UNIVERSITY OF MASSACHUSETTS, et al., Plaintiffs, v. Hon. David J. KAPPOS, Defendant.
Civil Action No. 10-00894 (ESH).
United States District Court, District of Columbia.
Nov. 9, 2012.
Fred Elmore Haynes, U.S. Attorney‘s Office, Washington, DC, for Defendant.
MEMORANDUM OPINION
ELLEN SEGAL HUVELLE, District Judge.
Plaintiffs University of Massachusetts and Medarex, Inc. 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, because the examination of a patent application often takes more than three years from filing to the issuance of a patent, this meant that many patentees received effective patent terms of less than the historical seventeen-year period. Thus, in 1999, Congress amended the Patent Act by creating patent term adjustments (“PTA“) to extend patent terms in response to unreasonable delays in the examination of a patent application. See
The Patent Act created several types of PTA. First, a patentee can accrue PTA if the PTO fails to take certain specified actions within fixed windows of time. Specifically,
[I]f the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to ... provide at least one of the notifications under
section 132 or a notice of allowance undersection 151 not later than 14 months after ... the date on which an application was filed undersection 111(a) ...the term of the patent shall be extended 1 day for each day after the end of the period specified ... until the action [notification or notice of allowance] is taken.
For example, if the PTO does not issue an Office action responding to a patent application within 14 months after the application was filed, the patentee will be awarded one day of PTA for every day from the end of the 14-month period until the first Office action is issued. Id. This type of PTA is known as “A delay.” The PTO notifies the patentee of the amount of A delay that has been awarded when it issues the Notice of Allowance.
The PTO has promulgated a set of final rules interpreting the proper calculation of A delay under
A second type of PTA—known as “B delay“—accrues if the PTO fails to issue a patent within three years of the filing of the application. See
II. BACKGROUND
The subject of this case is U.S. Patent No. 7,625,559 (“‘559“), entitled “Antibodies Against Clostridium Difficile Toxins and Uses Thereof.” (Plaintiffs’ Motion for Summary Judgment (“Pl. Mot“) at 4.) “The patent is for monoclonal antibodies, and antigen binding portions thereof, that specifically bind to toxins of Clostridium difficile (”C. difficile“), and methods of making and using the same.” (Id.) The patent application was filed with the PTO on February 4, 2005. (Id.) The original patent application addressed “three main embodiments of the invention—monoclonal
On July 13, 2007, the PTO issued a first Office action establishing a “restriction requirement” pursuant to
On October 9, 2007, plaintiffs filed a Preliminary Amendment and Response to the Restriction Requirement. (Id. at 8.) They “elected” Group VIII—defined as a “‘composition’ comprising both an antibody that specifically binds to C. difficile toxin A and an antibody that specifically binds to C. difficile toxin B“—for continued examination, canceled original claims 1–80, and added new claims 81–95, “which fell within the elected Group VIII.” (Id. at 7, 8.) Plaintiffs did not challenge the groupings designated by the Examiner in their Response. (Plaintiffs’ Reply Brief in Support of Their Motion and Opposition to Defendant‘s Cross-Motion (“Pl. Reply“) at 3.)
After submitting the Amendment and Response, plaintiffs’ attorneys engaged in phone discussions with the Examiner and her supervisor. During those calls, plaintiffs’ attorneys expressed their view that the restriction requirement was erroneous insofar as “no groups were defined by the Examiner separately for antibodies or portions thereof, that bind specifically to C. difficile toxin A or toxin B, as had been described and claimed in the applicants’ original application.” (Pl. Mot. at 9). It was agreed that a new restriction requirement should be issued “to correct the fundamental errors in the Restriction Requirement.” (Id.) “Since the applicants already had complied with the Examiner‘s first Restriction Requirement by making an election and canceling the ‘non-elected’ claims, it was suggested by the Examiner‘s Supervisor that the applicants file a Supplemental Amendment to add the canceled claims back into the application, so the Examiner could essentially start over and issue a proper restriction requirement.” (Id.)
Applicants submitted a Supplemental Amendment and Response on November 21, 2007, in which they noted in the “Remarks” section:
Applicants thank Examiner Lakia J. Tongue and the Examiner‘s supervisor, Bruce R. Campbell, for the numerous teleconferences during [which] the Re-
striction Requirement issued on July 13, 2007 was discussed. Based on these discussions, it is Applicants[‘] understanding that the Restriction Requirement set forth in the Office Action mailed July 13, 2007 (Paper No. 20070621) will be vacated due to errors on the part of the U.S. Patent and Trademark Office (“PTO“) and a corrected restriction requirement will be issued in due time. Accordingly, as requested by Examiner Campbell, Applicants submit this Supplemental Amendment and Response adding claims corresponding to the originally filed claims, so as to facilitate the PTO in re-issuing the Restriction Requirement. Please amend the application as set forth below. (Id. at 10.)
In the Supplemental Amendment, plaintiffs “amended and broadened claims 81, 82, and 89–91 by adding additional, alternative limitations to the claims” and “added new claims 96–131 to the application.” (Defendant‘s Cross-Motion for Summary Judgment and Opposition to Plaintiff‘s Motion for Summary Judgment (“Def. Mot.“) at 10.) The parties agree that most of the added claims “found support in (or corresponded to) the claims that were first presented in the original application.” (Def. Mot. at 10; Pl. Reply at 6.) There is some disagreement, however, as to whether certain added claims were entirely new or merely reflected “minor changes to the wording” of the claims. (Def. Mot. at 10 but see Pl. Reply at 6.) In the administrative proceeding, the PTO referred to plaintiffs’ “new claims” without qualification. (PTO Decision Upon Remand and Reconsideration of Patent Term Adjustment (“PTO Decision“), ECF No. 14 at 4.)
On February 21, 2008, the Examiner issued another Office action establishing a new restriction requirement. (Pl. Mot. at 11.) The new restriction requirement divided the claims based on the different toxins of C. difficile. (Id.) Applicants filed a response to the second restriction requirement, in which they wrote: “A Restriction Requirement issued in the above-referenced application on July 13, 2007. Due to errors on the part of the U.S. Patent and Trademark Office, the original Restriction Requirement of July 13, 2007 was vacated and a new Restriction Requirement issued on February 21, 2008.” (Id. at 12.)
On May 1, 2009, the PTO issued a Notice of Allowance and a Determination of Patent Term Adjustment under
III. PROCEDURAL HISTORY
On May 28, 2010, not having received a response to their second Request for Reconsideration, plaintiffs filed suit, alleging that the PTO had improperly calculated the amount of PTA to which their ‘559 patent was entitled. (Pl. Mot. at 1.) On August 23, 2010, this Court granted a consent motion to remand the case to the PTO for recalculation and adjustment of the
On March 12, 2012, the PTO issued its Decision Upon Remand and Reconsideration of Patent Term Adjustment, granting the requested relief in part and finding a PTA of 1,070 days, including 465 days of A delay, rather than the 688 days of A delay that applicants calculated based on the date of the second restriction requirement. (Id. at 1, 3.) The PTO found that “the amendment was expressly suggested by the [E]xaminer and therefore should not have been considered an application delay under
ANALYSIS
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. 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.” Id. (quoting Kisser v. Cisneros, 14 F.3d 615, 619 (D.C.Cir.1994)).
B. Motion for Summary Judgment
Normally, a motion for summary judgment under
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 the legal question of whether the PTO‘s determination of A delay for plaintiffs’ ‘559 patent was a valid and appropriate exercise of agency discretion.
C. Standard of Review
“If the statute is clear and unambiguous ‘that is the end of the matter, for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” Board of Governors, FRS v. Dimension Financial Corp., 474 U.S. 361, 368, 106 S.Ct. 681, 88 L.Ed.2d 691 (1986) (quoting Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842–43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)). Where a statute is silent or ambiguous on a particular issue, however, and “where Congress has authorized an agency to promulgate substantive rules under a statute it is charged with administering,” the court “must uphold the agency‘s interpretation of an ambiguity or omission in that statute if the interpretation is a reasonable one.” Merck & Co., Inc. v. Kessler, 80 F.3d 1543, 1549 (Fed. Cir.1996) (citing Chevron, 467 U.S. at 842–45). The Federal Circuit has previously determined that the PTO does not have the authority to issue substantive rules, only procedural regulations regarding the conduct of proceedings before the agency. See Merck, 80 F.3d at 1549–50. Indeed,
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; 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.” Cathedral Candle Co. v. United States Int‘l Trade Comm‘n, 400 F.3d 1352, 1366 (Fed. Cir.2005).
The crux of plaintiffs’ claim is that the A delay for patent ‘559 should have been calculated to include the entire period from April 5, 2006 (the fourteen-month deadline) up until and including February 21, 2008, when the second restriction requirement was issued, effectively nullifying the “fundamentally flawed” first restriction requirement. Defendant maintains that the PTO properly calculated the period of A delay as running from April 5, 2006 until July 13, 2007, when the first restriction requirement was issued in satisfaction of the statutory mandate to “provide at least one of the notifications under section 132.”
Under the APA, the Court functions as an appellate authority addressing legal questions, Ludwig, 82 F.3d at 1096, and only in rare circumstances, not present here, will the Court disturb the agency‘s factual findings.2 Nevertheless, while purportedly agreeing that there are no facts in dispute, the parties argue about whether plaintiffs’ Supplemental Amendment included new claims or merely restated the original, canceled claims, and whether the second restriction requirement was intended to vacate the first restriction requirement or merely to respond to the “new” claims.3 The PTO has decided these disputes based on the evidence before it, and the Court has no basis to disturb the PTO‘s factual findings.
Specifically, the PTO found that the second restriction requirement was issued in response to plaintiffs’ “new” claims in their Supplemental Amendment and was not intended to vacate the first restriction requirement. (PTO Decision at 4.) Plaintiffs’ continued assertions to the contrary are unsupported by the facts, as the PTO found that the record reflected no “express assertion” by the Examiner that the first restriction requirement was vacated. (Id.) Moreover, the Court is unconvinced by plaintiffs’ attempts to attribute an adoptive admission to defendant by arguing that the Examiner “never refuted or denied” plaintiffs’ statements in their correspondence that the restriction requirement had been vacated. (Pl. Mot. at 10, 12.) As the PTO noted, in a decision discussed at length in § III infra, “the mere use of the word ‘vacate’ in a subsequent Office action, especially during the give-and-take process of examination, does not alone entitle a patentee to A-delay under
The question is whether, as a matter of law, when an applicant successfully convinces an Examiner to change a ruling contained in an Office action, regardless of whether it is classified as a vacatur, that renders the first Office action “a nullity for purposes of calculating A delay under
Plaintiffs insist that the first restriction requirement was so “fundamentally flawed” that it “stood in the way of further prosecution.” (Pl. Reply at 3.) Plaintiffs make a convincing case that it was necessary to persuade the Examiner to revise the restriction requirement. This is, however, irrelevant to the question of calculating A delay. The patent prosecution process involves significant back and forth, during which it is assumed that the PTO will sometimes make mistakes and applicants will have the opportunity to correct those mistakes. The statute implicitly acknowledges as much, see, e.g.,
Under
[I]f the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to ... provide at least one of the notifications under section 132 or a notice of allowance under section 151 not later than 14 months after ... the date on which an application was filed under section 111(a) ... the term of the patent shall be extended 1 day for each day after the end of the period specified ... until the action [notification or notice of allowance] is taken.
Plaintiffs do not dispute, nor can they, that “an action” is clearly defined under
The correctness of the PTO‘s statutory interpretation is further reinforced when considered in comparison to another provision of the statute, for “[w]here Congress includes particular language in one section of the statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Immigration and Naturalization Serv. v. Cardoza-Fonseca, 480 U.S. 421, 432, 107 S.Ct. 1207, 94 L.Ed.2d 434 (1987) (citation and internal quotation marks omitted). As defendant points out,
Plaintiffs emphasize the PTO‘s “admission” that the Supplemental Amendment was submitted at the request of the Examiner. (Pl. Mot. at 18–19; PTO Decision at 5.) Indeed, the PTO found that because the Examiner requested the Supplemental Amendment, the delay caused by its submission should not be considered applicant delay that would lead to a reduction of PTA. (Pl. Mot. at 18–19; PTO Decision at 5.) But the PTO found that the same delay also should not count as A delay. The PTO‘s decision to treat that time period as neither applicant delay nor A delay reflects a reasonable interpretation of the respective regulatory provisions at issue. Under
III. THE ONCOLYTICS CASE
Plaintiffs argue that the PTO‘s decision in the instant case is inconsistent with a prior PTO decision on remand from this Court, and is thus arbitrary and capricious. In that case, Oncolytics, the PTO issued an initial Office action with a restriction requirement on March 12, 2009. The applicant replied by “traversing the election requirement,” or proposing a regrouping of the claims, and provisionally electing certain claims. The PTO thereafter issued a second Office action on August 24, 2009, accepting the applicant‘s proposed regrouping and rejecting the elected claims on the merits, thereby “fixing” the applicant‘s election. The PTO then issued a third Office action on January 6, 2010, rejecting the applicant‘s traversal of the original restriction, rejecting the applicant‘s election of regrouped claims, adopting the applicant‘s original election of claims and making the election final, and rejecting the elected claims on the merits. The applicant replied to the third Office action on March 24, 2010 and supplemented his reply on May 6, 2010. Finally, on June 8, 2010, the PTO issued a Notice of Allowance with a Determination of PTA. (Pl. Mot. at 20; Def. Mot. at 23 n. 10); see Oncolytics at 1–2. In sum, the PTO initially accepted the applicant‘s regrouping but rejected his claims on the merits, then rejected his regrouping and still rejected his claims on the merits, before finally deciding to allow his claims on the merits.
After the patent issued, the patentee argued that the PTA should be calculated based on the January 6, 2010 Office action because the “Office action mailed August 24, 2009, failed to meet the requirements of
However, upon remand from the district court, the PTO reversed course in Oncolytics and awarded the PTA demanded by the patentee. The PTO wrote in its decision, “[u]pon reconsideration of all the facts of this case, the USPTO has determined that the specific facts of this case constitute the rare occurrence in which it is appropriate for the USPTO to treat an Office action issued in an application as a non-event for the purposes of calculating USPTO delay under
Plaintiffs’ argument does not withstand scrutiny. First, defendant convincingly distinguishes Oncolytics by explaining that in that case, “the USPTO changed the identity of the claims that were actually being examined in the application after they already had been fixed by a rejection on the merits[, while] [i]n the case at bar, the claims were never fixed and no action on the merits occurred before the Office actions were allegedly ‘vacated‘.” (Def. Mot. at 23 n. 10.) This is a meaningful distinction. Here, plaintiffs successfully convinced the PTO to issue a new, different restriction requirement before plaintiffs’ elections were made final. In Oncolytics, the applicant was initially successful in doing the same, but then the PTO spontaneously reversed course a second time, after the elections were made final. It is clear that the PTO‘s actions in Oncolytics were anomalous and caused significant delay at applicants’ expense. By contrast, in the instant case, the PTO was immediately responsive to plaintiffs’ arguments for a revised restriction requirement and made the necessary corrections before the process had progressed any further.
Second, the Court recognizes that in the Oncolytics case, it could be argued that the PTO failed to “acknowledge and provide an adequate explanation for its departure from established precedent,” opening the door to a finding that it acted arbitrarily and capriciously in that case. Jicarilla Apache Nation v. Department of the Interior, 613 F.3d 1112, 1119 (D.C.Cir.2010) (citations and internal quotation marks omitted). However, neither side challenged the PTO‘s ruling in Oncolytics. In the instant case, the PTO appears to have returned to its usual practice, consistent with the clear and unambiguous language of the statute, of refusing to treat an Office action as a “non-event” for the purposes of calculating A delay. Thus, the Court cannot conclude that the PTO acted arbitrarily and capriciously in this case.
CONCLUSION
For the foregoing reasons, the Court denies plaintiffs’ Motion for Summary Judgment and grants defendant‘s Cross-Motion for Summary Judgment. A separate Order accompanies this Memorandum Opinion.
ELLEN SEGAL HUVELLE
District Judge