IP Law Daily, PATENT—Fed. Cir.: Patent term adjustment properly denied for period covering appeals of denied claims, (Sep 14, 2022)

By Cheryl Beise, J.D.

“Type C” PTA delay for appeal of claim rejections did not apply because the appeals did not reverse adverse determinations of patentability.

The federal district court in Alexandria, Virginia, correctly upheld Patent Trial and Appeal Board decisions to deny patent term adjustments for two patents held by SawStop Holding LLC, the U.S. Court of Appeals for the Federal Circuit has ruled. In one case, an adjustment was not warranted for the time of appeal before the Board because the examiner’s adverse determination of unpatentability of the claim at issue remained before and after the appeal to the Board, albeit for a different reason. In the other case, an adjustment was properly denied for the time of appeal before a district court because the claim at issue remained subject to an outstanding rejection by the Board and was thus unpatentable both before and after the appeal (SawStop Holding LLC v. Vidal, September 14, 2022, Linn, R.).

SawStop Holding LLC (“Sawstop”) appealed two summary judgment decisions issued by the federal district court in Alexandria, Virginia, affirming the USPTO’s denials of patent term adjustments (“PTAs”) for two Sawstop patents—U.S. Patent Nos. 9,522,476 (the ’476 patent) and 9,927,796 (the ’796 patent). Both patents are directed to power saws with safety features. Issuance of the both was delayed by appeals before final allowance.

In SawStop Holdings LLC v. lancu, 496 F. Supp. 3d 944 (E.D. Va. October 26, 2020) ("Sawstop I"), the district court rejected Sawstop’s request for a patent term adjustment of 841 days for the ’476 patent based on the time the application was under review by the Patent Trial and Appeal Board. In SawStop Holdings LLC v. Hirschfeld, No. 1:20-cv-1212, (E.D. Va. May 20, 2021) ("Sawstop II"), the USPTO granted a PTA of 1,132 days for the time of appeal before the Board, but rejected Sawstop’s request for an additional 3,495 days for the time the case was on appeal to a district court. Sawstop appealed both district court decisions, which were consolidated by the Federal Circuit.

PTA “C Delay.” In 1999, Congress expanded patent term adjustments, codified at 35 U.S.C. § 154(b), to compensate applicants for three broad classes of prosecution delays. This appeal concerns the "C Delay," codified at 35 U.S.C. § 154(b)(1)(C), which provides PTA for each day the application is pending in an interference proceeding, a secrecy order, or a successful appeal to the PTAB or a federal court. In relevant part, subsection (C) states:

Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to . . .

(iii) appellate review by the Patent Trial and Appeal Board or by a Federal court in a case in which the patent was [1] issued under a decision in the review [2] reversing an adverse determination of patentability, the term of the patent shall be extended 1 day for each day of the pendency of the proceeding, order, or review, as the case may be.

35 U.S.C. § 154(b)(1)(C) (emphasis added). The Federal Circuit noted that the meanings of the two italicized phrases above are at the center of the appeals. For both patents, Sawstop requested PTAs for C Delays under the facts surrounding appeals of rejected claims.

The ’476 patent PTA rejection. Regarding the ’467 patent, the PTO made no adjustment to the term of the ’467 patent for the time spent on the appeal before the Board. The Board explained that the claim at issue (claim 11) “was not issued under a decision in the review reversing an adverse determination of patentability” because “the claim remain[ed] under rejection after the Board decision” and “the patent only issue[d] after further prosecution” and amendment. The district court affirmed, holding that because claim 11 was subject to a new ground of rejection on appeal, the ’476 patent application was not “issued under a decision in the review reversing an adverse determination of patentability,” and thus was not eligible for PTA under § 154(b)(1)(C)(iii).

With respect to the ’476 patent, Sawstop argued that the PTO and the district court improperly interpreted the statutory expression “reverses an adverse determination of patentability” to add a new requirement that a decision in the review reversing an adverse determination of patentability must not subject the claims at issue to a new rejection.

The Federal Circuit was not persuaded. The adverse determination of unpatentability of claim 11 remained before and after the appeal to the Board, albeit for a different reason. The appeal was not “successful” as it resulted in no substantive change in the unpatentability of claim 11. “The PTO faithfully applied the statutory text and did not improperly add a new requirement for eligibility for C Delay,” the court said. Moreover, because claim 11 of the ’476 patent application was subject to an adverse determination of patentability both before and after the appeal, and because the claim issued only after significant substantive post-appeal prosecution and amendment, the ’476 patent did not “issue[] under a decision in the review reversing an adverse determination of patentability” as that expression is used in 35 U.S.C. § 154(b)(1)(C)(iii).

The ’796 patent PTA rejection. Regarding the ’796 patent, the examiner rejected independent claim 1 for both anticipation and provisional non-statutory obviousness-type double patenting (“double patenting”) and rejected dependent claim 2 for anticipation. Sawstop appealed all three rejections to the Board. The Board affirmed both rejections of claim 1, but reversed the anticipation rejection of claim 2, rendering it patentable. Sawstop then filed a complaint in the federal district court in Washington, D.C., challenging only the Board’s anticipation rejection of claim 1. The court reversed the anticipation rejection. On remand, Sawstop was given the option to file a terminal disclaimer or cancel claim 1 and rewrite claim 2 as an independent claim. Sawstop chose the latter and the Board issued a notice of allowance of claim 2 and other claims dependent therefrom. In issuing the ’796 patent, the PTO granted PTA under 35 U.S.C. § 154(b)(1)(C)(iii) for the delay incurred in the successful reversal of the rejection of claim 2 at the Board. But the PTO denied any additional PTA for the delay caused by the appeal of claim 1 to the D.C. district court.

After reviewing the Board’s decision, the Alexandria district court granted the PTO’s motion for summary judgment, holding that the ’796 patent was not entitled to PTA for Sawstop’s appeal to the D.C. district court because the appeal did not “revers[e] an adverse determination of patentability” as required by 35 U.S.C. § 154(b)(1)(C)(iii), as claim 1 remained subject to the outstanding provisional double patenting rejection and was thus unpatentable both before and after the appeal. The court also held that because claim 1 was eventually cancelled and thus did not issue in the patent, the ’796 patent did not “issue under” an adverse determination of patentability as that phrase is used in 35 U.S.C. § 154(b)(1)(C)(iii) and was not eligible for additional PTA for that independent reason.

Concerning the ’796 patent, Sawstop on appeal argued that the statute only requires the reversal of “an adverse determination of patentability” and the PTO’s interpretation improperly replaces the statutory “an” with a requirement that “all” rejections of a particular claim be reversed. The Federal Circuit observed that “Sawstop’s argument again confuses specific rejections with the determination of patentability.” The court reiterated that “the singular reversal referenced in the statute is the determination of patentability of the claim under appellate review, not a basis for a rejection or number of rejections.”

Sawstop also argued that the purpose of the statute is to compensate applicants for reductions in patent term that are not the fault of the applicant. However, this broad reading was not supported by the plain language of the statute, according to the court. Sawstop additionally attempted to argue that phrase “allowable claims” in the A Delay provision should apply to the C Delay, but the court was not persuaded, explaining that acts triggering A Delays are unrelated to and independent of the acts giving rise to C Delays.

Lastly, Sawstop contended that the Board’s reversal of the examiner’s anticipation finding of claim 1 was a reversal of an adverse determination of patentability. The problem with this argument was that that the PTO’s “adverse determination of patentability” of claim 1 of the ’796 patent was based on two grounds: double patenting and anticipation. Sawstop only appealed anticipation. Sawstop’s success in reversing the anticipation rejection left the provisional double patenting rejection in place. Thus, the appellate decision did not reverse “an adverse determination of patentability.”

The Federal Circuit also held that the district court correctly found that the ’796 patent was ineligible for a C Delay for the independent reason that the ’796 patent did not issue under a decision under the review. The ’796 patent, as issued, did not include claim 1 as appealed. “Rather, Sawstop cancelled claim 1 and replaced it with an independent form of claim 2, which had been allowed in dependent form prior to the appeal,” the court noted.

The Case is No. 21-1537.

Attorneys: Jared Weston Newton (Quinn Emanuel Urquhart & Sullivan, LLP) for SawStop Holding LLC. Hugham Chan, U.S. Department of Justice, for Katherine K. Vidal.

Companies: SawStop Holding LLC

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