Canadian Federal Court of Appeal Releases Decision on Patent Fees

In the recent case of Barton No-Till Disk Inc. and Flexi-Coil Ltd. v. Dutch Industries Ltd. and The Commissioner of Patents ("Dutch Industries"), the Canadian Federal Court of Appeal allowed an appeal against a Federal trial court's decision concerning the determination of entity status for the purpose of fees relating to patents and patent applications. In Canada, a patent applicant or patentee qualifying as a small entity is permitted to pay Patent Office fees at a reduced rate. In Canada, a small entity is a university, or an entity that employs 50 or fewer employees so long as the entity is not under a legal obligation to transfer rights in the invention to anyone other than a small entity. The Canadian Patent Office had allowed a patentee to top-up any shortfall in fees if it had earlier paid incorrectly at the small entity rate and so a mistake in designation was not considered fatal to the validity of the patent. In Dutch Industries, the original applicant/plaintiff had filed 2 applications (the "˜388 patent and the "˜904 application, respectively), one prior and one subsequent to a licensing agreement concerning their inventions with a co-plaintiff which did not qualify as a small entity. Top-up payments were made once litigation had commenced. The plaintiffs sued the defendants for infringement of the "˜388 patent; and the defendant countered that the Patent Office had no jurisdiction to accept any top-up, and that as a result the "˜388 patent lapsed and the "˜904 application was no longer in effect. The trial court held that the Patent Office had no authority to accept top-ups under the relevant legislation and thus the defendant won. The Court of Appeal reasoned that the entity status of an applicant (and of the patentee of the corresponding issued patent) is determined once and for all at the time of filing of the application. There is no subsequent re-determination of entity status. As a result, the Court of Appeal found that the "˜388 patent had not lapsed for underpayment since at that time, the patentee was a small entity. On the other hand, the "˜904 application was deemed to have been abandoned and could not be reinstated, since at the time of filing the applicant was not a small entity. The court of appeal commented that it is complex to determine whether an applicant qualifies as a small entity under Canadian law and the consequence of a mistake is that the patent rights are lost. Applicants who claim this status should be careful but no longer have to revise their status if it changes following filing. For a copy of the decision, please see: http://decisions.fct-cf.gc.ca/fct/2003/2003fca121.html For a copy of the Patent Rules, please see: http://laws.justice.gc.ca/en/P-4/SOR-96-423/156490.html#rid-156500 Concerned about your company's intellectual property? Contact Gord Jepson (gjepson@dww.com) or Sue Diaz (sdiaz@dww.com) of DWW.