Are You Able to Extend Your Patent’s Term of Enforcement?
Posted on Sep 3, 2014 in Articles
This article originally appeared in The Legal Intelligencer on September 3, 2014.
The U.S. Constitution provides to inventors the exclusive right to their discoveries “for limited times.” Patents are thus granted with limited terms of enforcement. Is there a way to extend the term of a patent? Is there a way to increase the time period during which a patent can be monetized? In some situations, the answer to both questions is a resounding “yes.”
Some patents have huge value until the very last moment that they are enforceable. For those patents, extending the patent term by even a day can be worth quite a lot of money.
Consider the patent that covers the cholesterol-lowering drug Lipitor. In its most successful year, and while the patent was in force, sales of Lipitor in the United States generated an average of $24 million a day. Now that the patent has expired, Lipitor sales in 2015 are projected to drop by two-thirds. Thus, it was desirable for the Lipitor patent to be in force as long as possible.
When the U.S. patent system was first created in 1790, the term of each patent was individually decided, but “not exceeding 14 years.” The 1836 Patent Act allowed for the term to be extended an additional seven years. In 1861, all patent terms were unified so that every patent would expire 17 years from the date of issue. In 1994, the term of each U.S. patent was changed to the time period that is still in effect today—20 years from the filing date. Under the current law, time spent prosecuting the application takes away from the time period that the resulting patent is enforceable.
Because a patent cannot be enforced until it has been granted, pre-grant delays caused by the U.S. Patent and Trademark Office can significantly affect the length of time a patent can be enforced. Because of the large number of unexamined patent applications, delays can drag on for years. When a high-value patent is delayed from being granted, a patent owner can be deprived of millions and millions of dollars. Thus, in 1999, Congress enacted patent term guarantees, which provide for patent terms to be extended under certain circumstances. When a patent issues, the patent office provides the patent owner with a patent adjustment—the number of additional days of patent term the patent should receive under the “guarantee.” It then becomes the responsibility of the patent owner to check the patent adjustment to ensure that it was calculated correctly. If the patent owner disputes the calculation, reconsideration can be requested.
The guarantee has three components:
- A guarantee of prompt patent office responses.
- A guarantee that applications will be examined in no more than three years (and that patent grant will occur in that time period if patentable subject matter has been claimed).
- A guarantee of adjustments (increases) to patent terms for delays due to derivation proceedings (when inventorship is contested), secrecy orders (when patent prosecution is halted due to national security concerns), and appeals.
The patent term is increased one day for each day of delay that meets the criteria of the guarantee. The guarantee also reduces the amount of the adjustment when delays are deemed to be caused by the applicant.
Since the guarantees have been put into place, the implementation details have been “tweaked” by Congress and the courts.
In 2013, the AIA (America Invents Act) Technical Corrections Act revised and clarified the date from which the patent term adjustment is measured with respect to international applications filed under the Patent Cooperation Treaty (PCT). PCT applications allow a designated country to be “entered” with a national stage filing so that patent rights can be pursued in that country. Formalities within that country may be completed several months later. The Technical Corrections Act revised and clarified that the applicable time period for patent term adjustment is based on the date of the national stage filing.
Calculating the exact number of days of term adjustment can be a very difficult task. Determining how many days of adjustment the patent owner is entitled to requires counting the number of days between each event that took place during prosecution. Just before a patent issues, patent office computers evaluate all of the relevant dates, and calculate the patent term adjustment. The patent owner is informed of the calculated number when the patent issues. The Technical Corrections Act also changed the procedure for disputing the calculation. The calculation must now be disputed within two months of the issue date of the patent (with a deadline extendable by five months).
Unfortunately, there has been an error in the software that the patent office uses to calculate patent term adjustment. Many patents were thus issued with patent term adjustment calculations based on the completion of national stage formalities, as opposed to when the national stage was entered. As previously stated, it is the responsibility of the patent owner to check the patent term adjustment calculated by the patent office, and to file a request for correction if an error is found. Because there were so many patents issued with incorrect patent term adjustment calculations (due to the patent office delay in updating their software), the patent office offered simplified procedures for requesting correction when those errors occurred. Those procedures were available through the beginning of August.
One other significant event occurred this year with regard to patent term adjustment, and that was the U.S. Court of Appeals for the Federal Circuit’s decision in Novartis v. Lee (2013-1160, Fed. Cir., Jan. 15, 2014). The decision relates to how patent term adjustment is calculated when an applicant files a request for continued examination (RCE) in a patent application. In some applications, after two rejections from the patent office, an RCE needs to be filed in order to continue prosecution. Prior to the Novartis decision, all of the time following the filing of an RCE did not count toward the three-year pendency guarantee. The Novartis decision modified the patent term adjustment rules by allowing the time period between application allowance and granting of the patent to count toward the guarantee (regardless of whether or not an RCE was filed).
At the time of this article’s inception, the patent office had still not issued any statement as to whether their patent term adjustment software has been modified to account for the Novartis decision. Thus, if the term adjustment for a particular patent is important, the calculated term adjustment needs to be checked for accuracy.
For many patents, obtaining a patent term adjustment may be a non-issue. In the consumer electronics field, for example, some technologies may have short life spans (examples: eight-track tapes, VHS video, plasma television) and the patents may not have value 20 years after the application was filed. In other areas, however, every day that the patent is enforceable can be extremely important, and the patent term adjustment should be checked to ensure that it is correct. In this manner, the patent can be monetized for the maximum period possible.
– by Lawrence Ashery