Supernus Pharmaceuticals, Inc. v. Iancu

          Appeal from the United States District Court for the Eastern District of Virginia in No. 1:16-cv-00342-GBL-IDD, Judge Gerald Bruce Lee.

          Douglas H. Carsten, Wilson, Sonsini, Goodrich & Rosati, PC, San Diego, CA, argued for plaintiffs-appellants. Also represented by Veronica Susana Ascarrunz, Adam William Burrowbridge, Washington, DC.

          Shaun R. Snader, United Therapeutics Corporation, Washington, DC, for plaintiff-appellant United Therapeu­tics Corporation.

          R. Trent McCotter, Office of the United States Attorney for the Eastern District of Virginia, Alexandria, VA, argued for defendant-appellee Andrei Iancu. Also represented by Kakoli Caprihan, Brian Racilla, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA.

          Before Dyk, Schall, and Reyna, Circuit Judges.

          REYNA, CIRCUIT JUDGE.

         Supernus Pharmaceuticals, Inc. and United Thera­peutics Corp. appeal the entry of summary judgment by the U.S. District Court for the Eastern District of Virgin­ia. The district court determined that, based on this court's decision in Gilead Sciences, Inc. v. Lee, the U.S. Patent and Trademark Office's calculation of the patent term adjustment for the patent at issue was correct, and that summary judgment was warranted as a matter of law. We reverse the district court's grant of summary judgment because the patent term adjustment in this case went beyond the period during which the applicant failed to undertake reasonable efforts and thereby exceeded the limitations set by the patent term adjustment statute.

         Background

         I.

         The life of a patent, the period of time during which the exclusive nature of a patent is in effect, is measured in years and days and is referred to as the "term" of the patent or "patent term." Prior to June 8, 1995, the term of a patent was seventeen years, measured from the date that the patent issued to its expiration date seventeen years later. See Merck & Co. v. Kessler, 80 F.3d 1543, 1547 (Fed. Cir. 1996).

         When the United States entered the World Trade Or­ganization, it assumed certain obligations and commit­ments under the terms of the World Trade Organization Agreement on Trade Related Aspects of Intellectual Property Rights. See Agreement on Trade-Related As­pects of Intellectual Property Rights, 33 I.L.M. 1197 (1994). As a result, Congress changed the patent term from seventeen years to twenty years, measured from the filing date of the earliest United States non-provisional application for the patent. See Pub. L. No. 103-465, § 532, 108 Stat. 4809, 4984 (1994) (codified at 35 U.S.C. § 154(a)(2)).

         In addition to extending the patent term from seven­teen years to twenty years, Congress passed the patent term adjustment ("PTA") statute in 1999 in an effort to discourage delay in the patent application process. See Pub. L. No. 106-113, § 1000(a)(9), 113 Stat. 1501, 1536 (1999) (codified at 35 U.S.C. § 154(b)). Specifically, § 154(b) grants the U.S. Patent and Trademark Office ("USPTO") authority to adjust the patent term by adding days to account for delays caused by the USPTO. See id. §§ 154(b)(1)(A)–(C). Such adjustments are favorable to an applicant because they extend the life of the patent. But the USPTO may also reduce the PTA in order to account for delays caused by the applicant. Id. § 154(b)(2); see, e.g., Gilead Scis., Inc. v. Lee, 778 F.3d 1341, 1343–45 (Fed. Cir. 2015).

         Section 154(b)(1) outlines three types of delays caused by the USPTO, known as Types A, B, and C, that can result in a PTA. Adjustments for a Type A delay apply when the USPTO fails to provide a notification under 35 U.S.C. § 132 or a notice of allowance within fourteen months of an application's filing. 35 U.S.C. § 154(b)(1)(A)(i). The statute provides that "the term of the patent shall be extended 1 day for each day" the USPTO does not meet its response deadlines. Id. § 154(b)(1)(A). Similarly, Type B adjustments extend the patent term by one day for every day that the USPTO fails to issue a patent after three years have passed between the filing date of the application and the date of allowance. Id. § 154(b)(1)(B). Finally, Type C adjust­ments are for delays that are excluded from the Type B delay due to derivation proceedings, secrecy orders, or successful appeals. Id. § 154(b)(1)(C).

         As noted above, the statute recognizes that conduct by the applicant may also cause delay in the examination or prosecution of the application. Section 154(b)(2)(C) au­thorizes the USPTO to reduce the total amount of PTA for Type A, B, and C delays by deducting the number of days equal to the period of time that "the applicant failed to engage in reasonable efforts to conclude prosecution of the application." Id. § 154(b)(2)(C)(i). An applicant is deemed to have failed to engage in reasonable efforts for the cumulative time in excess of three months that the appli­cant takes to respond to a notice of rejection, objection, argument, or other request from the USPTO. Id. § 154(b)(2)(C)(ii). The statute provides that the Director of the USPTO "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." Id. § 154(b)(2)(C)(iii).

         The Director of the USPTO has promulgated such regulations: 37 C.F.R. § 1.704, titled "Reduction of period of adjustment of patent term." 37 C.F.R. § 1.704 (2015). Relevant here is § 1.704(c)(8), which regulates the calcu­lation for reduction of PTA in instances where the appli­cant submits a supplemental paper to the USPTO. Section 1.704(c)(8) provides:

Submission of a supplemental reply or other pa­per, other than a supplemental reply or other pa- per expressly requested by the examiner, after a reply has been filed, in which case the period of adjustment set forth in § 1.703 [that extends the patent's term due to USPTO delay] shall be re­duced by the number of days, if any, beginning on the day after the date the initial reply was filed and ending on the date that the supplemental re­ply or other such paper was filed . . . .

Id.

         The USPTO has also promulgated regulations that permit an applicant to file an information disclosure statement ("IDS") up to the end of the patent examination process, while providing incentives for an applicant to submit any necessary IDS promptly. Id. §§ 1.97(a)–(d). As relevant here, the USPTO will accept without condi­tion an IDS that is filed before notice of the first office action after the applicant has filed a request for continued examination ("RCE"). Id. § 1.97(b)(4). Also relevant here, when an applicant submits an IDS disclosing a communi­cation from a foreign patent office, there is a thirty-day safe harbor that exempts reduction of PTAs under § 1.704(c)(8), provided that the IDS is submitted within thirty days of the applicant receiving the information from the foreign patent office that is eventually contained in the IDS.^[1] Id. § 1.704(d)(1).

         II.

         The relevant facts in this case are not in dispute. Ap­pellant Supernus Pharmaceuticals, Inc. ("Supernus") is the owner and assignee of the patent at issue, U.S. Patent No. 8,747,897 ("the '897 patent"), titled "Osmotic Drug Delivery System." Co-Appellant United Therapeutics Corp. ("UTC") is the exclusive licensee of the '897 patent. UTC assisted in the prosecution of the patent application and took action as the applicant in that capacity. Super-nus and UTC are collectively referred to herein as "Supernus."

         On April 27, 2006, Supernus filed U.S. Patent Appli­cation No. 11/412,100 ("the '100 application"). On August 20, 2010, the USPTO issued a final rejection. On Febru­ary 22, 2011, Supernus filed an RCE, which removed the finality of the rejection and permitted the examiner to consider additional information submitted by Supernus. 35 U.S.C. § 132(b); 37 C.F.R. § 1.114. The '100 application issued on June 10, 2014, as the '897 patent.

         On the same day it filed the '100 application, Super-nus filed international application PCT/US2007/009969, claiming priority from the '100 application. The interna­tional application gave rise to European Application No. 07755989.6. On October 13, 2011, the European Patent Office ("EPO") issued the European application as Euro­pean Patent EP2010189 ("the EP patent"). On August 21, 2012, the EPO notified Supernus's European patent counsel that a Notice ...