Minister of Industry tables technical amendments to the Patent Act

OTTAWA, December 3, 2004 — The Honourable David L. Emerson, Minister of Industry, introduced a Bill proposing two technical amendments to the Patent Act in the House of Commons today.

The first amendment will provide relief to patent holders and applicants affected by the 2003 decision of the Federal Court of Appeal in Dutch Industries Ltd. v. The Commissioner of Patents, Barton No-Till Disk Inc. and Flexi-Coil Ltd. The Bill will provide a one-year time limit for innocent parties, who incorrectly paid their patent fees at the lower small entity fee level instead of at the higher large entity fee level, to make the necessary payments to secure their patents.

The second amendment ensures the Senate equal participation in assessing and recommending eligible candidates for an expert advisory committee to the government to be established under the Jean Chrétien Pledge to Africa.

"The Government is following through with the earlier announcement to clarify the payment of certain patent fees while taking into account public consultations with key stakeholders," said Minister Emerson. "The Government is also ensuring that a comprehensive assessment is performed during the selection of the expert advisory committee members who will be recommending which new pharmaceutical products should be eligible for export under the Jean Chrétien Pledge to Africa."

This initiative builds upon the Government of Canada's commitment toward good government and smart regulation that enhances conditions for an innovative economy while finding improved ways to ensure the establishment of the highest standards.

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BACKGROUNDER

Technical Amendments to the Patent Act

The proposed legislation seeks to address two technical issues. First, it would provide relief to patent holders and applicants who, having incorrectly paid certain patent fees, see the validity of their patents jeopardized. Second, it would ensure the Senate's participation in the assessment and recommendation of candidates for the expert advisory committee to the government to be established under the Jean Chrétien Pledge to Africa (JCPA).

Incorrectly paid fees

The Patent Act and Patent Rules require that patent holders/applicants pay fees, including annual maintenance fees, in order for their patents and applications to remain valid for the duration of their 20-year term of protection. The fees paid by patent holders/applicants vary according to the entity size — either large or small entity. Small entity provisions, introduced in 1985, were intended to encourage small businesses (50 or fewer employees) and universities to use the patent system.

In 2003, pursuant to the patent infringement case of Dutch Industries Ltd. v. The Commissioner of Patents, Barton No-Till Disk Inc. and Flexi-Coil Ltd. (commonly known as the Dutch Industries case), the Federal Court of Appeal ruled that entity size is determined once, when the patent regime is first engaged. For example, if a company initially files as a large entity they are required to pay large entity fees throughout the life of the patent regardless of any subsequent changes in the entity size of the company. The court's decision did not support the prior common understanding that as the entity changed size, so would the required fee.

The court decision also curtailed the practice of flexibility exercised by the Canadian Intellectual Property Office (CIPO) which consisted of allowing patent holders/applicants to pay the difference in fees (commonly referred to as "top-up" payments) when their entity size changed from small to large.

As a consequence, some 7000 patent holders/applicants may now find themselves in the situation of having underpaid a fee and having no recourse to correct these minor payment errors, thus putting the validity of patents in jeopardy. In August 2003, the government announced its intention to amend the Patent Act to clarify the payment of certain patent fees.

The proposed amendments to the Patent Act will provide a one-year time limit for the correction of past fee payments in situations where a fee was incorrectly paid at the lower small entity fee level instead of the higher large entity fee level.

Senate's participation under the JCPA

The JCPA calls for the creation of an expert advisory committee to advise the government on what pharmaceutical products should be eligible for export under the regime. During examination of the JCPA in 2004, an amendment was made to allow a House of Commons committee responsible for industry related matters to assess and recommend candidates for the expert advisory committee to the government. However, this amendment did not provide for the equal participation of the Senate. An amendment ensuring the Senate's participation has thus been included in the proposed Bill.

Further details on Bill C-29 can be found on the Library of Parliament Web site.