Underpaid Maintenance Fees Caused Patent to Lapse, Federal Court Rules

2001-01-01

UNDERPAIDMAINTENANCEFEESCAUSEDPATENTTOLAPSE,FEDERALCOURT
RULES

By
BarryGamache
LEGERROBICRICHARD,Lawyers
ROBIC,Patent&TrademarkAgents
CentreCDPCapital
1001Square-Victoria-BlocE–8
thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.:(514)9876242-Fax:(514)8457874
www.robic.ca-info@robic.com

ArecentdecisionoftheTrialDivisionoftheFederalCourtofCanadaallowed
anapplicationforjudicialreviewinacasewhereCanada’sCommissionerof
Patentshadacceptedpaymentsonaccountofunderpaidpatent
maintenancefeesaftertheprescribeddateforpaymenthadpassed.Lower
anderroneousmaintenancefeeshadbeenpaidoverseveralyearsonthe
basisthatthepatenteewasentitledtoclaimsmallentitystatus(andthus
smallermaintenancefees)wheninfactitwasnot(DutchIndustriesLtd.v.
Canada(CommissionerofPatents),courtdocketsT-967-00,T-968-00,August
13,2001,Dawson,J.).
OnNovember24,1994,patenteeBartonNo-TillDiskInc.(“Barton”)entered
intoanexclusivelicenseagreementwithFlexi-CoilLtd.(“Flexi-Coil”)whereby
rightstopracticetheinventiondescribedinCanadianPatentNo.2,121,388(”
‘388patent”)weregrantedtoFlexi-Coil.The’388patentwasbasedonan
applicationfiledonApril15,1994andissuedonJuly23,1996.Bartonalso
grantedrightstoFlexi-CoilinaninventiondescribedinCanadianPatent
ApplicationNo.2,146,904(“‘904application”).
InotherproceedingspendingbeforetheFederalCourt,DutchIndustriesLtd.
wasnamedasdefendantandwasallegedtohaveinfringedthe’388patent.
Initsdefenceinthatcase,DutchIndustriesLtd.allegedthatthe’388patent
hadlapsedfornon-paymentoftherequiredmaintenancefeeswithinthe
prescribedtime.Thecircumstancesofallegednon-paymentweredescribed
asunderpaidmaintenancefeesflowingfromthefactthatsmallentitystatus
wasclaimedbythepatenteewheninfactsuchstatuswasnotavailabletoit.
Themaintenancefeesinaccordancewithsmallentitystatuswerepaidby
thepatenteeuptoMarch29,2000.Atthattime,thesolicitorsforpatentee
BartonwrotetotheCommissionerwithrespecttoboththe’388patentand
the’904applicationindicatingthatinfactBartonwasnotentitledtosuch

smallentitystatusasofNovember25,1994andforwardingthebalanceofthe
officialfeesthathadnotbeenpaidsincethatdate.TheCommissionerof
Patentsacceptedthesepayments.
TheapplicationsforjudicialreviewthatwerelaunchedbyDutchIndustries
Ltd.soughtordersquashingtheCommissioner’sdecisiontoacceptsuch
retroactivepaymentsandfindingthatboththe’388patentandthe’904
applicationhadlapsedforfailuretopaytheprescribedmaintenancefees
andforfailuretoapplyforreinstatementinatimelyfashion.
Regardingthe’388patent,theCourtreviewedtheapplicableprovisionsof
Canada’sPatentAct,R.S.C.1985,c.P-4inforceattherelevanttime:
Subsection27.1(1)providedthat”anapplicantforapatentshall,tomaintain
theapplicationineffect,paytotheCommissionersuchfees,inrespectof
suchperiods,asmaybeprescribed”.TheActfurtherprovidedthatan
applicationforapatentshallbedeemedtohavebeenabandonedifthe
feespayablebytheapplicantinrespectofaperiodprescribedforthe
purposesofsaidSubsection27.1(1)werenotpaidbeforetheexpirationof
thatperiod.TheActalsoprovidedthatanapplicationdeemedtohavebeen
abandonedunderSection27.1″maybereinstated”onpetitionbythe
applicantpresentedtotheCommissionerwithinsuchperiodasmaybe
prescribedandonpaymentofaprescribedfee.Suchapplicationso
reinstatedretaineditsoriginalfilingdateanditspriority,ifany.
ReferencewasalsomadebytheCourttoSection76.1ofthethenapplicable
Ruleswhichreadinpart:”Thefeetomaintainanapplicationforapatentin
effectshallbepaidforeachone-yearperiodbetweenthefirstand
nineteenthanniversariesofthedateofthefilingoftheapplicationin
Canada”.TheRulesfurtherprovidedthatthesefees”shallbepaid”beforethe
expirationofeachperiodreferredtointhatsubsection.Finally,itwasalso
mentionedintheRulesthatapetitiontoreinstateanapplicationforapatent
pursuanttoSection27.1ofthePatentAct”shallbepresented”withinsix(6)
monthsafterthedateonwhichtheapplicationforthepatentwasdeemed
tohavebeenabandoned.WhileSection139oftheRulesgavethe
Commissionerbroaddiscretionandauthoritytoextendcertaintimelimitson
othermatters,suchdiscretionandauthoritywasremovedasfarastheabove
provisionsofSection76.1oftheRuleswereconcerned(SeeSubsection76.1(6)
inforceatthetime).
InlightoftheclearprovisionsofthePatentAct,theCourtfoundthatthere
wasamandatoryrequirementtopaytheprescribedfeesandanequally
mandatoryconsequenceofdeemedabandonmentifthespecifiedfees
werenotpaidbeforetheexpirationoftheperiodprescribedforpayment.
Moreover,theCourtfoundthatanyrequestforreinstatementshouldhave

beeninitiatedaccordingtotheRulesinforceatthetime,i.e.withinthe
prescribedperiodofsix(6)months.
InlightoftheconclusionthattheCommissionerdidnothavethediscretionto
allowforthepaymentofthebalanceofmaintenancefeesafterthe
expirationoftheperiodforapplyingforreinstatement,theCourttherefore
madeafindingthatboththe’388patentand’904applicationhadlapsed.
ThisCourtdecisionappearstobeawarningforpatenteesandtheiragents
aliketotakenoteofanychangeofstatusofthepatenteewhichmight
influencethescaleofmaintenancefeesitiscalledtopay.Any
underpaymentandlackofrequestforreinstatementmadewithinthe
prescribedtimeperiodwillleadtowhattheCourtcalledanapparentlyharsh
butinevitableresultconsideringtheclearandunambiguouslanguageofthe
Act.
Publishedat(2001),15-11W.I.P.R.5-6underthetitleUnderpaidMaintenance
FeesCausedPatenttoLapse.
LEGERROBICRICHARD,2001.

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