Dura Lex, Sed Lex Rule Applied by Federal Court in Lapsed Patent Case

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DURALEX,SEDLEXRULEAPPLIEDBYFEDERALCOURTINLAPSEDPATENTCASE

By
BarryGamache
LEGERROBICRICHARD,Lawyers
ROBIC,Patent&TrademarkAgents
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AcascadeofadministrativeerrorsapparentlycausedoneofF.Hoffmann-La
RocheAG’s(“Hoffmann-LaRoche”)patentstolapse.Byitsapplicationfor
judicialreview,Hoffmann-LaRochetriedtopreserveitspatent,claimingthat
theCommissionerofPatentshaddutiestowardspatentholders,whichwere
notfulfilledinthiscase.Inhisdecision,Mr.JusticeO’Reillysawnosuchduties
andrejectedHoffmann-LaRoche’sapplication(F.Hoffmann-LaRocheAGv.
CommissionerofPatents,2003FC1381(November25,2003,O’ReillyJ.)).
PharmaceuticalgiantHoffmann-LaRochewastheholderofCanadian
Patentnumber1,291,492issuedbackin1991.In1995,Hoffmann-LaRoche
appliedtotheCommissionerofPatentstohavethatpatentre-issued:Thiswas
achievedin1998andtheCommissionerassignedthere-issuedpatent
number1,340,121.
In2002,Hoffmann-LaRochewasadvisedthatitsre-issuedpatenthadlapsed
forfailurebyittopaythecorrectamountinannualmaintenancefees.
Hoffmann-LaRocheadmitted”innocenterror”inlettingitspatentlapseand
askedtheFederalCourttopreserveitspatent.
Hoffmann-LaRoche’spredicamenthighlightstheexistenceofdifferenttariffs
ofmaintenancefeesfornewpatentsandre-issuedpatents.Thoughthe
amountofmaintenancefeesareallrelativelymodest,useofthewrongtariff
whencalculatingthemaintenancefeesowedcanleadtoerroneous
amountsbeingpaid(ornoamountbeingpaidatall!)withdisastrous
consequences.
Initsdecision,theCourtwritesthatthePatentAct,R.S.C.1985,c.P-4requires
patentholderstopayannualmaintenancefees:Foranewpatentheldbya
largeentity,nopaymentisrequiredthefirstyear,then$100eachyear
beginningonthesecond,andcontinuingthroughthefifthanniversaryofthe
patent.Thepatentholdermustthenpay$150eachyearafterthat.Further

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feeincreasesoccuronthepatent’stenthanniversary.However,ifthepatent
isre-issued,thepatentholdermustcontinuetopaytherequiredfeeonthe
anniversaryoftheoriginalpatent.Itmustbenotedthatifapatentholder
missesadeadlinetopayarequiredfee,hecanstillmakeapaymentupuntil
oneyearaftertheduedate,alongwitha$200latefee.
InthecaseofHoffmman-LaRoche’sre-issuedpatent,aseriesoferrorswere
madebothbytheCommissionerofPatentsandHoffmann-LaRoche:
AccordingtotheCourt’ssummaryofevents,”Hoffmann-LaRochewrongly
classifiedthere-issuedpatentasanewpatent.Accordingly,itbelievedthat
nofeewasdueonthefirstanniversaryofthe”new”patent.Inreality,
however,becauseitwasare-issuedpatent,afeeof$150wasdueonthe
originalpatent’seighthanniversary,whichwasOctober29,1999.Hoffmann-
LaRoche,thinkingthatitwasthepatent’sfirstyear,paidnothingin1999,but
thenpaidwhatwouldhavebeenthenormal$100annualfeeforanew
patentin2000and2001.ThismeantthatHoffmann-LaRochemissedentirely
onepaymentof$150,whichwasdueinOctober1999.Further,insteadof
makingthatpaymentandpayingtheprescribedlatefeethenextyear,it
onlypaidthe$100feethatwouldhavebeenrequiredinthesecondyearof
anewpatent.Again,consistentwithitsmistakenclassificationofthepatent,it
paidanother$100in2001.Bythen,however,theCommissioner’sofficehad
detectedtheerrorandtookstepstoinformHoffmann-LaRochethatthe
patentwascancelled.”ThemistakemadebyHoffmann-LaRocheregarding
theclassificationofitspatentwasalsomadebytheCommissionerofPatents
whoappearedalsotohavetreatedthere-issuedpatentasanewpatent.Its
recordswerenotsetstraightuntilwellafterHoffmann-LaRoche’sdeadlinefor
itsmaintenancefeesanditslatefeeshadbothpassed.
IndiscussingthevariousissuesraisedbyHoffmann-LaRocheinsupportofits
application,theCourttooknoteofthepurposeofmaintenancefeesunder
thePatentAct;referencewasmadetotheSupremeCourtofCanada
decisioninFreeWorldTrustv.Électro-SantéInc.[2000]2S.C.R.1024,atpara.
13:”Patentprotectionrestsontheconceptofabargainbetweenthe
inventorandthepublic.Inreturnfordisclosureoftheinventiontothepublic,
theinventoracquiresforalimitedtimetheexclusiverighttoexploitit”.In
exchangefortheexclusiverighttoexploittheirinvention,patentholdershave
adutytopaymaintenancefeestokeepapatentingoodstanding.This
responsibilityfallssquarelyontheshouldersofthepatentholder.Onthispoint,
thePatentActisclearasitsprovisionsrelatingtothedurationofpatentsare
expresslysubjecttothetermsoftheprovisionsrelatingtomaintenancefees.
InrejectingHoffmann-LaRoche’sapplication,theCourtruledthatthe
Commissionerdoesnothavethedutytoallowpatentholderstobenotified
andheardbeforetheyarefoundtobeindefaultregardingthepaymentof

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theirmaintenancefees.Ensuringthattheappropriateamountof
maintenancefeesarepaidinatimelyfashionistheresponsibilityofthe
patentholder;eveniftheCommissionerofPatentsmakeshisownmistakesin
theclassificationofapatent,anddoesnotwarnapatentholderbeforeits
patentiscancelled,thisdoesnotlessenordiminishthepatentholder’sown
obligations.
Amongotherarguments,Hoffmann-LaRochearguedthattheCourthadthe
authoritytoproviderelieffromthestrictprovisionsofthePatentActregarding
maintenancefeesonthegroundsofequity.ThoughitistruethattheCourt
cangrantequitablerelieftopreventtheforfeitureofpropertyunderaprivate
contractsuchasalease,JusticeO’Reillyconsideredthatthesituationis
entirelydifferentwhenforfeitureresultsfromaclearprovisionofastatute:If
theCourtweretoextendthetimeforpayingthemaintenancefees,which
areclearlyspeltoutunderthestatute,itwouldbesubstitutingitsown
deadlineforthatenactedbyParliament.Underthecircumstances,theclear
provisionsoftheLawwereinescapableandtheCourtcouldnot”save”
Hoffmann-LaRoche’spatent.
Thiscaseisareminderforpatentholdersthattheymusttaketheappropriate
stepstoensurethatthestrictprovisionsofthePatentActregarding
maintenancefeesarefollowed,failingwhichpatentholdersmayface
“catastrophic”consequenceswithnoreliefotherthantheCourt’ssympathy.

LEGERROBICRICHARD,2004.
PublishedunderthetitleCourtCannotReinstatePatentThatLapsedforFailuretoPayFees
(2004),18-2WIPR3-4.Publication142.157.

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