Federal Circuit Panel Hears Oral Arguments in In re Cellect, LLC to determine the Fate of Patent Term Adjustments

6 min

On June 9, 2023, the Federal Circuit—presided over by Judges Lourie, Dyk, and Reyna—held oral arguments in In re Cellect, LLC. The case that many clients, especially the biotechnology and pharmaceutical companies, have been closely following involves resolving whether a judge-made doctrine of Obviousness-type Double Patenting can truncate a legislative grant of patent term adjustment.

Cellect, LLC – Main Argument

Counsel for Cellect, LLC started by urging the Court to reverse the Board's decision that statutory adjustment under 154(b), in and of itself, without any claims of gamesmanship, is invalid under obviousness-type double patenting (ODP), arguing that (1) the two concerns underlying ODP rejection are not present in this case, namely unjust extension of time and gamesmanship due to different ownership; (2) Patent Office ignored the natural reading of the statute, containing the "shall" language mandating a grant of PTA in case of office delays; (3) Ezra clarifies that a "judge made doctrine cannot cut short statutory extension"; and (4) during prosecution, the Examiner did not raise an ODP rejection, so now the Court cannot punish Cellect based on hindsight, because the patents have expired without the patentee having filed a terminal disclaimer over the reference patent.

Counsel for Cellect, LLC was certainly met by a hot bench on Friday that initially noted that during prosecution, Cellect had conceded that its claims were patentably indistinct. Therefore, according to the judges, there was a valid double patenting concern here; the law is clear—a challenged patent term should not extend beyond the reference patent term. Judge Dyk posited a hypothetical question, asking if Cellect believed that the term of the challenged patent would have been limited under ODP prior to Congress's passing of the PTA statute. To this, Cellect's counsel agreed. Judge Dyk proceeded to ask what indication then exists in 35 USC § 154 that Congress wanted to change the ODP doctrine? Counsel for Cellect responded by pointing to the mandatory language of the statute, but Judge Dyk disagreed; according to him, § 154 did not expressly deal with ODP. Judge Dyk stressed that ODP has been a long-term part of patent law. In enacting § 154, Congress knew full well that ODP is rooted in Supreme Court precedent, and it did not attempt to override ODP by passing the PTA statute. Judge Dyk clarified that while it is true that § 154 compensates patentees for PTO delays, the statute does not necessarily compensate for delays resulting in multiple patentably indistinct claims.

Judge Reyna separately warned that the real problem here is not merely the tug-of-war between the statutory and judicially crafted doctrines; instead, Cellect's approach runs counter to § 101. It is a basic principle of patent law that a patentee cannot have two patents on the same invention. Judge Reyna also asked Cellect's counsel point-blank if its best argument on appeal is that a "statutory extension overrides a judge made doctrine." Cellect's counsel agreed. To that, Judge Reyna advised that even if the Examiner did not raise an ODP rejection, it is the patentee that is managing the prosecution. If patentee knew that its patents encompassed ever-so-slight variations in the same underlying invention and conceded during prosecution that challenged claims were not patentably distinct, it should have filed a terminal disclaimer to avoid harmful results. The judges repeatedly dismissed arguments that a patentee should not be punished for Examiner's faults. One of the judges warned that Cellect cannot risk its appeal on the argument that an Examiner did not do its job. It was Cellect that was managing its prosecution and knew very well which claims were patentably indistinct from the others. The appeal to CAFC has an underlying concession and assumption that the challenged claims are patentably indistinct from reference claims, which is why ODP applies.

Judge Dyk finally noted that the facts of this case are not analogous to ones in Ezra. Ezra specifically recognizes that ODP applies, but only if after taking account of ODP, the patent is delayed because of FDA delays with respect to the product approval, a patentee is entitled to PTE. Here, patentee had knowledge and explicitly conceded that both sets of claims were patentably indistinct, and despite that knowledge failed to file a terminal disclaimer over the challenged claims prior to expiration of reference patents. Once Cellect's reference patent expired, the adjustment period for the remaining patents should also extinguish.

USPTO – Main Argument

In her main argument, counsel for USPTO reiterated the facts of the case and urged that by not filing a timely terminal disclaimer, Cellect has triggered the very concerns that justify unpatentability under ODP. She argued that under the Federal Circuit's holding in Boehringer, by failing to terminally disclaim a later patent before expiration of an earlier patent, Cellect enjoyed unjustified advantage: a purported time extension of the right to exclude from the date of the earlier patent.

Judge Lourie was concerned that § 154(b)(2)(b) did not really apply here, as there was no terminal disclaimer filed during prosecution. To that, counsel for USPTO responded that while there was none filed, it "should have been." Under Ezra, Cellect's challenged claims should have been terminally disclaimed once an ODP challenge arose. Lourie was also concerned about not filling in the statutory blanks. Counsel for USPTO explained that § 253 was directed to this language: by adding a terminal disclaimer limit, Congress impliedly admitted that ODP applies to determine PTA. Judge Dyk agreed with counsel for USPTO, reasoning that if Congress passed a statute and there is no indication they intended to change ODP, the general rule is that the ODP framework existing at the time governs, as it is rooted in the Supreme Court precedent.

Counsel for USPTO explained that Cellect has conceded there is no issue of obviousness in this case and that here, only certain patentably indistinct claims will be invalidated under ODP. She proceeded to argue that as the doctrine of double patenting does not invalidate an entire patent—but only patentably indistinct claims—the equity issues do not arise. Judges asked and answered counsel for USPTO about USPTO's response to the conflicting language in Ezra that a judge-made doctrine cannot truncate a statutory right: Judge Dyk reasoned that in theory, ODP has always been part of all term extension statutes since 1870, and, given the Supreme Court precedent, this court cannot hold that a statute necessarily prevails over and wipes out ODP. Congress, in enacting § 154, is presumed to have legislated in view of ODP doctrine.

Counsel for USPTO finally pointed out that under In Re: Vivint, Inc., a question of patentability is new until it has been decided on the merits, and here Examiner did not consider during prosecution whether the challenged claims were patentably indistinct from the reference claims. Counsel for USPTO also cited to Patlex ;in explaining that the purpose of the reexamination statute is to correct any errors made by government. Here, as Examiner admittedly made an error during prosecution, the Board did not err by rectifying that issue on reexamination. Counsel for Cellect essentially repeated his main arguments in rebuttal, citing Ezra.

It remains to be seen whether the Federal Circuit will uphold the underlying USPTO decision and whether the holding of Cellect will be limited to the specific facts of the case. But if the judges' questioning is any indication, the Federal Circuit appears to be putting the onus squarely on the patentee to be aware of and to file preemptive terminal disclaimers for patentably indistinct subject matter, where necessary.

* The authors would like to thank Ms. Taskeen Aman, an associate in Venable's New York office, for her assistance in writing this article.