In Gilead Sciences, Inc. v. Lee, No. 14-1159 (Fed. Cir. Feb. 26, 2015), the Federal Circuit held that the PTO reasonably interpreted 35 U.S.C. § 154(b)(2)(C) to reduce patent term adjustment ("PTA") for a patent based on the filing of a supplemental information disclosure statement ("IDS") after a response to a restriction requirement.
Gilead Sciences, Inc. ("Gilead") owns U.S. Patent No. 8,148,374 ("the '374 patent") covering the compound cobicistat, an HIV drug. During the prosecution of the application that led to the '374 patent, Gilead filed an IDS fifty-seven days after responding to an initial restriction requirement issued by the PTO. In issuing the '374 patent, the PTO determined that Gilead was entitled to a PTA of 559 days, accounting for, inter alia, the reduction by an applicant-induced delay of the period between Gilead's initial reply to the restriction requirement and its filing of the IDS, according to 35 U.S.C. § 154(b)(2)(C)(i), which states that the PTA should be reduced by a period during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application. Gilead contested that its filing of the IDS did not cause any actual delay and should not have been subtracted from the PTA. The PTO, however, maintained that Gilead's filing of the IDS constituted a failure to engage in a reasonable effort to conclude prosecution as required by 37 C.F.R. § 1.704(c)(8).
Gilead filed suit challenging the PTO's interpretation and application of 35 U.S.C. § 154(b) as "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law and in excess of statutory jurisdiction, authority, or limitation." Slip op. at 7 (quoting Gilead Scis., Inc. v. Rea, 976 F. Supp. 2d 833, 835 (E.D. Va. 2013) ("Gilead I")). The parties then filed cross-motions for SJ. The district court granted the PTO's motion for SJ, finding that the PTO's interpretation was not unreasonable.
On appeal, the Federal Circuit began the review of the PTO's statutory interpretation by applying the two-step framework established in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Step one of the Chevron framework asks whether Congress directly addressed the precise question at issue. In this case, the district court determined the precise issue to be "whether filing a supplemental IDS after submitting a reply to a restriction requirement constitutes a failure to engage in reasonable efforts to conclude prosecution of the application." Slip op. at 8 (quoting Gilead I, 976 F. Supp. 2d at 836). In its appeal, Gilead did not address the precise issue as framed by the district court, but instead asserted that PTA can be reduced only when an applicant's conduct actually delays the conclusion of prosecution. The Court rejected Gilead's argument and explained that the plain meaning of the PTA statute does not equate "'reasonable efforts to conclude prosecution of the application' as described by § 154(b)(2)(C)(i) to applicant conduct requiring actual delay." Id. at 9.
The Federal Circuit further rejected Gilead's argument that Congress intended to penalize only applicant behaviors causing actual delay because § 154(b)(2)(C)(ii), which stipulates that an applicant will be deemed to act unreasonably to conclude prosecution if the applicant takes more than three months to respond to a PTO notice, sets forth a specific time frame requiring actual delay. According to the Court, the next subsection, § 154(b)(2)(C)(iii), employs broad language to authorize the PTO to define other circumstances constituting failure to engage in reasonable efforts to conclude prosecution, and the statutory text does not support Gilead's contention that Congress meant to restrict such conduct solely to applicant conduct causing delay. The Court also found that the legislative history supports the PTO's construction of the statute and postulated that Congress's intent was "to penalize applicant conduct as opposed to the results of such conduct." Id. at 12. Thus, the Court determined that Congress did not address the precise question as framed by the district court.
The Federal Circuit then turned to step two of the Chevron framework to find that the PTO's construction of the statute was permissible. The Court noted that Congress "expressly delegated authority" to the PTO to establish the circumstances constituting failure to engage in reasonable efforts to conclude prosecution as stipulated in § 154(b)(2)(C)(iii), and that § 1.704(c)(8) "encompasses the precise situation in this case––the filing of a supplemental IDS after submission of a reply to a restriction requirement." Id. at 13. Thus, the Court found that Congress intended to sanction "not only applicant conduct or behavior that results in actual delay, but also those having the potential to result in delay irrespective of whether such delay actually occurred." Id. at 14.
The Federal Circuit further explained that Gilead failed to account for delays caused to other applications because, "[a]lthough an applicant's conduct may not actually result in delaying the issuance of that applicant's patent, such conduct may have negative externalities for other patent applicants because it could result in delaying the issuance of their patents." Id. The Court also added that because Gilead submitted the IDS within the mandated four-month window in which the PTO must reply to the response to the restriction requirement, this filing increases the PTO's workload and makes it "increasingly difficult for the PTO to satisfy the statutorily-mandated time requirement stipulated in § 154(b)(1)(A)(ii)." Id. at 16.
Accordingly, the Court found the PTO's construction of the statute reasonable and affirmed the district court's grant of SJ to the PTO.
Judges: Dyk, Wallach (author), Hughes
[Appealed from E.D. Va., Judge O'Grady]
This article previously appeared in Last Month at the Federal Circuit, March 2015
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