On July 27, 2012, the Federal Court set aside for a second time a refusal by the Canadian Commissioner of Patents to correct a clerical error that caused a patent to lapse. In Repligen Corporation v. Canada (A.G.) the Court held that the Commissioner of Patents had failed to act reasonably again by not weighing all the relevant factors when deciding not to correct a clerical fee payment error. The Court was not slow to substitute its own decision for that of the Commissioner, even when that decision was clearly a discretionary one.
Summary
The applicant, Repligen Corporation (Repligen), sought a second review by the Court of a further refusal by the Commissioner to exercise discretion under section 8 of the Patent Act (the Act). The Commissioner refused to correct the payment of two anniversary maintenance fees for Repligen's patent no. 1,341,486 (the 41 Patent) where Repligen's fee agent had used a form which listed the wrong patent number 1,314,486 - a patent held by Rolls-Royce PLC, (the 14 Patent). The end result was that the 41 Patent was declared to have lapsed pursuant to section 46(2) of the Act.
Over the course of the first three anniversary payments for the 41 Patent there followed a cycle of payments and refunds where Repligen's and Rolls-Royce's respective fee agents would both attempt to pay against the 14 Patent. This resulted in Repligen's fee agent receiving a refund of its first anniversary payment and Rolls-Royce receiving a refund of two of their anniversary payments where Repligen's fee agent had paid first.
In August 2007 Repligen's patent agent was informed that the prescribed fees for the 41 Patent had not been paid and that the patent would lapse unless payment was made within 12 months of the anniversary date. The patent agent did nothing in response to this and failed to inform Repligen of the situation. The 41 Patent was declared lapsed due to non-payment in July 2008.
In April 2009, Repligen's new patent agent discovered that the 41 Patent had lapsed. The new agent requested that the error in relation to the fee documents be corrected by the Commissioner pursuant to section 8 of the Act and paid the fourth anniversary maintenance fee.
In February 2010, the Commissioner declined to correct the error. Importantly, the Commissioner acknowledged that this error was clerical in nature. The reasons for the refusal included Repligen's delay in asserting the error and the potential for damage to third parties that could result from a correction. It was suggested also that section 46(2) of the Act prevented the revival of lapsed patents for non-payment.
Comment
Standard of review of the decision
It is an established principle that questions of fact,
discretion or policy involve a mixture of law and facts and as such
are to be reviewed by the Court against a standard of
reasonableness . This is the case here where section 8 of the Act
allows for the exercise of discretionary power to correct clerical
errors.
The question for the Court was whether it was reasonable, under the
circumstances and given the scope of section 8 of the Act, for the
Commissioner to decide not to exercise discretion here.
Repligen No. 1 - in brief
In Repligen Corporation v. Canada (A.G.) (No.1) (discussed in more detail here), a successful application was made for judicial review of the Commissioner's decision.
The Court held that the Commissioner had failed in reaching a decision to weigh up all the relevant factors in favour of making the correction. These included the impact on Repligen from the loss of its patent; its lack of awareness of the error; the purpose of maintenance fees under the Act (to avoid "deadwood" and to pay the costs of the Patent Office) and that payments had been made on time.
It was also held that the Commissioner was wrong to cite section 46(2) of the Act since this would not operate in case of a correction under section 8 of the Act which mean that the 41 Patent had never lapsed.
The Court further considered that the speculative invocation of third party rights (which could always be raised by virtue of the patent publication process), without more, would "fundamentally impair" the Commissioner's remedial powers under section 8 of the Act.
Following this judgment, the correction request was sent back to be decided by another official at the Patent Office. This again resulted in a refusal to correct the error – but with revised reasoning.
Repligen No. 2 – the present case
The Court accepted Repligen's application for a second review and considered the Commissioner's refusal and the reasoning that:
- certain other incorrect information automatically generated in the fee documents was substantive and not merely clerical in nature
- Repligen's lack of due diligence of its payment arrangements offset the objective of the maintenance fee provisions of the Act in favour of correction
- a correction under section 8 that would deem a patent to be valid retrospectively would be "an extraordinary remedy"
- there was potential for prejudice to unknown third parties since the expiry of the 41 patent expiry had been public for two years
- there could be adverse implications for Rolls-Royce if its 14 Patent was found to have expired retrospectively.
The Court's decision
The Court found that the main issue was still whether the Commissioner had acted reasonably in deciding not to exercise discretion to correct the patent number error.
Mr Justice Lemieux's decision in Repligen No.1 was used for guidance since the parties disputed the extent to which the Commissioner had complied with its provisions.
The Court considered that the Commissioner's decision should be reached in a manner that "reflects justification, transparency and intelligibility" and should reflect "the remedial nature of section 8 of the Act in addressing clerical errors".
The Court held that Commissioner had again failed to reach a balanced decision. The actions of Repligen in the circumstances and the impact of the loss of its patent had not been afforded sufficient weight against the view that Repligen had not been diligent enough in its payment arrangements and that there was potential for damage to third parties.
The Court expressly stated that the Commissioner's decision should "reasonably reflect the interests of Repligen and Rolls Royce" where "both attempted to comply with maintenance fee provisions". It was considered important that the 14 Patent had expired without causing prejudice to Rolls Royce.
The Court considered that the Commissioner was driving towards a standard of perfection in the payment of fees by describing as "extraordinary" the use of section 8 discretion to remedy a clerical error through which a patent would not have lapsed. It was suggested that this would defeat the purpose of section 8 of the Act.
The Court directed that the application for correction again be sent to the Patent Office for another decision by a different official. It remains to be seen how the application is decided this time around.
Effects of the Court's decision
The Court's decision means that neither a lack of due diligence nor possible damage to third parties are of themselves fatal to the correction of a party's fee submission under section 8 of the Act.
Any decision as to whether or not to exercise section 8 discretion should involve a balanced assessment of the prejudice that the patentee will suffer as a result of the lapsed patent. It appears that this will offset third party prejudice that is merely speculative.
This decision has wider implications and may be revisited in future litigation where a party asserts (offensively or defensively) that it has relied on the listing of a patent as expired on the patent register where this has since been restored.
Notes
1 2012 FC 931
2 The fact that the error was clerical was not disputed. If not the interpretation of the meaning of "clerical error" under s.8 of the Act would have to be considered. The applicable standard of review here would be correctness.
3 Scannex Technologies LLC v Canada (A.G.), 2009 FC
1068
4 2010 FC 1288
Links to decision
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