INTRA-CELLULAR THERAPIES, INC v. IANCU

Before Wallach, Chen, and Hughes. Appeal from the United States District Court for the Eastern District of Virginia.

Summary: If a proper reply to a final Office Action is not filed within the three-month response period, applicant delay may accrue resulting in the reduction of patent term adjustment.

During the prosecution of a patent application, Intra-Cellular filed a response three months after the receipt of a final Office Action disputing the Examiner’s rejections. The Patent Office mailed an Advisory Action indicating that Intra-Cellular’s after-final submission failed to overcome the rejection. In response, twenty-one days after the three-month deadline, Intra-Cellular filed a second after-final submission adopting all of the examiner’s suggestions. The patent was subsequently allowed. The Patent Office reduced the number of patent term adjustment (PTA) days for the patent by twenty-one days, reasoning that the period between the first and second after-final submissions constituted applicant delay because the first after-final submission was not a proper reply.

Intra-Cellular filed a complaint in the United States District Court for the Eastern District of Virginia seeking judicial review of the Patent Office’s PTA determination. The district court applied Chevron, reasoning that the Patent Office’s PTA determination involved a question of statutory interpretation by the Patent Office of 35 U.S.C. § 154(b)(2)(C) (“the PTA statute”) which provides that a patent’s PTA “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.” The district court granted summary judgment in favor of the Patent Office reasoning that, at Chevron Step 1, the plain language of the statute did not clearly address the present situation and, at Chevron Step 2, the Patent Office’s determination relied on a permissible construction of the PTA statute. Intra-Cellular appealed.

The Federal Circuit concluded that the district court did not err in granting summary judgment. At Chevron Step 1, the Federal Circuit agreed with the district court that, read in the context of the statutory scheme, the PTA statute did not answer the question of what type of action by an applicant constitutes “reasonable efforts to conclude prosecution” for the purpose of responding to a final Office Action. At Chevron Step 2, the Federal Circuit noted that the relevant regulation related to the PTA statue, 37 C.F.R. § 1.704(b), provides that applicant delay will accrue if an applicant takes longer than three months to “reply” to an Office Action, but that § 1.704(b) itself does not define “reply.” The Federal Circuit explained that the regulatory framework makes clear that a proper “reply” to a final Office Action must either comply with 37 C.F.R. § 1.113(c), cancelation or appeal of the rejected claims, or § 1.114, filing a Request for Continued Examination. The Federal Circuit explained that the Patent Office properly read the term “reply” in § 1.704(b) in harmony with § 1.113(c) and § 1.114. Because Intra-Cellular’s response was not a proper reply to a final Office Action, its conduct did not amount to reasonable efforts to conclude prosecution and applicant delay properly accrued.

Editor: Paul Stewart

Written by: Samuel I. Cockriel & Karen M. Cassidy