Reshika Dhir is a J.D. candidate at Osgoode Hall Law School and is taking the Patent Law course.
In Canada, a correctly filed patent application that may result in a patent is only half the battle won. The minimum 20 years protection is only guaranteed if the applicants, either themselves or through their authorized correspondents in law, follow through and make efforts to secure their innovation. One such continuous obligation is the payment of maintenance fees.
In order to keep a patent application or a patent in effect in Canada, s. 27.1(1) of Patent Act mandates the applicants to pay maintenance fees to the Commissioner for prescribed periods. The first payment is due no later than the second anniversary of the filing date of the application, and it continues for each subsequent anniversary of the date of filing up to the 19th year.
The fee is required to be paid to prevent the patent rights from expiring before the maximum 20 years. This is because s. 73(1)(c) of the Patent Act delineates that an application for a patent in Canada shall be deemed to be abandoned if the applicant does not pay the fees payable under s. 27.1, within the time provided by the regulations. Maintenance fees are not required for patents issued before October 1, 1989. The standard fees for maintaining an application filed on or after October 1, 1989 are $100 for years 2-4, $200 for years 5-9, $250 for years 10-14 and $450 for years 15-19. (Schedule II, Tariff of Fees of the Patent Rules). Pursuant to s. 6(1) of the Patent Rules, an authorized correspondent is the only person entitled to pay the maintenance fee for patent applications (http://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr00111.html). An “authorized correspondent” is defined in section 2 of the Rules as being (Sarnoff Corp. v. Canada (Attorney General) (F.C.)):
– The inventor provided that he or she has not assigned his rights or appointed an agent;
– A patent agent appointed by the inventor or applicant; or
– An associate patent agent
In a recent 2010 decision of Unicorp v. Canada (Attorney General), the Federal Court (FC) upheld the Commissioner of Patent’s decision upon judicial review, finding the Patent Application No. 2,531,185 completely abandoned. The case involved the failure of Unicorp’s representative to pay the third anniversary maintenance fee due on July 5, 2007. As per subsection 73(3) of the Act and subsection 98(1) of the Rules, the Applicant had twelve months to reinstate the Application, provided a request for reinstatement was made, the reinstatement fee was paid and the annual maintenance fees were paid.
Unicorp submitted a request for reinstatement, a reinstatement fee and the third and fourth maintenance fees through a different representative on June 23, 2008, few weeks before the expiration of the grace period on July 5, 2008. On July 23, 2008, Unicorp received the acknowledgement of the Canadian Intellectual Property Office (CIPO) regarding reception of the payments, but was advised that the payments were rejected because the payments were not paid by the authorized correspondent on the file, and no Appointment of Representative had been signed. In this case, such an appointment form was argued to have been signed on June 16, 2008. The Applicant submits it is not disputed that the Appointment of Agent had not been submitted to CIPO prior to July 5, 2008. The failure to provide that document to CIPO was an inadvertent clerical error which occurred within the office of the later appointed representative. Despite that, the end result was an abandonment of the application form beyond the point of reinstatement.
While there are some useful inherent flexibilities in the provisions governing maintenance fees, application abandonment and reinstatement, these rules have some rigid aspects as well. The Canadian patent system is generous in providing: the possibility of payment of maintenance fees for a number of years in advance; availability of 12-month grace period to reinstate the application; and possibility to reinstate even if the application was intentionally allowed to fall abandoned. In contrast, one might be required to establish that the abandonment was “unintentional” or “unavoidable” in the U.S. However, in light of the purpose of the maintenance fees, the decision in Unicorp appears to be heavy handed.
The object of the annual maintenance fee provision is to provide defrayment of the costs of administering the patent regime and to cover costs of any follow up and correspondence between the CIPO and the authorized correspondent. At the same time, the purpose is also to discourage the proliferation of “deadwood” patents and patent applications by requiring patentees to take steps on an annual basis to keep them in good standing (Sarnoff Corp. v. Canada (Attorney General) (F.C.)). In the instant case, it is evident that the application was not intended to be abandoned as the reinstatement request and the fees were paid before the expiration of the grace period.
Likewise, the purpose behind s. 6(1) is to prevent various persons (i.e., inventor, multiple joint inventors, legal representative of inventor or joint inventors, associate patent agent or patent agent) to communicate with and direct communications to the Commissioner of Patents regarding a particular patent application. This eliminates the potential for conflicting requests, instructions and responses because of uncertainty as to who would act, with the consequence of missed deadlines. However, in the instant case, there is no evidence that the Commissioner of Patents was exposed to any such confusion involving various people trying to contact the patent office at various times. On the contrary, as far as the applicant is concerned, the Appointment of Agent was diligently signed before the grace period and was meant to be submitted in the CIPO.
At first glance, it doesn’t seem fair that a seemingly minor fault in having maintenance fees paid by a firm which was not an agent should result in a wholly disproportionate loss of rights. There is no evidence of any loss to the Patent Office or to the public. But the loss to the applicant is potentially large since it has lost an opportunity to obtain a patent. But this is how the legislature intended it.
While progressive discipline, a warning followed by a serious financial penalty etc., may seem more appetizing in situations involving failure to strictly adhere to administrative requirements, CIPO has opted to strictly interpret the maintenance fee provisions of the Act and the Rules in order to ensure compliance by applicants through the timely and diligent filing of fees. The motto in all of this is that for applicants to win the battle, they must follow up and follow through. It is apparently not sufficient to simply rely on the authorized correspondent to send all the essential forms and paperwork to CIPO, rather the applicant must demand receipts and proof of such delivery in order to eliminate any clerical slip-ups.
The Unicorp case seems to simply be an application of fairly straightforward (and rigid, as Reshika mentioned) statutory provisions. The Patent Act does not provide for exceptions to the conditions of patent maintenance due to clerical errors. In my opinion, this seems reasonable given that there are already provisions for reinstatement if maintenance fees are missed. If a general exception was allowed on the basis of clerical error, this would potentially allow for more subjectivity and ambiguity within the patent system. I agree with the concern raised within the case over potential “uncertainty in the administration of the patent system”. In such a highly regulated system, strict adherence to administrative requirements is a sensible way to go.
The closer Unicorp waited until the deadline, the greater the chance it took that they would not make the deadline. Clerical errors on the part of their representatives should have been accounted for in any business decision they made, including the decisions to obtain new representatives and pay the fees when they did. This judgment must no doubt be very frustrating for Unicorp, since it was their representative that made the error and not themselves. However, that is a standard risk, which should also be considered as a business decision, whenever one appoints a representative. And Unicorp does have the option of making a claim against the firm that made the clerical error.
This may be a case in point of a broader systemic problem within the legal services industry. As firms grow and take on more and more files, the greater the chances of errors occurring in individual files. This is especially so when the actions to be performed on a particular file do not require much thought but rather the file must only pass through the same process along with hundreds of others (as the case may be with the payment of maintenance fees). As is the case in many law firms, staff are typically juggling multiple tasks under extreme time pressure. But the decision to have such an internal clerical system in place is made by the law firm, and the decision to hire that law firm is made by the patent owner. The burdens of such inherent risks in the way firms and owners do business should not be taken on by the Patent Office.
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