Date Set for Coming Into Force of Section 2 of An Act to Amend the Patent Act (Bill C-29)

OTTAWA, October 28, 2005 — The Honourable David L. Emerson, Minister of Industry, is pleased to announce that section 2 of An Act to amend the Patent Act (Bill C-29) will be brought into force on February 1, 2006.

Section 2 of the Act seeks to provide relief to patent holders and applicants who, having incorrectly paid certain patent fees, could see the validity of their patents jeopardized. The amendments will provide patent holders and applicants who have been affected by certain Court decisions with a one-year time limit to rectify past fees that were incorrectly paid at the small entity level.

The Courts' decisions affect those whose entity status changed from large to small after the patent was first engaged and who subsequently paid a fee on the small entity scale. Currently, these patent holders and applicants have no recourse to make corrective payments. These decisions also affect those who have erroneously paid patent fees based on the small entity scale when they, as large entities, should have paid the higher fees. The validity of their patents could be contested in court as a result of having paid the wrong fee and because the Commissioner of Patents was found to lack the legal authority to accept corrective payments for these cases.

"The Patent Act has been amended in order to provide relief to patent holders and applicants affected by the Courts' decisions and to protect those who risk losing patent protection for their inventions," said Minister Emerson. "This technical amendment will not only relieve a great concern in the patent community, but will also maintain the integrity of Canada's intellectual property regime."

This legislative 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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For more information, please contact:

Christiane Fox
Office of the Honourable David L. Emerson
Minister of Industry
(613) 995-9001

Media Relations
Industry Canada
(613) 943-2502

Backgrounder

Section 2 of An Act to amend the Patent Act (Bill C-29)

Amendments to the Patent Act
Section 2 of An Act to amend the Patent Act (Bill C-29) seeks to provide relief to patent holders and applicants who, having incorrectly paid certain patent fees, could see the validity of their patents jeopardized.

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 their entity size — large or small. 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 application process is first engaged. For example, if a company is a large entity at filing, it is 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's decision also curtailed the practice of flexibility exercised by the Canadian Intellectual Property Office, which consisted of allowing patent holders/applicants to pay the difference in fees (commonly referred to as "top-up" payments) when they later discovered that their entity size had changed from small to large.

Two groups of patent holders/applicants are affected by the Court's decision:

The first group could potentially encompass thousands of patent holders/applicants whose entity status changed from large to small some time after the patent was first engaged and who subsequently paid a fee on the small entity scale. Currently, these patent holders/applicants have no recourse to make corrective payments.

The second group comprises those who have discovered that they erroneously paid on the small entity scale when they, in fact, were large entities and should have paid the higher fees. The validity of their patents could be contested as a result of having paid the wrong fee in court and because the Commissioner of Patents was found to lack the legal authority to accept corrective payments for these cases.

The amendments to the Patent Act will provide patent holders/applicants with 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.

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