[Federal Register Volume 79, Number 117 (Wednesday, June 18, 2014)]
[Proposed Rules]
[Pages 34681-34685]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-14186]


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DEPARTMENT OF COMMERCE

United States Patent and Trademark Office

37 CFR Part 1

[Docket No.: PTO-P-2014-0023]
RIN 0651-AC96


Changes to Patent Term Adjustment in View of the Federal Circuit 
Decision in Novartis v. Lee

AGENCY: United States Patent and Trademark Office, Commerce.

ACTION: Notice of proposed rulemaking.

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[[Page 34682]]

SUMMARY: The United States Patent and Trademark Office (Office) is 
proposing changes to the rules of practice pertaining to the patent 
term adjustment provisions in view of the decision by the U.S. Court of 
Appeals for the Federal Circuit (Federal Circuit) in Novartis AG v. 
Lee. The Federal Circuit confirmed in Novartis that any time consumed 
by continued examination is subtracted in determining the extent to 
which the period of application pendency exceeds three years, 
regardless when the continued examination was initiated. The Federal 
Circuit, however, decided that the time consumed by continued 
examination does not include the time after a notice of allowance, 
unless the Office actually resumes examination of the application after 
allowance. The Office is proposing changes to the rules of practice to 
provide that the time consumed by continued examination does not 
include the time after a notice of allowance, unless the Office 
actually resumes examination of the application after allowance. The 
Office also is proposing changes to the rules of practice to provide 
that the submission of a request for continued examination after a 
notice of allowance has been mailed will constitute a failure of an 
applicant to engage in reasonable efforts to conclude processing or 
examination of an application and thus result in a reduction of any 
period of patent term adjustment.

DATES: Comment Deadline Date: Written comments must be received on or 
before August 18, 2014.

ADDRESSES: Comments should be sent by electronic mail message over the 
Internet addressed to: AC96.comments@uspto.gov. Comments also may be 
submitted by postal mail addressed to: Mail Stop Comments--Patents, 
Commissioner for Patents, P.O. Box 1450, Alexandria, VA, 22313-1450, 
marked to the attention of Kery Fries, Senior Legal Advisor, Office of 
Patent Legal Administration, Office of the Deputy Commissioner for 
Patent Examination Policy.
    Comments further may be sent by electronic mail message over the 
Internet via the Federal eRulemaking Portal. See the Federal 
eRulemaking Portal Web site (http://www.regulations.gov) for additional 
instructions on providing comments via the Federal eRulemaking Portal.
    Although comments may be submitted by postal mail, the Office 
prefers to receive comments by electronic mail message over the 
Internet because sharing comments with the public is more easily 
accomplished. Electronic comments submitted in plain text are 
preferred, but may be submitted in ADOBE[supreg] portable document 
format or MICROSOFT WORD[supreg] format. Comments not submitted 
electronically should be submitted on paper in a format that 
facilitates convenient digital scanning into ADOBE[supreg] portable 
document format.
    Comments will be available for viewing via the Office's Internet 
Web site (http://www.uspto.gov). Because comments will be made 
available for public inspection, information that the submitter does 
not desire to make public, such as an address or phone number, should 
not be included in the comments.

FOR FURTHER INFORMATION CONTACT: Kery Fries, Senior Legal Advisor, 
Office of Patent Legal Administration, Office of the Deputy 
Commissioner for Patent Examination Policy, at telephone number 571-
272-7757.

SUPPLEMENTARY INFORMATION:
    Executive Summary: Purpose: The Office is proposing changes to the 
rules of practice pertaining to the patent term adjustment provisions 
of 35 U.S.C. 154(b) in view of the decision by the Federal Circuit in 
Novartis, 740 F.3d 593 (Fed. Cir. 2014). The Federal Circuit confirmed 
in Novartis that any time consumed by continued examination under 35 
U.S.C. 132(b) is subtracted in determining the extent to which the 
period defined in 35 U.S.C. 154(b)(1)(B) exceeds three years, 
regardless when the continued examination under 35 U.S.C. 132(b) was 
initiated. The Federal Circuit, however, decided that the time consumed 
by continued examination under 35 U.S.C. 132(b) does not include the 
time after a notice of allowance unless the Office actually resumes 
examination of the application after allowance.
    Summary of Major Provisions: The Office is proposing changes to the 
rules of practice to provide that the time consumed by continued 
examination under 35 U.S.C. 132(b) does not include the time after a 
notice of allowance, unless the Office actually resumes examination of 
the application after allowance. The Office also is proposing changes 
to the rules of practice to provide that the submission of a request 
for continued examination under 35 U.S.C. 132(b) after a notice of 
allowance under 35 U.S.C. 151 has been mailed will constitute a failure 
of an applicant to engage in reasonable efforts to conclude processing 
or examination of an application and thus result in a reduction of any 
period of patent term adjustment under 35 U.S.C. 154(b)(1).
    Costs and Benefits: This rulemaking is not economically significant 
under Executive Order 12866 (Sept. 30, 1993).
    Background: In January 2014, the Federal Circuit issued a decision 
in Novartis pertaining to the patent term adjustment provisions of 35 
U.S.C. 154(b), and specifically the impact of continued examination 
under 35 U.S.C. 132(b) on patent term adjustment under the three-year 
pendency provision of 35 U.S.C. 154(b)(1)(B). The Federal Circuit 
confirmed in Novartis that any time consumed by continued examination 
under 35 U.S.C. 132(b) is subtracted in determining the extent to which 
the period defined in 35 U.S.C. 154(b)(1)(B) exceeds three years, 
regardless when the continued examination under 35 U.S.C. 132(b) was 
initiated. See 740 F.3d at 601 (``[t]he better reading of the language 
is that the patent term adjustment time should be calculated by 
determining the length of the time between application and patent 
issuance, then subtracting any continued examination time (and other 
time identified in (i), (ii), and (iii) of [35 U.S.C. 154](b)(1)(B)), 
and determining the extent to which the result exceeds three years''). 
The Federal Circuit, however, decided that the time consumed by 
continued examination under 35 U.S.C. 132(b) does not include the time 
after a notice of allowance unless the Office actually resumes 
examination of the application after allowance. See 740 F.3d at 602 
(``[t]he common-sense understanding of `time consumed by continued 
examination,' 35 U.S.C. 154(b)(1)(B)(i), is time up to allowance, but 
not later, unless examination on the merits resumes''). Therefore, the 
Office is proposing changes to the rules of practice to provide that 
the time consumed by continued examination under 35 U.S.C. 132(b) does 
not include the time after a notice of allowance, unless the Office 
actually resumes examination of the application after allowance.
    The Office makes the patent term adjustment determination indicated 
in the patent by a computer program that uses the information recorded 
in the Office's Patent Application Locating and Monitoring (PALM) 
system (except when an applicant requests reconsideration pursuant to 
Sec.  1.705). See Changes to Implement Patent Term Adjustment Under 
Twenty-Year Patent Term, 65 FR 56365, 56370, 56380-81 (Sept. 18, 2000) 
(final rule). The decision in Novartis that the time consumed by 
continued examination under 35 U.S.C. 132(b) does not include the time 
after a notice of allowance unless the Office actually resumes 
examination of the application after

[[Page 34683]]

allowance requires modifications of the Office's patent term adjustment 
program, and these modifications of the Office's patent term adjustment 
program have not yet been completed. The Office, however, calculates 
the patent term adjustment manually when an applicant requests 
reconsideration of a patent term adjustment determination pursuant to 
Sec.  1.705. The Office is now deciding requests for reconsideration of 
a patent term adjustment filed pursuant to Sec.  1.705 consistent with 
the Federal Circuit decision in Novartis.
    The patent term adjustment statutory provision also includes the 
provision that ``[t]he period of adjustment of the term of a patent 
under [35 U.S.C. 154(b)(1)] shall be reduced by a period equal to the 
period of time during which the applicant failed to engage in 
reasonable efforts to conclude prosecution of the application,'' and 
that ``[t]he 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.'' See 35 U.S.C. 154(b)(2)(C)(i) and (iii). Under the 
authority provided in 35 U.S.C. 154(b)(2)(C), the Office is proposing a 
rule of practice that establishes the submission of a request for 
continued examination under 35 U.S.C. 132(b) after a notice of 
allowance under 35 U.S.C. 151 has been mailed as constituting a failure 
of an applicant to engage in reasonable efforts to conclude processing 
or examination of an application. This rule of practice is proposed to 
ensure that an applicant does not obtain multiple periods of patent 
term adjustment under 35 U.S.C. 154(b)(1)(B) for the time after a 
notice of allowance under 35 U.S.C. 151 as a consequence of delaying 
issuance of the application by filing request for continued examination 
under 35 U.S.C. 132(b) after a notice of allowance under 35 U.S.C. 151.

Discussion of Specific Rules

    The following is a discussion of proposed amendments to title 37 of 
the Code of Federal Regulations, Part 1:
    Section 1.703: Section 1.703(b)(1) is proposed to be amended to 
provide that the time consumed by continued examination of the 
application under 35 U.S.C. 132(b) is the number of days, if any, in 
the period beginning on the date on which a request for continued 
examination of the application under 35 U.S.C. 132(b) was filed and 
ending on the date of mailing of a notice of allowance under 35 U.S.C. 
151, unless prosecution in the application is reopened. If prosecution 
in the application is reopened, the time consumed by continued 
examination of the application under 35 U.S.C. 132(b) also includes the 
number of days, if any, in the period or periods beginning on the date 
on which a request for continued examination of the application under 
35 U.S.C. 132(b) was filed or the date of mailing of an action under 35 
U.S.C. 132, whichever occurs first, and ending on the date of mailing 
of a subsequent notice of allowance under 35 U.S.C. 151. As discussed 
previously, this proposed amendment is consistent with the decision in 
Novartis that the time consumed by continued examination under 35 
U.S.C. 132(b) does not include the time after a notice of allowance 
unless the Office actually resumes examination of the application after 
allowance.
    Section 1.704: Section 1.704(c) is proposed to be amended to 
include a new provision that establishes the submission of a request 
for continued examination under 35 U.S.C. 132(b) after a notice of 
allowance under 35 U.S.C. 151 has been mailed as constituting a failure 
of an applicant to engage in reasonable efforts to conclude processing 
or examination of an application, in which case the period of 
adjustment set forth in Sec.  1.703 shall be reduced by the number of 
days, if any, beginning on the date of mailing of the notice of 
allowance under 35 U.S.C. 151 and ending on the date the request for 
continued examination under 35 U.S.C. 132(b) was filed. As discussed 
previously, this rule of practice is proposed to ensure that an 
applicant does not obtain multiple periods of patent term adjustment 
under 35 U.S.C. 154(b)(1)(B) for the time after a notice of allowance 
under 35 U.S.C. 151 as a consequence of delaying issuance of the 
application by filing request(s) for continued examination under 35 
U.S.C. 132(b) after a notice of allowance under 35 U.S.C. 151. The 
provisions of Sec.  1.704(d) would not be applicable to this new 
provision as the information disclosure statement rules (Sec. Sec.  
1.97 and 1.98) provide for the submission of an information disclosure 
statement after a notice of allowance under 35 U.S.C. 151 has been 
mailed up until the issue fee is paid without the need for the filing 
of a request for continued examination under 35 U.S.C. 132(b) (Sec.  
1.97(d)), and the Office has a program to allow for the submission of 
an information disclosure statement even after the payment of the issue 
fee (Quick Path Information Disclosure Statement (QPIDS) Pilot Program, 
77 FR 27443 (May 10, 2012)).

Rulemaking Considerations

    A. Administrative Procedure Act: This rulemaking proposes to amend 
37 CFR 1.703 to provide that the time consumed by continued examination 
under 35 U.S.C. 132(b) does not include the time after a notice of 
allowance has been mailed, unless the Office actually resumes 
examination of the application after allowance. This rulemaking also 
proposes to amend 37 CFR 1.704 to include a provision that establishes 
the submission of a request for continued examination under 35 U.S.C. 
132(b) after a notice of allowance under 35 U.S.C. 151 has been mailed 
as constituting a failure of an applicant to engage in reasonable 
efforts to conclude processing or examination of an application. The 
proposed amendment to 37 CFR 1.703 to provide that the time consumed by 
continued examination under 35 U.S.C. 132(b) does not include the time 
after a notice of allowance has been mailed, unless the Office actually 
resumes examination of the application after allowance, simply 
implements the Federal Circuit's ruling on the provisions of 35 U.S.C. 
154(b)(1)(B)(i) in Novartis. Therefore, the proposed amendment to 37 
CFR 1.703 is simply a procedural and/or interpretive rule. See Bachow 
Commc'ns Inc. v. F.C.C., 237 F.3d 683, 690 (D.C. Cir. 2001) (rules 
governing an application process are procedural under the 
Administrative Procedure Act); Inova Alexandria Hosp. v. Shalala, 244 
F.3d 342, 350 (4th Cir. 2001) (rules for handling appeals were 
procedural where they did not change the substantive standard for 
reviewing claims); Nat'l Org. of Veterans' Advocates, Inc. v. Sec'y of 
Veterans Affairs, 260 F.3d 1365, 1375 (Fed. Cir. 2001) (rule that 
clarifies interpretation of a statute is interpretive).
    Accordingly, prior notice and opportunity for public comment are 
not required pursuant to 5 U.S.C. 553(b) or (c) (or any other law), 
with respect to the proposed change to 37 CFR 1.703. See Cooper Techs. 
Co. v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008) (stating that 5 
U.S.C. 553, and thus 35 U.S.C. 2(b)(2)(B), does not require notice and 
comment rulemaking for ``interpretative rules, general statements of 
policy, or rules of agency organization, procedure, or practice'') 
(quoting 5 U.S.C. 553(b)(A)). The Office, however, is publishing all of 
these proposed changes (rather than only the proposed change to 37 CFR 
1.704) for comment as it seeks the benefit of the public's views on the 
Office's proposed implementation of the Federal Circuit's 
interpretation of the provisions of 35 U.S.C. 154(b)(1)(B)(i) in 
Novartis.

[[Page 34684]]

    B. Regulatory Flexibility Act: For the reasons set forth herein, 
the Deputy General Counsel for General Law of the United States Patent 
and Trademark Office has certified to the Chief Counsel for Advocacy of 
the Small Business Administration that changes proposed in this notice 
will not have a significant economic impact on a substantial number of 
small entities. See 5 U.S.C. 605(b).
    The proposed changes to the patent term adjustment reduction 
provisions do not impose any additional requirements or fees on 
applicants. The proposed change to 37 CFR 1.703 simply implements the 
Federal Circuit's ruling on the provisions of 35 U.S.C. 154(b)(1)(B)(i) 
in Novartis and reflects how patent term adjustment is now calculated 
in response to a request for reconsideration of patent term adjustment. 
The proposed change to 37 CFR 1.704 specifies that the submission of a 
request for continued examination under 35 U.S.C. 132(b) after a notice 
of allowance under 35 U.S.C. 151 has been mailed constitutes a failure 
of an applicant to engage in reasonable efforts to conclude processing 
or examination of an application. This proposed change will not have a 
significant economic impact on a substantial number of small entities 
because applicants are not entitled to patent term adjustment for 
examination delays that result from an applicant's delay in prosecuting 
the application (35 U.S.C. 154(b)(2)(C)(i) and 37 CFR 1.704(a)) and 
because applicants may avoid any consequences from this provision 
simply by refraining from filing a request for continued examination 
under 35 U.S.C. 132(b) after a notice of allowance under 35 U.S.C. 151 
has been mailed.
    For the foregoing reasons, the changes proposed in this notice will 
not have a significant economic impact on a substantial number of small 
entities.
    C. Executive Order 12866 (Regulatory Planning and Review): This 
rulemaking has been determined to be not significant for purposes of 
Executive Order 12866 (Sept. 30, 1993).
    D. Executive Order 13563 (Improving Regulation and Regulatory 
Review): The Office has complied with Executive Order 13563. 
Specifically, the Office has, to the extent feasible and applicable: 
(1) Made a reasoned determination that the benefits justify the costs 
of the rule; (2) tailored the rule to impose the least burden on 
society consistent with obtaining the regulatory objectives; (3) 
selected a regulatory approach that maximizes net benefits; (4) 
specified performance objectives; (5) identified and assessed available 
alternatives; (6) involved the public in an open exchange of 
information and perspectives among experts in relevant disciplines, 
affected stakeholders in the private sector, and the public as a whole, 
and provided on-line access to the rulemaking docket; (7) attempted to 
promote coordination, simplification, and harmonization across 
Government agencies and identified goals designed to promote 
innovation; (8) considered approaches that reduce burdens and maintain 
flexibility and freedom of choice for the public; and (9) ensured the 
objectivity of scientific and technological information and processes.
    E. Executive Order 13132 (Federalism): This rulemaking does not 
contain policies with federalism implications sufficient to warrant 
preparation of a Federalism Assessment under Executive Order 13132 
(Aug. 4, 1999).
    F. Executive Order 13175 (Tribal Consultation): This rulemaking 
will not: (1) Have substantial direct effects on one or more Indian 
tribes; (2) impose substantial direct compliance costs on Indian tribal 
governments; or (3) preempt tribal law. Therefore, a tribal summary 
impact statement is not required under Executive Order 13175 (Nov. 6, 
2000).
    G. Executive Order 13211 (Energy Effects): This rulemaking is not a 
significant energy action under Executive Order 13211 because this 
rulemaking is not likely to have a significant adverse effect on the 
supply, distribution, or use of energy. Therefore, a Statement of 
Energy Effects is not required under Executive Order 13211 (May 18, 
2001).
    H. Executive Order 12988 (Civil Justice Reform): This rulemaking 
meets applicable standards to minimize litigation, eliminate ambiguity, 
and reduce burden as set forth in sections 3(a) and 3(b)(2) of 
Executive Order 12988 (Feb. 5, 1996).
    I. Executive Order 13045 (Protection of Children): This rulemaking 
does not concern an environmental risk to health or safety that may 
disproportionately affect children under Executive Order 13045 (Apr. 
21, 1997).
    J. Executive Order 12630 (Taking of Private Property): This 
rulemaking will not effect a taking of private property or otherwise 
have taking implications under Executive Order 12630 (Mar. 15, 1988).
    K. Congressional Review Act: Under the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801-808), the United States Patent and Trademark Office 
will submit a report containing any final rule resulting from this 
rulemaking and other required information to the U.S. Senate, the U.S. 
House of Representatives, and the Comptroller General of the Government 
Accountability Office.
    L. Unfunded Mandates Reform Act of 1995: The changes set forth in 
this notice do not involve a Federal intergovernmental mandate that 
will result in the expenditure by State, local, and tribal governments, 
in the aggregate, of 100 million dollars (as adjusted) or more in any 
one year, or a Federal private sector mandate that will result in the 
expenditure by the private sector of 100 million dollars (as adjusted) 
or more in any one year, and will not significantly or uniquely affect 
small governments. Therefore, no actions are necessary under the 
provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 
1501 et seq.
    M. National Environmental Policy Act: This rulemaking will not have 
any effect on the quality of the environment and is thus categorically 
excluded from review under the National Environmental Policy Act of 
1969. See 42 U.S.C. 4321 et seq.
    N. National Technology Transfer and Advancement Act: The 
requirements of section 12(d) of the National Technology Transfer and 
Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because 
this rulemaking does not contain provisions which involve the use of 
technical standards.
    O. Paperwork Reduction Act: The Paperwork Reduction Act of 1995 (44 
U.S.C. 3501 et seq.) requires that the Office consider the impact of 
paperwork and other information collection burdens imposed on the 
public. The rules of practice pertaining to patent term adjustment and 
extension have been reviewed and approved by the Office of Management 
and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.) under OMB control number 0651-0020. The changes proposed 
in this rulemaking would: (1) Provide that the time consumed by 
continued examination under 35 U.S.C. 132(b) does not include the time 
after a notice of allowance, unless the Office actually resumes 
examination of the application after allowance; and (2) provide that 
the submission of a request for continued examination under 35 U.S.C. 
132(b) after a notice of allowance under 35 U.S.C. 151 has been mailed 
constitutes a failure of an applicant to engage in reasonable efforts 
to conclude processing or examination of an application.
    This rulemaking does not add any additional requirements (including 
information collection requirements) or

[[Page 34685]]

fees for patent applicants or patentees. Therefore, the Office is not 
resubmitting information collection packages to OMB for its review and 
approval because the changes in this rulemaking do not affect the 
information collection requirements associated with the information 
collections approved under OMB control number 0651-0020 or any other 
information collections.
    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall any person be subject to a penalty for failure 
to comply with, a collection of information subject to the requirements 
of the Paperwork Reduction Act unless that collection of information 
displays a currently valid OMB control number.

List of Subjects in 37 CFR Part 1

    Administrative practice and procedure, Courts, Freedom of 
information, Inventions and patents, Reporting and recordkeeping 
requirements, Small businesses.

    For the reasons set forth in the preamble, 37 CFR part 1 is 
proposed to be amended as follows:

PART 1--RULES OF PRACTICE IN PATENT CASES

0
1. The authority citation for 37 CFR part 1 continues to read as 
follows:

    Authority:  35 U.S.C. 2(b)(2), unless otherwise noted.

0
2. Section 1.703 is amended by revising paragraph (b)(1) to read as 
follows:


Sec.  1.703  Period of adjustment of patent term due to examination 
delay.

* * * * *
    (b) * * *
    (1) The number of days, if any, in the period beginning on the date 
on which a request for continued examination of the application under 
35 U.S.C. 132(b) was filed and ending on the date of mailing of a 
notice of allowance under 35 U.S.C. 151, unless prosecution in the 
application is reopened, in which case the period of adjustment under 
Sec.  1.702(b) also does not include the number of days, if any, in the 
period or periods beginning on the date on which a request for 
continued examination of the application under 35 U.S.C. 132(b) was 
filed or the date of mailing of an action under 35 U.S.C. 132, 
whichever occurs first, and ending on the date of mailing of a 
subsequent notice of allowance under 35 U.S.C. 151;
* * * * *
0
2. Section 1.704 is amended by redesignating paragraphs (c)(12) and 
(13) as paragraphs (c)(13) and (14), respectively, and by adding a new 
paragraph (c)(12) to read as follows:


Sec.  1.704  Reduction of period of adjustment of patent term.

* * * * *
    (c) * * *
    (12) Submission of a request for continued examination under 35 
U.S.C. 132(b) after a notice of allowance under 35 U.S.C. 151 has been 
mailed, in which case the period of adjustment set forth in Sec.  1.703 
shall be reduced by the number of days, if any, beginning on the date 
of mailing of the notice of allowance under 35 U.S.C. 151 and ending on 
the date the request for continued examination under 35 U.S.C. 132(b) 
was filed;
* * * * *

    Dated: June 11, 2014.
Michelle K. Lee,
Deputy Under Secretary of Commerce for Intellectual Property and Deputy 
Director of the United States Patent and Trademark Office.
[FR Doc. 2014-14186 Filed 6-17-14; 8:45 am]
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