Patent Term Adjustment (PTA) Update: Federal Circuit Clarifies PTA Calculations in After-Final Practice

By Thomas Scherer


In mid-September 2019, the Court of Appeals for the Federal Circuit (CAFC) decided an appeal related to the calculation of Patent Term Adjustment (PTA) in a case involving after-final practice.  After-final practice governs a patent applicant’s options for continued prosecution upon receipt of a final Office Action.  Before a final Office Action issues, a patent applicant has wide freedom to argue the merits of a case with the USPTO and amend the pending claims.  However, a final Office Action marks the end of normal prosecution as a matter of right.

After receiving a final Office Action, the patent applicant has a limited ability to reply and may only file a reply including amendments consistent with 37 C.F.R. § 1.116.  Such amendments are limited to those that: (1) cancel any rejected claims or comply with a requirement expressly set forth in a previous Office Action, (2) present rejected claims in better form for appeal, or (3) touch the merits of the application only upon a showing of good and sufficient reasons why the amendment is necessary and was not presented earlier.  If substantive, narrowing amendments are being filed in a reply to a final Office Action, a patent applicant may also request consideration under the After-Final Consideration Pilot (AFCP) 2.0 program, which grants Examiners a limited amount of time to consider whether the amendments are sufficient to place the application into condition for allowance.  Otherwise, a patent applicant may file a Request for Continued Examination (RCE) under 37 C.F.R. § 1.114 to re-open prosecution and re-establish the right to freely present amendments touching the merits of the application.  Alternatively, a patent applicant may file an appeal of the final rejections to the Patent Trial and Appeal Board (PTAB).

Intra-Cellular Therapies, Inc. v. Iancu, No. 18-1849 (Fed. Cir. 2019), which was decided by the CAFC on September 18, 2019, relates to a situation in which two replies to a final Office Action were filed.  The USPTO concluded that the two after-final replies constituted a failure by Intra-Cellular Therapies, Inc. (“the applicant”) to engage in reasonable efforts to conclude prosecution.  The first reply was filed 3 months from the mailing date of the final Office Action, while the second reply was filed 21 days later.  Thus, for PTA calculation purposes, the USPTO considered as applicant delay the time until the second reply was filed, i.e., the 21 days were applicant delay.

The applicant disagreed with the USPTO’s calculation and argued that the first after-final reply constituted a “reply” to the final Office Action for purposes of PTA calculation, while the second after-final reply constituted a “reply” to the Advisory Action subsequently issued.  The first after-final reply contained only arguments against the pending rejections, which the Examiner indicated were unpersuasive in the Advisory Action.  The second after-final reply included amendments under 37 C.F.R. § 1.116, which canceled all rejected claims, fully addressed minor informalities in the remaining claims, and placed the application into condition for allowance.

The CAFC ultimately agreed with the interpretation by the USPTO and concluded that a final Office Action closes prosecution on the merits and ends prosecution as a matter of right.  Thus, in order to properly reply to a final Office Action under 37 C.F.R. § 1.113 and satisfy the PTA rules, an applicant must either: file an appeal of a pending rejections; or file an amendment as specified in 37 C.F.R. § 1.114 or 37 C.F.R. § 1.116.  In the instant situation, the first reply presented only arguments, which were not found persuasive.  The CAFC decided that the first reply did not constitute a proper reply under 37 C.F.R. § 1.113 and, thus, would not trigger a stoppage of applicant delay from accruing.  The second reply presented amendments complying with 37 C.F.R. § 1.116 canceling claims and complying with requirements of form so as to place the application into condition for allowance.  Therefore, only the second reply constituted a proper reply under 37 C.F.R. § 1.113.  Accordingly, only the second reply was sufficient to stop the applicant delay from continuing to accrue.

It is worth noting that the CAFC explicitly stated their conclusion would not be affected by any of the USPTO pilot programs, such as the AFCP 2.0 program.  Therefore, if an after-final reply including amendments in accordance with the AFCP 2.0 program is filed, that reply still may or may not be considered a proper reply under 37 C.F.R. § 1.113 depending on the amendments presented.  This decision also makes clear that the CAFC will give deference to reasonable interpretations of the PTA statutes and rules by the USPTO.  Further, the Court’s holding illustrates a clear attempt by the CAFC at limiting broad interpretations of USPTO rules by patent applicants seeking additional PTA.

In view of the above, this decision provides valuable considerations for after-final practice where PTA is important to the patent applicant.  For example, it is imperative to remember that after-final practice is practice occurring when prosecution on the merits is closed.  Thus, the traditional back-and-forth of open prosecution no longer applies.  While it is certainly permissible to present arguments and/or amendments after receiving a final Office Action, patent applicants should be careful as to the timing of when after-final replies are presented and should always consider whether any after-final reply constitutes a proper reply under 37 C.F.R. § 1.113.