Canada: Dutch Industries Patent Fee Conundrum Solved Effective February 1, 2006

In our April 2003 IP Update, we reported on the Federal Court of Appeal decision Dutch Industries Ltd. v. The Commissioner of Patents, Barton No-Till Disk Inc. and Flexi-Coil Ltd., which declared a patent to be invalid because the annual maintenance fee payments were made on the small-entity scale when the patent owner did not qualify as a small entity. Although the patent owner made corrective "top-up" payments, the Court held that the Commissioner of Patents had no statutory authority to accept corrective payments, and therefore the patent had lapsed for failure to make appropriate maintenance fee payments.

Because the Commissioner of Patents had a longstanding practice of accepting corrective payments, this ruling had the potential to affect a large number of Canadian patents that could be deemed invalid on the basis of incorrect payments. If at any time in the past, small-entity fees were paid when the status of the patent owner at the time of filing the application was that of a large entity, the patent owner ran the risk of losing the patent rights for having paid insufficient fees.

In our March 2005 IP Update, we advised that the Government of Canada had responded by introducing Bill C-29. Bill C-29 provides the authority to the Commissioner to accept "top-up" fees to correct payment errors. Bill C-29 received Royal Asset on May 5, 2005 and will come into force on February 1, 2006. Bill C-29 will provide a twelve-month window for patent owners to provide the Canadian Intellectual Property Office with payments to make up for underpaid fees‘ and thereby secure their patent rights. There will be no extension to the twelve-month period to submit corrective payments. Owners of issued patents and patent applications who have paid patent fees at a reduced "small-entity" level should carefully review their current status as a small entity, and, in consultation with patent professionals, determine if any retroactive top-up payments will be required. Failure to do so may result in Canadian patent rights becoming irrevocably lost.