay Alone Is Not Sufficient to Receive a Patent Term Adjustment
Is a delay due to an appeal always entitled to a patent term adjustment? In Sawstop Holding LLC v. Vidal, the U.S. Court of Appeals for the Federal Circuit recently said “no.”
In Sawstop Holding LLC v. Vidal,[1] the U.S. Court of Appeals for the Federal Circuit recently held that not every delay due to an arguably successful appeal to the Patent Trial and Appeal Board (“PTAB”) will entitle the patentee to a patent term adjustment (“PTA”) under its plain language interpretation of the patent statute. On September 14, 2022, the CAFC affirmed a decision of the U.S. District Court for the Eastern District of Virginia denying PTA for patents granted to Sawstop Holding LLC. Sawstop requested extensions of the terms of two patents for delays associated with arguably successful appeals reversing an examiner’s rejections. The PTAB’s decision did not actually result in grant of the patents, however, and this fact was critical.
The term of a utility patent in the United States is 20 years from the earliest effective filing date of the application. Delays in patent grant caused by the United States Patent and Trademark Office (“USPTO”) may occur during the pendency of a patent application. The PTA process established an extension of the term of a patent affected by such delays, ensuring the applicant receives the benefit of a full patent term. The calculated adjustment is one day added to the patent term for every day of delay.
According to 35 U.S.C. §154(b), there are three types of delays that warrant a PTA. Type A delay is due to the USPTO failing to issue a first Office Action within 14 months of filing of the application. Type B delay occurs when prosecution exceeds the “normal” prosecution period between the filing date of the application and the issue date of the patent, estimated to be three years.
Type C delay results from secrecy orders, derivation proceedings, or appeals to the PTAB or a federal court. An adjustment in patent term due to an appeal delay applies to a patent that was issued under a decision in the review reversing an adverse determination of patentability. In Sawstop Holding LLC v. Vidal, the meaning of the italicized phrase is the crux of the rationale behind the rulings regarding Sawstop’s ’476 Patent and ’796 Patent.
In the application resulting in grant of the ’476 Patent, the examiner finally rejected claim 11 as being obvious over the combination of two prior art references. Sawstop appealed the rejection to the PTAB. Ultimately, the PTAB reversed the examiner’s rejection but also issued a new ground of rejection. Thereafter, Sawstop filed several amendments and a request for continuation examination (“RCE”) to address the new ground of rejection. The examiner eventually allowed claim 11, which issued as claim 1 of the ’476 Patent. The USPTO did not grant a PTA for the delay due to Sawstop’s appeal. The USPTO cited 35 U.S.C. §154(b)(1)(C)(iii) and held that “the claim was not issued under a decision in the review reversing an adverse determination of patentability.” The USPTO accurately stated that claim 11 remained under rejection following the PTAB’s decision, and the patent only issued following further prosecution and amendments.
Following the USPTO’s decision, Sawstop filed a complaint in the U.S. District Court for the Eastern District of Virginia challenging the denial of the PTA. The court agreed with the Patent Office that the ’476 Patent was not “issued under a decision in the review reversing an adverse determination of patentability” since claim 11 was rejected under a new ground of rejection following the appeal. Claim 11 was unpatentable both before and following the appeal; in other words, the adverse determination of patentability was not actually reversed.
In the application resulting in grant of the ’796 Patent, independent claim 1 was finally rejected based on both anticipation and judicially-created obviousness-type double patenting. In addition, dependent claim 2 was finally rejected for anticipation. Sawstop appealed all of the rejections to the PTAB. The PTAB affirmed both rejections of claim 1, but reversed the anticipation rejection of claim 2, making claim 2 patentable. Following the decision, Sawstop filed a complaint in the same U.S. district court challenging only the PTAB’s anticipation rejection of claim 1. The court eventually reversed the PTAB’s decision regarding claim 1, but made no decision regarding the outstanding double patenting rejection, as Sawstop did not include it in the complaint. Thus, claim 1 was unpatentable both before and after Sawstop’s appeals.
On remand, the PTAB provided Sawstop with the options of filing a terminal disclaimer to address the double patenting rejection or rewriting claim 2 as an allowable independent claim. Sawstop chose the second option. A notice of allowance issued for amended claim 2 and claims depending from claim 2. However, Sawstop filed an RCE and prosecution continued with several amendments to the claims. Eventually, a notice of allowance issued for the ’796 Patent. The USPTO granted PTA only for the delay due to the successful appeal of the rejection of claim 2.
Following the USPTO’s decision, Sawstop yet again filed a suit in the U.S. District Court for the Eastern District of Virginia challenging the denial of the PTA for patent claim 1. The court held that the ’796 Patent was not entitled to a PTA for claim 1 because the appeal did not “revers[e] an adverse determination of patentability,” since the double patenting rejection of claim 1 remained in effect following the appeal. Thus, claim 1 was not considered patentable before or after the appeal. Further, because claim 1 was cancelled during prosecution following the appeal, the District Court determined that the ’796 Patent did not “issue under” a decision reversing an adverse determination of patentability as required under 35 U.S.C. §154(b)(1)(C)(iii).
Sawstop then appealed the district court’s PTA decisions to the CAFC. In interpreting 35 U.S.C. §154(b)(1)(C)(iii), the CAFC noted that “Type C adjustments are for delays that are . . . due to . . . successful appeals.”[2]
Regarding the ’476 Patent, the CAFC affirmed the district court’s ruling. First, the appeal did not result in a substantive change in the patentability of claim 11. The CAFC explained that since the appeal of the determination of patentability of claim 11 was not “successful,” it was not “reversed,” as required by the statute. Second, due to the amendments made during prosecution to address the PTAB’s new ground of rejection, the version of claim 11 that eventually issued was not the same claim 11 that was “under a decision in the review” during appeal. The adverse determination of unpatentability remained both before and after the appeal, and the claim issued only after significant substantive prosecution following the appeal.
Regarding the ’796 Patent, the CAFC’s affirmance of the district court’s judgment was based on the same interpretation of the type C delay provision. The USPTO’s decision regarding claim 1 was based on both double patenting and anticipation. Sawstop appealed the anticipation rejection to the district court but did not appeal the double patenting rejection. Because the district court did not address the double patenting rejection in its ruling, claim 1 was unpatentable both before the appeal (anticipation and double patenting) and after the appeal (double patenting). As was also true for the ’496 Patent, the CAFC determined that the district court’s decision did not “revers[e] an adverse determination of patentability,” as required by the statute. The adverse determination of unpatentability remained both before and after the appeal.
Practitioners should heed the “plain language” interpretation of 35 U.S.C. §154(b)(1)(C)(iii) that guided the CAFC’s decision in denying Sawstop’s requests for PTAs for its patents.
