District Court Says “Shall” Means “Must” in Challenge to PTO Denial of Interim Patent Term Extension

July 25, 2011

By Kurt R. Karst

Late last week, the U.S. District Court for the Eastern District of Virginia granted the U.S. Patent and Trademark Office’s (“PTO’s”) Motion for Summary Judgment in a challenge mounted by the Genetics & IVF Institute (“GIVF”) to the PTO’s August 2010 denial of a Patent Term Extension (“PTE”) for U.S. Patent No. 5,135,759 (“the ‘759 patent”), which covers a method to preselect the sex of offspring and is owned by the U.S. Department of Agriculture (“USDA”).  As we previously reported, GIVF, as the exclusive licensee of the (now-expired) ‘759 patent, sued the PTO under the Administrative Procedure Act, and asked the court to, among other things, vacate and set aside the PTO’s August 2010 decision and to declare that the PTO has the discretion to extend the term of the ‘759 patent for the full period required under 35 U.S.C. § 156.

The case involves the interim PTE provisions at 35 U.S.C. § 156(d)(5), under which the PTO may grant an interim patent extension while a Premarket Approval application (“PMA”) is undergoing FDA review if the patent owner (or his agent) “reasonably expects that the applicable regulatory review period . . . that began for a product that is the subject of such patent may extend beyond the expiration of the patent term in effect.”  To request an initial interim PTE, the owner (or his agent) submits an application to the PTO “during the period beginning 6 months, and ending 15 days before such term is due to expire.”  The statute provides that a total of 5 interim PTEs may be granted.  After the initial interim PTE is granted, 35 U.S.C. § 156(d)(5)(C) provides that “[e]ach such subsequent application shall be made during the period beginning 60 days before, and ending 30 days before, the expiration of the preceding interim extension” (emphasis added).

The ‘759 patent was set to expire on August 4, 2009; however, the USDA requested and the PTO granted an interim PTE for a period of one year, through August 4, 2010.  Just days before the interim PTE was going to expire, the USDA, on July 27, 2010 petitioned the PTO for an extension of time to file a second interim PTE and also a request for a second subsequent interim PTE.  On August 2, 2010,  the PTO denied both the USDA’s petition and request for a second subsequent interim PTE, saying that “[b]ecause the relief that petitioner seeks is from a statute, the USPTO, without any statutory authority to grant such relief, cannot excuse failure to comply with the statutory timing requirement of § 156(d)(5)(C) . . . .”  Unsatisfied with this decision, GIVF decided to take the matter to court.

GIVF argued in its Motion for Summary Judgment that the PTO’s decision that the Office lacked discretion to consider the USDA’s untimely application, because § 156(d)(5)(C) uses “shall,” fails because “shall” is sometimes discretionary,  the PTO’s decision is “inconsistent with how the USPTO views Section 156 and how the law views the other timing provisions in federal patent law,” and because  “allowing the USPTO’s decision to stand will result in a harsh, absurd, and
unfair result.”

In a 31-page opinion, Judge James C. Cacheris granted the PTO’s Motion for Summary Judgment.  Noting that although in the proper context “shall” may be permissive, in 35 U.S.C. § 156(d)(5)(C), the court said, “shall”  is mandatory:

The relevant language provides that “[e]ach such subsequent application shall be made during the period beginning 60 days before, and ending 30 days before, the expiration of the preceding interim extension.”  35 U.S.C. § 156(d)(5)(C).  This language is unqualified.  The application “shall be made” in the relevant period, full stop.  Without any qualifying language, “[n]othing in the language of the statute states or suggests that the word ‘shall’ does not mean exactly what it says.”  Thus, “shall” has its ordinary meaning denoting a mandatory requirement or obligation.  [(Citation omitted)]

This was not the end of the inquiry for the court, however: 

That “shall” in § 156(d)(5)(C) has its ordinary meaning does not end the inquiry.  That mandatory requirement or obligation applies to the applicant for the Extension, and not the USPTO.  That is, § 156(d)(5)(C) speaks to when a patent holder must file an application for an Extension, and does not, by its terms, address anything the USPTO must do.  Put simply, saying that Plaintiff had a mandatory requirement or obligation to file its application within a certain period does not, in and of itself, address whether the USPTO had discretion to consider a tardy application. [(Italics in original)]

Turning to whether § 156(d)(5)(C) speaks to the PTO’s discretion, independent of imposing a mandatory obligation on GIVF, the court said that “[n]othing in that statute, or in § 156 generally, answers the question of whether the USPTO has discretion to consider a tardy application under § 156(d)(5)(C).”  There are several other provisions in the patent laws that expressly grant the PTO  with discretion when administering time periods or deadlines; however, Judge Cacheris, relying on the canon of statutory construction against superfluity, wrote that if the PTO  “has discretion regardless of the mandatory requirement placed on the patent holder . . .  and without the statute’s granting discretion, then Congress would not have needed to provide for that discretion in the other provisions . . . .  Thus, all of that discretionary language would be unneeded and superfluous.”

Finally, addressing the remedial nature of the PTE statute and the allegedly “harsh” result it produced here, Judge Cacheris stated that even “[a] liberal reading of ‘shall’ in § 156(d)(5)(C) is not enough to get to where Plaintiff would have this Court go.  The Court would also need to add language to the statute to add discretion where Congress stated none.  The Court will not do so.”  GIVF had sought to rely on the district court’s so-called “liberal-reading-of-a-remedial-statute rule” in Medicines Co. v. Kappos, 731 F. Supp. 2d 470 (E.D. Va. 2010), to support its position.   But Judge Cacheris was not convinced, saying that in Medicines Co. Judge Hilton “reasonably applied one of two alternative common definitions for a term,” but that GIVF, in contrast, “is effectively asking the Court to rewrite, or at least add, whole-cloth, language to § 156(d)(5)(C).”