Patent Term Adjustment in The United States and Additional Term in Canada

Introduction

Once an applicant has completed all the requisite steps for their patent application, the next step is filing the application and having it examined by the corresponding patent office. In the case of Canada, examination of an application must be requested within 4 years of the filing date of the application, while in the United States, examination proceeds automatically when filing a regular or non-provisional patent application. Examination of a patent application involves the patent office reviewing the application to ensure it meets formal requirements, conducting a search of prior public disclosures, and ultimately issuing either an approval or objection to the application.

The examination process often involves at least an initial objection, to which the applicant will need to respond to any substantive and/or technical objections. Accordingly, it may take some time to obtain a patent. In Canada, it currently takes an average of 30.8 months from requesting examination to get a patent, while in the United States, it need takes an average of 29.3 months from the filing of the patent application to get a patent inclusive of Requests for Continued Examination (RCEs). The period between filing (or, requesting examination in Canada) and issuance is heavily influenced by decisions made by the applicant in the filing and prosecution stages of the application, as well as any potentially delays by the corresponding patent office.

Given that any delays by the corresponding patent office eat into the lifetime, or term, of the patent, the process of patent term adjustment (PTA) to account for these delays exists in the United States, and a similar system will be introduced in Canada in the upcoming year.

This article provides an overview of PTA in the United States, as well as an overview of the proposed framework for additional term in Canada, which is due to come into force on January 1, 2025.

Patent Term Adjustment in the United States

Overview

PTA was introduced in the United States in 1999. The PTA system was introduced to add additional time to the term of the patent to compensate for certain types of delays caused by the United States Patent and Trademark Office (USPTO) in the process of issuing the patent. The situations under which PTA may be granted are highlighted in 35 USC 154(b)(1) and are summarized below.

b. When is PTA Granted?

Under 35 USC 154(b)(1)(A), PTA may be granted due to the Patent and Trademark Office’s (PTO) failure to meet their guarantee of prompt responses. These are often referred to as type “A’ delays and are linked to service standards of the PTO. PTA would be granted under this section if there are delays because of any of the following:

1. The PTO fails to issue an office action or notice of allowance not later than 14 months after the date on which the application is filed, or the date of commencement of the national stage of an international application.
2. The PTO fails to respond to a reply, or to an appeal, within 4 months after applicants file a reply to office action.
3. The PTO fails to act within 4 months after the date of a decision by the Patent Trial and Appeal Board or a decision by a Federal court, in a case in which allowable claims remain in the application.
4. The PTO fails to issue a patent within 4 months after the date on which the issue fee was paid.

Under 35 USC 154(b)(1)(B), PTA may be granted due to the PTO’s failure to meet their guarantee of no more than a 3-year application pendency. These are often referred to as type “B” delays. PTA under this section would be granted if the PTO fails to issue a patent within 3 years after the filing date of the application, or in the case of an international application, the date of commencement under the national stage. The 3-year period, however, does not include:

1. Any time consumed by continued examination of the application requested by the applicant
2. Any time consumed by an s. 135(a) proceeding, any time consumed by an s. 181 order, or any time consumed by appellate review by the patent Trial and Appeal Board or by a Federal court.
3. Any delay in processing of the application by the USPTO requested by the applicant except as permitted by paragraph (3)(C)

Under 35 USC 154(b)(1)(C), PTA may be granted due to the PTO’s failure to meet their guarantee or adjustments related to delays due to derivation proceedings, secrecy orders, and appeals. These are often referred to as Type “C” delays.

Calculation of PTA

As a starting point, the term of the patent shall be extended by 1 day for each 1 day after the end of the periods specified in clauses 35 USC 154(b)(1)(A)(i)-(iv) until the appropriate action described in the clause is taken, for each 1 day after the end of the 3-year period until the patent is issued as per 35 USC 154(b)(1)(B), and for each 1 day of the pendency of any proceeding, order, or review as per 35 USC 154(b)(1)(C).

PTA is then calculated as the sum of the delays caused by 35 USC 154(b)(1)(A)-(C), excluding certain periods of time and conditions, including:

1. Any overlap between any of the different types of delays.
2. Disclaimed term: no patent, the term of which has been disclaimed beyond a specified date, may be adjusted beyond the expiration date in the disclaimer.
3. Reduction of period of time adjustments, including the period of time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application.

What does failing to engage in reasonable efforts look like? 35 USC154(b)(2)(C)(ii) states that with respect to an adjustment to a patent term made under the authority of 35 USC 154(b)(1)(B), an applicant is deemed to have failed to engage in reasonable efforts to conclude processing or examination of an application for the cumulative total of any periods of time in excess of 3 months that are taken to respond to a notice from the Office making any rejection, objection, argument, or other request. 35 154(b)(2)(C)(iii) also states that the Director shall prescribe regulations establishing circumstances that constitute a failure of an applicant in engaging in reasonable efforts to conclude processing.

Miscellaneous Information

As per 35 USC 154(3), the USPTO will automatically make a determination of the period of any PTA and will transmit a notice of the determination no later than the date of issuance of the patent. The USPTO shall also provide the applicant with one opportunity to request reconsideration of any patent term adjustment determinations made by the director. This request must be filed no later than 2 months from the date the patent was issued, although this deadline can be extended by up to 5 months with payment of the appropriate fees. The fee for filing a request for reinstatement of all or part of the term reduced in an application for a patent term adjustment is $420 USD. Additionally, as per 35 USC 154(b)(4), an applicant dissatisfied with the Director’s decision on the applicant’s request for reconsideration shall have exclusive remedy by civil action against the Director within 180 days after the date of the Director’s decision on the applicant’s request for reconsideration.

Additional Term in Canada

Overview

As a result of the Canada-United States-Mexico Agreement (CUSMA), in which Parties agreed to provide a means to adjust the term of a patent when there are unreasonable delays in its issuance by the granting authority, amendments to the Patent Act to provide a framework for an additional term received royal assent in June 2023 and will come into force on January 1, 2025.

The proposed amendments have been published on May 18, 2024 for consultation, with the consultation period having ended on July 4, 2024. A summary of the additional term framework as released for consultation is discussed in this article pending the publishing of the amendments to the Patent Rules in their final form.

When is Additional Term Granted?

The amended Patent Act requires, subject to conditions, that the Commissioner grant an additional term for a patent if the patent was issued later than the later of:

1. Five years from a date to be defined in the Patent Rules for divisional applications and national phase entry applications, and the filing date of the application in any other case.
2. Three years from the date of the request for examination.

The proposed amendments to the Patent Rules permit for only one application for an additional term per patent, which may be dismissed if the application does not meet certain eligibility requirements. Beyond the eligibility requirements discussed previously, an additional term is available only for patent applications that were filed on or after December 1, 2020.

Calculation of Additional Term

The duration of the additional term is calculated as summing the number of days beyond the relevant applicable date as outlined above and subtracting the number of days of excluded periods of time as defined in the proposed regulations. In brief, the Regulatory Impact Analysis Statement (RIAS) identifies these days as “days in periods that do not occur during the processing of, or the examination of, the patent application by CIPO, periods that are not directly attributable to CIPO as well as periods that are attributable to the patent application.” It goes on to list examples of proposed days in the number of days to be subtracted, including “days when the patent applicant must take an action or pay a fee and the number of days in periods initiated by the patent applicant, such as requesting continued examination after certain events occur during patent examination.” More information related to these periods of time can be found in the proposed amended sections 117.03(1)(a) - (z.12) of the Act, which details 38 categories of periods of days to be subtracted.

It is also important to note that the number of days in any of the referenced periods includes the first day but not the last day. In addition, if a day is included in more than one period referred to in the subsection, that day is included only once in the sum referred to in that subsection.

Miscellaneous Information

The deadline to apply for additional term is within three months of issuance of the patent. With respect to fees for an application for additional term and for an application for reconsideration of additional term, the proposed fee as per the Patent Rules is a $2,500 standard fee and $1,000 fee for small entities.

With respect to appeals, the amendment to the Patent Act includes a process for the reconsideration of the additional term, which allows anyone to challenge the duration of the additional term granted by the Commissioner. This process involves filing an application for reconsideration and paying the prescribed fee. The application must meet certain formality requirements supporting the application. The Commissioner may dismiss the application or make a preliminary determination as to whether the duration of the additional term is no longer authorized under the Patent Act. If the preliminary determination is that the duration is longer than authorized, the Commissioner must also provide a preliminary determination of the shortened duration of the additional term.

Patent Term Adjustment in the United States vs. Additional Term in Canada – Insights

PTA and the additional term system coming to Canada have several key differences in how they operate, and consequently, their effects on the patent system.

PTA Automatic Determination vs. Requesting Additional Term

To start, it is important to discuss the implications of PTA being automatically determined and transmitted to the applicant under the United States’ system versus needing to be applied for under the proposed Canadian system. Under the PTA system, the USPTO automatically makes a determination of the period of PTA and transmits a notice of determination on or before the date of issuance of the patent. The applicant then has up to 2 months after patent issuance, with an extension of up to 5 months available, to request a reconsideration of the PTA by the USPTO. This would be accompanied by a fee of $420 USD as per the USPTO patent petition fees schedule. Under the Canadian system, CIPO will not provide any initial determination of additional term. Instead, it will need to be applied for by the applicant within three months of issuance of the patent, alongside a proposed standard fee of $2,500 or $1,000 for small entities. Because an additional term determination is locked behind both a tight three month period, as well as a potentially substantial $2,500 standard fee, which is likely to be significantly more than the sum of the application fee, request for examination fee, and final fee paid so far in the application process combined, applicants may be reluctant to pursue this option, and agents may be reluctant to recommend proceeding with this option to the applicants unless absolutely certain of the outcome.

Calculating the PTA/Additional Term and Days to be Subtracted

While the overarching methodologies for calculating PTA or additional term, as well as days to be subtract, are somewhat similar at a glance, it may be significantly harder to calculate additional term under the additional term system. For one, there are 38 different categories of potential days to subtract, all which must be considered and potentially make any analysis of additional term calculation much more onerous than the PTA counterpart. Furthermore, the United States has developed case law which can be used to inform potential disputes between the applicant and the USPTO. Because the additional term system will be freshly introduced, there may be additional apprehension to apply for it in fringe or questionable cases where there may be a disagreement between the applicant and CIPO as to the terms of the Act. Finally, it is helpful to consider that while the applicant would calculate their own expected PTA in both the systems, the PTA system has a point of comparison, that being the automatic determination provided by the USPTO. Receiving this determination may help understand whether the applicant, or the USPTO, has erred in their determination. The same cannot be said for the additional term system, in which there will be no such comparison possible between calculations, and where the applicant will have to rely solely on their calculation or the calculation of their agent.

Result on Patent System

The differences between the systems result in a larger percentage of U.S. patents receiving an additional term, and for more significant periods of time, as recognized by the proposed amendments. To put in into perspective, the RIAS found that in the regulatory scenario, in which the proposed amendments come into force on January 1, 2025 as planned, there would only be approximately 1,129 applications for an additional term and 51 applications for reconsideration of additional term from the 2024-25 fiscal year to the 2033-34 fiscal year. Meanwhile, USPTO data suggests that in the last 2 years, only 30-40% of all patent actions received their First Action with 14 months, suggesting that the remaining 60-70% of patent applications are likely entitled to some period of PTA on this basis alone.

Therefore, an applicant must carefully consider how critical it is to their patent to maximize the term and must recognize that as a result of the differences between the PTA system and the additional term system, similar patents may have a longer term in the United States than in Canada on the basis of which delays are recognized, the ways delays are calculated and their complexity, and the accessibility of appeals and reconsideration of the PTA and additional term calculation.

Conclusion

Hopefully this article has provided you with a better understanding of the patent term adjustment system currently in use in the United States, the proposed additional term system to be used in Canada starting next year, and the differences between the two systems and resulting effects.

If you would like to know more about patent term adjustment and the upcoming additional term system, contact us now for a complimentary and confidential initial telephone appointment with a member of our team.