Changes in Canadian Patent Legislation

January 11, 2007

This is to advise you of some current changes in the Canadian patent legislation related to the payment of various fees to the Canadian patent office on a small or large entity basis. As background, the amounts of various fees payable to the Canadian Intellectual Property Office are based upon whether the applicant is a small or a large entity.  Where a patent applicant or patent holder qualifies as a “small entity” as defined by Canadian patent legislation, certain fees payable to the Patent Office are reduced. 

However, given current Canadian case law, legislation, the costs associated with properly ascertaining entity status, and the potential for patent invalidity, we are recommending and instituting a general practice of switching all Canadian cases to large entity status. In response to legislative changes we will be making all future payments to the Canadian patent office at the large entity rate and will be topping up past payments to the large entity rate.  To protect our clients, and in accordance with the strong recommendation of Canadian counsel, we will be making such payments unless expressly instructed otherwise by our clients.   If you do not wish to be a part of this new general practice please respond by January 26, 2007.

Dutch Industries v. Commissioner of Patents:

The genesis of the current situation is the Canadian case of Dutch Industries Ltd. v. Commissioner of Patents et al.  - the defendant in a patent infringement action brought forward a defense alleging the invalidity of the patent in question, on the basis that the patentee had inappropriately claimed small entity status, and paid certain patent office fees at the reduced small entity rates, when they were not entitled to do so.  On that basis and upon reviewing the remainder of the legislative framework surrounding such fee payments, the Federal Court Trial Division found in favor of the defendants and ordered that at least one of the patents in the suit was invalid on this basis and that patent was deemed invalid.  On appeal to the Federal Court of Appeal the decision was overturned and leave was declined by the Supreme Court of Canada on, amongst other potential grounds, the basis that the Commissioner of Patents  intended to clarify the legislation to deal with the possibility that other patents or patent applications may be susceptible to similar attacks at some point in the future. 

Details of Bill C-29:

Prior to the Federal Court of Appeal’s decision in Dutch Industries and recent legislative amendments, it was the practice of the Commissioner of Patents to permit such deficiencies to be cured by "top-up" payments.  It apparently did not matter when such top-up payments were made. Top-up payments were received even after the deadline for the payment of the fee and the deadline for any corrective measures permitted by the Patent Rules.  This “top-up” practice is no longer permitted in the same form and subject to the contents of the current legislative amendment it will no longer be possible for a patent applicant to retroactively "top up" a fee.

Bill C-29, An Act to Amend the Canadian Patent Act came into force on February 1, 2006.  Effectively, this new legislation provides a one-year grace period within which patent owners or applicants can "top up" to the large entity rate, any fees that were previously paid on a small entity basis which it is determined were inappropriately paid at that lower amount.  Following February 1, 2007, entity-based top up will no longer be allowed and the consequence of inappropriate entity status selection of the time of filing of an application will be, at least on the basis of our current reading of the law, an invalid filing.

Topping Up Abandoned Applications:

Our initial analysis suggests that we also need to be concerned with assessment of the proper payments having been made and/or the proper top up being filed with respect to patent applications which may have originally been filed on a provisional or incomplete basis and subsequently abandoned that were used for priority claim purposes.  It would seem that if the priority document were not properly topped up within the cure period that arguably the document itself would be defective and might not properly form the basis for a priority claim.  On that basis we are of the view that subsequently abandoned patent applications including incomplete or complete applications, which were used as a priority claim or on a priority basis in subsequent filings, will be topped up. 

If you have any questions in this regard please contact Vance VanDrake at vvandrake@fbtlaw.com or Kevin Sprecher at ksprecher@fbtlaw.com.

Additional Documents:

Practices

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