Comments Received on Proposed Amendments to the Patent Act to Clarify the Payment of Certain Patent Fees

On December 22, 2003, the Canadian Intellectual Property Office (CIPO) posted on its Web site a request for comments on proposed amendments to the Patent Act to clarify the payment of certain patent fees. The deadline for submitting comments expired on March 31, 2004.

This document provides a summary of the comments that were received during this public consultation.

Contributors

In response to CIPO's call for comments, 23 submissions were received. The entities providing comments included intellectual property professional associations, patent agent firms, individual patent practitioners, technology transfer divisions of Canadian universities and national laboratories, and large multinational corporations. CIPO would like to thank all those individuals and organizations that took the time to respond to this request and that shared their concerns, and offered their suggestions concerning the draft legislation as originally proposed by CIPO.

General Reaction

Public reaction to the commitment from the Government of Canada, and the efforts by CIPO to amend the Patent Act in response to Federal Court decisions concerning entity size, and the associated fee payments was extremely supportive. A couple of submissions urged the Canadian Government to proceed with the proposed legislation as expeditiously as possible to alleviate potential uncertainty.

One submission, however, expressed concern over the enactment of retroactive provisions as this introduces an undesirable degree of uncertainty to third parties. If retroactive legislation was deemed necessary, this submission offered that the provision should be in the Patent Act, limited in time, and should provide for intervening rights for third parties.

One comment received suggested that the Government should review the merits of maintaining the small entity fee regime. Internationally, only Canada and the United States make a distinction based upon the size of the entity applying.

Subsection 4(1)

The great majority of comments expressed concern over the proposed language of subsection 4(1) of the Transitional Provisions.

Six-Month Time Limit

A large majority of submissions considered that the period of six months after the coming into force of the provision to "top up" past fee payments which were incorrectly paid at the small entity rate was unnecessarily restrictive. The concern was that such a limited period placed an unrealistic burden on the patent profession to communicate with all entities that might be affected and to take appropriate action. There was also concern that it would be impossible to accurately determine if small entity fees were appropriate due to the ambiguity of the small entity definition.

A large number of comments considered that correction of past fee payments should be permitted at any time, or that the time limit be made extendable, provided that the Commissioner was satisfied that the incorrect payment was due to inadvertence, accident or mistake and that the applicant/patentee acted diligently and in good faith (or some similar language).

If a time limit was deemed necessary, many felt that a period of at least one year was appropriate as this would coincide with a single cycle of maintenance fee payments and would permit a review of each individual file as the payments were brought forward in respective patent agent office notification systems.

It was suggested by one contributor that the retroactive corrective mechanism be made available for a period of time that would extend at least until the point at which further amendments to the Patent Rules come into force.

Application

Concern was expressed that the language of subsection 4(1) would not provide retroactive correction to applications/patents for which "top up" payments were made prior to the coming into force of the provisions. If these payments were to be accepted under the retroactive provision, respondents wondered if each case would then require a review to ensure that the information required under subsection 4(2) was submitted.

One comment queried whether subsection 4(1) was meant to cover, in addition to incorrect payments, the non-payment of fees.

Some concern was expressed that the language in subsection 4(1) required modification to remove all doubt that the proposed legislation would apply to pending and decided litigation. Language was also suggested, based upon previous decisions of the Courts, to confirm the clarifying intention and the retroactive application of subsection 4(1) to any future Court.

Section 12

Many submissions were received which expressed general support for the addition of paragraph 12(1)(g.1) and subsection 12(1.1) to section 12 of the Patent Act. The respondents interpreted the provisions as permitting the creation of rules that would allow an applicant/patentee to pay a missed fee at a later date. It was pointed out that this would bring Canadian patent legislation in line with the legislation of other major industrialized countries, such as the United States, the United Kingdom, Australia and Germany.

Of the submissions offering support for the proposed amendments to section 12, all indicated a desire to have the opportunity to review and comment on draft rules which would presumably address issues such as possible fees, the manner of making a request, the conditions under which a request would be made and considered (unavoidable or unintentional), time limits, etc.

Sections 78.1 and 78.4

While comments on these sections were minimal, one submission suggested that the proposed amendments to sections 78.1 and 78.4 of the Patent Act should also make reference to subsection 12(1.1) so that it is clear that "top up" payments for applications filed before October 1, 1996 would also have retroactive effect.

It was also mentioned that these two provisions were too complex and would require the expertise of a patent agent to take full advantage of the opportunity.

Unambiguous and Clear

A majority of the submissions received expressed the view that, while there was support for the retroactive correction of incorrectly paid fees as a result of entity size, there remained many questions that required clarification. In the absence of such clarification, and despite the position taken by CIPO, applicants/patentees could not be 100% confident that a future Court decision would not invalidate their patent.

Concern was expressed that the definition of small entity and the criteria for its assessment remained unclear and consequently applicants availing themselves of this possibility were at risk.

It was further noted that the recent Court decision was silent as to whether the entity status changes from that determined at the time of filing when there is an assignment to a new owner.

Certain submissions commented that CIPO needed to clarify what is meant by the phrase "when the patent system is first engaged", specifically with respect to Patent Cooperation Treaty applications.

It was also offered that the amendments should clarify whether the "top up" fee is the fee at the time of the initial payment or the fee under the January 1, 2004, fee schedule.

Other Comments

A segment of the comments received were from the technology transfer divisions of certain universities and these submissions expressed a distinct set of concerns.

The cost-effectiveness of the proposed amendment was repeatedly mentioned as an issue, as well as the impact of licensing university technology given the uncertainty surrounding the definition of small entity. It was expressed that the small entity provision was intended to reduce the cost burden for universities, but if the system were too complex, so as to require a patent agent, or so unforgiving that the risk associated with paying a small entity fee was the potential invalidation of university owned patents, the system would not be used.

It was suggested in one submission that the proposed amendments failed to address the underlying problem but rather focused on collecting underpaid patent fees.

In general this group urged CIPO to solidify the interpretation of the Courts that the entity size should be determined at the time of filing and maintained at that entity size designation throughout the life of the patent.

Alternative Solutions

In addition to CIPO's proposed amendments to the Patent Act, many respondents took the opportunity to offer alternative approaches to resolve the uncertainty created by the recent Court decision with respect to the incorrect payment of certain patent fees.

One proposal contemplated a fee payment amnesty period on the basis of its simplicity, certainty and cost-effectiveness.

A second alternative proposal was to amend the Patent Act to include a provision which would preclude an invalidity attack on a patent on the basis that a fee had been paid as a small entity rather than a large entity, both historically and in the future, as a result of inadvertence or accident, without any intention to mislead or deceive the public. A late fee in this instance would be applicable.

Next Steps

CIPO would like to express its gratitude to those who made the effort to provide comments on this very important initiative. CIPO will be reviewing the proposed amendments to the Patent Act in light of the comments received, and should have a revised proposal in the near term. CIPO expects to consult on proposed regulatory amendments in the fall of 2004.