CAFC Affirms District Court Analysis of Standard for Granting Patent Term Adjustment
“[T]he reversal of a ‘determination of patentability’ [in the statute relating to patent term adjustment] requires a determination that the claim in question is substantively allowable, not just free of a particular rejection.” – CAFC
The U.S. Court of Appeals for the Federal Circuit (CAFC) on Wednesday issued a precedential decision affirming a Virginia district court’s grant of summary judgment for the U.S. Patent and Trademark Office (USPTO) with respect to SawStop Holding LLC’s challenge of the denial of patent term adjustment (PTA) for two of its patents. The CAFC agreed with the district court that PTA was not warranted because the claim at hand did not issue under a decision that reversed an adverse determination of patentability. Instead, “‘the claim remain[ed] under rejection after the Board decision’ and ‘the patent only issue[d] after further prosecution’ and amendment.”
The text of the relevant statute relating to PTA reads as follows:
(b) Adjustment of Patent Term.—
(1) Patent term guarantees.—
…
(C) Guarantee of adjustments for delays due to derivation proceedings, secrecy orders, and appeals.—Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to—
(iii) appellate review by the Patent Trial and Appeal Board or by a Federal court in a case in which the patent was issued under a decision in the review reversing an adverse determination of patentability,
the term of the patent shall be extended 1 day for each day of the pendency of the proceeding, order, or review, as the case may be.
SawStop filed two suits with the U.S. District Court for the Eastern District of Virginia seeking PTA for two of its patents, U.S. Patent Nos. 9,522,476 (“‘476 patent”) and 9,927,796 (“‘796 patent”). SawStop sought PTA for delays due to appeals before allowance. On the ‘476 patent, the examiner rejected claim 11 as obvious and SawStop appealed to the Patent Trial and Appeal Board (PTAB), which ultimately affirmed the obviousness rejection, but on a new ground of rejection. SawStop thus reopened prosecution, filing several amendments and a request for continued examination (RCE), and the examiner eventually allowed the claim. No PTA was granted, however, and when SawStop challenged that decision the USPTO cited the statutory language and explained that “the claim was not issued under a decision in the review reversing an adverse determination of patentability.” SawStop thus filed suit in the district court, which upheld the USPTO’s interpretation of 35 U.S.C. § 154(b)(1)(C)(iii).
As to the ‘796 patent, the examiner rejected independent claim 1 on two bases—anticipation and provisional non-statutory obviousness-type double patenting (“double patenting”)—and finally rejected dependent claim 2 for anticipation. The PTAB affirmed both rejections of claim 1, but reversed the rejection of claim 2, finding it patentable. SawStop challenged the anticipation rejection of claim 1 in the district court, and the court ultimately reversed the rejection. However, since the double patenting rejection was not addressed, the court gave SawStop two options for allowance: file a terminal disclaimer or cancel claim 1 and rewrite claim 2 as an independent claim. SawStop chose to rewrite the claim and a notice of allowance was issued for claim 2, but SawStop filed an RCE and continued prosecution; a notice of allowance was eventually issued for the ‘796 patent and PTA was granted for the delay incurred in the successful reversal of the rejection of claim 2 at the PTAB, but not for the delay caused by the appeal of claim 1 to the district court. SawStop again challenged the refusal of PTA in district court and the court ruled in favor of the USPTO. SawStop then appealed the summary judgment rulings in both cases.
On appeal, the CAFC explained that the district court’s analysis of the (C) delay provision was consistent with its precedent that the “unambiguous language imposes two requirements: that an adverse determination of patentability be reversed, and that the application reviewed in that appeal issue as a patent as a result of that reversal.” The CAFC disagreed with SawStop’s argument that “any examiner rejection overturned on appeal qualifies as ‘a reversal of a determination of patentability,’ regardless of any new grounds of rejection issued by the Board.” SawStop said that the district court and the USPTO interpretation of the statute would “add a new requirement” that a decision reversing an adverse determination must not subject the claims to a new rejection. This reading does not serve the purpose of compensating the applicant for appellate delays that are not the applicant’s fault, said SawStop.
But the USPTO said that claim 11 was unpatentable both before and after the PTAB’s review, and the CAFC agreed. The court said:
While there is no dispute that the Board cast aside the examiner’s basis for rejecting claim 11, the Board in the same review found claim 11 unpatentable, albeit for a different reason…. The appeal thus resulted in no substantive change in the patentability of claim 11. Such a substantive change is required by the language of the statute itself: the reversal of a ‘determination of patentability’ requires a determination that the claim in question is substantively allowable, not just free of a particular rejection.”
The CAFC also cited a side-by-side comparison of the claims to show that the district court’s independent basis for granting summary judgment—”that claim 11 of the ’476 patent did not “issue under a decision in the review” because after the appeal, the claim was subject to a year of additional substantive prosecution and amendments to address the Board’s new ground of rejection”—was correct.
SawStop attempted to argue that the claim would not have ultimately issued “but-for” the appeal, and thus complied with the statutory language, but the CAFC disagreed:
Under Sawstop’s reading, the (C) delay provision could apply when an adverse determination of patentability is overcome on appeal, regardless of substantive amendments made after the appeal to secure allowance. This interpretation effectively reads out the phrase “in which the patent was issued under a decision in the review,” and thus cannot be sustained.
Turning to the ‘796 patent, SawStop had argued that the statute only requires the reversal of “an adverse determination of patentability” and that the USPTO’s denial of PTA caused by the appeal of claim 1 “improperly replaces the statutory ‘an’ with a requirement that ‘all’ rejections of a particular
claim be reversed.” The CAFC explained that this reading “again confuses specific rejections with the determination of patentability”:
“[T]he singular reversal referenced in the statute is the determination of patentability of the claim under appellate review, not a basis for a rejection or number of rejections.”
The CAFC also said that SawStop’s interpretation of the statute’s goals was too broad and that SawStop provided no basis to support its suggestion that the statute should be read as meant “to categorically compensate applicants for all appellate delays that were not the applicant’s fault.”
SawStop also argued that the PTA provision for (A) delay, § 154(b)(1)(A)(iii), specifically refers to “allowable claims,” and thus supports SawStop’s contention that the claim need not be suitable for allowance following the appeal. The CAFC called this interpretation “incorrect” and noted that the two provisions “reflect different stages of prosecution during which delay may occur and the different reasons for such delay.”
The act giving rise to (A) delay is the PTO’s failure to act after an appellate decision ‘in a case in which allowable claims remain in the application.’ The phrase ‘allowable claims’ in the (A) delay provision refers to the state of the claims when the triggering action—PTO inaction—takes place. This is a wholly different context than that of the (C) delay provision, “reversing an adverse determination of patentability,” which accurately reflects that the appellate change of the patentability of the claims is itself the triggering event.
Finally, the CAFC rejected SawStop’s argument that the PTAB’s reversal of the anticipation finding on claim 1 of the ‘796 patent was a “reversal of an adverse determination of patentability” because the examiner’s adverse determination of aptentability was based on two hrounds – double patenting and anticipation. SawStop only appealed anticipation and the district court did not address it. Since the provisional double patenting rejection was left in place, claim 1 was technically unpatentable both before and after the appeal, despite the reversal on anticipation. The CAFC thus agreed that the ’796 patent was ineligible for (C) delay PTA because it did not issue under a decision in the review. “The ’796 patent, as issued, did not include claim 1 as appealed,” said the CAFC.
