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Merck Sharp & Dohme Corp. v. Lee

United States District Court, D. Columbia.

November 6, 2014

MERCK SHARP & DOHME CORP., Plaintiff,
v.
MICHELLE LEE, Deputy Under Secretary of Commerce for Intellectual Property & Deputy Director of the United States Patent & Trademark Office, Defendant

Page 17

For Merck Sharp & Dohme Corp., Plaintiff: Kevin B. Collins, Paul J. Berman , LEAD ATTORNEYS, COVINGTON & BURLING LLP, Washington, DC USA; Blair E. Taylor, ROCHE TISSUE DIAGNOSTICS, Tucson, AZ USA.

For Michelle K. Lee, Honorable, Deputy Under Secretary of Commerce for Intellectual Property & Deputy Director of the United States Patent & Trademark Office, Defendant: Mitchell P. Zeff, LEAD ATTORNEY, U.S. ATTORNEY'S OFFICE, Washington, DC USA.

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MEMORANDUM OPINION

BERYL A. HOWELL, United States District Judge.

The plaintiff, Merck Sharp & Dohme Corp., brings suit against the defendant, Michelle Lee, the Deputy Under Secretary of Commerce for Intellectual Property & Deputy Director of the United States Patent and Trademark Office (" USPTO" ), alleging that the defendant improperly calculated the adjustment period for its patent term.[1] Pending before the Court is the plaintiff's Motion for Summary Judgment, ECF No. 18, and the defendant's Cross-Motion for Summary Judgment, ECF No. 19. For the reasons set forth below, the plaintiff's motion is granted and the defendant's motion is denied.

I. BACKGROUND

A. Legal Background

Before enactment of the Uruguay Round Agreements Act (" URAA" ) in 1994, the effective term of a patent ran seventeen years from patent issuance. Merck & Co. v. Kessler, 80 F.3d 1543, 1547 (Fed. Cir. 1996) (" Prior to June 8, 1995, U.S. patents had an expiration date under 35 U.S.C. § 154 measured as 17 years from the date the patent issued, except where terminal disclaimers were filed." ). The URAA amended the effective term of a patent from seventeen years commencing from issuance to twenty years from the date of filing. See 35 U.S.C. § 154(a)(2). Since the expiration of a patent is now keyed to the date on which the application for the patent was filed, delays by the USPTO during the prosecution of a given patent application may result in a reduction of the overall patent term. " [T]o compensate for

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certain application-processing delays caused by the PTO" that " now reduce a patent's term," Novartis AG v. Lee, 740 F.3d 593, 596 (Fed. Cir. 2014), 35 U.S.C. § 154(b) provides that an applicant can receive an adjustment in patent term for various categories of USPTO delay. The delays at issue in this case are termed " A delays" and " B delays."

" A delays" are set forth in 35 U.S.C. § 154(b)(1)(A), which is entitled " Guarantee of Prompt Patent and Trademark Office Responses." An " A delay" accrues when the USPTO fails to take a specific action on the patent application within the time frame provided by statute and runs until that action is taken. An " A delay" " extends the term of the patent one day for each day the PTO does not meet certain examination deadlines . . . ." Wyeth v. Kappos, 591 F.3d 1364, 1367 (Fed. Cir. 2010).

" B delays" are set forth in 35 U.S.C. § 154(b)(1)(B), which is entitled " Guarantee of No More than 3-Year Application Pendency." A " B delay" accrues when the USPTO fails to issue a patent within three years after the actual filing date of the application and runs until the patent is issued. Id. A " B delay" " extends the term of the patent one day for each day issuance is delayed due to the PTO's failure 'to issue a patent within 3 years after the actual filing date of the application . . . .'" Wyeth, 591 F.3d at 1367 (quoting 35 U.S.C. § 154(b)(1)(B)).

" A delays" and " B delays" are both subject to limitation under 35 U.S.C. § 154(b)(2). Under 35 U.S.C. § 154(b)(2)(A), to the extent that the periods of A delays and B delays overlap, the period of any adjustment in the length of the patent will " not exceed the actual number of days the issuance of the patent was delayed."

The Director of the USPTO is charged with granting a patent term adjustment in accordance with the provisions of 35 U.S.C. § 154(b). Specifically, 35 U.S.C. § 154(b)(3)(D) states that " [t]he Director shall proceed to grant the patent after completion of the Director's determination of a patent term adjustment under the procedures established under this subsection, notwithstanding any appeal taken by the applicant of such determination." If a party wishes to appeal a decision of the Director, 35 U.S.C. § 154(b)(4) , titled " Appeal of Patent Term Adjustment Determination," provides, in pertinent part, that a " dissatisfied" applicant " shall have remedy by a civil action," which is filed " in the United States District Court for the District of Columbia within 180 days after the grant of the patent." [2]

Prior to 2010, the USPTO's practice was to " use[] either the greater of the A delay or B delay to determine the appropriate adjustment but never [to] combine[] the two." Wyeth, 591 F.3d at 1368. In 2010, the Federal Circuit in Wyeth v. Kappos rejected the USPTO's practice, holding such a practice could not be reconciled with the language of the statute. See id. at 1371. According to the Court, the " B delay" is the period between the three-year mark after filing and the date the patent issues. Id. at 1369. An overlap between " A delays" and " B delays" occurs only when a violation of both provisions occurs at the same time. Id. In such a situation, the USPTO must add the " A delays" and " B delays" together and then reduce the adjustment by the overlap between the delays, such that no calendar

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day is counted twice. Id. at 1371. The USPTO has now adopted the Wyeth standard.

B. Factual Background

The plaintiff is the assignee of the 7,326,708 patent (" the '708 patent" ). Compl. ¶ 9. The USPTO determined, under the pre- Wyeth standard, that under 35 U.S.C. § 154(b) the patent term adjustment for the '708 patent was 657 days. Compl., Ex. 1, ECF No. 1-2. The defendant does not dispute that the determination of 657 days is incorrect in light of Wyeth because the USPTO failed to properly account for the " B delays." Compare Pl.'s Statement of Undisputed Material Facts & Mem. Supp. Mot. Summ. J. at ¶ ¶ 22-24, ECF No. 18-1, with Def.'s Statement of Material Facts at ¶ ¶ 22-24, ECF No. 19 (noting only that such facts are not " material to the timeliness question." ). Under the Wyeth standard, the defendant does not dispute that the correct patent term adjustment for the '708 patent is 883 days. Id.

C. Procedural Background

Although the '708 Patent was issued on February 5, 2008, the plaintiff did not file this action, challenging the defendant's determination of the patent term adjustment, until June 30, 2010--over two years after the patent issuance and only " after the 180 days provided for in 35 U.S.C. § 154(b)(4)(A)." See Pl.'s Statement of Material Facts ¶ ¶ 1, 25.

Prior to filing cross motions for summary judgment, the parties submitted a Joint Meet and Confer Report to the Court explaining their proposed schedule for the determination of the case. See Jt. Meet & Confer Rpt., ECF No. 15. Whereas, the plaintiff requested " a short period of discovery" prior to the filing of dispositive motions, the defendant sought to resolve the case " by cross motions for summary judgment without discovery." Id. at 1-2. In its report to the Court, the plaintiff did not identify the reasons for its discovery request. See id. The defendant stated its belief that " discovery is not appropriate" because " this action is a review of an administrative action that is to be done on the administrative record." Id. at 5. To resolve the scheduling dispute, the parties appeared for a status hearing to address the need for discovery and to set a briefing schedule. See Transcript of Initial Status Conference (March 9, 2012) (" Status Hearing" ), ECF No. 17. During the Status Hearing, the plaintiff stated its position that " there is probably going to be fact evidence [because] equitable tolling is a fact-bound inquiry." Id. at 6. Primarily, the plaintiff was concerned that, in response to the plaintiff's evidence in support of equitable tolling, the defendant would request to depose the plaintiff's affiants and, absent discovery, the plaintiff would be unable to address any counter-evidence put forth by the defendant. I ...


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