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Nippon Shinyaku Co., Ltd. v. Kappos

Court: District Court, District of Columbia
Date filed: 2019-02-27
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                       UNITED STATES DISTRICT COURT
                       FOR THE DISTRICT OF COLUMBIA

                                         )
    NIPPON SHINYAKU COMPANY, LIMITED,    )
                                         )
                      Plaintiff,         )
            v.                           )
                                         ) Civil Action No. 10-1142
                                         )
    ANDREI IANCU, 1 Under Secretary of   )
    Commerce for Intellectual Property   )
    and Director of the United States    )
    Patent and Trademark Office,         )
                                         )
                      Defendant.         )

                         MEMORANDUM OPINION

I.     Introduction

       Nippon Shinyaku Company, Limited (“Nippon”) owns United

States Patent Nos. 7,205,302 and 7,494,997 (respectively,

“ ‘302 patent” and “ ‘997 patent”). The United States Patent and

Trademark Office (“USPTO”) issued the ‘302 patent in 2007 with a

patent term adjustment (“PTA”) of 344 days, and the ‘997 patent

in 2009 with a PTA of ninety-nine days. In 2010, the USPTO

adopted new methods for calculating PTAs necessitated by the

United States Court of Appeals for the Federal Circuit’s

(“Federal Circuit”) decision in Wyeth v. Kappos, 591 F.3d 1364

(Fed. Cir. 2010). Prior to adopting the final procedure for such

calculations, the USPTO established an Interim Procedure for



1 Andrei Iancu has been automatically substituted as the
defendant in this case. See Fed. R. Civ. P. 25(d).
patentees seeking a recalculation of their PTAs subject to

certain time restrictions. Given its untimely requests, however,

Nippon was ineligible for a recalculation. Nippon brings this

action under the Administrative Procedure Act (“APA”), 5 U.S.C.

§§ 701 et seq., against the Under Secretary of Commerce for

Intellectual Property and Director of the USPTO. Nippon

challenges the USPTO’s Interim Procedure, alleging that the

Interim Procedure arbitrarily ensures disparate treatment of two

categories of patents and leaves it without a remedy to correct

the improper calculations of the PTAs for the patents at issue.

      Pending before the Court are the parties’ cross-motions for

summary judgment. Having carefully reviewed the motions,

oppositions and replies, and the entire record herein, the Court

concludes that the USPTO’s Interim Procedure was not arbitrary,

capricious, an abuse of discretion, or otherwise not in

accordance with law. Therefore, the Court DENIES Nippon’s motion

for summary judgment and GRANTS the USPTO’s cross-motion for

summary judgment.

II.   Background

        A. Statutory and Regulatory Framework

      A patent term begins “on the date on which the patent

issues” and “end[s] 20 years from the date on which the

application for the patent was filed in the United States[.]”



                                 2
35 U.S.C. § 154(a)(2). 2 Many patent terms became far shorter than

Congress intended, however, due to the USPTO’s lengthy delays in

examining patent applications and issuing patents. See Novartis

AG v. Kappos (“Novartis I”), 904 F. Supp. 2d 58, 61 (D.D.C.

2012), aff’d in part, rev’d in part sub nom. Novartis AG v. Lee

(“Novartis II”), 740 F.3d 593 (Fed. Cir. 2014). To address this

problem, Congress enacted the Patent Term Guarantee Act of 1999

(“Act”), which provides a guarantee of prompt USPTO responses.

See Pub. L. No. 106–113, §§ 4401–02, 113 Stat. 1501, 1501A–557

(1999) (codified as amended at 35 U.S.C. § 154(b)); see also

35 U.S.C. § 154(b)(1)(A). Section 154(b)(1) also provides a

“[g]uarantee of no more than 3-year application pendency,” see

35 U.S.C. § 154(b)(1)(B), and a guarantee of “1 day for each day

of the pendency” of “deprivation proceedings, secrecy orders,

and appeals.” See id. § 154(b)(1)(C).

     Since the prosecution of a patent application may take more

than three years, and to give each patent a term of at least

seventeen years, the Act allows the USPTO to adjust the terms of

a patent for certain delays during the examination process. See


2 In 1994, Congress replaced the seventeen-year patent term with
a term ending twenty years after the filing of a patent
application. See Wyeth, 591 F.3d at 1366 (citing Uruguay Round
Agreements Act, Pub. L. No. 103-465, § 532, 108 Stat. 4809
(1994) (codified as amended at 35 U.S.C. § 154)). A patent
application filed on or after June 8, 1995 has a term of twenty
years from the date the application was filed. Merck & Co. v.
Kessler, 80 F.3d 1543, 1547-48 (Fed. Cir. 1996).
                                3
Daiichi Sankyo Co., Ltd. v. Rea (“Daiichi I”), 12 F. Supp. 3d 8,

11-12 (D.D.C. 2013) (citations omitted), aff’d sub nom. Daiichi

Sankyo Co. v. Lee (“Daiichi II”), 791 F.3d 1373 (Fed. Cir.

2015), cert. denied, 136 S. Ct. 1491 (2016). The statute

provides for the adjustment and calculation of patent terms

caused by different categories of delay. Bristol-Myers Squibb

Co. v. Kappos, 891 F. Supp. 2d 135, 137 (D.D.C. 2012).

     Nippon’s PTAs resulted from two of those categories:

(1) “A Delay” and (2) “B Delay.” See generally Pl.’s Mot. for

Summ. J. (“MSJ”), ECF No. 46; Def.’s Mot. for Summ. J. (“MSJ”) &

Opp’n, ECF No. 48. 3 The A Delay “is excluded from the calculation

of the patent term” and “extend[s] the term of the patent one

day for each day the [US]PTO does not meet certain examination

deadlines[.]” Daiichi I, 12 F. Supp. 3d at 12 (citation

omitted). The B Delay “extends the term of the patent one day

for each day issuance is delayed due to the [US]PTO’s failure

‘to issue a patent within 3 years after the actual filing date

of the application in the United States.’” Wyeth, 591 F.3d at

1367 (quoting 35 U.S.C. § 154(b)(1)(B)).

              1.    The Wyeth Decision and its Implementation

     On April 22, 2004, the USPTO promulgated regulations




3 When citing electronic filings throughout this Opinion, the
Court cites to the ECF page number, not the page number of the
filed document.
                                4
explaining the methodology for calculating the “A/B Overlap.”

See Daiichi I, 12 F. Supp. 3d at 12 (citing Revision of Patent

Term Extension and PTA Provisions, 69 Fed. Reg. 21704–01 (Apr.

22, 2004)). Interpreting 35 U.S.C. § 154(b), the USPTO used the

greater of the A Delay or B Delay to determine the proper PTA

rather than combining the two delays. See Wyeth v. Dudas,

580 F. Supp. 2d 138, 140 (D.D.C. 2008), aff’d sub nom. Wyeth,

591 F.3d at 1368. In Wyeth, the district court rejected this

interpretation because the USPTO’s “construction [could not] be

squared with the language of § 154(b)(1)(B), which applies ‘if

the issue of an original patent is delayed due to the failure of

the [USPTO] to issue a patent within 3 years.’” 580 F. Supp. 2d

at 142 (emphasis in original) (quoting 35 U.S.C.

§ 154(b)(1)(B)). The court explained that B Delay “begins when

the [US]PTO has failed to issue a patent within three years, not

before.” Id. (emphasis added). The Federal Circuit upheld the

district court’s determination that the USPTO’s methodology in

calculating the A and B Delay overlap was contrary to the plain

language in Section 154(b) because “it effectively counts B

delay before it occurs.” Wyeth, 591 F.3d at 1375.

     Consistent with the Wyeth decision, after the USPTO decides

that a patent application will be granted, it issues a written

notice of allowance of the application. See 35 U.S.C. § 151(a).

This notice includes the USPTO’s initial determination of the

                                5
PTA, if applicable. 35 U.S.C. § 154(b)(3)(B)(i) (requiring the

USPTO to “make a determination of the period of any [PTA]” and

“transmit a notice of that determination no later than the date

of issuance of the patent[.]”). The PTA reflected in the notice

of allowance does not include the B Delay. See Bristol-Myers

Squibb Co., 891 F. Supp. 2d at 137.

     The USPTO determines the proper amount of the A Delay when

it issues notice to the patent applicant and before the patent

is granted. Daiichi I, 12 F. Supp. 3d at 12. The USPTO does not

determine the proper amount of the B Delay until the patent is

granted because the B Delay continues to accrue until the patent

is granted. Id. After determining the proper amounts for the A

Delay and the B Delay, the USPTO determines “the extent of any

overlap between the two types of delay.” Id. (citation omitted).

“To the extent that periods of [A Delay and B Delay] overlap,

any [PTA] shall not exceed the actual number of days the

issuance of the patent was delayed.” Id. (quoting 35 U.S.C.

§ 154(b)(2)(A)). “Because the overlap determination depends on

the amount of B Delay, it is also done at the time the patent is

granted.” Id. (citation omitted). “The final determination of

PTA—which factors in A Delay, B Delay, and A/B Overlap—is done

at the time the patent is granted.” Id. (citation omitted).

             2.     Administrative and Judicial Review of PTAs

     A patent applicant dissatisfied with PTA determinations may

                                6
seek administrative and judicial review. Id. at 12-13. The

patent applicant may “request reconsideration of any [PTA]

determination made by the Director,” 35 U.S.C.

§ 154(b)(3)(B)(ii), “within two months of the date the patent

issued,” 37 C.F.R. § 1.705(d) (2012) (“Rule 1.705(d)”). Daiichi

I, 12 F. Supp. 3d at 13. A patentee dissatisfied with the

USPTO’s response to the request for reconsideration may seek

further administrative review of the USPTO’s decision under Rule

1.705(d) by submitting a petition under 37 C.F.R. § 1.181(f)

(“Rule 1.181(f)”) “within two months of the mailing date of the

action or notice from which relief is requested[.]” 37 C.F.R.

§ 1.181(f) (2012). “[O]n petition of the interested party,” the

two-month limitation “may be suspended or waived by the Director

or the Director’s designee” in “an extraordinary situation, when

justice requires[.]” 37 C.F.R. § 1.183 (2013).

     Finally, the patent applicant may seek judicial review in

federal district court. 35 U.S.C. § 154(b)(4)(A). At the time

that Nippon’s patents were issued, a civil action for judicial

review of a PTA determination had to be “filed in the United

States District Court for the District of Columbia within 180

days after the grant of the patent.” Id. 4


4 In 2011, Congress amended the venue provisions in certain
patent statutes, including Section 154, such that suits under
Section 154(b) must be filed in the United States District Court
for the Eastern District of Virginia within 180 days after the
                                7
             3.     The Interim Procedure

     Following the Wyeth decision, on February 1, 2010, the

USPTO published notice of an Interim Procedure to “provid[e]

patentees with the ability to request a recalculation of their

[PTA] [consistent with the Wyeth decision] without a fee as an

alternative to the petition and fee required by 37 CFR

1.705(d).” Interim Procedure for Patentees To Request a

Recalculation of the PTA To Comply With the Federal Circuit

Decision in Wyeth v. Kappos Regarding the Overlapping Delay

Provision of 35 U.S.C. 154(b)(2)(A) (“Interim Procedure” or

“procedure”), 75 Fed. Reg. 5043–01, 5043 (Feb. 1, 2010).

According to the USPTO, this procedure would be in effect until

March 2, 2010, at which time the modifications to the computer

program used to calculate PTAs necessitated by the Wyeth

decision would be complete. Id. at 5043. This procedure was

available for only two types of PTA requests for reconsideration

based on the Wyeth decision: (1) requests that could have been

timely made within 180 days of the patent decision as set forth

in 35 U.S.C. § 154(b)(4); or (2) requests that could have been

timely made within the two-month time period set forth in Rule




date of the Director’s decision on the applicant’s request for
reconsideration. See Hyatt v. Iancu, 332 F. Supp. 3d 83, 89 n.4
(D.D.C. 2018) (citing Leahy-Smith America Invents Act, Pub. L.
112-29, § 9 (Sept. 16, 2011)); see also Def.’s MSJ, ECF No. 48
at 4 n.1.
                                8
1.181(f). Id. at 5043-44. The USPTO explained that the statutory

and regulatory framework provides that requests for

reconsideration by the USPTO of the PTA must be filed within two

months of the date the patent was issued pursuant to Rule

1.705(d), and that applicants dissatisfied with a determination

made by the Director of the USPTO could file a civil action

within 180 days after the grant of the patent pursuant to 35

U.S.C. § 154(b)(4). Id. The USPTO also cited the two-month

deadline for reconsideration of a Rule 1.705(d) decision

pursuant to Rule 1.181(f). Id. at 5044. The Interim Procedure

therefore provided patentees who could timely challenge the pre-

Wyeth PTA determinations to the USPTO pursuant to Rule 1.181(f)

or the district court pursuant to 35 U.S.C. § 154(b) with the

opportunity to request reconsideration from the USPTO. Id. As a

practical matter, the Interim Procedure was available for

patents that had been issued between August 5, 2009 and March 1,

2010 and for patentees who received the USPTO’s decision on a

Rule 1.705(d) request for reconsideration on December 1, 2009 or

later. See Daiichi II, 791 F.3d at 1375-76. Any petitions filed

outside of these windows would be denied as untimely by the

USPTO. 75 Fed. Reg. at 5043-44.

       B. Factual and Procedural Background

     The material facts in this case are undisputed. See Pl.’s

MSJ, ECF No. 46 at 16-18, 20; see also Def.’s MSJ, ECF No. 48 at

                                  9
1, 10-11. Nippon is a foreign corporation with its principal

place of business in Kyoto, Japan. Second Am. Compl., ECF No. 24

¶ 4. Nippon is the owner of the ‘302 patent, entitled

“Heterocyclic Compound Derivatives and Medicines,” and the ‘997

patent, entitled “Amide Derivative.” Pl.’s MSJ, ECF No. 46 at

16. The ‘302 patent was issued on April 17, 2007 with a notice

that its term would be extended or adjusted by 344 days under 35

U.S.C. § 154(b). Administrative Record (“A.R.”), ECF No. 45-3 at

90. The ‘997 patent was issued on February 24, 2009 with a

notice that its term would be extended or adjusted by ninety-

nine days under 35 U.S.C. § 154(b). Id. at 3.

     On July 6, 2010, before seeking administrative relief,

Nippon filed the initial complaint in this Court, alleging,

inter alia, that the USPTO’s pre-Wyeth determinations and

calculations “of the [PTAs] for the ‘302 and ‘997 patents were

arbitrary, capricious, an abuse of discretion, or otherwise not

in accordance with law under 5 U.S.C. § 706(2)(A).” Compl., ECF

No. 1 ¶ 18. Nippon filed this civil action more than three years

(1,176 days) after the issuance of the ‘302 patent and more than

a year (497 days) after the issuance of the ‘997 patent. See,

e.g., id. ¶ 7; Def.’s MSJ, ECF No. 48 at 10.

     Beginning in August 2010, Nippon also sought administrative

review of the USPTO’s PTA determinations in light of the Wyeth

decision. See A.R., ECF No. 45-3 at 142-43. On October 12, 2010,

                               10
the USPTO denied Nippon’s August 30, 2010 request for the ‘302

patent, treating it as a “request for reconsideration of [PTA]”

under Rule 1.705(d). Id. at 151. Because this request was

submitted outside of the “two months after the date of issuance

of the [‘302] patent,” the USPTO dismissed it as untimely under

Rule 1.705(d). Id. The record does not include the USPTO’s

decision for Nippon’s second request, dated September 10, 2010,

for the ‘302 patent. See generally A.R., ECF No. 45-3.

     On June 10, 2016, the USPTO mailed its decision on Nippon’s

request as to the ‘997 patent, stating that it considered the

request “for the issuance of a Certificate of Correction under

the provisions of 37 CFR 1.322 and/or 37 CFR 1.323.” Id. at 86

(styled “Response to the Request for Certificate of

Correction”). 5 The USPTO denied the request because it was

“improper” and “[t]he patent was printed in accordance with the

information set forth on the Issue Notification dated [February

24, 2009] which indicated the [PTA] is 99 day(s).” Id. The USPTO

stated that “[a] petition to Recalculate the [PTA] is required




5 Pursuant to 37 C.F.R. § 1.322, “[t]he Director may issue a
certificate of correction pursuant to 35 U.S.C. 254 to correct a
mistake in a patent, incurred through the fault of the Office,
which mistake is clearly disclosed in the records of the Office”
under certain conditions. 37 C.F.R. § 1.322(a)(1). Under
37 C.F.R. § 1.323, “[t]he Office may issue a certificate of
correction under the conditions specified in 35 U.S.C. 255 at
the request of the patentee or the patentee’s assignee, upon
payment of the fee set forth in § 1.20(a).” 37 C.F.R. § 1.323.
                                11
to be granted in order for a certificate of correction to be

issued.” Id.

     Between 2011 and 2014, the Court issued a series of stays,

at the parties’ requests, because several cases challenging the

USPTO’s pre-Wyeth PTA calculations closely resembled the issues

in this action. See generally docket for Civil Action No. 10-

1142. In 2015, Nippon filed a second amended complaint, bringing

a single facial challenge to the Interim Procedure, and seeking

declaratory relief pursuant to 28 U.S.C. § 2201 in the form of a

declaratory judgment stating that the Interim Procedure is

arbitrary, capricious, an abuse of discretion, or otherwise not

in accordance with the APA, and requesting that the Court enter

an injunction requiring the USPTO to rescind the procedure and

correct patent terms. See Second Am. Compl., ECF No. 24 at 6-8;

see also Pl.’s MSJ, ECF No. 46 at 8, 30. Thereafter, the parties

filed cross-motions for summary judgment. Those motions are ripe

and ready for adjudication.

III. Legal Standard

       A. Motion for Summary Judgment

     Under Federal Rule of Civil Procedure 56, “[t]he court

shall grant summary judgment if the movant shows that there is

no genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).



                               12
          In a case involving review of a final agency
          action under the APA, ... [the court has a]
          limited   role    of   ...    reviewing   the
          administrative record. The function of the
          district court is to determine whether or not
          as a matter of law the evidence in the
          administrative record permitted the agency to
          make the decision it did. Summary judgment
          thus serves as the mechanism for deciding, as
          a matter of law, whether the agency action is
          supported by the administrative record and
          otherwise consistent with the APA standard of
          review.

Daiichi I, 12 F. Supp. 3d at 14 (quoting Nat'l Parks

Conservation Ass’n v. Jewell, 965 F. Supp. 2d 67, 73 (D.D.C.

2013) (alterations, internal quotation marks, and citations

omitted)).

       B. Standard of Review

     Under the APA, the Court shall “hold unlawful and set

aside” the agency’s decision if it is “arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law.”

5 U.S.C. § 706(2)(A). “[A]n agency acts arbitrarily or

capriciously only if the decision was not based on the relevant

factors or it fails to examine the relevant data and articulate

a satisfactory explanation for its action including a rational

connection between the facts found and the choice made.”

Japanese Found. for Cancer Research v. Lee, 773 F.3d 1300, 1304

(Fed. Cir. 2014) (citation and internal quotation marks

omitted). The scope of review under this standard is narrow.

Id.; see also Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State

                               13
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (reviewing

court may not “substitute its judgment for that of the

agency.”).

     In determining whether the Interim Procedure comports with

law, it is necessary to determine the level of deference the

USPTO is entitled to in promulgating that procedure. Guided by

the limitations placed on the USPTO’s authority to promulgate

regulations under Section 154(b), the Federal Circuit and courts

in this Circuit have held that the USPTO’s PTA determinations

are not owed deference under Chevron, U.S.A., Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837 (1984). See, e.g.,

Merck, 80 F.3d at 1550; Wyeth, 580 F. Supp. 2d at 141 (noting

that the USPTO is not afforded Chevron deference because it only

has the authority to issue “procedural regulations regarding the

conduct of proceedings before the agency.”). Section 154(b)

limits the USPTO’s authority to “prescrib[ing] regulations

establishing procedures for the application for and

determination of [PTAs] [.]” 35 U.S.C. § 154(b)(3)(A). The USPTO

is, however, entitled to deference pursuant to Skidmore v. Swift

& Co., 323 U.S. 134 (1944) based on “the thoroughness evident in

its consideration, the validity of its reasoning, its

consistency with earlier and later pronouncements, and all those

factors which give it power to persuade, if lacking power to

control.” Id. at 140; see also Novartis I, 904 F. Supp. 2d at

                               14
64.

      The parties disagree as to whether the USPTO is entitled to

deference of its interpretation of its regulations. Compare

Def.’s MSJ, ECF No. 48 at 12 (“The USPTO’s interpretation of its

own regulations is also entitled to substantial deference.”),

with Pl.’s Reply, ECF No. 50 at 8 (“The USPTO is not entitled to

deference” because Nippon “is not challenging the USPTO’s

‘interpretation of its own regulations.’”). The Court is not

persuaded by Nippon’s argument because Nippon expressly

challenges the USPTO’s implementation of the Interim Procedure

that was based on the USPTO’s interpretation of 35 U.S.C. §

154(b) and its own regulations. See Pl.’s MSJ, ECF No. 46 at 15,

21; see also Second Am. Compl., ECF No. 24 ¶ 15-32.

IV.   Analysis

      It is undisputed that the PTAs for Nippon’s patents were

determined using the pre-Wyeth method of calculating A and B

Delay overlap. See Second Am. Compl., ECF No. 24 at ¶ 8. It is

also undisputed that Nippon’s patents were issued before August

5, 2009; Nippon did not request reconsideration of the PTAs

within two months of the patents’ issuance dates; and Nippon did

not file a claim for judicial relief within the 180-day window.

See Pl.’s MSJ, ECF No. 46 at 14, 16-17; see also Def.’s MSJ, ECF

No. 48 at 10-11. Nor does Nippon contend that it was entitled to

reconsideration of the PTAs under the Interim Procedure. See

                                15
Pl.’s MSJ, ECF No. 46 at 16. Nippon also acknowledges that it

was ineligible for relief under the Interim Procedure. See Pl.’s

MSJ, ECF No. 46 at 17; see also Second Am. Compl., ECF No. 24

¶¶ 22, 24. Undeterred, Nippon seeks judicial review of the

Interim Procedure. See generally Second Am. Compl., ECF No. 24.

     Nippon seeks a recalculation of the PTAs by the USPTO based

on the post-Wyeth methodology, alleging that the Interim

Procedure violated the APA. Pl.’s MSJ, ECF No. 46 at 8.

According to Nippon, the “sole issue” is “whether the [temporal]

limitations for recalculation of [PTAs] post-Wyeth, set by the

USPTO in the Interim Procedure, were a valid exercise of agency

discretion.” Id. at 19-20.

       A. Federal Circuit precedent does not foreclose Nippon’s
          arguments

     As an initial matter, the parties dispute whether the

doctrine of stare decisis determines the outcome of this case.

Nippon argues that Federal Circuit precedent does not determine

the outcome of this case on stare decisis grounds, 6 Pl.’s Reply,


6 Nippon also argues that res judicata and collateral estoppel do
not apply here, see Pl.’s MSJ, ECF No. 46 at 23, a proposition
that the USPTO does not dispute, see generally Def.’s MSJ, ECF
No. 48; Def.’s Reply, ECF No. 52. Although the USPTO has
conceded the argument by not responding, see Campbell v. Nat’l
R.R. Passenger, 311 F. Supp. 3d 281, 327 n.13 (D.D.C. 2018), the
Court agrees that Nippon is not precluded from bringing this
case since it was not a litigant in Daiichi II. See Cornish v.
United States, 885 F. Supp. 2d 198, 209 (D.D.C. 2012) (holding
that res judicata barred a plaintiff’s claims where he brought
the same claims against the same agency in a prior suit). Courts
                                16
ECF No. 50 at 10, because Nippon’s arguments here were neither

presented to nor considered by the Federal Circuit in two cases

dealing with some of the same issues in this case. See Daiichi

II, 791 F.3d at 1379-80 (holding that the USPTO did not abuse

its discretion by only applying the Interim Procedure to patents

issued in the 180-day window); see also Novartis II, 740 F.3d at

600 (holding that plaintiff did not timely file suit within 180

days of denial of reconsideration pursuant to Section

154(b)(4)). 7 The USPTO responds that the issues raised by Nippon

here were decided in the USPTO’s favor in that precedent when

the Federal Circuit affirmed two lower court decisions, Daiichi

II and Actelion Pharmaceuticals Ltd. v. Lee (“Actelion II”),

565 F. App’x 887 (Fed. Cir. 2014), holding that the Interim

Procedure did not violate the APA. See Def.’s MSJ, ECF No. 48 at

4-5, 5 n.2, 13-18, 20, 24; see also Actelion Pharm. Ltd. v.


narrowly construe the doctrines of res judicata and collateral
estoppel to reach the merits. Cf. Cent. Delta Water Agency v.
United States, 306 F.3d 938, 953 (9th Cir. 2002) (“[W]hen
considering whether a prior action involved the same ‘nucleus of
facts’ for preclusion purposes, we must narrowly construe the
scope of that earlier action.”).
7 Federal Circuit precedent is binding on this Court because a
suit under Section 154(b) may only be appealed to the Federal
Circuit. See 28 U.S.C. § 1295(a)(4)(C) (Federal Circuit has
“exclusive jurisdiction” over “an appeal from a decision of” a
federal “district court to which a case was directed pursuant to
section . . . 154(b) of title 35[.]”); cf. Kline v. Cisneros,
76 F.3d 1236, 1239 (D.C. Cir. 1996) (holding that the court of
appeals had no jurisdiction over an appeal from a district court
decision where 28 U.S.C. § 1295(a)(2) gave exclusive
jurisdiction to the Federal Circuit over the appeal).
                                17
Kappos (“Actelion I”), 972 F. Supp. 2d 51, 58 (D.D.C. 2013),

aff’d sub nom. Actelion II, 565 F. App’x 887. However, the USPTO

acknowledges that the doctrine of stare decisis may not apply to

all of Nippon’s arguments. See Def.’s MSJ, ECF No. 48 at 14, 18.

      “Stare decisis compels adherence to a prior factually

indistinguishable decision of a controlling court.” Brewster v.

Comm’r, 607 F.2d 1369, 1373 (D.C. Cir. 1979).

          The rule of stare decisis is never properly
          invoked unless in the decision put forward as
          precedent the judicial mind has been applied
          to and passed upon the precise question.
          Questions which merely lurk in the record,
          neither brought to the attention of the court
          nor ruled upon, are not to be considered as
          having been so decided as to constitute
          precedents.

Nat’l R.R. Passenger v. ExpressTrak, LLC, Civil Action No. 02-

1773, 2006 WL 2947558 at *6 (D.D.C. Oct. 16, 2006) (citations

omitted); see also Supernus Pharm., Inc. v. Iancu, 913 F.3d

1351, 1357 (Fed. Cir. 2019) (finding that a prior decision with

different facts and a different legal question was not

controlling in that action). Here, Nippon has raised arguments

in its challenge to the Interim Procedure that were not

specifically raised in the prior cases. Therefore, the Court can

consider the open question of whether the Interim Procedure

violates the APA based on those arguments.




                               18
       B. The Interim Procedure does not violate the APA, and is
          not arbitrary and capricious or otherwise contrary to
          law

     Nippon contends that the Interim Procedure violates the APA

because it treats similarly-situated patentees differently in

that it allows some, but not all, patentees to receive post-

Wyeth PTA recalculations. See Pl.’s MSJ, ECF No. 46 at 1, 9-11,

23-30. The USPTO responds that Nippon’s claims must be resolved

in its favor based on the Federal Circuit’s decisions in

Novartis II, Daiichi II, and the summary affirmance in Actelion

II because in those decisions, the Federal Circuit concluded

that the Interim Procedure is not arbitrary, capricious, or

otherwise contrary to law under the APA. See Def.’s MSJ, ECF No.

48 at 13-18. According to the USPTO, Nippon’s “challenge is just

another collateral attack on the USPTO’s decision not to reopen

all of the final [PTA] determinations in earlier patents for

which the patent owners did not seek timely reconsideration

either under 37 C.F.R. § 1.705(d) [2012] or 35 U.S.C. §

154(b)(4)(A).” Id. at 19.

          1. Prior challenges to the Interim Procedure

     Novartis II involved a challenge to the PTA determinations

for certain patents outside of the 180-day limitation period set

forth in Section 154(b)(4) rather than, as here, a facial

challenge to the Interim Procedure. 740 F.3d at 595, 599-600.

There, the plaintiff argued, among other things, that the

                               19
limitation period should be equitably tolled because the Wyeth

decision had not been decided when the patents issued. Id. at

600. The Federal Circuit “readily affirm[ed] the district

court’s holding that [the plaintiff]’s claims as to fifteen

patents were untimely asserted” since the plaintiff did not seek

relief within the 180-day period, noting that “nothing stood in

the way of Novartis’s timely pressing the very claim Wyeth

pressed.” Id.

     The other two cases cited by the USPTO did involve

challenges to the Interim Procedure itself. In Daiichi II, the

Federal Circuit affirmed the district court’s grant of summary

judgment in favor of the USPTO where the plaintiff there

challenged the USPTO’s use of the 180-day period for

administrative review under the APA and the USPTO’s “disparate

treatment” of patents issued before August 5, 2009. 791 F.3d at

1379-81. Two of the patents at issue there did not qualify for

the USPTO’s Interim Procedure because they were issued before

August 5, 2009. Id. at 1376. The plaintiff filed Rule 1.705(d)

requests for reconsideration of the PTAs outside of the two-

month window and petitions under 37 C.F.R. § 1.183 to waive the

two-month window in light of the Wyeth decision. Id. The USPTO

denied the plaintiff’s requests and petitions because they were

untimely. Id.   The plaintiff later filed requests for

reconsideration of the USPTO’s denials, but the USPTO also

                                20
denied those requests because the USPTO’s Interim Procedure only

allowed requests for recalculation of the PTAs within 180 days

after the grant of the patent. Id. The USPTO explained, among

other things, that the USPTO would not accept any requests for

PTA recalculations outside of the 180-day window because “the

judicial-review provision of 35 U.S.C. § 154(b)(4) evidenced

congressional intent that PTA issues be resolved soon after

issuance.” Id. (citation and internal quotation marks omitted).

     Accepting the USPTO’s reasoning for only considering

requests filed within the 180—day window, the Federal Circuit

held that the USPTO “acted within its discretion under the

statute to ‘prescribe regulations establishing procedures for

the . . . determination of [PTAs]’ . . . in adopting the 180-day

period as part of the Interim Procedure.” Id. at 1379-80

(quoting 35 U.S.C. § 154(b)(3)). The Federal Circuit also held

that “the [US]PTO acted within its discretion in denying

Daiichi’s requests for reconsideration of the [PTA]

determinations.” Id. at 1380. The Federal Circuit accepted the

USPTO’s “ample reasoning” that “this brief [180-day] period for

judicial review indicates Congress’ intent that [the USPTO]

resolve [PTA] issues more expeditiously than allowed under the

full administrative challenge period.” Id. In doing so, the

Federal Circuit found that the USPTO did not abuse its

discretion in fashioning regulations for the procedures of PTA

                               21
reconsiderations that rejected petitions for administrative

review outside of the 180-day window. Id.

     The Federal Circuit in Daiichi II also rejected the

disparate treatment argument the plaintiff made there. See id.

at 1380-81. The Federal Circuit found that the USPTO’s decision

to grant extensions of the administrative review period for some

patents to match the 180-day judicial review period for all

patents was not arbitrary and capricious. Id. at 1381. The

Federal Circuit determined that the plaintiff “was treated

identically to all other patentees whose patents had issued more

than 180-days prior to the deadline for filing a petition and

who were unable to show extraordinary circumstances.” Id. The

Federal Circuit made clear that “[c]hoosing an administrative

filing deadline that mirrors the judicial filing deadline,

especially when it lengthens that deadline for some patentees,

is neither arbitrary nor capricious.” Id.

     The USPTO also cites the Federal Circuit’s summary

affirmance of Actelion I, in which the district court held that

the Interim Procedure did not violate the APA. Actelion II, 565

F. App’x 887 (affirming the district court’s decision without an

opinion under Federal Circuit Rule 36). However, the grounds

upon which the district court relied—that the plaintiff was

“foreclosed from using an APA claim to circumvent

§ 154(b)(4)(A)’s 180–day time limit to attain a PTA

                               22
recalculation” because Section 154(b)(4)(A) “expressly waives

sovereign immunity for appeals of PTA determinations and makes

them reviewable under the APA’s judicial review provisions”—is

not an argument advanced by the USPTO here. Id. at 58 n.9.

          2. The Rule 1.181(f) Challengers were not treated
             differently

     Nippon argues that the Interim Procedure violates the APA

because it treats two categories 8 of similarly-situated patentees

differently without providing a rationale. Pl.’s MSJ, ECF No. 46

at 23. The first category of similarly-situated patentees are


8 The USPTO points out that Nippon does not fall into the
categories of patents that the USPTO purportedly treated
differently under the Interim Procedure because Nippon did not
seek judicial relief within the prescribed time limits. See
Def.’s MSJ, ECF No. 48 at 19-20. Nippon could not seek
administrative relief under the Interim Procedure because it did
not file a timely request for reconsideration under Rule
1.705(d), and none of Nippon’s patents were issued between July
15, 2009 and August 5, 2009. See id. at 19, n.8. In its reply
brief, the USPTO states for the first time that the APA’s
“harmless error” rule weighs against Nippon’s APA challenge
because “[i]f the agency’s mistake did not affect the outcome,
if it did not prejudice the petitioner, it would be senseless to
vacate and remand for reconsideration.” Def.’s Reply, ECF No. 52
at 6 (citation omitted). Although the USPTO pointed out the
underlying factual issue in its cross motion, it did not make
the legal argument until its reply brief. See generally Def.’s
MSJ, ECF No. 48; Def.’s Reply, ECF No. 52. Arguments raised for
the first time in a reply brief are waived. Lindsey v. District
of Columbia, 879 F. Supp. 2d. 87, 95 (D.D.C. 2012). Even if the
Court were to consider it, the Court doubts it would be
meritorious because the relief Nippon seeks should the Court
find the procedure to violate the APA is for the Court to enter
an injunction requiring the USPTO to rescind the procedure and
correct patent terms affected by the Wyeth decision, which would
give Nippon the relief it seeks. See Second Am. Compl., ECF No.
24 at 8; see also Pl.’s MSJ, ECF No. 46 at 8, 30.
                                23
those who could timely challenge the pre-Wyeth determinations to

the USPTO pursuant to Rule 1.181(f) (“Rule 1.181(f)

Challengers”). Id. at 23-24. Nippon argues that the Interim

Procedure created an “exception” to allow patentees in this

category to seek relief pursuant to the Interim Procedure and

that the exception is arbitrary because a patentee’s ability to

timely seek relief depends upon the date the USPTO’s response to

the request for reconsideration was mailed pursuant to Rule

1.705(d). Id. at 23-25. As a result, two patentees who received

a patent on the same day are being treated differently due to

the date the USPTO’s response was mailed. Id. at 25.

Specifically, if one patentee timely requested reconsideration

pursuant to Rule 1.705(d) and that request was denied within two

months of February 1, 2010, the patentee could seek a post-Wyeth

adjustment. Id. If, however, the patentee’s request for

reconsideration was denied more than two months prior to

February 1, 2010, the patentee could not seek a post-Wyeth

adjustment. Id. Nippon argues that this is arbitrary and

capricious because: (1) the two-month window from December 1,

2009 to February 1, 2010 was arbitrary in part because the

patentee has no control over the date triggering that window;

and (2) no rationale was provided in the Interim Procedure for

allowing this category of patentees to challenge the PTA

determinations within two months rather than 180 days. Id. at

                               24
25-28. Nippon concludes that it is illogical to limit the

availability of post-Wyeth relief for the Rule 1.181(f)

Challengers because the reason for implementing the Interim

Procedure was to expand administrative relief. Id. at 27; see

also Pl.’s Reply, ECF No. 50 at 14.

     The USPTO responds that this aspect of the procedure is not

arbitrary for at least two reasons. First, because the patentees

in this category could seek review of the PTAs pursuant to

existing regulations, their inclusion in the Interim Procedure

was merely a recognition of this fact rather than an “exception”

to the procedure. Def.’s MSJ, ECF No. 48 at 20-21. Second, “the

Interim Procedure grouped patentees into two categories: those

who could still timely challenge their pre-Wyeth PTA

determination (either administratively or judicially) and those

who could not.” Id. at 21. Patentees in the former category

could use the Interim Procedure and those in the latter category

could not. Id. The USPTO concludes that patentees who could

still timely administratively challenge the PTA determination as

of the date the Interim Procedure was published were similarly

situated with those who could challenge it judicially and were

treated alike, so there is no disparate treatment. Id. The USPTO

also disputes that the two-month window was arbitrary and that

no rationale was provided because the two-month window was

dictated by existing USPTO regulations and the Interim Procedure

                               25
specifically cited 37 C.F.R. § 1.181(f). Id. at 22-24.

     The Court is not persuaded by Nippon’s arguments regarding

the Rule 1.181(f) Challengers. Patentees who were able to timely

seek post-Wyeth relief pursuant to Rule 1.181(f) were able to do

so pursuant to long-standing USPTO regulations. See 37 C.F.R.

§ 1.181(f) (A patentee dissatisfied with the response to the

request for reconsideration may seek further administrative

review of the USPTO’s decision under Rule 1.705(d) by submitting

a petition under 37 C.F.R. § 1.181(f) “within two months of the

mailing date of the action or notice from which relief is

requested.”). Although the date of a USPTO decision responding

to a Rule 1.705 request for reconsideration is not within the

patentee’s control, “[f]iling deadlines, like statutes of

limitations, necessarily operate harshly and arbitrarily with

respect to individuals who fall just on the other side of them,

but if the concept of a filing deadline is to have any content,

the deadline must be enforced.” United States v. Locke, 471 U.S.

84, 101 (1985). Moreover, this deadline exists in long-standing

USPTO regulations. Cf. Sec. Univ. v. Acosta, 317 F. Supp. 3d

343, 348 (D.D.C. 2018) (“Although there is no set timeframe for

determining what is or is not arbitrary and capricious, these

timeframes are consistent with analogous circumstances.”). The

Court therefore finds that the two-month window is neither

arbitrary nor capricious. See Daiichi II, 791 F.3d at 1380-81

                               26
(Section 154(b)(3)(A) expressly authorizes the USPTO to make

regulations, including administrative filing deadlines,

governing the procedures of PTA reconsiderations); cf. Novartis

II, 740 F.3d at 600 (noting a plaintiff’s failure to comply with

the USPTO’s “reasonable filing deadlines[.]”).

     Despite Nippon’s contention that no rationale was provided

for allowing the Rule 1.181(f) challenges, the Interim Procedure

itself cited Rule 1.181(f). See 75 Fed. Reg. at 5044. Finally,

the Rule 1.181(f) Challengers were treated identically to all

other patentees who could still timely challenge their PTA

determinations under the Interim Procedure. See Daiichi II,

791 F.3d at 1381. And patentees who could not timely challenge

their PTA determinations were treated the same since they were

excluded from the Interim Procedure. See 75 Fed. Reg. at 5043-

44. The USPTO’s grouping of challengers into those who could

still timely challenge their PTA determinations and those who

could not is a reasonable and valid exercise of agency

discretion and firmly rooted in long-standing USPTO regulations.

     Nippon’s remaining arguments are without merit. Nippon

argues that the “arbitrary nature of the two-month window for .

. . a renewed request for reconsideration as provided in the

Interim Procedure is further evidenced by the fact that the

concept of the Interim Procedure was . . . to . . . essentially

replac[e] the two month deadline with 180 days.” Pl.’s MSJ, ECF

                               27
No. 46 at 27. But as the USPTO points out, “[t]he Interim

Procedure waived the two-month period set forth in Rule 1.705(d)

. . . and ‘replaced’ it with the 180-day period set forth in

Section 154(b)(4)(A) . . . because such timely judicial

challenges would eventually return to the USPTO through remands

from the court.” Def.’s MSJ, ECF No. 48 at 26. A similar

replacement for the Rule 1.181(f) Challengers did not make sense

because they already filed timely requests for reconsideration

under Rule 1.705(d).

     Nippon also contends that the Interim Procedure was “simply

arbitrary and capricious” for “provid[ing] no comment period.”

Pl.’s MSJ, ECF No. 46 at 26-27; see also id. at 9 (“[T]he USPTO

did not provide a period for public comment and articulated no

rationale for its position”). The court in Actelion I rejected

the plaintiff’s argument that the Interim Procedure violated the

APA because it “was not promulgated via notice-and-comment

rulemaking pursuant to 5 U.S.C. § 553.” 972 F. Supp. 2d at 58

n.9. The court found that the “USPTO was not required to use

notice-and-comment rulemaking to devise the Interim Procedure

because it is a procedural rule, not a substantive rule.” Id.

(citing 5 U.S.C. § 553(b)(A); Chamber of Commerce of U.S. v.

U.S. Dep’t of Labor, 174 F.3d 206, 211 (D.C. Cir. 1999)). For

the same reasons, this Court rejects Nippon’s suggestion that a

comment period was required prior to the publication of the

                               28
Interim Procedure.

          3. The July patents were not treated differently

     The second category of allegedly similarly-situated

patentees who Nippon asserts were treated differently as a

result of the Interim Procedure are those whose patents issued

between July 15, 2009 and August 5, 2009 (the “July patents”).

See Pl.’s MSJ, ECF No. 46 at 28-30; see also Pl.’s Reply, ECF

No. 50 at 7, 13, 19. Patents issued during this timeframe

“reached 180 days post-issuance between the Wyeth decision and

the establishment of the Interim Procedure.” Pl.’s MSJ, ECF No.

46 at 28. Thus, these patentees could have filed judicial

challenges to their PTA calculations in light of the Wyeth

decision, but no longer could once the Interim Procedure was

published. Id. Nippon argues that these patentees were treated

differently than patentees whose patents had issued more than

180 days prior to the deadline and that they were “misled” by

the USPTO’s announcements about forthcoming guidance to

implement the Wyeth decision into thinking that they would have

an administrative remedy. Id. at 28-30. Nippon maintains that it

was “logical” for these patentees not to file a judicial

challenge in light of the USPTO’s announcements. Id. at 28.

     The USPTO responds that the Federal Circuit decided this

issue in Daiichi II when it held that the USPTO “did not abuse

its discretion by determining not to accept petitions for

                               29
administrative review filed more than 180 days after the patent

grant.” Def.’s MSJ, ECF No. 48 at 27 (quoting Daiichi II, 791

F.3d at 1380). Even if this decision does not control, the USPTO

alternatively maintains that the July patents were treated the

same as patents issued before August 5, 2009, and the July

patents are actually not a separate category because they belong

to the same category of patent holders who fell outside of the

180-day period under the Interim Procedure. See id. at 28. The

USPTO disputes Nippon’s argument that it was “logical” for this

group of patentees not to seek judicial relief because the

USPTO’s announcements expressly reminded patentees that they

needed to comply with the 180-day period to seek judicial

relief. Id. at 28-29.

     The Court is not persuaded by Nippon’s arguments regarding

the July patents. First, as the USPTO points out, it is

undisputed that the July patents issued prior to August 5, 2009.

See id. at 27. In Daiichi II, in rejecting the disparate

treatment argument advanced there, the Federal Circuit

determined that the plaintiff there “was treated identically to

all other patentees whose patents had issued more than 180-days

prior to the deadline for filing a petition and who were unable

to show extraordinary circumstances.” 791 F.3d at 1380. In other

words, the Daiichi II plaintiff was treated identically to all

other patentees whose patents issued prior to August 5, 2009.

                               30
See id.

     Nippon maintains that the July patents were treated

differently from other patentees whose patents issued prior to

August 5, 2009 because they could have sought judicial review of

their PTAs after the Wyeth decision, but they were “misled” by

the USPTO in its announcements. Pl.’s MSJ, ECF No. 46 at 29.

Assuming a filing deadline is a proper basis for determining

whether parties are similarly-situated, the Court disagrees that

the July patents were treated differently because nothing

prevented those patentees from filing judicial challenges either

pre- or post-Wyeth. See Novartis II, 740 F.3d at 600 (“At a

minimum, nothing stood in the way of Novartis’s timely pressing

the very claim Wyeth pressed.”).

     Finally, the record does not support Nippon’s contention

that the July patents were “misled” by the USPTO. Four days

after the Wyeth decision was issued on January 7, 2010, the

USPTO posted a two-paragraph notice stating that pending a

determination of whether to seek further review of the decision,

“the USPTO is in the process of changing the manner it will

calculate [PTAs] under Section 154(b) to conform to the Federal

Circuit’s decision.” Pl.’s MSJ, Ex. B, ECF No. 46-3 at 2. The

second paragraph reminded interested parties of the deadline for

seeking judicial review: “Applicants and Patent Owners

dissatisfied with a [PTA] determination by the agency are

                               31
reminded of the requirement to seek review of that determination

within 180 days of patent issuance and the time periods set in

the implementing regulations. See 35 USC 154(b)(4) and 37 CFR

1.705.” Id. Later, on January 20, 2010, the USPTO issued a two-

paragraph announcement stating that it and the Department of

Justice would not seek further review of the Wyeth decision and

that “[t]he USPTO [was] preparing guidance for expediting

requests for recalculation of [PTA] by the USPTO in light of the

Wyeth decision. This guidance will be issued as soon as

possible.” Pl.’s MSJ, Ex. A, ECF No. 46-2 at 2. The announcement

included the exact same reminder of the deadline for seeking

judicial review that had been in the January 11, 2010 notice.

Id. Therefore, rather than it being “reasonable” for the July

patents “to believe that the USPTO was going to implement a

process to correct its mistake that would not require judicial

review” and “[t]here was no reason for these patentees to

believe that the USPTO’s upcoming guidance would not apply to

them[,]” Pl.’s MSJ, ECF No. 46 at 29-30, the USPTO expressly

reminded patent applicants and owners of the deadline for

seeking judicial review. Since Nippon has failed to show that

the Interim Procedure treated similarly-situated patentees –

i.e., those whose patents issued prior to August 5, 2009 –

differently, and since the record does not support its

contention that the July patents were misled by the USPTO, its

                               32
APA challenge fails. 9

V.   Conclusion

     For the reasons set forth above, and in view of the narrow

scope of review and deference appropriately due, the Court finds

that the Interim Procedure is not arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law.

Accordingly, the Court DENIES Nippon’s motion for summary

judgment and GRANTS USPTO’s cross-motion for summary judgment. A

separate Order accompanies this Memorandum Opinion.

SO ORDERED

Signed:   Emmet G. Sullivan
          United States District Judge
          February 27, 2019




9 Nippon argues that the USPTO treated it disparately when it
denied its requests as untimely on different grounds. See Pl.’s
MSJ, ECF No. 46 at 25-26. But the USPTO maintains that its
denials of Nippon’s requests, which were improperly submitted as
requests for certificates of correction, did not constitute
“impermissible arbitrary and capricious treatment under the APA”
because it specifically identified the procedural infirmities in
Nippon’s requests in different responses—Nippon filed the
request for the ‘302 patent outside of the two-month deadline
and Nippon’s request for the ‘997 patent incorrectly used the
general provisions of 35 U.S.C. § 254 instead of the regulations
promulgated under 35 U.S.C. § 154(b)(4). Def.’s MSJ, ECF No. 48
at 27. The Court agrees.
                               33