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Abraxis Bioscience, LLC v. Kappos
Citations: 10 F. Supp. 3d 53; 109 U.S.P.Q. 2d (BNA) 1910; 2014 U.S. Dist. LEXIS 1834; 2014 WL 65739Docket: Civil Action No. 2011-0730
Court: District Court, District of Columbia; January 8, 2014; Federal District Court
Original Court Document: View Document
Abraxis Bioscience, LLC filed a lawsuit against David Kappos, the Under Secretary of Commerce for Intellectual Property and Director of the USPTO, seeking an increase in the patent term adjustment (PTA) for U.S. Patent No. 7,820,788 from 199 days to at least 321 or 323 days. The case involves cross-motions for summary judgment regarding the USPTO's calculation of the PTA, particularly in relation to a request for continued examination (RCE) filed more than three years after the patent application date, governed by 35 U.S.C. 154(b)(1)(B)(i). The court granted the USPTO’s Motion for Summary Judgment and denied Abraxis's Renewed Motion. The memorandum emphasizes the importance of contextual statutory interpretation in understanding patent law, which is rooted in the constitutional authority granted to Congress to promote progress in science and the arts. The evolution of patent terms, particularly the shift from a 17-year term from issuance to a 20-year term from application filing, was also highlighted, noting that this change was intended to align U.S. laws with those of international trading partners but could potentially reduce the effective patent term during the application process. Congress established provisions in the URAA for patent term extensions up to five years to address administrative delays, specifically due to interference delays, secrecy orders, or appellate review, as outlined in 35 U.S.C. 135(a) and 181. Extensions are subject to reductions for time spent in appellate review within the first three years post-filing and any period where the applicant did not act diligently, with the USPTO tasked to assess due diligence. The 1999 American Inventors Protection Act (AIPA) refined these provisions, eliminating the five-year cap but retaining other limitations. AIPA introduced the Patent Term Guarantee Act, which includes guaranteed adjustments under section 154(b)(1), stipulating three scenarios for patent term extension due to administrative delays. The guarantees include: 1. A one-day extension for each day the USPTO fails to meet examination deadlines, particularly if the patent is not issued within four months after the issue fee is paid. 2. An extension of one day for each day beyond the three-year application pendency caused by USPTO delays, excluding specific time periods related to the applicant's actions, such as requests for continued examination or appeals. The USPTO's interpretation of these provisions, particularly regarding the applicant's responsibility and the delays excluded from patent term adjustments, is central to the current litigation. Section 154(b)(1)(B) stipulates that if the United States Patent and Trademark Office (USPTO) does not issue a patent within three years of the application filing date, the patent's term is extended by one day for each day beyond that period until the patent is issued. Specific exclusions to this delay include time for applicant-requested continued examination, certain proceedings, and delays requested by the applicant, except as allowed under paragraph (3)(C). The Federal Circuit in Wyeth v. Kappos clarified that 'B delay' begins when the USPTO fails to issue the patent within the three-year window and ends upon issuance. The court rejected the USPTO's interpretation that 'B delay' could start at any time post-filing, affirming that it only commences after the three-year mark. Furthermore, section 154(b)(1)(C) ensures that the patent term is also extended for each day that certain proceedings, orders, or appeals are pending. Section 154(b)(2) imposes limits on Patent Term Adjustment (PTA), indicating that periods of overlap in delays under Parts A, B, and C should not exceed the actual delay in patent issuance. The Federal Circuit criticized the USPTO’s method of calculating these delays, emphasizing that overlapping periods should not result in double counting. Lastly, section 154(b)(3) grants the USPTO the authority to establish regulations for PTA application and determination. The USPTO is responsible for calculating and notifying the applicant of the accrued PTA upon patent issuance. Unlike previous regulations, the AIPA amendments allow for extensions due to appellate review at any time, provided the applicant successfully reverses an adverse patentability determination. Any Patent Term Adjustment (PTA) under 35 U.S.C. 154(b)(2)(C)(i) is subject to reduction for delays caused by the applicant's failure to engage in reasonable efforts to conclude prosecution. The USPTO is empowered to define what constitutes a lack of reasonable efforts. The introduction of Requests for Continued Examination (RCE) under the AIPA allows applicants to continue examination after a final rejection or allowance without filing a new application. An RCE maintains the original filing date and any accrued PTA from previous USPTO delays. It can include various submissions such as information disclosure statements or amendments but cannot introduce new matter. Time spent on RCE is excluded from the Part B delay calculations, which account for USPTO administrative delays. The USPTO has issued regulations interpreting PTA calculations. Specifically, 37 C.F.R. 1.702(b) establishes that patent terms are adjusted if the patent is not issued within three years of application filing, excluding time for RCEs and certain other proceedings. Additionally, 37 C.F.R. 1.703(b) outlines how to measure the time consumed by RCE, defining it as the period from the RCE filing to patent issuance. Thus, the USPTO determines that no Part B delay accrues during the RCE period, regardless of whether the RCE is filed before or after the three-year deadline. The USPTO regards the duration of a Request for Continued Examination (RCE) as the period from the RCE's filing date until the patent issues, impacting the Patent Term Adjustment (PTA) under subparagraph (B). The regulation 1.703(b) contrasts this by measuring the time consumed by other proceedings from their initiation until termination. The plaintiff filed for the ’788 patent on October 26, 2006, as a continuation of a prior application. By October 26, 2009, the application was still pending, and on December 31, 2009, it faced a final rejection of all claims. The plaintiff had multiple options post-rejection, including filing an RCE, which would retain previously accrued PTA. After amending claims per the examiner's suggestions, the plaintiff filed an RCE on April 14, 2010. The applicant amended four claims, added one new claim, and withdrew twenty-one claims. Following the RCE, the examiner issued a notice of allowance on June 1, 2010, and the plaintiff paid the necessary fees on June 3, 2010, while seeking a patent term adjustment. The USPTO ultimately granted a 23-day adjustment under Part A and a 169-day adjustment under Part B when the patent was issued on October 26, 2010. An applicant is entitled to a patent term adjustment (PTA) for delays by the USPTO in issuing a patent. The plaintiff paid the issue fee for the ’788 patent on June 3, 2010, but the patent was issued on October 26, 2010, resulting in a delay of 23 days, which the USPTO added to the patent term under Part A. For Part B, the USPTO calculated the adjustment based on a statutory deadline of October 26, 2009, and excluded days after the plaintiff filed a Request for Continued Examination (RCE) on April 14, 2010. This led to an additional 169 days being added under Part B. The plaintiff filed suit on April 15, 2011, contesting the USPTO's calculations under both Parts A and B. Specifically, the plaintiff argued for a total of 316 days for Part B, asserting that the delay period should run from the filing of the RCE to the issuance of a notice of allowance, rather than the patent issuance date. In an alternative argument, the plaintiff claimed the delay extended to the payment of the issue fee. After a joint remand to the USPTO on October 31, 2011, the USPTO confirmed the 135-day adjustment under Part A but maintained that its calculation for Part B was correct, resulting in a total of 199 days of PTA. While both parties agreed on the 135 days of Part A delay and the 105 days of applicant delay, they disputed the specific amount of Part B delay. They concurred on three time periods: 169 days following the statutory deadline, 49 days from the RCE filing to the notice of allowance, and 23 days added under Part A. The disagreement revolves around whether additional Part B delay should be calculated from the notice of allowance or payment of the issue fee to the patent issuance, the latter of which overlaps with the 23 days already accounted for in Part A. The USPTO assessed a Part B delay of 169 days for the plaintiff's application, spanning from October 27, 2009, when the application exceeded the three-year mark, to April 14, 2010, when the plaintiff filed a Request for Continued Examination (RCE). Under USPTO regulations, all time after the RCE filing until the patent issuance is excluded from Part B delay calculations. Consequently, the USPTO calculated a total of 199 days of Patent Term Adjustment (PTA): 135 days of Part A delay (including 23 days after the three-year deadline), plus the 169 days of Part B delay, minus 105 days of applicant delay. While the plaintiff agrees with the start date of Part B delay, it contests that the end date should be the patent's issuance on October 26, 2010, rather than the RCE filing, leading to a claimed total of 365 days of Part B delay. The plaintiff initially proposed deducting only 49 days (from RCE filing to Notice of Allowance) or 51 days (including the issue fee payment) from this total, resulting in 316 or 314 days of Part B delay, respectively. Subsequently, the plaintiff revised its position, asserting entitlement to the entire 365-day period as Part B delay without deductions for the RCE. The parties concur that any overlapping delay periods must be adjusted according to statutory guidelines. The USPTO maintains that Part B delay ended with the RCE filing, while the plaintiff argues for an extended delay calculation until patent issuance. This difference leads to a contention over the treatment of specific periods after the Notice of Allowance in calculating non-overlapping delays. Ultimately, the plaintiff asserts entitlement to at least 321 days of PTA based on their determination: 135 days of Part A delay, 291 days of non-overlapping Part B delay, minus 105 days of applicant delay. The parties are in dispute over the interpretation of section 154(b)(1)(B) and its clause (i) within the context of the AIPA amendments, specifically regarding the determination of Part B delay and the exclusion of time spent on continued examination of a patent application. This involves three key provisions: (1) subparagraph (B), which addresses Part B delay; (2) section 154(b)(1)(A)(iv), mandating that the USPTO must issue a patent within four months of fee payment; and (3) section 154(b)(2)(A), which states that adjustment periods cannot exceed the actual days of patent issuance delay. Summary judgment under Federal Rule of Civil Procedure 56 can be granted when there is no genuine dispute over material facts, allowing judgment as a matter of law. The court assesses materiality based on substantive law relevant to claims. A factual dispute must be 'genuine' to impact case outcomes. Summary judgment can also be granted against parties that fail to demonstrate essential elements of their claims, where they bear the burden of proof at trial. In this case, the cross motions for summary judgment involve a legal challenge to USPTO regulations related to the ’788 patent. Appeals in patent matters fall under the Federal Circuit's jurisdiction, which establishes controlling precedent. District courts under 28 U.S.C. 1338 must adhere to the substantive patent law of the Federal Circuit. When agency actions are challenged, the review is confined to legal questions, not factual determinations, as the court operates similarly to an appellate court evaluating agency decisions under the arbitrary and capricious standard. Under the Administrative Procedure Act (APA), agencies are responsible for resolving factual issues based on the administrative record, while district courts assess whether the agency's decision is legally permissible based on that record. In the case at hand, both parties agree on the relevant facts regarding the patent term adjustment for the ’788 patent and dispute the legality of the USPTO’s calculations under 35 U.S.C. § 154(b)(1)(B). The court finds that no material facts are in contention, leading to a purely legal issue that justifies summary judgment for the prevailing party. A dissatisfied patent applicant may seek judicial review of the USPTO's patent term adjustment decision under the APA, which allows for changes to the adjustment period as stated in 35 U.S.C. § 154(b)(4)(A). A district court can invalidate an agency's decision if it is deemed arbitrary, capricious, an abuse of discretion, or otherwise not compliant with the law. The Supreme Court has outlined that an agency rule may be deemed arbitrary if it relies on inappropriate factors, overlooks significant aspects of the issue, provides explanations contrary to the evidence, or presents implausible reasoning. The review scope of agency rules is narrow to prevent judicial overreach into agency decisions. The Chevron framework applies to judicial reviews of agency construction of statutes. Under Chevron Step One, the court determines if Congress has directly addressed the issue in question. If Congressional intent is clear, it must be followed without agency interpretation. Changes from the Leahy-Smith America Invents Act have transferred exclusive jurisdiction over USPTO patent term adjustment challenges to the United States District Court for the Eastern District of Virginia. Jurisdiction for the lawsuit is established in the United States District Court for the District of Columbia. The court employs traditional statutory construction methods to determine if Congress has addressed the specific question at hand, including examining the statute's text, purpose, structure, and drafting history. If ambiguity exists, the analysis proceeds to Chevron Step Two, assessing whether the agency's interpretation is a permissible construction of the statute. Courts are cautioned against creating public policy through their own interpretations of ambiguous statutes, as this authority is generally reserved for the agencies. When Congress delegates rule-making authority to an agency, the agency’s interpretation is entitled to deference if it is a reasonable construction of the statute, even if it differs from the court's interpretation. Moreover, even without explicit congressional delegation for a specific provision, an agency may still reasonably address ambiguities within its general authority. Agency rules that do not receive the highest level of deference under Chevron may still warrant some deference due to the agency's specialized expertise and the need for uniformity in interpretations of national law. Courts may apply Skidmore deference to agency interpretations, which requires a demonstration of the interpretation's thoroughness, reasoning validity, consistency with prior rulings, and overall persuasive power. If section 154(b)(1)(B) and its clause (i) are ambiguous, the USPTO claims its interpretation warrants Chevron deference but suggests Skidmore deference is sufficient for review. Chevron deference applies only when Congress has delegated authority to the agency to create rules with the force of law, a condition not met by the USPTO, as established by Federal Circuit precedent. The USPTO is limited to issuing procedural regulations, not substantive rules, regarding patent term adjustments. Thus, the Court focuses on Skidmore deference if ambiguity exists in the statute. The plaintiff contends that the USPTO's regulations improperly denied a patent term adjustment for delays post-application filing, arguing for an adjustment of at least 122 days or alternatively 124 days. The central dispute centers on the interpretation of section 154(b)(1)(B) and its clause (i), which excludes delays caused by examination requested by the applicant. The USPTO's relevant regulations, as stated in 37 C.F.R. 1.703(b), are crucial to this discussion. The plaintiff argues that the interpretation of "examination" as extending until a patent is issued contradicts the intent and structure of the Patent Term Guarantee Act. They contend that examination concludes with a notice of allowance or when the issue fee is paid, and any delays following this should not affect the calculation of Part B delay. The plaintiff's recent stance indicates that after the three-year statutory deadline, Part B delay accrues regardless of any Request for Continued Examination (RCE) filings. The court evaluates the ambiguity of 35 U.S.C. § 154(b)(1)(B) regarding whether filing an RCE after three years halts Part B delay. Opinions from three district judges reveal differing interpretations of the provision: two find it clear and unambiguous, while one disagrees. The court aligns with the latter, asserting that the statute's silence on post-three-year RCEs does not indicate clear congressional intent. The court notes that ambiguity exists when a statute can be interpreted in multiple ways, which is pertinent for Chevron analysis. Judicial disagreement on a statute's clarity does not resolve the ambiguity issue, as the search for a statute's plain meaning can be complex, supported by various judicial interpretations. The trilogy of opinions regarding section 154(b)(1)(B) clarifies its interpretation concerning patent term adjustment (PTA) and the impact of a Request for Continued Examination (RCE) filed after the three-year statutory deadline. In Exelixis I, the court evaluated whether PTA should be reduced due to RCE filings post-deadline. The court found the language of section 154(b) to be clear and unambiguous, leading to three key conclusions: 1. The "not including" clause relates solely to the three-year period and does not affect the day-for-day PTA adjustment after this deadline. Events that are "not included" only toll the start date for the deadline. 2. If the three-year deadline has passed, the circumstances that might be excluded from Part B delay are irrelevant. The court emphasized that the tolling only applies to RCEs filed before the deadline, and once it has expired, PTA is awarded without regard to subsequent RCE filings. 3. The court determined that an RCE filing does not constitute "applicant delay" under section 154(b)(2)(C), as the statute is designed to provide PTA for delays caused by the USPTO while penalizing delays attributable to the applicant. Since RCEs are not categorized as "applicant delay," the USPTO's interpretation that would penalize applicants for filing RCEs was deemed erroneous. Overall, the Exelixis I ruling underscores that, post-deadline, PTA should be calculated on a day-for-day basis without reductions for RCE filings. Section 154(b) distinguishes a Request for Continued Examination (RCE) from an applicant's failure to engage in reasonable efforts to conclude prosecution, indicating that RCEs toll the three-year clock but do not reduce Patent Term Adjustment (PTA). The Exelixis I court rejected the USPTO's argument that its interpretation of section 154(b)(1)(B) would render section 154(b)(1)(C) unnecessary. Section 154(b)(1)(C) addresses delays from interference proceedings, secrecy orders, or appellate reviews. The USPTO contended that under the plaintiff's interpretation, delays occurring after the three-year deadline would not be excluded from PTA calculations, potentially making section C redundant. The court disagreed, asserting that while the application of section B might lead to less frequent awards of section C delays, it does not eliminate the necessity of section C. The court also noted that an RCE filed after the three-year period presents a problem that the PTO should address by issuing rejection notices before the deadline and requiring timely RCE responses. The court emphasized that it would not rectify all statutory inequities. A subsequent decision in Novartis upheld the reasoning in Exelixis I, affirming that section 154(b)(1)(B) is clear and unambiguous. The Novartis court rejected the PTO's interpretation that the "not including" clause in section B pertains to remedies rather than triggers for PTA accrual post-deadline. It observed a conflict between the PTO's regulations at 37 C.F.R. § 1.703(b) and § 1.702(b), with the former suggesting a remedy that excludes RCE time, while the latter clearly states that the three-year window is tolled during RCE filing without prescribing a remedy for post-deadline scenarios. The term of an original patent will be adjusted if its issuance is delayed due to the USPTO's failure to issue the patent within three years of the application filing date, as per 35 U.S.C. 111(a), excluding specific time periods such as those consumed by continued examination under 35 U.S.C. 132(b). The Exelixis II court rejected the notion that the statute's lack of explicit mention of Requests for Continued Examination (RCEs) filed after the three-year period indicates clear congressional intent, contrasting earlier rulings in Exelixis I and Novartis. It argued that treating RCEs differently based on their filing timing would yield absurd outcomes, such as earlier-filed RCEs indefinitely postponing patent term adjustment (PTA) while later-filed RCEs would unfairly generate PTA. The court emphasized that the statutory construction should avoid such absurd results. It concluded that the statute and its legislative history do not warrant different treatments for RCEs based on when they are filed. Additionally, it clarified that section 154(b)(1)(B) does not ensure a resolution of patent applications within three years, particularly with RCEs tolling this timeline. The court maintained that regulations at 37 C.F.R. 1.702(b) and 1.703(b) align with the intent of section 154(b), ensuring applicants are not penalized for USPTO-caused delays but also do not benefit from delays they request. The Exelixis II decision highlights that RCEs represent applicant-initiated delays, and the legislative history reflects concerns over "submarine" patents, emphasizing penalties for those who intentionally manipulate delays in the patent issuance process. Conferees expressed that focusing on the application date rather than the issuance date will prevent manipulation of the patent system through "submarine" patents, which allow applicants to delay patent issuance and potentially extract royalties from independently developed technologies. The introduction of the Request for Continued Examination (RCE) process, which permits unlimited filings after a final rejection, raises concerns about possible abuses that prompted earlier patent law reforms. The Exelixis II court found section 154(b) ambiguous, agreeing with the PTO's regulation that denies Patent Term Adjustment (PTA) from the time an RCE is filed. Various cases, including Exelixis I and Novartis, interpret section 154(b)(1)(B) as silent concerning the implications of RCE filings after the three-year statutory deadline, confirming its ambiguity. This interpretation aligns with statutory construction principles that seek to ensure all provisions of a statute are given effect, avoiding conclusions that render parts of the statute superfluous. If an RCE filed after the three-year deadline does not affect the accrual of Part B delay, it would undermine the intended adjustments under section 154(b)(1)(A)(iv). A delay occurs if the USPTO does not act within four months after the payment of the issue fee, allowing for a "grace" period before Part A delay begins. However, this grace period becomes superfluous and is effectively eliminated for Part A delay occurring after the three-year statutory deadline if Part B delay is interpreted to extend indefinitely after that deadline. This interpretation, as seen in the Exelixis I and Novartis cases, undermines a significant portion of the grace period clause in section 154(b)(1)(A)(iv). While calculating each delay period must follow its specific timeline, the Federal Circuit has indicated that these calculations must align with the overall statutory intent. Eliminating the Part A grace period post-deadline could incentivize applicants to prolong the review process to gain additional PTA that would not otherwise be attributed to agency delays. In the Exelixis I and Novartis cases, the courts did not address Part A delays occurring after the three-year limit, as those applications did not experience such delays. Furthermore, interpreting the “not including” clause in section 154(b)(1)(B) as non-operational after the three-year deadline overlooks its interaction with Part C delay. This interpretation suggests that types of proceedings excluded from Part B delay would automatically fall under Part B after three years, contrary to the structure intended to prevent double-counting of delays across different parts. The limitation in section 154(b)(2)(A) aims to ensure PTA does not exceed the actual delay in patent issuance, aligning with the exclusion of specific proceedings under clause (ii) of subparagraph (B). In the post-deadline period, specific proceedings listed in subparagraphs (B)(ii) and (C) are counted once as Part C delay. The Court acknowledges that an alternative interpretation exists regarding the accrual of Part B delay beyond the three-year deadline, especially if the plaintiff's perspective is accepted, which could lead to increased concerns over double-counting. The Court disagrees with the Exelixis I and Novartis court decisions that statutory silence about the impact of a Request for Continued Examination (RCE) filing post-deadline means that Part B delay accrues without regard to other actions. The premise that RCE filings do not constitute applicant delay under section 154(b)(1)(B) is contested. Instead, RCE filings are treated similarly to applicant-requested delays, with both referenced in subparagraph (B) but in different order. Subparagraph (B)(i) details RCE delays, while subparagraph (B)(iii) encompasses general applicant delays. This interpretation is reinforced by the limitations imposed by paragraph (2)(C), which governs patent term adjustment (PTA) related to applicant delays, indicating that all forms of applicant delay, including those under Part B, are subject to reduction if the applicant does not engage in reasonable efforts to conclude prosecution. Adjustments to patent term under paragraph (1)(B) are examined in relation to RCE (Request for Continued Examination) filings. The courts in Exelixis I and Novartis suggested that RCE filings under subparagraph (B)(i) should not be seen as delays caused by the applicant, with applicant delay being confined to subparagraph (B)(iii). This interpretation implies that the reductions in PTA (Patent Term Adjustment) for applicant delay outlined in paragraph (2)(C) should apply only to subparagraph (B)(iii), although they do not. The Novartis court also noted an inconsistency between USPTO regulations 37 C.F.R. 1.702(b) and 1.703(b), which address the "not including" clauses in both the "trigger" and the "remedy." Regulation 1.702(b) specifies grounds for patent term adjustment due to examination delay, while paragraph (2)(C) allows the USPTO to set regulations on applicant delay. The Exelixis II court affirmed that the USPTO used this authority to establish 37 C.F.R. 1.703(b), penalizing applicants for RCE filings by excluding time consumed by such filings from Part B delay. This regulation aligns with congressional intent, indicating that time consumed by RCE-triggered continued examination should not count as USPTO delay. The court finds no inconsistency between 1.702(b) and 1.703(b) as they serve distinct purposes, collectively guiding how RCE filings affect Part B delay. Specifically, an RCE filed before the three-year deadline tolls the trigger, while one filed after reduces the PTA remedy. The court agrees with prior judges that section 154(b)(1)(B) does not explicitly address RCE filings after the three-year period, leading to various interpretations of Part B delay. Consequently, the court deems this provision ambiguous. Regarding clause (i) of section 154(b)(1)(B), the parties differ on its interpretation despite both asserting its unambiguity. The ordinary meaning of "examination" concludes upon the issuance of a notice of allowance or payment of the issue fee. The USPTO's interpretation of clause (i) as excluding all time after an RCE filing from Part B delay is viewed as valid and consistent with the statute's language and design. In contrast, the plaintiff argues that the exclusion should apply only from the RCE filing until the notice of allowance or issue fee payment. The Exelixis II court supported the USPTO's interpretation concerning the computation of Part B delay under section 154(b)(1)(B) of the Patent Act. Clause (i) specifies that time spent on continued examination requested by the applicant is excluded from Part B delay calculations. The plaintiff argues that examination concludes with the issuance of a notice of allowance or payment of the issue fee, asserting that any subsequent delay should not count against their Part B delay. In contrast, the USPTO argues that examination continues until the patent is issued, as obligations remain post-allowance. The plaintiff criticizes the Exelixis II decision for allegedly lacking thorough statutory interpretation, particularly regarding whether they are entitled to a Part B adjustment for the time between issue fee payment and patent issuance. The USPTO’s regulation, 37 C.F.R. 1.703(b)(1), aligns with its interpretation that the entire period from the request for continued examination until patent issuance is excluded from Part B delay. The court notes that the plaintiff's argument for two potential end-dates for examination indicates ambiguity in determining the end of continued examination, and emphasizes that the statute's language refers specifically to time "consumed by continued examination." The plaintiff argues that the choice of words “consumed by” in clause (i) implies a finite time period limited to delays requested by the applicant. In contrast, the USPTO contends that the word “any” in the same clause suggests a broader interpretation, encompassing all time consumed by a request for continued examination (RCE). However, neither party's argument convincingly clarifies when “continued examination” ends. The plaintiff asserts that “any time consumed by continued examination” should be interpreted as only the period from the RCE request to the notice of allowance, supporting this with USPTO regulations. The plaintiff's example of substituting “after” for “consumed by” illustrates the ambiguity of clause (i), potentially allowing for interpretations that could favor either party. Additionally, the plaintiff references 37 C.F.R. 1.703(b)(4), which states that time consumed by appellate review ends at the issuance of a notice of allowance, suggesting that the same conclusion should apply to RCEs. Ultimately, the core issue remains the determination of the end date for “continued examination.” The plaintiff's argument is flawed due to a misunderstanding of the terms in two clauses concerning end-dates. Clause (i) specifically excludes time for “continued examination,” while clause (ii) excludes it for appellate review and other specified proceedings. The USPTO differentiates between “examination” and “appellate review,” noting that the appellate review period is finite and defined by the pendency of an appeal, concluding once the appeal is resolved. Conversely, the USPTO maintains jurisdiction over an application until the patent is issued, which explains the agency's responsibility for delays, such as those occurring beyond the four-month grace period post-issue fee payment. Furthermore, the distinction is supported by the definition of Part C delay, which adds delays from appellate review to the Patent Term Adjustment (PTA), indicating the concept of "pendency of the proceeding" implies an end before patent issuance. The statute does not define the "pendency" of a continued examination, leaving ambiguity regarding the duration of such examination. The court finds the meaning of “continued examination” under clause (i) ambiguous. To address this, the court will evaluate the USPTO’s interpretation of 35 U.S.C. 154(b)(1)(B)(i) using Skidmore deference, which applies even when Chevron deference is not applicable. The Federal Circuit has indicated that agency interpretations can merit deference based on the agency's expertise and thoroughness. The court will next assess whether the USPTO’s interpretation, which states that the time for an RCE extends until patent issuance, possesses persuasive authority. The reasonableness and persuasiveness of the USPTO's interpretation of section 154(b)(1)(B)(i) is evaluated against the plaintiff's assertion that time is not “consumed by continued examination” after a notice of allowance or issue fee payment, leading to an accrual of Part B delay post-deadline. The Court finds the USPTO's interpretation compelling for several reasons: 1. **Long-standing Interpretation**: The USPTO's interpretation, as stated in 37 C.F.R. 1.703(b), has been consistently applied since its adoption in October 2000, shortly after the AIPA's enactment. This consistency aligns with factors considered under Skidmore for deference. 2. **Formal Adoption**: The regulation was established through notice and comment rulemaking, reinforcing its authority and reliability. 3. **Rejection of Plaintiff’s Objections**: During the adoption of the Final Rule, the USPTO addressed comments that challenged the exclusion of time after a request for continued examination (RCE) from Part B delay, affirming that further processing is classified under continued examination. 4. **Clarification of Delay Adjustments**: The USPTO clarified that while Part B delay does not accrue post-RCE filing, applicants remain eligible for Part A and C delay adjustments. 5. **Illustrative Example**: The USPTO provided an example demonstrating that an applicant filing an RCE may still qualify for a term adjustment if the patent does not issue within the stipulated timeframes after the issue fee payment, highlighting how delays in processing can affect term adjustments. Overall, the Court concludes that the USPTO's interpretation possesses substantial persuasive power due to its longevity, formal establishment, and thorough responses to objections raised during the regulatory process. The Court agrees with the Exelixis II ruling that the USPTO's adherence to three formal factors—agency interpretation adoption, contemporaneous timing with statute enactment, and consistent application—holds significant weight. This consistency indicates a thoughtful consideration of interpretations rather than mere post hoc rationalization, thereby supporting the appropriateness of judicial deference to the USPTO’s views. The Court dismisses the plaintiff's argument that the end-date for continued examination under section 154(b)(1)(B)(i) is defined by the issuance of a notice of allowance or issue fee payment. Instead, it affirms that the examination period lasts until a patent is granted, referencing 35 U.S.C. § 131, which requires the Director to issue a patent if the applicant is entitled to one, without specifying a notice of allowance as a conclusion of examination. Additionally, USPTO regulation 37 C.F.R. § 1.313 allows for withdrawal from issue after a notice of allowance has been issued, indicating that the examination process can continue even post-notice. The grounds for such withdrawals, including USPTO mistakes or patentability concerns, further support the interpretation that the examination period extends until a patent is issued. Furthermore, applicants must disclose all material information relevant to patentability during examination, reinforcing the continuity of the examination process. The duty to disclose information regarding pending patent claims persists until the claim is either canceled, withdrawn, or abandoned, as stipulated by 37 C.F.R. 1.56(a). This regulation maintains the disclosure obligation even after a notice of allowance or payment of the issue fee, implying that the duty continues until the patent is issued, unless interrupted by the aforementioned actions. The examination process is authorized to continue beyond the notice of allowance and fee payment, supported by case law such as Blacklight Power, Inc. v. Rogan, which affirmed that the USPTO retains the authority to reject claims and withdraw applications even after these milestones, to resolve outstanding patentability questions. Furthermore, in Seachange Int’l, Inc. v. C-COR, Inc., the court noted that examination continued post-allowance, requiring applicant responses to protests prior to patent issuance. Historical cases, such as Sampson v. Dann, also illustrate the USPTO's ability to withdraw applications after fee payment based on shifts in patentability standards. In contrast, the plaintiff argues that the USPTO's interpretation introduces an unwarranted distinction between "examination" and "prosecution," claiming that examination concludes with the notice of allowance. The plaintiff asserts that this distinction is not supported by previous interpretations or longstanding USPTO policies equating the terms "examination" and "prosecution." The USPTO concurs with the interpretation that the terms "prosecution" and "examination" are synonymous in the context of 35 U.S.C. 154(b)(2)(C)(i) and (ii). The plaintiff references a court discussion in Blacklight Power, suggesting that the terms are used interchangeably, arguing that if prosecution concludes with the notice of allowance, then examination must also end at that point. However, the statutory language specifies that delays caused by the applicant affect processing or examination, highlighting the applicant's responsibilities. The USPTO clarifies that while examination refers to its duties under 35 U.S.C. 131, prosecution pertains to the applicant's actions as defined by 35 U.S.C. 133. The plaintiff's argument conflates these terms, overlooking that examination may persist beyond the prosecution period's closure, which occurs upon a notice of allowance or final rejection, at which point the applicant cannot amend claims as a matter of right. The plaintiff's assertion that the patent process distinguishes between examination and post-examination phases, relying on 35 U.S.C. 151, misinterprets the notice of allowance, as it does not imply ongoing prosecution post-allowance. The notice in question does not confirm the conclusion of all examination processes; instead, it states that the applicant cannot modify the allowed claims further. The plaintiff argues that once a Notice of Allowance is issued, the examiner loses jurisdiction over the application unless it is returned for further examination. They reference the USPTO Manual of Patent Examining Procedure (MPEP) to support their claim, specifically noting that jurisdiction remains with the primary examiner until the Notice of Allowance is mailed. The plaintiff cites the Blacklight Power case as an example where examination did not continue post-allowance. However, the USPTO counters this by indicating that while the primary examiner's jurisdiction ends with the Notice of Allowance, other agency officials retain jurisdiction after the notice and payment of the issue fee, as outlined in MPEP 1308. This includes the authority of Technology Center Directors and the Office of Petitions to withdraw applications if patentability is questioned. Furthermore, MPEP 1305 allows for continued examination post-Notice of Allowance under certain conditions. The plaintiff also argues that interpreting section 154(b)(1)(B) as the USPTO suggests would unfairly exclude administrative delays from the calculation of Patent Term Adjustment (PTA) by treating the period between notice and patent issuance as applicant delay. The USPTO denied an extension for its own delay during this period, which the plaintiff highlights. The Patent Office considers delays between the issuance of a notice of allowance and the issuance of a patent as “time consumed by continued examination.” It attributes this delay to the applicant only when it follows a request for continued examination (RCE), which the plaintiff argues wrongfully assigns the Office’s delay to applicants. The plaintiff claims that Abraxis did not cause the delay in question and asserts that the Office's interpretation punishes patentees who file RCEs, contravening the Patent Term Guarantee Act designed to mitigate delays caused by the USPTO that are outside the applicant’s control. The USPTO counters this by stating that its interpretation broadly excludes all time associated with an RCE from Part B delay calculations, arguing that it does not lead to longer examination delays since the agency remains subject to a four-month Part A guarantee after the issue fee is paid. The USPTO maintains that the time consumed during the RCE process is appropriately charged to the applicant, as the RCE is initiated at their request. The plaintiff's contention that the USPTO's approach penalizes RCE filers is disputed; the USPTO clarifies that applicants receive Part B delay for the period before the RCE is filed and that delays beyond four months post-fee payment are added under Part A. The plaintiff seeks to have the four-month grace period treated as agency delay if it occurs after the three-year deadline, but the statute does not differentiate based on this timing. Consequently, the Court will not alter the statute to eliminate this grace period. The plaintiff argues that the USPTO regulation at 37 C.F.R. 1.703(b)(1) arbitrarily treats applicants differently based on the timing of delays in their applications, specifically claiming that delays following a Request for Continued Examination (RCE) are unfairly distinguished from those occurring during initial examination or appellate review. The USPTO counters this assertion, asserting that applicants who file RCEs are not similarly situated to those who do not, as the circumstances differ significantly. The court supports the USPTO's position, noting that RCEs often arise from initial rejections and indicate a failure to submit a properly framed application, resulting in applicant-caused delays that are incompatible with the purpose of Part B patent term adjustments, which are designed to compensate for USPTO-caused delays. Furthermore, the court highlights that applicants who successfully appeal a rejection are treated differently since their delays stem from USPTO errors, which qualifies them for adjustments under Part C. In contrast, RCE applicants, by voluntarily choosing to revise their claims rather than appeal, incur delays that disqualify them from Part B adjustments. Thus, the distinctions in treatment between RCE filers and those receiving notices of allowance or successfully appealing rejections are justified based on the underlying causes of the delays. The USPTO's interpretation of 35 U.S.C. 154(b)(1)(B)(i) is deemed reasonable, as it aligns with the statute's structure by not attributing delays to the USPTO under Part B that are not also attributed under Part A. Part A allows four months post-issue fee payment for patent issuance without counting this time as delay, and if not issued within this period, it counts as Part A delay. The plaintiff’s argument that a notice of allowance or payment of the issue fee after the three-year deadline triggers Part B delay is rejected, as it would unjustly increase the patent term adjustment (PTA) for applicants. The USPTO correctly interprets the statute to exclude Part B delay for periods following these actions when they follow the filing of a request for continued examination (RCE), which is considered applicant-prompted delay. The Federal Circuit's precedent reinforces that courts must enforce statutory provisions as written, even if they produce different outcomes for similar applicants. Recent legislative changes, specifically the "Innovation Act," affirm the USPTO's interpretation, clarifying that no Part B delay is awarded for time resulting from an RCE. Consequently, the USPTO’s denial of Part B adjustment between the notice of allowance and patent issuance is upheld. The court finds that while the provisions in question are ambiguous, the USPTO’s regulation offers a reasonable interpretation, leading to the granting of the USPTO's Motion for Summary Judgment and denial of the plaintiff’s motion regarding Part B delay calculation.