United States: Congressman Goodlatte Proposes Patent Reform To Eliminate Section 145 Actions And Exelixis I-Type Patent Term Adjustment

As reported on the House Judiciary Committee website, on May 23, 2013, Congressman Goodlatte (R-Va.) released "a discussion draft of legislation designed to address the ever increasing problem of abusive patent litigation." This draft legislation comes on the heels of the Patent Abuse Reduction Act of 2013 (S. 1013), which was introduced in the Senate by Senator Cornyn (R-Tx.) on May 22, 2013. While much attention has been focused on the patent litigation provisions of these bills, the Goodlatte proposal also would, among other things, eliminate Section 145 actions and eliminate Exelixis I-type Patent Term Adjustment (PTA). While this bill has not been introduced in the House, it is supported by Senator Leahy (D-Vt.) who may introduce similar legislation in the Senate.

Section 145 Actions

A patent applicant who is denied a patent after appealing to the USPTO's Patent Trial And Appeal Board has the option of either appealing directly to the Federal Circuit under 35 USC § 141 or challenging the USPTO decision in district court under 35 USC § 145. While the Federal Circuit would review the USPTO decision on the record that was before the agency, the applicant can introduce new evidence in a district court proceeding. Recently, in Hyatt v. Kappos, the Supreme Court affirmed the broad scope of evidence that may be introduced in a § 145 proceeding.

[W]e conclude that a district court conducting a §145 proceeding may consider "all competent evidence adduced . . . and is not limited to considering only new evidence that could not have been presented to the PTO." Thus, we agree with the Federal Circuit that "Congress intended that applicants would be free to introduce new evidence in §145 proceedings subject only to the rules applicable to all civil actions, the Federal Rules of Evidence and the Federal Rules of Civil Procedure."

Apparently, the USPTO is not content to live with this decision. Despite the rarity of § 145 actions, the draft Goodlatte legislation would simply do away with them altogether:

SEC. 9. IMPROVEMENTS AND TECHNICAL CORRECTIONS TO THE LEAHY-SMITH AMERICA INVENTS ACT.

(a) REPEAL OF CIVIL ACTION TO OBTAIN A PATENT.—

(1) REPEAL.—Section 145 of title 35, United 17 States Code, is repealed.

There you have it!

Exelixis I-Type Patent Term Adjustment

As I have written in previous articles about the Exelixis I and Exelixis II PTA cases, different judges on the U.S. District Court for the Eastern District of Virginia have disagreed on the meaning of 35 USC § 154(b)(1)(B)(i), and the extent to which the filing of a Request for Continued Examination (RCE) impacts the ability to accrue "B" type PTA. In Exelixis I, Judge Ellis, III, agreed with the patent holder that the USPTO had incorrectly interpreted the statute and improperly denied PTA when the first RCE was filed more than three years after the patent application's filing date, while in Exelixis II, Judge Brinkema upheld the USPTO's interpretation. Although these cases have been appealed to the Federal Circuit, the USPTO appears to be hedging its bets by supporting a provision in the Goodlatte draft legislation that would re-write the statutory language at issue as follows:

(B) GUARANTEE OF NO MORE THAN 3-YEAR APPLICATION PENDENCY.- Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the United States Patent and Trademark Office to issue a patent within 3 years after the actual filing date of the application in the United States, not including 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, not including–
(i) any time consumed by continued examination of the application requested by the applicant consumed after continued examination of the application is requested by the applicant under section 132(b);
(ii) ...
(iii) ...
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.

What bothers me more than this provision itself is the proposed effective date:

(2) EFFECTIVE DATE.—The amendments made by this subsection shall apply to all applications and patents that are filed or pending on or after the date of the enactment of this Act.

If the Federal Circuit holds that the USPTO has been improperly interpreting the current statute (either by affirming Exelixis I, agreeing with the second interpretation offered in Exelixis II, or construing the statute in some other way), any changes to § 154(b)(1)(B) should not apply to pending applications that could be negatively impacted by the new statutory language.

No News is Good News?

When I read draft legislation like this, I am reminded that Congressional gridlock is not always a bad thing. While there does seem to be critical mass on both sides of the aisle to address the "problem of abusive patent litigation," I hope that others are less interested in eliminating § 145 and amending § 154(b)(1)(B). Congressman Goodlatte's draft legislation also proposes to codify the doctrine of obviousness-type double patenting—I will review that proposal in a subsequent article.

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