By Dinis Cheian on October 21, 2022
The following article by Dinis Cheian is an interesting analysis of patent extension calculation errors that Cheian claims to have found in the Patent Office’s software. I thought Chicago IP Blog readers would find it interesting.
The Patent Office’s software is miscalculating the expiration extensions of some patents. Typically, a patent expires twenty years after the filing of the underlying application. However, the Patent Office extends patent terms to compensate for certain delays in processing applications. This extension is known as PTA. By default, the PTA is automatically calculated by a computer program administered by the Patent Office. However, that program was not originally designed to compute PTA and, given the complex rules governing the calculation, it makes mistakes.
I discuss two types of these systematically observed mistakes at length in my paper. First, the program sometimes fails to detect the applicant’s delayed replies, which leads to a smaller applicant delay and an excessive PTA. I found this problem in 24,914 patents. 121 have been litigated as of 2016. Second, the dates of some correspondence between the applicant and the examiner appear backdated in the records used by the program to determine the PTA. For example, if the computer believes that an applicant’s late reply to a rejection was received earlier than it was, the computer will fail to detect the applicant’s delay. In turn, this will lead to a shorter applicant delay and a longer PTA than warranted. I observed this glitch in 2,618 patents, 21 of which have been litigated as of 2016. My list of the software’s errors is not exhaustive. I suspect there could be additional inaccuracies in the software’s calculations, impacting even more patents.
Patent prosecutors have little incentive to correct Patent Office’s mistakes when it favors their clients, if they are even aware of the errors. When a patent is awarded less PTA than it is entitled to, the applicant may challenge the Patent Office’s determination within two months after the date of the grant. Applicants routinely file such challenges as a longer patent life benefits them. In contrast, there are few incentives to correct the Patent Office when it errs in the opposite direction and awards more PTA. Under current regulations, there is no obligation to file a request to correct excessive PTA. In addition, when submitting a request to correct the PTA, even one to lower it, the applicant must pay a fee. It appears that the Patent Office sometimes refunds or does not charge the fee, but the regulation sets out the fee and does not guarantee it will be refunded. It is worth noting that requests to lower the PTA are nevertheless submitted by practitioners in some cases. Nevertheless, the incentives to submit such requests are lacking even when the applicant is aware that she was awarded excess PTA.
Until and unless the Patent Office improves its algorithms and/or changes the incentives, patent practitioners and especially patent litigators and lawyers should be on the lookout for inflated PTA. If the error is detected during litigation, defendants have options. Under 35 U.S.C. § 282(c)(2), “[i]nvalidity of the extension of a patent term . . . because of the material failure . . . by the Director [of the Patent Office] to comply with the requirements of [the patent statutes] shall be a defense in any action involving the infringement of a patent during the period of the extension of its term.” Thus, defendants in patent infringement lawsuits can raise the erroneously granted PTA as a defense to avoid paying damages during the excess period. Notably, however, there isn’t even a single case in which such a defense was raised in the almost forty years since that subsection was enacted. This lacuna suggests that patent litigators rarely double-check the PTA. However, other explanations are possible. For example, it may be the case that such defenses were raised in confidential communications between the parties or that plaintiffs do not assert patents with excessive PTA.
Another subset of patent practitioners that urgently needs to take note of these bugs is the group assisting pharmaceutical companies in registering generic drugs with the FDA. At the expiration of a patent covering a drug, entities that would like to sell generic versions of the drug need to register the generic with the FDA. The entity that files first for such a registration has the exclusive right to market the generic drug for 180 days. As part of the filing, the entity must certify that the patent covering the original drug is invalid. Therefore, lawyers on the lookout for PTA errors may discover that certain patents expire, and are thus invalid, earlier than it appears if one blindly relies on the Patent Office’s calculations. This realization would allow lawyers to file the generic registration earlier, thus securing the exclusive rights for their clients.