In Re Cellect: What's The Issue And What To Expect

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The Supreme Court is about to receive a Petition for Certiorari in a case that impacts how long a patent protects new inventions, we expect. Specifically, the case addresses the Patent Term...
United States Intellectual Property
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What Congress has guaranteed, the courts have taken away

The Supreme Court is about to receive a Petition for Certiorari in a case that impacts how long a patent protects new inventions, we expect. Specifically, the case addresses the Patent Term Adjustment (PTA) provisions—which are Congressional guarantees that add time back to a patent's life to compensate for situations where the U.S. Patent Office improperly delays its examination—and how the judicially-created doctrine of Obviousness Type Double Patenting (ODP) now undermines those guarantees.

Here's what you need to know:

  • Normally, members of the same family have the same expiration date – which is based upon 20-years from their common application priority date. In re Cellect, however, held that ODP applies between patents in the same family where those patents have different expiration dates solely because of PTA, rendering the later-expiring patents invalid because of their PTA.
  • PTA is only awarded when the Patent Office does not meet statutorily guaranteed deadlines – so any difference in expiration date among patent family members is solely because of Patent Office delays. In Cellect, however, the Federal Circuit held that ODP is determined after the PTA restoration is applied, so it is the Patent Office delays in violation of Congressional "guarantees" that create the invalidity problem.
  • The Cellect decision also broke with precedent to eliminate any equitable considerations. Until that decision, equity was a hallmark of an ODP analysis.

What's the Issue and What to Expect

On August 28, 2023, the Federal Circuit held that patents subject to statutory PTA could be invalidated based upon ODP by earlier-expiring patent family members with no or less PTA, affirming a decision by the Patent Office's Patent Trial and Appeal Board ("PTAB") to that effect. In re Cellect, LLC, 81 F.4th 1216 (Fed. Cir. 2023). Cellect, supported by amici, petitioned for en banc Rehearing* on January 19, 2024, which the Federal Circuit denied without substantive comment. Cellect is expected to file a Petition for Certiorari with the Supreme Court in the next few days; its petition deadline is May 20, 2024.

Obviousness-Type Double Patenting – A Brief Background

Courts recognize two types of double patenting – (i) statutory or "same invention" double patenting under 35 U.S.C. § 101, which prevents two patents claiming the exact same invention; and (ii) the judicially created ODP, which prohibits a single patentee from receiving multiple patents for obvious variants of an invention. ODP invalidates a later-filed variant patent when an invention is disclosed in an earlier related patent by the same inventor and the later variant's claims are not "patentably distinct" from the earlier patent's. (ODP is used because the earlier "reference" patent or application is not prior art for an obviousness rejection under §103 because, for instance, they derive from the same parent application, as occurred in Cellect.)

ODP was created out of public policy concerns, to prevent situations where obvious variant patents were being obtained as a result of a patentee's "gamesmanship." Two inequities resulted from these tactics: (i) under prior law, it allowed patentees to improperly extend patent exclusivity for the same invention because previously a patent's term was measured from when it issued, and (ii) separately owned patents create the risk of harassment by multiple plaintiffs if not commonly owned (although this is a less common issue). Historically, the former was the main concern, although in In re Fallaux, 564 F.3d 1313, 1318 (Fed. Cir. 2009), the Federal Circuit recognized that 1995 changes in the law any concern of an improper patent extension is of "limited force."

URAA Changed How Patent Term is Determined and Provided PTA

In 1995, Congress enacted the Uruguay Round Agreements Act ("URAA"), which, among other changes, amended how a patent's term is calculated. Under URAA, patents expire 20 years from the earliest claimed priority date – previously, patents expired 17 years from the grant of the patent. This 20-year period applies regardless of how many years it takes a patent to issue, and so Congress was concerned that undue Patent Office examination delays would waste patent term. Therefore, Congress guaranteed that the Patent Office would meet certain examination deadlines. If the Patent Office failed to do so then the patentee would be compensated with added patent term, which it called PTA. See 35 U.S.C. §154(b). In practice, PTA is one of two significant systems for adding patent term.

Patent Term Extension – Another Congressional Guarantee of Patent Coverage

The other system for adding patent term is the Patent Term Extension ("PTE") provisions of 35 U.S.C. §156, which similarly compensates patentees for government delay. PTE was enacted as part of the balance underlying the Drug Price Competition and Patent Term Restoration Act of 1984 (known as the Hatch-Waxman Act), and extends a patent's term based upon a patentee's inability to market a claimed invention that requires Food & Drug Administration (FDA) approval while FDA conducts its review. The Federal Circuit previously held that ODP does not invalidate an otherwise validly-obtained patent that has PTE. Novartis v. Ezra, 909 F.3d 1367, 1373 (Fed. Cir. 2018) (evaluating ODP prior to applying PTE). In other words, the ODP analysis looks at a patent's pre-PTE term—when the patent would expire before PTE is added on..

In re Cellect – The Federal Circuit Speaks on ODP and PTA

In Cellect, a Federal Circuit panel reviewed four related ex parte reexamination decisions from PTAB invalidating Cellect's patents based upon ODP, where all of the patents traced their priority to a common priority application. Without PTA they all would have expired on the same day, but there were undue Patent Office delays during prosecution of some applications, so PTA awards due to those delays meant no two patents expired on the same day.

Cellect argued that (1) PTA must be treated similarly to PTE because both schemes are mandatory statutory grants meant to compensate a patentee for government delay, and (2) PTAB failed to consider the equities as part of its ODP in its analysis and any PTA-extending delay was solely due to the Patent Office's failure to deliver on Congressionally mandated deadlines. The Federal Circuit panel rejected both arguments.

Under Cellect, the ODP analysis looks at a patent's post-PTA term (not pre-term like PTE). The panel distinguished PTE and PTA based upon how the two statutes are worded (so the Novartis decision on PTE did not apply to PTA).

The panel also rejected Cellect's equitable arguments, seemingly holding that any extension of patent term—regardless of reason—is "unjust," 81 F.4th at 1230 ("[G]ood faith during prosecution does not entitle [Cellect] to a patent term to which it otherwise is not entitled."). Cellect's rejection of an equitable analysis already has been recognized by one district court. See Allergan USA, Inc. v. MSN Labs. Priv. Ltd., 2023 U.S. Dist. LEXIS 172641, at *58-61 (D. Del. Sep. 27, 2023).

In re Cellect – Ramifications

Practically, the Cellect decision has had serious implications for industries where it is common to have multiple patents issue from the same parent application. While there are potential strategies to address double patenting issues in existing portfolios, they all either are untested, or involve surrendering patent term via terminal disclaimer.

Legally, Cellect has been interpreted differently by at least two courts in the District of Delaware which suggests the decision has created more uncertainty than clarity, especially on the role of equitable considerations in ODP. In Allergan 2023 U.S. Dist. LEXIS 172641, at *10-11, for instance, Judge Andrews held a patent invalid for ODP based on Cellect's holding.

Three months later, Judge Williams in ACADIA Pharms. Inc. v. Aurobindo Pharma Ltd., 2023 U.S. Dist. LEXIS 221663, at *20-24 (D. Del. Dec. 13, 2023), declined to follow Allergan in applying Cellect and expressly distinguishes Allergan particularly as to the equitable issues. Compare Allergan USA, Inc., 2023 U.S. Dist. LEXIS 172641 at *60 (refusing to consider Allergan's equitable arguments based on Cellect's rejection of equitable concerns in ODP analysis); with ACADIA Pharms. Inc., 2023 U.S. Dist. LEXIS 221663, at *23-24 (finding that gamesmanship was not present in Acadia's patent prosecution strategy). The ACADIA decision took care to note that the parties presented arguments in ACADIA that had not been made in Allergan so a true split of authority remains unclear.

What's Next

Cellect is expected to file a Petition for Certiorari shortly. Cellect and Amici likely will argue that PTA is a Congressional guarantee that cannot be overridden by the judge-made ODP, that PTA and PTE should be treated similarly and both be excluded from an ODP analysis, and that the Federal Circuit improperly dismissed the equitable roots of ODP. Further, based upon briefing before the Federal Circuit, several amici may argue that ODP based on patent expiration date is not necessary in a post-URAA world since there is no risk of prosecution gamesmanship now that patent term is calculated from filing date, not issuance.

* The Foley Hoag LLP attorneys authoring this alert filed an amicus brief on behalf of the New York Intellectual Property Association (NYIPLA) supporting rehearing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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