In 2001, the case of Dutch Industries Ltd v Canada
(Commissioner of Patents), 2001 FCT 879, 2003 FCA 121, sent shockwaves through Canadian
patent practice when it was held that a simple error in paying a
fee to the Canadian Intellectual Property Office (CIPO) could have
a devastating effect on the ability to obtain or maintain a patent.
To address this problem, section 3.1 of the Patent Rules
was introduced on January 1, 2004 to provide the Commissioner of
Patents with a means to avert the effects of such errors in some
circumstances. The Federal Court has recently considered the scope
of section 3.1 to remedy such an error.
Section 3.1 provides that where there is a "clear
but unsuccessful" attempt to pay a fee, the Commissioner
shall, in certain circumstances, notify the applicant that further
fees are owing, and upon payment of the fees as specified, the
application is deemed to be in good standing. In Karolinska
Institutet Innovations AB v Attorney General of Canada, 2013 FC 715 ("Karolinska"),
Justice Hughes of the Federal Court reviewed the application of
section 3.1, particularly in regard to what constitutes a
"clear but unsuccessful attempt" by an applicant to pay a
fee. Justice Hughes indicated that "clear but
unsuccessful" is to be provided a fair, large and liberal
construction. In the circumstances of the case, Justice Hughes
found that where the applicant attempted to pay a fee owing, but
failed to do so, the Commissioner of Patents was required to send
notice to the applicant to remedy those fee deficiencies before
refusing processing on the grounds of insufficient payment.
The applicants' Canadian patent agent was instructed to
proceed with national phase filing of two Patent Cooperation Treaty
(PCT) applications. As the 30 month deadline for national phase
filing had passed, both applications were subject to late entry
fees. However, due to a clerical error at the patent agent's
office, the applications submitted to CIPO included only the basic
national phase filing fees.
Although both national phase entries were filed several days in
advance of the 42 month deadline for late entry, no notice of
deficiency was issued by CIPO pursuant to section 3.1. Rather,
six weeks after the deadlines had passed, CIPO sent letters
indicating that it had refused the national phase entries for
failure to pay the necessary late entry fees. When CIPO advised the
agent that it would take no further steps to remedy the situation,
the applicants sought judicial review.
The Court found that, pursuant to section 3.1, CIPO was
required to consider whether the Canadian patent agent had made a
"...clear but unsuccessful attempt..." to pay
the late fee. CIPO argued that it was not "clear" that
the applicants wished to pay not only the PCT filing fee, but also
the late entry fee. The Court disagreed.
Justice Hughes first noted that the purpose of the fees is not
penal, but rather a means of recovering administration costs and
ridding the system of deadwood patents. Justice Hughes then quoted
section 12 of the Interpretation Act, which states that
"(e)very enactment is deemed remedial, and shall be given such
fair, large and liberal construction and interpretation as best
ensures the attainment of its objects." Accordingly, he held
that a reference to "the fee" in section 3.1 should
be liberally construed to include not only a basic filing fee, but
also the additional late filing fee. Moreover, Justice Hughes found
that CIPO can easily recognize an application as one requiring
payment of a late fee, and thus further recognize that the
"filing fee" referred to by an agent must, on a fair,
large and liberal interpretation, include not only the basic fee,
but the additional fee, as well.
Therefore, the Court found CIPO's decision unreasonable
insofar as it misapplied section 3.1 to the circumstances, and
ordered the Commissioner to issue notices under section 3.1(2)
requiring payment of the deficient fees.
Despite Justice Hughes' ruling in favour of the applicant in
Karolinska, it is generally prudent to include language in
correspondence with CIPO that broadly authorizes the Commissioner
to withdraw any necessary funds and take any necessary action to
maintain an application in good standing.
The preceding is intended as a timely update on Canadian
intellectual property and technology law. The content is
informational only and does not constitute legal or professional
advice. To obtain such advice, please communicate with our offices
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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