United States: Patent Term Adjustment For Divisional Patents

Most of the Patent Term Adjustment (PTA) cases being filed in the U.S. District Court for the Eastern District of Virginia involve patents issuing from applications in which a Request for Continued Examination (RCE) was filed, and cite the November 1, 2012 decision of Judge Ellis, III in Exelixis. (That decision, and a conflicting decision from Judge Brinkema, are on appeal at the Federal Circuit.) A recent PTA complaint filed by Mr. Mohsenzadeh caught my attention, because it raises a different issue: should PTA be awarded in a divisional application when the USPTO took longer than 14 months to issue a Restriction Requirement in the parent application?

The Patents at Issue

The patents at issue are U.S. Patent 8,352,362 and U.S. Patent 8,401,963, directed to methods of transferring resources from one entity to another, and related methods. These two patents stem from divisional applications of U.S. Patent 7,742,984.

The patent applications that issued as the '362 and '963 patents were filed on January 8, 2010. The '362 patent was issued on January 8, 2013, and the '963 patent was issued on March 19, 2013. The USPTO did not award any PTA to these patents.

The USPTO Delay At Issue

The patent application that issued as the parent '984 patent (the "parent application") was filed July 6, 2001 and issued June 22, 2010. The USPTO awarded 2,104 days PTA to the '984 patent, including 1476 days for the USPTO's failure to issue a first Office Action within 14 months of the application's filing date.

The first Office Action issued in the parent application was a Restriction Requirement mailed September 21, 2006, 1476 days after 14 months after the application was filed. Mr. Mohsenzadeh argues that the PTA calculations for the '362 and '963 patents should include the 1476 days of USPTO delay in issuing the Restriction Requirement in the parent application, because it is that Restriction Requirement that necessitated the filing of the applications that issued as the '362 and '963 patents.

The Statute At Issue

The statute at issue is the basic PTA statute, 35 USC § 154(b):

(b) Adjustment of Patent Term.—
(1) Patent term guarantees.—
(A) Guarantee of prompt patent and trademark office responses.— Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to—
(i) provide at least one of the notifications under section 132 or a notice of allowance under section 151 not later than 14 months after—
(I) the date on which an application was filed under section 111 (a); or
(II) the date of commencement of the national stage under section 371 in an international application;
(ii) respond to a reply under section 132, or to an appeal taken under section 134, within 4 months after the date on which the reply was filed or the appeal was taken;
(iii) act on an application within 4 months after the date of a decision by the Patent Trial and Appeal Board under section 134 or 135 or a decision by a Federal court under section 141, 145, or 146 in a case in which allowable claims remain in the application; or
(iv) issue a patent within 4 months after the date on which the issue fee was paid under section 151 and all outstanding requirements were satisfied,
the term of the patent shall be extended 1 day for each day after the end of the period specified in clause (i), (ii), (iii), or (iv), as the case may be, until the action described in such clause is taken.

Mr. Mohsenzadeh argues that the plain language of statute supports its position because the issue of its original patents—the '362 and '963 patents —was delayed due to the USPTO's failure to issue an Office Action within 14 months after the date on which an application—the parent application—was filed.

The USPTO Rule at Issue

The USPTO cited 37 CFR § 1.704(c)(12) in denying Mr. Mohsenzadeh's requests for PTA. This rule states:

(c) Circumstances that constitute a failure of the applicant to engage in reasonable efforts to conclude processing or examination of an application also include the following circumstances, which will result in the following reduction of the period of adjustment set forth in § 1.703 to the extent that the periods are not overlapping:
*****
(12) Further prosecution via a continuing application, in which case the period of adjustment set forth in Sec. 1.703 shall not include any period that is prior to the actual filing date of the application that resulted in the patent.

(This rule originally was set forth at 37 CFR § 1.704(c)(11), and was renumbered to 37 CFR § 1.704(c)(12) with the PTA rule changes published August 12, 2012, with an effective date of September 17, 2012.)

However, it is not clear that this rule applies to divisional applications. Filing a divisional application does not achieve "[f]urther prosecution" of the subject matter examined in the parent application. Rather, a divisional application is filed to obtain examination of subject matter that the Examiner refused to examine in the first application. Likewise, it is difficult to understand how filing a divisional application could constitute "a failure of the applicant to engage in reasonable efforts to conclude processing or examination of an application," given that the filing of a divisional application is necessary to obtain examination of subject matter that was withdrawn by the Examiner in the parent application.

An Interesting Question

The 20-year term of a patent issuing from a divisional application is measured from the filing date of the parent application. Thus, any USPTO delay in issuing a Restriction Requirement leads to the divisional application being filed later in its own 20-year term. The USPTO's interpretation of the PTA statute in this case puts divisional patents at a distinct disadvantage–a divisional patent is never made whole for USPTO delays in issuing the Restriction Requirement that necessitated the divisional application filing in the first instance, even though those delays shorten the effective term of the divisional patent.

The PTA statute was enacted to protect patent holders from the impact of USPTO delays after the U.S. changed from a 17-year patent term (measured from the patent grant date) to a 20-year patent term (measured from the earliest effective U.S. patent application filing date). When understood in this context, the USPTO's interpretation of the PTA statute as applied to divisional applications may be inconsistent with Congressional intent. When U.S. patents enjoyed a 17-year term, a divisional patent would have the same term as its parent patent, e.g., both the parent patent and the divisional patent would have a 17-year term measured from their respective grant dates. Although the change to a 20-year patent term necessarily shortens the term of a divisional patent, Mr. Mohsenzadeh's interpretation of the PTA statute would soften the blow when the USPTO delays in issuing a Restriction Requirement, while the USPTO's interpretation only makes it worse.

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