A patent’s term begins on the day it issues and expires twenty years from the earliest claimed nonprovisional priority date. This twenty-year rule applies in the United States and virtually all other countries. There are exceptions, however. This chapter introduces the special circumstances under which a U.S. patent’s term can be lengthened through extension and/or adjustment and shortened through disclaimer. It also shows how, in the therapeutic world, changing a patent’s term can have profound economic consequences.
As we will see in chapter 15, the U.S. generic drug industry is largely a result of legislative changes made in 1984 to remove obstacles to both innovator and generic drug companies. Of relevance here is a problem innovator drug companies faced prior to that time. Before 1984, it was often the case that by the time an innovator company won Food and Drug Administration (FDA) approval for a new drug after lengthy clinical trials, the company’s patent on the drug was close to expiry or had already expired.
As this predicament hindered drug innovation, Congress amended the patent law to permit extending the term of an innovator drug patent. Specifically, the law allows for extending—by up to five years—the term of a patent to an innovator drug (or a method of making or using it) or another product requiring regulatory approval. The exact length of term extension is calculated according to a complex formula as a function of the time required for regulatory approval.
EXAMPLE 6.1
On October 2, 2010, scientists at Company X invent Compound X, which they identify as an antitumor drug candidate.
On January 2, 2011, Company X files a U.S. provisional patent application claiming Compound X. Company X then files a PCT application on January 2, 2012, claiming priority of the provisional application. On July 2, 2013, Company X enters the PCT national stage in the United States, among other countries, where substantive examination begins.
A U.S. patent claiming Compound X issues from the U.S. application on July 2, 2016. Since the earliest claimed nonprovisional priority date for the U.S. patent is the PCT application’s January 2, 2012, filing date, the patent will expire twenty years after that date (i.e., January 2, 2032), absent lengthening or shortening owing to circumstances discussed in this chapter.
During examination of the U.S. patent application, Company X starts clinically testing Compound X in support of FDA approval.
On January 2, 2025, the FDA approves Compound X (now Drug X) for treating pancreatic tumors. Without term extension, Company X’s patent would expire in seven years.
However, shortly after the FDA approves Drug X, Company X obtains a five-year patent-term extension (which is measured in days) based on the specific facts of Drug X’s regulatory approval process. This means that instead of expiring on January 2, 2032, the patent will now expire on January 2, 2037. The value of this additional patent exclusivity can be worth millions of dollars per day, depending on the facts.
In addition to lengthening a patent’s term through extension, the term of a patent can also be lengthened through adjustment. However, extension and adjustment solve different problems and are granted using different criteria.
Unlike patent-term extension, which remedies the effects of delay owing to obtaining regulatory approval, patent-term adjustment compensates for unreasonable Patent Office delays. The speed with which the Patent Office processes and examines a patent application directly affects when the resulting patent will issue. Unreasonable delays by the Patent Office, caused by neglecting to promptly process or examine an application, can easily delay patent issuance by days, months, and even years.
Before 1999, there was no recourse for late patent issuance owing to unreasonable Patent Office delays. So, if a patent had a twelve-year term instead of, say, the fifteen-year term it would have had but for the Patent Office’s unreasonable delay, the patent owner would have had no choice but to make do with a compromised patent term.
In 1999, Congress introduced a solution to this problem in the form of patent-term adjustment. Unlike patent-term extension, adjustment is not limited to patents for products requiring regulatory approval. Instead, this remedy can be used for a patent claiming any type of invention.
The Patent Office can adjust (i.e., lengthen) the term of a patent if it unreasonably delayed prosecution and if the applicant did not also unreasonably do so to as great a degree. Determining the number of days, if any, by which a patent’s term should be adjusted requires performing a calculation according to a complex formula. That is, it requires determining the length of unreasonable delay by the Patent Office and of any unreasonable delay by the applicant. It then requires subtracting the length of the applicant’s unreasonable delay from that of the Patent Office to determine the number of days, if any, by which the patent’s term is to be adjusted.
EXAMPLE 6.2
On January 2, 2011, Company X files a U.S. provisional patent application claiming Compound X, an antitumor drug candidate. Company X then files a PCT application on January 2, 2012, claiming priority of the provisional application. On July 2, 2013, Company X enters the PCT national stage in the United States, among other countries, where substantive examination begins.
During substantive examination of the U.S. application, and after Company X has responded in a timely manner to the examiner’s first office action, the examiner unreasonably delays reviewing Company X’s response and issuing a further office action.
A U.S. patent claiming Compound X issues from the U.S. application on July 2, 2017. Since the earliest claimed nonprovisional priority date for the U.S. patent is the PCT application’s January 2, 2012, filing date, the patent will expire twenty years after that date (i.e., January 2, 2032), absent lengthening or shortening owing to other circumstances.
However, a one-year patent-term adjustment (which is measured in days) is granted based on the specific facts of the examiner’s unreasonable delay during prosecution. This means that instead of expiring on January 2, 2032, the patent will now expire on January 2, 2033. Just as with patent-term extension, in the case of therapeutic inventions, the value of this additional patent exclusivity can be worth millions of dollars per day, depending on the claimed invention.
The effects of patent-term extension and patent-term adjustment are additive, not mutually exclusive.
Here, though, on January 2, 2025, the FDA approves Compound X (now Drug X) for treating pancreatic tumors. This approval is based, in large part, on the clinical tests of Compound X started during prosecution of the U.S. application.
Shortly after the FDA approves Drug X, Company X obtains a three-year patent-term extension (which is measured in days) based on the specific facts of Drug X’s regulatory approval process. This means that instead of expiring on January 2, 2033, the patent will now expire on January 2, 2036.
So, the three-year patent-term extension and one-year patent-term adjustment act additively here to lengthen the patent term by four years.
FIGURE 6.1 This diagram illustrates the concept of lengthening a patent’s term. The prism represents the twenty-four-year period that includes the prosecution and term of Company X’s patent described in example 6.3. The prism’s lower portion (P + T) represents the twenty-year period that includes the patent’s prosecution and the term to which it would have been entitled absent any lengthening or shortening. The prism’s upper portion (A + E) represents the four-year lengthening of Company X’s patent term resulting from two things: the one-year term adjustment and the three-year term extension. With the patent-term adjustment and extension, Company X’s patent will expire twenty-four years from the patent’s earliest nonprovisional priority date, rather than twenty years from that date.
As we know from chapter 5, a patent may not claim more than one invention. This rule gives rise to restriction practice.
A seemingly redundant yet distinct rule is that only one patent can be granted for a single invention. It is this rule that bars what is known as double patenting; that is, the granting of more than one patent for a single invention to the same party. There are two types of double patenting: statutory double patenting and obviousness-type double patenting.
Statutory double patenting occurs when two co-owned patents claim the same invention. This type of double patenting can be avoided during prosecution by canceling or amending the offending claims of the patent application being examined.
EXAMPLE 6.4
Company X owns U.S. Patent A. Claim 1 of this patent provides synthetic Antibody A (AbA).
Company X also owns U.S. Patent Application B. Claim 1 of this application provides a method for making AbA, and claim 2 provides AbA per se. Company X included claim 2 in this application inadvertently, without realizing that claim 1 of Patent A already claims AbA.
During examination of Application B, the examiner rejects claim 2 over claim 1 of Patent A on the grounds of statutory double patenting. That is, the examiner rejects claim 2 because it claims an invention already patented by Company X.
In response, Company X cancels claim 2 of Application B, thereby overcoming the statutory double-patenting rejection.
Obviousness-type double patenting, also known as nonstatutory double patenting, is a court-created doctrine. Here, the invention claimed in one patent is obvious over the invention claimed in a co-owned patent. In obviousness-type double patenting, the two claimed inventions are not the same, yet one is obvious over the other.
If obviousness-type double patenting were permitted, a patentee could unfairly obtain patent protection extending beyond the twenty-year date for what is, in essence, a single invention. The patentee could do this by filing a series of patent applications over time that merely cover obvious variations of the same invention.
Shortening the term of a subsequent patent so obtained prevents this unjust outcome. Accomplishing this involves surrendering—that is, disclaiming—the terminal portion of the patent term that, if not disclaimed, would unfairly extend patent protection for an invention. A terminal disclaimer is the document for doing this.
EXAMPLE 6.5
Company X owns U.S. Patent A. Claim 1 of this patent provides synthetic Antibody A (AbA). Patent A has an earliest claimed nonprovisional priority date of January 2, 2010, and will expire on January 2, 2030.
Company X also owns U.S. Patent Application B, which has an earliest claimed nonprovisional priority date of January 2, 2013. Claim 1 of this application provides AbA labeled with a fluorescent compound.
During examination of Application B, the examiner rejects claim 1 of the application over claim 1 of Patent A on the basis of obviousness-type double patenting. That is, the examiner asserts that the labeled antibody of claim 1 is obvious over the antibody claimed in Patent A.
“Patent B,” if permitted to issue from Application B, would expire on January 2, 2033, absent a terminal disclaimer or any other term modification. This means that Patent B would remain in force for three years after Patent A expires. If the examiner’s assertion of obviousness-type double patenting is correct, the last three years of Patent B’s term would unfairly protect an invention that is merely an obvious variant of the invention for which patent protection has already expired. Put differently, Patent B would, in essence, unfairly extend Company X’s patent protection for AbA to the twenty-three-year date, rather than the twenty-year date.
To remedy this problem and overcome the examiner’s rejection, Company X files a terminal disclaimer over Patent A. By doing so, Company X surrenders the terminal portion (i.e., the last three years) of Patent B’s term so that Patent B expires on January 2, 2030, when Patent A does, and no later.
Of course, if Company X disagreed with the examiner’s assertion of obviousness-type double patenting, Company X could traverse the rejection instead of filing a terminal disclaimer.
FIGURE 6.2 This diagram illustrates the concept of shortening a patent’s term. The left prism (A) represents the twenty-year period that includes the prosecution and term of Patent A described in example 6.5. This term expires twenty years from its earliest nonprovisional priority date. The right prism (B) represents the time period including the prosecution and term of Patent B. To overcome the examiner’s obviousness-type double-patenting rejection, Company X files a terminal disclaimer (TD) by which it surrenders the final three-year portion of Patent B’s term. By doing so, Company X ensures that Patent B’s term will expire no later than Patent A’s term.