Basketball fans may remember a great moment from the 1986 movie Hoosiers, about a 1951 Indiana high school basketball team.  With the final seconds ticking down in a tied game, the assistant coach “Shooter” Flatch (Dennis Hopper) sketched out the last play of the game.

Alright, now listen to me.  This is the last shot that we got!  We’re going to run the picket fence at ‘em.  Merle, you’re the swing man.  Jimmy, you’re solo right.  Alright, Merle should be open swinging around the end of that fence. Now Boys …… don’t get caught watching the paint dry!

As patent practitioners, so much of what we do is managing deadlines, devising strategy within those deadlines and evaluating the impact of delay.  The importance of this is illustrated in Intra-Cellular Therapies, Inc. v. Andrei Iancu[1] where the Federal Circuit upheld a decision by the District Court for the Eastern District of Virginia on patent term adjustment (PTA).[2]  It serves as a reminder to practitioners that in addition to other tactical considerations involved in replying to a Final Office Action, they must also account for its effect on PTA.

The origins of the decision lay in the prosecution of U.S. Patent No. 8,658,077 (‘077 Patent) of Intra-Cellular Therapies, Inc. (ICT).[3]  A non-final office action was issued on October 9, 2012 reciting informality objections and rejections under §112 & §103.[4]  ICT replied with arguments addressing the §112 & §103 rejections, and amendments to address the informalities.[5]  The Patent Office mailed a Final Office Action on April 17, 2013 repeating the obviousness rejections and including new objections.[6]  ICT replied under 37 CFR 1.116 on July 17, 2013, repeating the same arguments vis-à-vis the §103 rejection, adding a new claim, and amending to circumvent the other objections.[7]  An Advisory Action was mailed July 26, 2013, indicating that ICT’s submission had overcome some of the §112 rejections and formality objections but had no impact on the §103 rejections.[8]  The Examiner made suggestions on amending or canceling claims to bring the application in condition for allowance, and on August 7, 2013, ICT filed a second after final response complying with all of the Examiner’s suggestions.[9]  A Notice of Allowance was mailed August 20, 2013.[10]

PTA is computed by subtracting the total delay in prosecution due to the Applicant from the total delay due to the Patent Office.  Delay results from a failure to engage in reasonable efforts to conclude prosecution under §154(b)(2)(C):

Reduction of period of adjustment.

(i) The period of adjustment of the term of a patent under paragraph (1) shall be reduced by a period equal to the period during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application.

(ii) With respect to adjustments to patent term made under the authority of paragraph (1)(B), an applicant shall be deemed to have failed to engage in reasonable efforts to conclude processing or examination of an application for the cumulative total of any periods of time in excess of 3 months that are taken to respond to a notice from the Office making any rejection, objection, argument, or other request, measuring such 3-month period from the date the notice was given or mailed to the applicant.

(iii) The Director shall prescribe regulations establishing the circumstances that constitute a failure of an applicant to engage in reasonable efforts to conclude processing or examination of an application.

For the ‘077 Patent, the PTA was 264 days, however, this included 21 days of applicant delay resulting from the time between the 3-month date for responding to the Final Office Action and ICT’s submission of the second reply after final.  The Patent Office (PTO) had found that although ICT’s first response after final was timely submitted on the 3-month date, it didn’t constitute a proper “reply” under 37 CFR §1.704(b).[11]  Their view was that the clock started ticking on the PTA clock the day after the three-month deadline on the Final Office Action, and didn’t stop until the second after final submission complying with the Examiner’s suggestions.[12]  When ICT requested judicial review of the PTA finding in the Eastern District of Virginia, the court considered it to be a matter of statutory interpretation and proceeded with a Chevron analysis.  The threshold question related to whether a submission filed after a final Office action that fails to place the application in condition for allowance (such as ICT’s first after final submission) constitutes a failure to engage in reasonable efforts to conclude prosecution.[13]  The court answered this in the affirmative and ultimately granted summary judgment for the PTO.[14]

On appeal, the Federal Circuit found that the statute governing PTA does not answer what “reasonable efforts” are for responding to a final office action.[15]  Unlike a non-final office action, which only requires a “bona fide attempt to advance prosecution,” the requirements for a final office action are steeper.[16]  There, if the applicant wishes to keep arguing against the examiner’s rejections, it must take those arguments to the Patent Board on appeal or file an RCE to reopen prosecution in front of the examiner.  Instead, if the applicant wishes to make an amendment to a claim, only certain types of amendments are allowed under §1.116.[17]  Moreover, the regulation indicates that not all after-final amendments constitute proper replies.  Since prosecution was closed with the mailing of the Final Office Action, and the Examiner was under no obligation to consider arguments in the first after final submission that had previously been made and rejected, the Federal Circuit held that such activity wasn’t a demonstration of a reasonable effort to conclude prosecution.[18]

In reaching its decision, the Federal Circuit rejected various ITC arguments.  In particular, it rejected the argument that proper replies for final office actions need only include bona fide attempts to address all rejections, since this would adopt the standards for non-final rejections, as well as empowering the after final response to have the impact of an RCE without the PTA reduction accompanying RCE’s.[19]  One argument it did not address (as it was waived) had to do with the PTO’s “After Final” pilot programs, which have the impact of encouraging applicants to lengthen prosecution.[20]

After Final practice is obviously conducted on a case-by-case basis, taking into account the Client’s needs and the history of the prosecution.  Timing isn’t the only factor, but it is an important factor, and in any event, it’s never a good idea “to be caught watching the paint dry.”

[1] 2018-1849 (Fed. Cir. September 18, 2019).
[2] Slip Op. at 2.
[3] Slip Op. at 7.
[4] Id.
[5] Slip Op. at 7-8.
[6] Slip Op. at 8.
[7] Id.
[8] Id.
[9] Slip Op. at 8-9.
[10] Slip Op. at 9.
[11] Id.
[12] Slip Op. at 10.
[13] Slip Op. at 11.
[14] Slip Op. at 3.
[15] Slip Op. at 14.
[16] Id.
[17] Id.
[18] Slip Op. at 17.
[19] Slip Op. at 18.
[20] Slip Op. at 21.

-William Reid

This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. The opinions expressed in this article are those of the author only and are not necessarily shared by Dilworth IP, its other attorneys, agents, or staff, or its clients.