NOVARTIS AG, et al., Plaintiffs, v. Hon. David J. KAPPOS, Defendant.
Civil Action No. 10-cv-1138 (ESH).
United States District Court, District of Columbia.
Nov. 15, 2012.
58, 60
Benjamin D.M. Wood, U.S. Patent & Trademark Office, Alexandria, VA, Fred Elmore Haynes, Mitchell P. Zeff, Carl Ezekiel Ross, U.S. Attorney‘s Office, Washington, DC, for Defendant.
MEMORANDUM OPINION
ELLEN SEGAL HUVELLE, District Judge.
Plaintiffs Novartis AG and Novartis Vaccines and Diagnostics, Inc. (“Novartis“) have sued David J. Kappos, the Under Secretary of Commerce for Intellectual Property and the Director of the U.S. Patent and Trademark Office (“PTO“). Plaintiffs bring this suit under
BACKGROUND
I. LEGAL FRAMEWORK
Prior to 1994, U.S. patents were granted for a term of seventeen years from the date the patent issued. In 1994, Congress adjusted the term of a U.S. patent to twenty years from the date the application was filed to bring the U.S. in line with other countries’ patent terms. However,
The Patent Act created several types of PTA, two of which are at issue here. First, a patentee can accrue PTA if the PTO fails to take certain specified actions within fixed windows of time. See
A second type of PTA accrues if the PTO fails to issue a patent within three years of the filing of the application. See
if the issue of an original patent is delayed due to the failure of the [PTO] 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.
Id.
The PTO has promulgated two final rules interpreting the proper calculation of B Delay under
After the Federal Circuit‘s decision in Wyeth, the PTO announced that it would not seek further review of that decision and would implement the court‘s interpretation of A/B Delay Overlap when determining the appropriate amount of PTA for issued patents beginning on March 2, 2010. (AR166-67.) The PTO also announced that it would permit recalculation of PTA for patents issued prior to March 2, 2010, so long as the request for reconsideration was filed within 180 days of the grant of the patent. (AR170.) Thus, only patents that had been granted within the 180 days prior to that announcement were eligible for a recalculation of their PTA using the new post-Wyeth interpretation.
Because the overlap determination depends on the amount of B Delay, it is also done at the time the patent is granted. The final determination of PTA, which factors in just A Delay but also B Delay and any overlap between A and B Delay, is therefore known as an Issuance Determination.
II. PROCEDURAL HISTORY
On July 6, 2010, Novartis filed suit, alleging that the PTO had improperly calculated the amount of PTA to which eleven of its patents were entitled. (Complaint [ECF No. 1].) Novartis argued first that the PTO acted improperly in refusing to apply the post-Wyeth interpretation of A/B Delay Overlap to patents granted prior to September 2, 2009 (“the Wyeth Claim“). Second, Novartis challenged the PTO‘s interpretation of the effect of an RCE on the determination of B Delay (“the RCE Claim“). On February 16, 2012, this Court ordered that this case be consolidated with three other matters—Novartis v. Doll, No. 09-cv-1203, Novartis v. Kappos, No. 11-cv-0659, and Novartis v. Kappos, No. 11-cv-0821—all of which raise the same legal issues. Given the consolidation of the four cases, the PTA determinations for twenty-three of Novartis’ patents are now at issue.
Plaintiffs filed a Motion for Summary Judgment on May 16, 2012. ([Dkt. No. 35] (“Pls.’ Mot.“).) Defendant then filed a Cross Motion for Summary Judgment and Opposition to plaintiffs’ motion on June 18, 2012. ([Dkt. No. 38] (“Def.‘s Mot.“).) On July 18, 2012, plaintiffs filed an Opposition to defendant‘s Cross Motion and a Reply to defendant‘s Opposition to its Motion. ([Dkt. No. 40] (“Pls.’ Reply“).) And finally, on August 20, 2012, defendant filed a Reply to plaintiff‘s Opposition. ([Dkt. No. 42] (“Def.‘s Reply“).)
I. LEGAL STANDARDS
A. Judicial Review of Patent Term Adjustments
The APA provides judicial review of an agency action to a party who has suffered a legal wrong because of that action.
The arbitrary and capricious standard “presumes the validity of agency action, requiring [the court] to determine whether the agency has considered the relevant factors and ‘articulate[d] a rational connection between the facts found and the choice made.‘” AT & T Corp. v. FCC, 220 F.3d 607, 616 (D.C. Cir. 2000) (quoting Motor Vehicle Mfrs. Ass‘n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)). The court “may reverse only if the agency‘s decision is not supported by substantial evidence, or the agency has made a clear error in judgment.” Kisser v. Cisneros, 14 F.3d 615, 619 (D.C. Cir. 1994).
B. Motion for Summary Judgment
Normally, a motion for summary judgment under Rule 56 shall be granted if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
“Under the APA, it is the role of the agency to resolve factual issues to arrive at a decision that is supported by the administrative record, whereas ‘the function of the district court is to determine whether or not as a matter of law the evidence in the administrative record permitted the agency to make the decision it did.‘” Id. at 90 (quoting Occidental Eng‘g Co. v. INS, 753 F.2d 766, 769-70 (9th Cir. 1985)). Thus, “when an agency action is challenged” solely with “arguments about the legal conclusion to be drawn about the agency action,” then the case on review presents only a question of law and can be resolved on the administrative record pursuant to a motion for summary judgment. Marshall Cnty. Health Care Auth. v. Shalala, 988 F.2d 1221, 1226 (D.C. Cir. 1993). In that instance, a “district court[] reviewing agency action under the APA‘s arbitrary and capricious standard do[es] not resolve factual issues, but operate[s] instead as [an] appellate court[] resolving legal questions.” James Madison Ltd. by Hecht v. Ludwig, 82 F.3d 1085, 1096 (D.C. Cir. 1996).
In this case, the only issue for review is a legal question as to whether the PTO‘s determination of PTA for each of Novartis’ patents was a valid and appropriate exercise of agency discretion.
C. Standard of Review
In answering this question, it is necessary to determine what level of defer-
Instead, the PTO is only entitled to deference under Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944), which depends upon “the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” Id. at 140, 65 S.Ct. 161; see also Merck, 80 F.3d at 1550. In other words, a court will only defer to an agency interpretation if, among other things, “the agency‘s position constitutes a reasonable conclusion as to the proper construction of the statute.” See Cathedral Candle Co. v. United States Int‘l Trade Comm‘n, 400 F.3d 1352, 1366 (Fed. Cir. 2005).
II. TIMELINESS
Challenges to PTA determinations are governed by
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.1
As an initial matter, Novartis asserts that the 180-day limitation of
The Court disagrees. Section 154(b)(3) is entitled “Procedures for patent term adjustment determination” and is the only section of the statute to address the PTO‘s procedures for determining PTA. From its plain language, it is clearly intended to relate to all PTA determinations, regardless of when they occur. Indeed, the very language Novartis points to—that the Director “shall proceed to grant the patent after completion of the Director‘s determination“—clearly requires that the Director make a full determination of all types of PTA because both A Delay and B Delay (as well as any overlap between the two) must be determined before the patent is granted.
In addition to being consistent with the plain meaning of the statute, this interpretation avoids absurd results. Congress clearly intended to include strict controls on judicial review of PTA determinations. Under Novartis’ interpretation, only Pre-Issuance Determinations would be subject to those controls, while the final, complete PTA determinations that accompany an issued patent would not. Instead, a patentee would have 180 days in which to challenge the calculation of A Delay but six years in which to challenge B Delay and A/B Delay Overlap.
In reaching this conclusion, this Court is persuaded by the recent opinion in Janssen Pharmaceutica N.V. v. Kappos, 844 F.Supp.2d 707 (E.D.Va. 2012), that
[I]n a case in which a patentee is challenging the number of days of PTA calculated by the USPTO, whether that calculation occurred before the patent was issued or afterwards, such a decision is governed by §§ 154(b)(3) and (b)(4)(A). In other words, any challenge to a PTA determination is governed by § 154(b)(4)(A).
Id. The court reasoned that a contrary holding would be “entirely inconsistent with the Congressional intent plain on the face of the statute—to strictly limit the forum and timing for seeking judicial review of these very specific USPTO decisions.” Id. As such, the 180-day limitation prescribed by that section applies to the PTA determinations at issue here.
A. Ordinary Tolling
Judicial review of agency actions is ordinarily tolled until the agency
[W]here a petition for reconsideration has been filed within a discretionary review period specifically provided by the agency (and within the period allotted for judicial review of the original order)... the petition tolls the period for judicial review of the original order, which can therefore be appealed to the courts directly after the petition for reconsideration is denied.
482 U.S. at 279, 107 S.Ct. 2360.
With respect to U.S. Patent No. 7,470,792 (“the ‘792 patent“), Novartis filed a petition for PTA reconsideration with the PTO within two months of issuance, as directed by
The PTO asserts that the ordinary tolling rule does not apply to
Next, the PTO argues that the language of
The same argument by the PTO was rejected in Bristol-Myers Squibb, 841 F.Supp.2d at 244-45. The Court concluded defendant‘s arguments do not “support a conclusion that Congress intended for the ordinary tolling rule not to apply to Section 154(b)(4)(A).” Id. at 244. To the contrary,
Because the Court holds that the general tolling rule applies, and because Novartis filed its complaint with respect to the ‘792 patent within 180 days after the denial of its petition for reconsideration, Novartis’ claim with respect to that patent was timely filed.
B. Equitable Tolling
With respect to the nineteen remaining patents that were neither timely filed nor susceptible to ordinary tolling, Novartis argues that the 180-day limitations period should be equitably tolled.
The Court must first determine if
In light of these recent admonishments to construe the meaning of “jurisdictional” narrowly, it is perhaps more prudent to conclude that
With respect to its Wyeth Claim, Novartis argues first that it lacked knowledge of its claim until the Federal Circuit‘s decision on January 7, 2010, in Wyeth changed the law with respect to A/B Delay Overlap. (Pls.’ Mot. at 48-49.) Additionally, Novartis argues that it reasonably relied on the PTO‘s longstanding and consistent use of its pre-Wyeth method of calculating A/B Delay Overlap; according to Novartis, up until the Wyeth decision forced the PTO to use the correct interpretation of A/B Delay Overlap, Novartis reasonably believed that it would have been futile to file a lawsuit appealing the PTO‘s PTA determinations under that method of calculation. (Id.) Thus, Novartis suggests that the 180-day limitation should have been equitably tolled until the PTO‘s January 20, 2010 announcement that it would not seek further appellate review of the Federal Circuit‘s Wyeth decision.
With respect to its RCE Claim, Novartis goes even further, asserting that because no federal court has yet ruled on the viability of this claim, the statute of limitations has not yet begun to run. (Id. at 49.) Novartis insists that it was not until this claim was raised by Abbott Laboratories in Abbott v. Kappos, 10-cv-1853, 2010 WL 4488218 (D.D.C.), filed on October 29, 2010, that Novartis even became aware that this was a possible claim. (Id.)
Novartis’ arguments are unpersuasive. In effect, Novartis’ position amounts to a contention that the statute of limitations should not begin to run until such time as a federal court has actually ruled on and upheld the very claims they seek to pursue. But of course, Novartis was free to raise the same issues that Wyeth and Abbott Laboratories raised in their lawsuits within the 180 days after their patents were granted. As this Circuit has previously noted:
The only sure way to determine whether a suit can be maintained is to try it. The application of the statute of limitations cannot be made to depend upon the constantly shifting state of the law, and a suitor cannot toll or suspend the running of the statute by relying upon the uncertainties of controlling law. It is incumbent upon him to test his right and remedy in the available forums. These suits were not commenced until through the labor of others the way was made clear.
Commc‘ns Vending Corp. of Arizona, Inc. v. FCC, 365 F.3d 1064, 1075 (D.C. Cir. 2004) (quoting Fiesel v. Bd. of Ed., 675 F.2d 522, 524-25 (2d Cir. 1982)). It is of no moment that the PTO had consistently applied its pre-Wyeth interpretation of A/B Delay Overlap; the question is not what the PTO would have done in response to a request for reconsideration, but rather what a federal court would have done in reviewing the PTO‘s interpretation. That was both unasked and unanswered until Wyeth raised exactly this issue in its lawsuit, just as Novartis was free to do at any point within 180 days of its patents being granted.
Regardless, contrary to Novartis’ argument, a change in law is not such an extraordinary circumstance as to justify the application of equitable tolling. See Nihiser v. White, 211 F.Supp.2d 125, 130-31 (D.D.C. 2002). Indeed, this case is analogous to Venture Coal Sales Co. v. United States, 370 F.3d 1102 (Fed. Cir. 2004), in which Venture Coal argued that its injury
None of the cases relied on by Novartis undercut Venture Coal. In each case, the “change in circuit precedent” that was found sufficient to justify equitable tolling related to the statute of limitations itself; in other words, the law changed in such a way that the petitioners’ habeas filings, which would otherwise have been considered timely, no longer were. See, e.g., Shelton v. Purkett, 563 F.3d 404, 407 (8th Cir. 2009) (“Because Shelton‘s petition was just barely timely under Nichols [v. Bowersox, 172 F.3d 1068 (8th Cir. 1999)], it is clear that under the Riddle [v. Kemna, 523 F.3d 850 (8th Cir. 2008)] rule... Shelton‘s petition was untimely.“); Griffin v. Rogers, 399 F.3d 626, 636 (6th Cir. 2005) (“This 30-day window was adopted by the Palmer [v. Carlton, 276 F.3d 777 (6th Cir. 2002)] Court in January 2002... [y]et Griffin failed to file within this 30-day window in October 1998, over three years before the time frame was adopted in this circuit.“); York v. Galetka, 314 F.3d 522, 528 (10th Cir. 2003) (allowing equitable tolling because petitioner filed his habeas petition over a year before the Supreme Court decision holding that pendency of federal habeas petition does not toll statute of limitations); Harris v. Carter, 515 F.3d 1051, 1055-56 (9th Cir. 2008) (“[Harris] filed successive petitions for state post-conviction relief while ensuring that enough time would remain to file a federal habeas petition under the then-existing Dictado [v. Ducharme, 244 F.3d 724 (9th Cir. 2001)] rule. The Supreme Court‘s overruling of the Dictado rule made it impossible for Harris to file a timely petition.“). In these and other similar cases, equitable tolling was justified because the unforeseeable change in law made it impossible for the petitioners to file their petitions in a timely fashion. That is a far cry from this case. Novartis benefited from the change in law but it could have (as Wyeth did) attempted to effectuate that very change through a timely challenge to the PTO‘s PTA determinations.
In light of these considerations, even assuming that
C. Discovery Rule
As its final attempt to skirt the 180-day limitation of
As is the case with the equitable tolling doctrine, it can be debated as to whether the discovery rule even applies to
However, as previously discussed, the Court need not resolve this question because it finds that the discovery rule, even if available under
The Court will now turn to the merits relating to the four patents (the ‘155, ‘518, ‘031, and ‘792 patents) as to which Novartis has raised timely claims.
III. RCE CLAIM
For three of the four timely-challenged patents, Novartis asserts that the PTO improperly calculated the amount of B Delay to which it was entitled under
[I]f the issue of an original patent is delayed due to the failure of the [USPTO] 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);
...
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.
The PTO and Novartis disagree about the proper interpretation of
The PTO has interpreted the “not including” clause to be a part of the remedy provision; in other words, if a patent has not issued within three years of its filing date, the patentee shall be entitled to a day-for-day patent term adjustment for every day until the patent issues, but “not including” any time consumed by an RCE. (See Def.‘s Mot. at 33.) Novartis insists that the clause applies to the trigger. Under Novartis’ view, if the patent is not issued within the three-year period, “not including” time consumed by an RCE, then the patentee is entitled to the day-for-day remedy. (Pls.’ Mot. at 21-22.) In other words, the filing of an RCE tolls the running of the three-year clock, but if the three-year clock runs out, the applicant would be entitled to a day-for-day patent term adjustment for every day until the patent issues, regardless of what activity occurred during that time—even an RCE. (Id.)
This exact issue was recently decided by the Eastern District of Virginia in Exelixis, Inc. v. Kappos, 906 F.Supp.2d 474, 2012 WL 5398876 (E.D.Va. Nov. 1, 2012). The issue in that case—as here—was “whether § 154(b)(1)(B) requires that, or even addresses whether, any PTA be reduced by time attributable to an RCE where, as here, the RCE is filed after the expiration of the three year guarantee period specified in that statute.” Id. at 477, at *2 (emphasis added). Like Novartis, Exelixis argued that “the PTO improperly calculated B delay by not providing a day for day PTA for time consumed by the RCE filed after the three year period had expired.” Id. at 479-80, at *5. And just as it did in this case, the PTO argued that “the time consumed by an RCE is always excluded from the calculation of B delay because, in the PTO‘s view, any time consumed by an RCE is subtracted from the PTA awarded under subparagraph (B), regardless of when the RCE is filed.” Id.
Judge Ellis agreed with Exelixis’ interpretation. First and foremost, he concluded that the plain and unambiguous language of
Second, Judge Ellis noted that the plain meaning of
Judge Ellis also thoroughly dispensed with the very arguments that the PTO has raised in this case. For example, in response to the PTO‘s insistence that its construction of
This Court finds Judge Ellis’ well-reasoned opinion to be persuasive. It will therefore adopt his rationale for concluding that the PTO‘s interpretation is contrary to the plain and unambiguous language of
Additionally, the Court notes one further consideration, not addressed by the parties in this case but raised by Abbott Biotherapeutics in Abbott v. Kappos, 10-cv-1853 (D.D.C.) that helps to bolster the conclusion reached here. Abbot notes that the PTO‘s position here—as embodied in
The period of adjustment under
§ 1.702(b) is the number of days, if any, in the period beginning on the day after the date that is three years after the date on which the application was filed under35 U.S.C. 111(a) ... but not including the sum of the following periods: (1) The number of days, if any, in the period beginning on the date on which an [RCE] was filed and ending on the date the patent was issued.
However, that regulation is in tension with the immediately preceding PTO regulation,
[T]he term of an original patent shall be adjusted if the issuance of the patent was delayed due to the failure of the Office to issue a patent within three years after the date on which the application was filed under
35 U.S.C. 111(a) ..., but not including: (1) Any time consumed by continued examination of the application under35 U.S.C. 132(b) .
In response to Abbott‘s argument, the PTO appears to offer no explanation of the inconsistency between
In sum, the PTO‘s interpretation of
IV. WYETH CLAIM
In Wyeth, the Federal Circuit held that the PTO‘s interpretation of
As an initial matter, it is noteworthy that the PTO failed to respond to Novartis’ Wyeth claim, so the Court may treat this argument as conceded. See Day v. D.C. Dep‘t of Consumer & Regulatory Affairs, 191 F.Supp.2d 154, 159 (D.D.C. 2002).
Regardless, under the PTO‘s own policy, the Wyeth method of calculating A/B Delay Overlap should have been applied to the ‘792 patent. Specifically, on March 10, 2010, the PTO wrote a letter to the Patent Public Advisory Committee in which it explained its position on the application of Wyeth to previously-issued patents. The PTO explained:
The USPTO is acting consistent with the judicial review provisions of
35 U.S.C. § 154(b)(4) in limiting patent term adjustment recalculations to patentees who either: (1) filed a request for patent term adjustment recalculation that has not yet been decided within the 180-day period in35 U.S.C. § 154(b)(4) ; or (2) are currently engaged in a challenge, in the USPTO or the courts, to the USPTO‘s patent term adjustment determination that was commenced within the 180-day period in35 U.S.C. § 154(b)(4) .
In addition to violating its own policy, the PTO‘s refusal to apply Wyeth to the ‘792 patent is contrary to well-established law. The ‘792 patent was issued on December 30, 2008, a full two months after the district court opinion in Wyeth, 580 F.Supp.2d 138. Novartis sought agency reconsideration of its PTA determination in February 2009, in part based on the district court‘s Wyeth ruling. (A1011–14.) In June 2009, the PTO declined to apply the Wyeth method of calculating overlap to the ‘792 patent. (A1015-21.) This was erroneous. The Supreme Court has made it clear that it is “error to refuse to apply a rule of federal law retroactively after the case announcing the rule has already done so.” James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 540, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991). The district court‘s Wyeth opinion was applied retroactively to Wyeth; Wyeth‘s patent terms were adjusted in accordance with the newly-announced rule in that case. Thus, when Novartis filed for reconsideration almost five months later, the PTO abused its discretion by refusing to calculate Novartis’ patent consistently with the method adopted in Wyeth. Its decision to do so “violate[d] the principle of treating similarly situated parties the same.” Nat‘l Fuel Gas Supply Corp. v. FERC, 59 F.3d 1281, 1289 (D.C. Cir. 1995).
For these reasons, the Court finds that the PTO erred in not applying either this Court‘s or the Federal Circuit‘s Wyeth decision to the ‘792 patent.
V. FIFTH AMENDMENT TAKINGS CLAIM
As its final argument, Novartis asserts that by applying its erroneous interpretations of
With respect to the nineteen patents for which Novartis did not timely challenge the PTA determinations under
Moreover, the Court need not address this argument as it relates to the remain-
CONCLUSION
For the reasons stated above, plaintiffs’ motion for summary judgment is granted in part and denied in part, and defendant‘s motion for summary judgment is granted in part and denied in part. A separate Order accompanies this Memorandum Opinion.
Civil Action No. 10–1463 (RMC).
United States District Court, District of Columbia.
Nov. 15, 2012.