The Scope of the Term “University” Within the Rules Respecting the Patent Act
THESCOPEOFTHETERM”UNIVERSITY”WITHINTHERULESRESPECTINGTHEPATENT
ACT
MarcelNaud*
LEGERROBICRICHARD
,L.L.P.
Lawyers,PatentandTrademarkAgents
CentreCDPCapital
1001Square-Victoria–BlocE–8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.(514)9876242–Fax(514)8457874
www.robic.ca–info@robic.com
InCanada,thetariffapplicabletosmallentitiestoapplyforandmaintain
patentsislowerthanthetariffapplicabletolargeentities.Withrespecttoan
invention,theRulesRespectingthePatentAct(hereinafterthe”Rules”)define
asmallentityasbeing,subjecttocertainexceptions,(i)anentitythatemploys
50orfeweremployeesor(ii)auniversity.Thissituationcreatedanincentivefor
certainentities,suchasresearchcentresaffiliatedtoauniversity,todeclare
thattheyqualifyassmallentitieswhentheyfileapatentapplicationinorder
tobenefitfromthesomewhatadvantageoustariffassociatedwithsuch
status,byinterpretingthescopeoftheterm”university”intheRulesasbroadly
aspossible.
Untilrecently,thispracticewasnotveryriskybecauseitseemedpossiblefor
anentitywhichinfactdidnotqualify,toretroactivelyremedyitsdefaultby
payingthetariffapplicabletoalargeentity,aslongasitwasinitiallypaying
thesmall-entitytariffingoodfaith.ButsincetheDutchIndustriesdecisionwas
renderedlastyear(see:DutchIndustriesLtd.c.Canada(Commissionerof
Patents,2001FCT879)ithasbecomeclearthatifthevalidityofapatentis
challengedbyathird-partyonthatbasis,suchdefaultwouldbesanctioned
bythelossoftherightsderivedfromthepatentapplication.Infact,theCourt
statedthat”[i]tdoesnotappearreasonabletoconcludethatthefailureof
thepatentee/patentapplicanttocorrectlyadvisetheCommissionerastothe
righttoclaimsmallentitystatusshouldresultinmoreadvantageoustreatment
beingaffordedtothepatentee/patentapplicant(themoreadvantageous
treatmentbeingtoallowatop-uppaymenttobemadeaftertheexpiration
ofthegraceperiod)”.
©CIPS,2002.*OfLEGERROBICRICHARD,L.L.P.,amultidisciplinaryfirmoflawyers,andpatentand
trademarkagents.PublishedintheSpring2002issue(Vol.6,No.2)issueofourNewsletter.
Publication068.046E.
Thissituationincreasedthenecessitytodefineasclearlyaspossiblethescope
oftheterm”university”inordertoavoidcircumstanceswherecertainentities
erroneouslydeclarethattheyqualifyassmallentitiesandconsequentlyrun
theriskoflosingtheirrightsderivedfromtheirpatentapplications.Infact,
thereisagreatlikelihoodthatentitiesthathaveanambiguousstatusinthat
respectwouldnotbeconsideredasorassimilatedtouniversitiesand,assuch,
couldnottakeadvantageofthetariffapplicabletosmallentities.
Theordinaryscopeoftheterm”university”
Therearealmostasmanydefinitionsoftheterm”university”asthereare
dictionaries.However,therearecertainrecurrentattributesinthese
definitions,notablytheactivitiesofteachingandlearninginhigherbranches
andthecorrespondingattributionofdiplomasofdifferentdegrees.Inthe
absenceoflegalorcontractualdefinitions,Courtsoftenrefertodefinitionsin
dictionariesinordertosettheinterpretativecontextofagivennotion.Hence,
evenifthedefinitionsof”university”indictionariesarenotconclusive
regardingthestateofthelaw,theymayprovideguidancewithrespect
thereto.Forinstance,Black’sLawDictionary(6
thedition)definesuniversityas
“[a]ninstitutionofhigherlearning,consistingofanassemblageofcolleges
unitedunderonecorporateorganizationandgovernment,affording
instructionintheartsandsciencesandthelearnedprofessions,and
conferringdegrees.”
Thelegalscopeoftheterm”university”
InthefederalExciseTaxAct(see:R.S.C.1985,c.E-15),”university”hasbeen
definedas”arecognizeddegree-grantinginstitutionoranorganizationthat
operatesacollegeaffiliatedwith,oraresearchbodyof,suchaninstitution.”In
French,thedefinitionbecomesan”institutionreconnuequidécernedes
diplômes,ycomprisl’organisationquiadministreuneécoleaffiliéeàunetelle
institutionoul’institutderecherched’unetelleinstitution.”
Accordingtothisdefinition,theapplicabilityofwhichdoesnotgobeyondthe
ExciseTaxAct,auniversityhas3mainattributes,namely:(1)beingan
institution,(2)recognized,(3)thatgrantsdegrees.Theideaof”institution”
suggeststhattheentitymustbe”instituted”,i.e.thatitwascreatedbythewill
ofapublicauthority,andnotmerelybythewillofindividuals;theideaof
being”recognized”suggeststhatthepublicauthoritylegislatively
acknowledgedthe”university”statusofsuchinstitution;finally,theideaof
“grantingdegrees”suggeststhatthisisthemainobjectiveofsuchinstitution,or
atleastoneofitsfundamentalaspects,withtheactivitiesthatthisimplies.
Theseattributesarecumulative.
Inaddition,theuseoftheexpression”or”intheEnglishversionandofthe
words”ycompris”intheFrenchversionhasanextensiveeffect,whichtendsto
indicatethat,absentthisaddition,theentitiesthatfallwithinthedefinitionby
reasonofthisextensionwouldhaveotherwisebeenexcluded.
Inthesamemanner,itseemspossibletoinferfromtheabsenceofalegal
definitionof”university”intheRulesthatthelegislativeintentwasnottoextend
thescopeofthisterminthesamewayasintheExciseTaxAct.
Section1oftheQuebecActrespectingEducationalInstitutionsatthe
UniversityLevel(see:L.R.Q.ch.E-14.1)enumeratesalistofentitieswhichare
recognizedaseducationalinstitutionsattheuniversitylevel.Thechoiceofthis
expressionasopposedtothesimplerterm”university”indicatesthatthesetwo
notionsarenotinterchangeable:thescopeoftheformerisnecessarily
broaderthanthescopeofthelatter,sinceafaculty,schoolorinstituteof
someoftheinstitutionsenumeratedintheStatute,managedbyalegal
personseparatefromthatwhichadministerssuchinstitutions,isitselfan
educationalinstitutionattheuniversitylevel,withoutnecessarilybeinga
university.
Furthermore,section2ofthisStatuteclearlyestablishesthat,inordertogrant
universityleveldegreesordiplomas,onemustbeaninstitutioncontemplated
insection1oralegalpersonorbodyinwhichthepowertoconfersuch
degreesordiplomasisvestedbyanActofParliament.Thus,thisconstitutesa
powerexclusivelyreservedtotheseentities,whichmakesitasignificant
attributeinqualifyinganentityasbeinga”university”.
Finally,theQuebecActrespectingHealthServicesandSocialServices(see:
L.R.Q.ch.S-4.2)allowssomehospitalcentrestoacquirethestatusofuniversity
hospitalcentre.However,itdoesnotseemlogicaltoconcludefromthatfact
alonethatahospitalcentrecanbecomeauniversity,andthis
notwithstandingthelevelofintegrationwiththevariousprogramsofthe
universitytowhichitisaffiliated.Thisisanotherelementthattendstoindicate
thatcertainentitiesmayhavea”university”statuswithoutbeingauniversity.
Thescopeoftheterm”university”pursuanttojurisprudence
InthecaseofReCityofLondon(see:ReCityofLondonandUrsulineReligious
oftheDioceseofLondon,[1964]1O.R.587(O.C.A.)),theOntarioCourtof
AppealconsideredthattheUrsulineCollegecouldnottakeadvantageofa
taxexemptionwithrespecttoarealestateassessmentprovidedfor
universitiesbyvirtueoftheAssessmentAct(R.S.O.1960,c.23).
Thejudge’sdiscussiononthisissuebeganwithareminderthat,intaxmatters,
apersonwhoclaimsanadvantageonthebasisofanexemptioninastatute
“mustbringhimselfclearlywithinthefourcornersoftheexoneratingclauses”,
andthatinsuchmatters,thepersonwhoclaimseligibilitytothebenefit
associatedwiththeexemptionmustclearlydemonstratethatithasarightto
suchexemption.
Withoutextendingthereachofthisprincipletoastatutewhichwouldhavea
differentobjectthanthecollectionoftaxestofinancepublicservices,there
arereasonstobelieve,basedonthefindingsinthatjudgment,that,ifadoubt
remainswithrespecttotherightofanentitytoclaimeligibilitytoabenefit
associatedwithsmallentitystatus,itwouldnotberesolvedinitsfavour,
preciselybecauseoftheuncertaintysurroundingtheissue.Thisisevenmore
truesincethefeescollectedbyvirtueofthetariffareprobablymeantto
finance,atleastpartially,thepublicservicesassociatedwiththefilingand
maintenanceofpatents.
Inaddition,intheabove-mentionedcase,thefactthattheCollegeitselfwas
notgrantingdiplomas,despitebeingaffiliatedwithWesternOntarioUniversity
toprovidecoursesleadingtothegrantingofsuchdiplomas,waspivotalinthe
findingthatsuchentitywasnotauniversity.
ThispositionisnotincontradictionwiththeonetakenintheBritishcase
St.David’sCollege,Lapeterv.MinistryofEduction(see:[1951]1All.E.R.559),
onwhichtheOntarioCourtofAppeal’sdecisionrelied.Inthatcase,despite
thejudge’sacknowledgementthattheentityfeaturedmanyattributes
generallyassociatedwithauniversity,hefoundthattheentitywasnota
universitybecauseitscharterdidnotrefertosuchstatus.
FromthejudgementrenderedinReCityofLondon,onemustkeepinmind
thatprovidingteachingactivitiestostudentswhomayobtaindegrees
grantedbyauniversitytowhichanentityisaffiliateddoesnotsufficeto
extenduniversitystatustothatentity.
Conclusion
ForthepurposeoftheapplicationoftheRules,auniversitystatusseemslikea
meredichotomywhichallowsorpreventsanentityfromtakingadvantageof
thetariffapplicabletosmallentities.Thisbeingsaid,intheeventoflitigation
onthevalidityofapatentonthatbasis,itmaywellbepossiblethatanentity
whichclaimstoqualifyasa”university”accordingtotheRules,wouldhaveto
clearlydemonstratethatithasthegeneralattributesofauniversitysoasto
qualifyasone.
Inthatrespect,themostsignificantattributesseemtobe:(1)beinginstituted
byapublicauthority,(2)beinggrantedauniversitystatusfromthatpublic
authorityand(3)beingabletograntdiplomas.Inaddition,thecaseofRe
CityofLondonisrelevantincomingtotheconclusionthatbeingaffiliated
withauniversityandprovidingcourseswhichmayleadtoadiplomagranted
bysuchuniversitydoesnotsufficetoestablishthattheentityisauniversity.
Somedefinitionsoftheterm”university”mayevenleavethedooropento
arguethatuniversity-levelinstitutionsthatonlygrantdiplomasinoneparticular
fieldordiscipline(e.g.commerceorengineering)wouldnotqualifyasa
university.
Hence,forthetimebeing,itisimpossibletoclearlyestablishthedefinitive
criteriawhichwouldbeusedbyaCourtinordertodecidethisissue.Inan
articlediscussingthequestion(see:Whatisa”university”for”smallentity”
purposesinCanadianpatentlaw?”,(1997)14C.I.P.R.75),authorSheldon
Burshteinconcludes:”Itappearsthatthemostimportantcriterioninqualifying
aninstitutionasauniversityisitsabilitytograntdegrees.[…]However,many
institutionsaffiliatedwithuniversitiesdonotqualifythemselvesasuniversities.
Thiswouldbeparticularlytrueofrelatedentitiesthataresetupexpresslyfor
thepurposeofcommercializingresearchconductedatauniversitybutthat
donotgrantdegrees.”
Inalllikelihood,whenaCourtorParliamentwillhavetomakeafinal
determinationonthisissue,itwillhavetocomeupwithobjectivecriteriato
elaboratea”test”,soastoallowentitiestodeterminewithcertaintytheirrights
andobligationswithrespecttotheRules.Thisquestforobjectivecriteriacould
bedetrimentaltoentitieswhosecurrentstatusonthisissueisambiguous,but
whostillwishtoclaimsmallentitystatus.
Inanyevent,theultimateoutcomeofadebateofthisissueremainshighly
uncertainforentitiesaffiliatedtouniversities,andinparticularforthosethatdo
notgrantdiplomas,and,barringnewdevelopments,thenotionofuniversity
mustberestrictivelyconstrued.Infact,untiltheissueisclearlysettled,the
monetarydifference,whateveritmaybe,betweenthetariffapplicabletoa
largeandasmallentitytoapplyforandmaintainapatentinCanada,isnot
worththeriskofhavingapatentinvalidatedonthegroundthattheproper
applicabletariffwasnotpaid.
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