Industry Reactions to In re Cellect Decision

An August 2023 decision from the Federal Circuit Court of Appeals¹ highlighted potential new fragilities in the patent portfolios of many industry giants, especially those in the pharmaceutical industry. The decision strengthened the judicially-made obviousness-type double patenting (ODP) doctrine², clarifying that irrespective of the filing of a terminal disclaimer, ODP for a patent that has received PTA³ must be based on the expiration date of the patent after said PTA has already been added. Appellant Cellect, LLC has filed a petition for en banc rehearing – a petition that has since been followed by no fewer than eleven amici curiae briefs in support of a rehearing,⁴ including those on behalf of Johnson & Johnson, Abbvie Inc., and Novartis Pharmaceuticals.ⁱ

Decision Background

In In re Cellect, the Federal Circuit affirmed the Patent Trial and Appeal Board’s findings of unpatentability of various claims in Cellect’s four patents directed towards devices comprising image sensors. Each of the challenged patents claimed priority to the same parent application, and had received individual grants of PTA. A fifth patent also claimed priority to the same parent application but was not awarded PTA. Thus, absent the PTA, all five patents would otherwise expire on the same date. Cellect argued that PTA and PTE⁵ should be treated identically for the sake of ODP analyses, but the Court rejected such an argument as an “unjustified attempt to force disparate statutes into one.” Instead, the Federal Circuit held that terminal disclaimers were intended by Congress, per the relevant statutory language, to cut short PTA but not PTE. Thus, unlike with patents receiving PTE, ODP should be based on the expiration date of a patent after PTA has been added, not before. For further information on the decision itself, consider reading one of the many write-ups on the matter.⁶

The Aftermath

Since the decision, many law firms and practitioners have published their commentaries on the decision, offering advice to clients and the industry in general on how progress forward in this “post-Cellect” world. These recommendations summarily include those for patent prosecutors (e.g., reconsider continuation applications or ensure patentable distinctness between future filings), those for owners of issued patents (e.g., review patent portfolios for ODP risk and file retroactive terminal disclaimers where necessary), and those for patent challengers (e.g., look to ODP as a method of invalidation). However, many, and for obvious reasons excusing the pun, are less keen to accept this as the “new status quo” of obviousness-type double patenting. Several pharmaceutical and biotechnology giants, for example, have filed amici curiae briefs in support of Cellect’s petition for rehearing. Below I address the common themes and arguments of those amici to understand from where this pushback is coming.

Those that have submitted amici briefs each include arguments only slightly varying from one another, so at least for those seeking rehearing, there appears to be a somewhat uniform front. The arguments in favor of rehearing fall generally into three categories: (1) contradiction of Congressional intent, (2) incompatibility with prior decisions, and 3) upsetting equitable considerations and expectations. All are interwoven with each other to varying degrees.

Contradiction of Congressional Intent

The most substantial position taken in the various amici curiae briefs is that which claims the Cellect panel misinterpreted Congressional intent or improperly embellished the statutory language in violation of the separation of powers and case law. Briefs such as Abbvie’s expound that the statutory history in-and-around the URAA⁷ and the PTGA⁸ demonstrate that Congress had already prescribed “how and under what conditions ODP could limit PTA in Section 154(b)” with a “narrow exception preventing PTA for patents subject to a terminal disclaimer.” Accordingly, “this reference to terminal disclaimers made clear that Congress specifically considered ODP in establishing PTA.” Further, “Congress specifically considered the term-cutting effect of ODP in the 1999 revision and adopted Section 154(b)(2)(B) which states ‘no patent the term of which has been disclaimed beyond a specified date may be adjusted under this section beyond the expiration date specified in the disclaimer.’” The 1999 revision also expanded the availability of PTA to “guarantee” a 17-year minimum effective patent term. Where Congress speaks directly to an area of law, a court-made doctrine cannot serve to subtract or add to what has already been legislatively prescribed.⁹ Accordingly to AIPLA, “Congress could not have intended to give a benefit to patent owners to make up for lost term, and, within the same statute, penalize patent owners for accepting that benefit by allowing a judge-made doctrine to thereafter invalidate PTA-extended patents.”

IPOA mirror this “guarantee” intent, pointing to the clear language of Section 154(b), which states that “if the issue of an original patent is delayed, due to the failure of the Patent and Trademark Office… the term of the patent shall be extended.” (emphasis added). According to IPOA, this is a clear indication of what Congress intended; explicitly-stated, the filing of a terminal disclaimer is the “sole exception authorized by Congress to its mandatory ‘shall be extended’ directive.” Merck and AIPLA focus their arguments on the “plain words of the statute” as well. The former emphasized that “the statutory framework for PTA recognizes that patent term subject to a pre-existing disclaimer cannot be modified… the statute only refers to disclaimers that have previously been filed, meaning that PTA cannot be awarded after the patent term has been disclaimed. AIPLA confirms this interpretation, stating that “[Section 154(b)(2)(B)] provides only that if a terminal disclaimer has been filed, PTA cannot extend a patent’s expiration beyond the date specified in the disclaimer”; “[the Cellect panel] incorrectly reasoned that since PTA cannot be awarded to extend term if a terminal disclaimer was filed, Congress necessarily intended that the absence of a terminal disclaimer should expose a patent with PTA-extended term to invalidation under ODP.”

Lastly, a common denominator among briefs was the argument that “if Congress had intended double patenting to entirely vitiate patent term adjustments in § 154(b), it would have said so.” Similarly, “[h]ad Congress intended to extend ODP to additional scenarios [beyond those specific provisions in the statute], it would have enacted different statutory language.” 

Incompatibility with Prior Decisions

Most amici also drive home the inability to reconcile the Cellect decision with Ezra¹⁰ and Breckenridge¹¹. Merck described the former as a matter in which “this Court refused to allow an earlier expiring patent to render an earlier filed, earlier issued patent invalid based on PTE.” IPOA similarly described Ezra, where this Court declined to hold “that a judge made doctrine would cut off a statutorily-authorized time extension.” Yet here, amici argue that Cellect has done the exact thing it refused to do in Ezra. AIPLA pointed to the similarity in facts between Cellect and Ezra, arguing that “this Court specifically noted that ‘the concerns that drove recent decisions of this court’ concerning ODP include the risk of ‘potential gamesmanship…through structuring of priority claims’ …[and] where no such tactics were identified and the challenged patent would have expired earlier but for the statutory extension, this Court declined to apply ODP. On par with the arguments of fellow amici, AIPLA claim the same facts apply here yet the Cellect panel reached the opposite conclusion. Language Tech et al. took a different approach to the irreconcilability between Cellect and Ezra, suggesting that the panel “failed to point to any difference in the language of § 154 [than in § 156] that requires a different outcome for PTA. That PTA for a given patent is limited by a terminal disclaimer under § 154(b)(2)(B) is not a statutory prohibition on the “effective” extension of reference claims in other patents.”

Amici such as PhRMA also point to this panel’s departure from Breckenridge, where “[t]his Court refused to allow judge-made doctrine to supersede Congress’s intent: Congress intended patent owners who filed patent applications before the transition date to the new patent term law to enjoy the maximum possible term available, and applying double patenting to cut off that statutory term would be inconsistent with the URAA.” (quotations removed). Accordingly, PhRMA urge a rehearing of the decision because “the legislative choice to shift the expiration date of a patent by granting a patent-term adjustment under § 154(b) should be given the same force as the post-URAA shift in expiration date of patents this Court addressed in Breckenridge. Interestingly, the Cellect decision failed to mention the Breckenridge decision entirely.

Upsetting Equitable Considerations and Expectations

Amici have repeatedly emphasized how the Cellect decision deviated from the “equitable underpinnings” upon which ODP was first created, aiming to prevent “improper” or “unjustified” patent term extensions from a patentee’s “gamesmanship,” commonly citing Immunex v. Sandoz¹², Novartis v. Breckenridge¹³, and Gilead v. Natco¹⁴. One brief describes the Cellect decision as “equally impact[ing] applicants that engaged in very different conduct – those with many overlapping continuation applications as well as those with potentially just one; the diligent as well as the careless ones; the well-intentioned as well as the responsible ones.”¹⁵ Most briefs also indicate the immediate impact of the Cellect decision’s deviation, pointing to a recent District of Delaware decision, which interpreted Cellect as holding that “ODP depends solely on patent expiration dates and should not [be] influenced by equitable concerns. Any extension past the ODP reference patent’s expiration date constituted an inappropriate timewise extension for the asserted claims of the challenged patents;” also that “Cellect recognizes no exception to the rule it announced, whether for first-filed, first-issued claims or otherwise.”¹⁶ As Novartis wrote, “[Cellect’s decision] has led some parties to argue, incorrectly, that patents expiring later due to PTA are always invalid under Cellect in view of earlier-expiring obvious variant patents.”¹⁷ PhRMA wrote, “[Cellect] has already been erroneously and rigidly extended in a recent case.” 

Amici also point to the significant disruption to patent practice and patent holder expectations. As Merck explained, “pharmaceutical development requires the expenditure of significant resources and years of research and development. Accordingly, the retroactive application of new law-changing rules years after investment decisions have been made does significant damage. By eliminating PTA for commonly-owned patents that have different expiration dates and unmooring ODP from its equitable underpinnings, the Panel’s decision constitutes a significant change in the law. The US Supreme Court has warned that courts must be cautious before adopting changes that disrupt the settled expectations of the investing community.”¹⁸ Biocom, for example, echoes this sentiment, writing that “it is unrealistic to expect the USPTO, applicants, and patentees to comprehensively and consistently address ODP based on constantly shifting PTA during prosecution.”¹⁹ Lastly, as PhRMA put it, citing Festo, “to ‘change so substantially the rules of the game now’ necessarily ‘subvert[s] the various balances’ struck by Congress, the PTO, and innovators who prosecuted their patents without any knowledge that this new judge-made rule would someday arise.”

Further Developments

On December 14, 2023, the USPTO filed a response to Cellect’s appeal, arguing that the panel’s decision was appropriate because “Cellect owns several patents claiming essentially the same invention, and, due to PTA, enjoyed an unjustified timewise extension of its ability to exclude the public from practicing that invention.” As one would expect, the USPTO’s response addresses and denies each of the three main arguments outlined above, as raised by Cellect and amici; the panel’s decision was 1) correctly interpreted Congressional intent with regards to §154, §156, and “guarantees” from the Patent Term Guarantee Act, 2) consistent with precedent, and 3) consistent with the underlying policy considerations of ODP.

Around a similar time to the filing of the USPTO’s response, the Plaintiff-Appellants in Allergan v. MSN, the recent District of Delaware decision cited by amici above, filed their appeal brief. Allergan (Plaintiff-Appellants) argued “[t]he district court misinterpreted this Court’s Cellect decision as establishing a hard-and-fast rule that, unless a terminal disclaimer is filed, ODP always invalidates claims that are patentably indistinct from those in any other patent having an earlier expiration date…. ODP however, does not and cannot apply to invalidate the claims of a first-filed, first-issued patent based solely on a later-filed, later-issued, earlier-expiring continuation patent.” Similarly to the amici in Cellect, Allergan also argued that the decision and the district court’s treatment of ODP is contrary to the statutory language and Congressional intent, while further disregarding the equitable considerations underlying ODP. Obviously, as Allergan point out in their brief, if Cellect is overturned, so shall this case.

¹In re: Cellect, LLC, 81 F.4th 1216 (Fed. Cir. 2023).
² ODP is grounded in public policy, prohibiting the issuance of claims of patents that are not patentably distinct from claims in earlier patents on the same subject matter, often within the same “family,” in order to prevent a undue extensions of a patent for the same invention or obvious modifications thereof. See In re Lonardo, 119 F.3d 960 (Fed. Cir. 1997).
³ Patent Term Adjustment (PTA) extends the term of a U.S. Patent to accommodate for delays caused by the USPTO during prosecution of said patent. 
⁴ As of December 10, 2023.
⁵ Patent Term Extension (PTE) extends the term of a U.S. Patent to accommodate for delays caused by the regulatory review process before a product can be marketed, such as FDA approval.
⁶See, e.g., https://www.wilmerhale.com/insights/client-alerts/20230829-patent-term-adjustments-in-jeopardy-after-in-re-cellect; https://www.goodwinlaw.com/en/insights/publications/2023/08/alerts-otherindustries-ip-in-re-cellect-federal-circuit-opens-new-path
⁷ Uruguay Round Agreements Act, 1994.
⁸ Patent Term Guarantee Act, 1999.
⁹ Citing Amgen Inc. v. Sanofi, 598 U.S. 594 (2023).
¹⁰Novartis AG v. Ezra Ventures LLC, 909 F.3d 1367 (Fed. Cir. 2018).
¹¹Novartis Pharm. Corp. v. Breckenridge Pharm., Inc., 909 F.3d 1364 (Fed. Cir. 2018).
¹²Immunex Corp. v. Sandoz, Inc., 964 F.3d 1049 (Fed. Cir. 2020).
¹³Novartis Pharm. Corp. v. Breckenridge Pharm., Inc., 909 F.3d 1364 (Fed. Cir. 2018).
¹⁴Gilead Scis., Inc., v. Natco Pharma Ltd., 753 F.3d 1208 (Fed. Cir. 2014).
¹⁵ Brief of Amicus Curiae Biotechnology Innovation Organization and Biocom California. 
¹⁶Allergen, USA, Inc. v. MSN Lab’ys Priv. Ltd., 2023 US Dist. LEXIS 172641 (D. Del. 2023).
¹⁷ Brief of Amicus Curiae Novartis Pharmaceuticals Corporation.
¹⁸ Corrected Amicus Curiae Brief of Merck Sharp & Dohme, LLC, AstraZeneca Pharmaceuticals LP, Amgen Inc., Association of University Technology Managers, Inc. Johnson & Johnson, and Novo Nordisk Inc. (citing Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 US 722 (2022).
¹⁹ Brief of Amicus Curiae Biotechnology Innovation Organization and Biocom California.
ⁱ  Considered Amici Curiae Briefs:
   Brief for New York Intellectual Property Law Association as Amicus Curiae (NYIPLA)
   Brief of Amicus Curiae Pharmaceutical Research and Manufacturers of America (PhRMA)
   Brief of Amici Curiae Language Technologies, Inc., Parus Holdings, Inc., and Robocast, Inc. (Language et al.)
   Correct Brief for Amicus Curiae Intellectual Property Owners Association
   Corrected Amicus Curiae Brief of Merck Sharp & Dohme, LLC, AstraZeneca Pharmaceuticals LP, Amgen Inc., Association of University Technology Managers, Inc. Johnson & Johnson, and Novo Nordisk Inc.
   Amici Curiae Brief of Biotechnology Innovation Organization and Biocom California
   Brief of Amicus Curiae Novartis Pharmaceuticals Corporation
   Brief of Amicus Curiae American Intellectual Property Law Association
   Brief of Amici Curiae Abbvie Inc. and Innovation Alliance
   Corrected Brief of Amicus Curiae Robert A. Armitage