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Nippon Shinyaku Company Limited v. Iancu

United States District Court, District of Columbia

February 27, 2019

NIPPON SHINYAKU COMPANY, LIMITED, Plaintiff,
v.
ANDREI IANCU, [1] Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Defendant.

          MEMORANDUM OPINION

          EMMET G. SULLIVAN UNITED STATES DISTRICT JUDGE

         I. Introduction

         Nippon Shinyaku Company, Limited (“Nippon”) owns United States Patent Nos. 7, 205, 302 and 7, 494, 997 (respectively, “ ‘302 patent” and “ ‘997 patent”). The United States Patent and Trademark Office (“USPTO”) issued the ‘302 patent in 2007 with a patent term adjustment (“PTA”) of 344 days, and the ‘997 patent in 2009 with a PTA of ninety-nine days. In 2010, the USPTO adopted new methods for calculating PTAs necessitated by the United States Court of Appeals for the Federal Circuit's (“Federal Circuit”) decision in Wyeth v. Kappos, 591 F.3d 1364 (Fed. Cir. 2010). Prior to adopting the final procedure for such calculations, the USPTO established an Interim Procedure for patentees seeking a recalculation of their PTAs subject to certain time restrictions. Given its untimely requests, however, Nippon was ineligible for a recalculation. Nippon brings this action under the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701 et seq., against the Under Secretary of Commerce for Intellectual Property and Director of the USPTO. Nippon challenges the USPTO's Interim Procedure, alleging that the Interim Procedure arbitrarily ensures disparate treatment of two categories of patents and leaves it without a remedy to correct the improper calculations of the PTAs for the patents at issue.

         Pending before the Court are the parties' cross-motions for summary judgment. Having carefully reviewed the motions, oppositions and replies, and the entire record herein, the Court concludes that the USPTO's Interim Procedure was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Therefore, the Court DENIES Nippon's motion for summary judgment and GRANTS the USPTO's cross-motion for summary judgment.

         II. Background

         A. Statutory and Regulatory Framework

         A patent term begins “on the date on which the patent issues” and “end[s] 20 years from the date on which the application for the patent was filed in the United States[.]” 35 U.S.C. § 154(a)(2).[2] Many patent terms became far shorter than Congress intended, however, due to the USPTO's lengthy delays in examining patent applications and issuing patents. See Novartis AG v. Kappos (“Novartis I”), 904 F.Supp.2d 58, 61 (D.D.C. 2012), aff'd in part, rev'd in part sub nom. Novartis AG v. Lee (“Novartis II”), 740 F.3d 593 (Fed. Cir. 2014). To address this problem, Congress enacted the Patent Term Guarantee Act of 1999 (“Act”), which provides a guarantee of prompt USPTO responses. See Pub. L. No. 106-113, §§ 4401-02, 113 Stat. 1501, 1501A-557 (1999) (codified as amended at 35 U.S.C. § 154(b)); see also 35 U.S.C. § 154(b)(1)(A). Section 154(b)(1) also provides a “[g]uarantee of no more than 3-year application pendency, ” see 35 U.S.C. § 154(b)(1)(B), and a guarantee of “1 day for each day of the pendency” of “deprivation proceedings, secrecy orders, and appeals.” See id. § 154(b)(1)(C).

         Since the prosecution of a patent application may take more than three years, and to give each patent a term of at least seventeen years, the Act allows the USPTO to adjust the terms of a patent for certain delays during the examination process. See Daiichi Sankyo Co., Ltd. v. Rea (“Daiichi I”), 12 F.Supp.3d 8, 11-12 (D.D.C. 2013) (citations omitted), aff'd sub nom. Daiichi Sankyo Co. v. Lee (“Daiichi II”), 791 F.3d 1373 (Fed. Cir. 2015), cert. denied, 136 S.Ct. 1491 (2016). The statute provides for the adjustment and calculation of patent terms caused by different categories of delay. Bristol-Myers Squibb Co. v. Kappos, 891 F.Supp.2d 135, 137 (D.D.C. 2012).

         Nippon's PTAs resulted from two of those categories: (1) “A Delay” and (2) “B Delay.” See generally Pl.'s Mot. for Summ. J. (“MSJ”), ECF No. 46; Def.'s Mot. for Summ. J. (“MSJ”) & Opp'n, ECF No. 48.[3] The A Delay “is excluded from the calculation of the patent term” and “extend[s] the term of the patent one day for each day the [US]PTO does not meet certain examination deadlines[.]” Daiichi I, 12 F.Supp.3d at 12 (citation omitted). The B Delay “extends the term of the patent one day for each day issuance is delayed due to the [US]PTO's failure ‘to issue a patent within 3 years after the actual filing date of the application in the United States.'” Wyeth, 591 F.3d at 1367 (quoting 35 U.S.C. § 154(b)(1)(B)).

         1. The Wyeth Decision and its Implementation

         On April 22, 2004, the USPTO promulgated regulations explaining the methodology for calculating the “A/B Overlap.” See Daiichi I, 12 F.Supp.3d at 12 (citing Revision of Patent Term Extension and PTA Provisions, 69 Fed.Reg. 21704-01 (Apr. 22, 2004)). Interpreting 35 U.S.C. § 154(b), the USPTO used the greater of the A Delay or B Delay to determine the proper PTA rather than combining the two delays. See Wyeth v. Dudas, 580 F.Supp.2d 138, 140 (D.D.C. 2008), aff'd sub nom. Wyeth, 591 F.3d at 1368. In Wyeth, the district court rejected this interpretation because the USPTO's “construction [could not] be squared with the language of § 154(b)(1)(B), which applies ‘if the issue of an original patent is delayed due to the failure of the [USPTO] to issue a patent within 3 years.'” 580 F.Supp.2d at 142 (emphasis in original) (quoting 35 U.S.C. § 154(b)(1)(B)). The court explained that B Delay “begins when the [US]PTO has failed to issue a patent within three years, not before.” Id. (emphasis added). The Federal Circuit upheld the district court's determination that the USPTO's methodology in calculating the A and B Delay overlap was contrary to the plain language in Section 154(b) because “it effectively counts B delay before it occurs.” Wyeth, 591 F.3d at 1375.

         Consistent with the Wyeth decision, after the USPTO decides that a patent application will be granted, it issues a written notice of allowance of the application. See 35 U.S.C. § 151(a). This notice includes the USPTO's initial determination of the PTA, if applicable. 35 U.S.C. § 154(b)(3)(B)(i) (requiring the USPTO to “make a determination of the period of any [PTA]” and “transmit a notice of that determination no later than the date of issuance of the patent[.]”). The PTA reflected in the notice of allowance does not include the B Delay. See Bristol-Myers Squibb Co., 891 F.Supp.2d at 137.

         The USPTO determines the proper amount of the A Delay when it issues notice to the patent applicant and before the patent is granted. Daiichi I, 12 F.Supp.3d at 12. The USPTO does not determine the proper amount of the B Delay until the patent is granted because the B Delay continues to accrue until the patent is granted. Id. After determining the proper amounts for the A Delay and the B Delay, the USPTO determines “the extent of any overlap between the two types of delay.” Id. (citation omitted). “To the extent that periods of [A Delay and B Delay] overlap, any [PTA] shall not exceed the actual number of days the issuance of the patent was delayed.” Id. (quoting 35 U.S.C. § 154(b)(2)(A)). “Because the overlap determination depends on the amount of B Delay, it is also done at the time the patent is granted.” Id. (citation omitted). “The final determination of PTA-which factors in A Delay, B Delay, and A/B Overlap-is done at the time the patent is granted.” Id. (citation omitted).

         2. Administrative and Judicial Review of PTAs

          A patent applicant dissatisfied with PTA determinations may seek administrative and judicial review. Id. at 12-13. The patent applicant may “request reconsideration of any [PTA] determination made by the Director, ” 35 U.S.C.§ 154(b)(3)(B)(ii), “within two months of the date the patent issued, ” 37 C.F.R. § 1.705(d) (2012) (“Rule 1.705(d)”). Daiichi I, 12 F.Supp.3d at 13. A patentee dissatisfied with the USPTO's response to the request for reconsideration may seek further administrative review of the USPTO's decision under Rule 1.705(d) by submitting a petition under 37 C.F.R. § 1.181(f) (“Rule 1.181(f)”) “within two months of the mailing date of the action or notice from which relief is requested[.]” 37 C.F.R. § 1.181(f) (2012). “[O]n petition of the interested party, ” the two-month limitation “may be suspended or waived by the Director or the Director's designee” in “an extraordinary situation, when justice requires[.]” 37 C.F.R. § 1.183 (2013).

         Finally, the patent applicant may seek judicial review in federal district court. 35 U.S.C. § 154(b)(4)(A). At the time that Nippon's patents were issued, a civil action for judicial review of a PTA determination had to be “filed in the United States District Court for the District of Columbia within 180 days after the grant of the patent.” Id.[4]

         3. The Interim Procedure

         Following the Wyeth decision, on February 1, 2010, the USPTO published notice of an Interim Procedure to “provid[e] patentees with the ability to request a recalculation of their [PTA] [consistent with the Wyeth decision] without a fee as an alternative to the petition and fee required by 37 CFR 1.705(d).” Interim Procedure for Patentees To Request a Recalculation of the PTA To Comply With the Federal Circuit Decision in Wyeth v. Kappos Regarding the Overlapping Delay Provision of 35 U.S.C. 154(b)(2)(A) (“Interim Procedure” or “procedure”), 75 Fed.Reg. 5043-01, 5043 (Feb. 1, 2010). According to the USPTO, this procedure would be in effect until March 2, 2010, at which time the modifications to the computer program used to calculate PTAs necessitated by the Wyeth decision would be complete. Id. at 5043. This procedure was available for only two types of PTA requests for reconsideration based on the Wyeth decision: (1) requests that could have been timely made within 180 days of the patent decision as set forth in 35 U.S.C. § 154(b)(4); or (2) requests that could have been timely made within the two-month time period set forth in Rule 1.181(f). Id. at 5043-44. The USPTO explained that the statutory and regulatory framework provides that requests for reconsideration by the USPTO of the PTA must be filed within two months of the date the patent was issued pursuant to Rule 1.705(d), and that applicants dissatisfied with a determination made by the Director of the USPTO could file a civil action within 180 days after the grant of the patent pursuant to 35 U.S.C. § 154(b)(4). Id. The USPTO also cited the two-month deadline for reconsideration of a Rule 1.705(d) decision pursuant to Rule 1.181(f). Id. at 5044. The Interim Procedure therefore provided patentees who could timely challenge the pre-Wyeth PTA determinations to the USPTO pursuant to Rule 1.181(f) or the district court pursuant to 35 U.S.C. § 154(b) with the opportunity to request reconsideration from the USPTO. Id. As a practical matter, the Interim Procedure was available for patents that had been issued between August 5, 2009 and March 1, 2010 and for patentees who received the USPTO's decision on a Rule 1.705(d) request for reconsideration on December 1, 2009 or later. See Daiichi II, 791 F.3d at 1375-76. Any petitions filed outside of these windows would be denied as untimely by the USPTO. 75 Fed.Reg. at 5043-44.

         B. Factual and Procedural Background

         The material facts in this case are undisputed. See Pl.'s MSJ, ECF No. 46 at 16-18, 20; see also Def.'s MSJ, ECF No. 48 at 1, 10-11. Nippon is a foreign corporation with its principal place of business in Kyoto, Japan. Second Am. Compl., ECF No. 24 ¶ 4. Nippon is the owner of the ‘302 patent, entitled “Heterocyclic Compound Derivatives and Medicines, ” and the ‘997 patent, entitled “Amide Derivative.” Pl.'s MSJ, ECF No. 46 at 16. The ‘302 patent was issued on April 17, 2007 with a notice that its term would be extended or adjusted by 344 days under 35 U.S.C. § 154(b). Administrative Record (“A.R.”), ECF No. 45-3 at 90. The ‘997 patent was issued on February 24, 2009 with a notice that its term would be extended or adjusted by ninety-nine days under 35 U.S.C. § 154(b). Id. at 3.

         On July 6, 2010, before seeking administrative relief, Nippon filed the initial complaint in this Court, alleging, inter alia, that the USPTO's pre-Wyeth determinations and calculations “of the [PTAs] for the ‘302 and ‘997 patents were arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law under 5 U.S.C. § 706(2)(A).” Compl., ECF No. 1 ¶ 18. Nippon filed this civil action more than three years (1, 176 days) after the issuance of the ‘302 patent and more than a year (497 days) after the issuance of the ‘997 patent. See, e.g., id. ¶ 7; Def.'s MSJ, ECF No. 48 at 10.

         Beginning in August 2010, Nippon also sought administrative review of the USPTO's PTA determinations in light of the Wyeth decision. See A.R., ECF No. 45-3 at 142-43. On October 12, 2010, the USPTO denied Nippon's August 30, 2010 request for the ‘302 patent, treating it as a “request for reconsideration of [PTA]” under Rule 1.705(d). Id. at 151. Because this request was submitted outside of the “two months after the date of issuance of the [‘302] patent, ” the USPTO dismissed it as untimely under Rule 1.705(d). Id. The record does ...


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