The Dilemma of Unpaid Fees: Dutch Industries Ltd. v The Commissioner of Patents

Recently, the Supreme Court of Canada dismissed an application for leave to appeal the Federal Court of Appeal's decision in Dutch Industries Ltd. v The Commissioner of Patents, et al. (Dutch Industries case). The case involved the fee payments required of patentees and applicants and the effect of an inadequate payment. Under the Patent Act and Patent Rules, patentees and applicants are required to pay certain prescribed fees to maintain the validity of patents and applications. By virtue of the entity status provisions under the Act, applicants which qualify as small entities (such as universities, or corporations with 50 or fewer employees, which have not engaged in any contractual or legal obligation to transfer or license any right to the invention) are permitted to pay reduced fees. Applicants or patentees who do not meet the statutory definition of a small entity are sometimes called large entities. In the Dutch Industries case, the validity of Barton's issued patent and pending patent application was challenged. Barton had paid the maintenance fees for both the patent and the pending patent application as a "small entity" even after Barton became a "large entity". In an attempt to rectify this situation, Barton made a retroactive top-up payment to pay the balance of the fees outstanding. Traditionally, the Canadian Patent Office permitted applicants to make such retroactive top-up payments when an applicant inaccurately paid fees as a small entity. In the Dutch Industries case, the Federal Court ruled that such top-up payments were not authorized by law. Consequently, Barton's issued patent was held invalid and its pending patent application was deemed abandoned. An appeal of the Patent Office decision to the Federal Court of Appeal was dismissed. In its decision, the Federal Court of Appeal confirmed that top-up payments were not prescribed by law and, further, that entity status was determined upon the date of filing the patent application with the Patent Office. For Barton, this meant that its issued patent was valid since it qualified as a small entity at the time of filing the application for that patent. However, Barton's pending patent application was invalid since it was a large entity at the time that application was filed. The decision created a situation of uncertainty and, in response, on August 8, 2003, the Government of Canada announced its intention to amend the Patent Act to provide a mechanism for the retroactive correction of past fee payments. The Government also stated that regulatory changes will be made "to provide greater clarity to the patent payment regime on a forward-looking basis". The Government's announcement following the Federal Court of Appeal's decision may explain why the Supreme Court dismissed the application for leave to appeal. For more information, visit: http://strategis.ic.gc.ca/sc_mrksv/cipo/patents/notice_aug03-e.html. To review a copy of the Federal Court of Appeal's decision, see: http://decisions.fct-cf.gc.ca/fct/2003/2003fca121.html. Summary by: Lenni Carreiro