Supreme Court Must Reverse Ruling Thwarting Patent Term Guarantees

The Federal Circuit’s decision to expand the scope of a judge-created rule for invalidating certain patents may impact nearly half of US patents and is likely to cost US biopharma and technology innovators billions of dollars. For these reasons and others, the US Supreme Court should take up and reverse In re Cellect, preserving statutory guarantees.

In re Cellect diminishes the intent of Congress and undercuts its decision to fundamentally alter the US patent system in 1994 to align it with the rest of the world. Congress changed the starting point of a patent’s term to 20 years from when an inventor filed a patent application, rather than 17 years from the time the patent was granted.

This altered the impact of US Patent and Trademark Office delays in examining patents. Under the old system, delays had no impact on patent term because it was measured from patent issuance. But starting the clock on the date of filing a patent application meant delays began consuming the effective term of the patent, resulting in a diminished value and creating a need to restore lost patent term.

The 1999 Patent Term Guarantee Act, part of the American Inventors Protection Act, was the chosen remedy. It promised inventors a full patent term adjustment for any examination delay caused by the USPTO. It guaranteed that the term of a patent would be extended one day for each day of USPTO delay.

Given the prevalence of delays, the USPTO adjusts the terms of approximately half of the patents it issues, according to data from 2005 to 2022. This has caused patents to inventions from the same initial application to routinely expire later than others in the same patent family, and the difference in their terms is due to the adjustment.

In re Cellect turns Congress’s statutory guarantee on its head. It concerns patents in the same family, some with patent term adjustment and some without, that would have all expired on the same day but for the delays of the USPTO in issuing some of the patents.

Cellect LLC had asked the Federal Circuit to overturn a decision by the Patent Trial and Appeal Board to invalidate four imaging tech patents on the grounds of “obviousness-type double patenting,” or OTDP. It argued that the Board improperly broadened the reach of OTDP and, in the process, erroneously punished patent owners whose patent terms have been adjusted.

The OTDP is a judicially created doctrine to prevent unjustified extensions of a patent’s term because of patents that are obvious versions of one another. Patent term adjustment was the sole basis for invalidity.

The Federal Circuit upheld the Board’s decision, saying it was grounded in the statute because patent term adjustment is not guaranteed in all circumstances. It can’t be used to compensate patent applicants that have voluntarily shortened the term of their patents to avoid OTDP or for other reasons. The problem with that analysis is that patents with term adjustments aren’t patents with voluntarily shortened terms. If they were, in accordance with statute, they would have no patent term adjustment.

The Federal Circuit’s decision also is at odds with its own prior rulings. It previously recognized that patents with so-called patent term extensions for delays due to Food and Drug Administration review of drugs for marketing approval couldn’t be invalidated based on statutorily guaranteed term extensions over patents in the same family that didn’t have those extensions.

Widespread Impact

Cellect’s petition for en banc review at the Federal Circuit was denied, and their petition at the Supreme Court was filed Monday. While the case involves tech patents, Cellect’s en banc petition was supported by pharmaceutical giants, including Johnson & Johnson, Merck, AstraZeneca, Novartis, and others. It is now time for the justices to restore Congress’s patent term guarantee.

The impact of In re Cellect is enormous, as it largely undoes Congress’s Patent Term Guarantee Act. A single patent application often includes multiple inventions and results in numerous patents. For example, biopharma companies typically obtain claims for a new drug in one patent and the method of making and using the drug in separate patents.

As another example, an automotive company may claim an image processing system to control high-beams in one patent and high-beams comprising such system in another. If patent term adjustment is received on one but not the other patents, which is typical, then the patent with the adjustment may be invalidated. Indeed, patents across industries have been invalidated solely based on patent term adjustment.

USPTO data shows that the average patent term adjustment granted from 2005 to 2022 generally exceeds six months and that many patents have years of term adjustments.

Millions of patents are now at risk for invalidation solely based on patent term adjustment. More than 380,000 patents were issued in fiscal year 2022 alone. In re Cellect robs innovators of both time and money, because every day of patent term can be worth tens of millions of dollars. It turns guarantees to uncertainty and denies diligent US inventors promised patent terms, devaluing their investment.

The Federal Circuit’s decision hurts big companies, and it hurts universities and small companies that rely on predictable licensing revenue or on being acquired based on their ability to adequately protect their inventions for a sufficient amount of time. It puts innovators to the herculean and uncertain task of reviewing their patents that have term adjustments and analyzing whether to disclaim the adjustments entirely to save their patents from invalidation.

Given the upheaval caused by the Federal Circuit’s decision, the Supreme Court should take up invalidation of US patents solely based on patent term adjustment. In re Cellect provides the opportunity to do so now.

The case is In re Cellect LLC, Fed. Cir., No. 22-1293, affirmed 8/28/23.

The case is Cellect v. Vidal, U.S., cert petition filed 5/20/24.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Irena Royzman is partner in Orrick’s New York office focusing on life sciences patent litigation.

Lauren Drake is partner in Orrick’s Los Angeles office also focusing on life sciences patent litigation.

Write for Us: Author Guidelines