On June 2, 2007, amendments to Canada’s Patent Rules (“Amendments”) will come into force. These Amendments will deal with various issues including (i) reduced payments for small entities; (ii) the requirements for sequence listings; and (iii) the documents required to establish a non-inventor’s right to file a patent application. The Amendments also include a few other minor changes that deal with issues like refund policy, PCT national entry requirements, corrections of faulty translations, and others.

The Amendments, which were published in the Canada Gazette, Part II on May 16, 2007 as SOR/2007-90, come into force 30 days following their registration which took place on May 3. The remainder of this text discusses the principal changes made by the Amendments.

SMALL ENTITY REGIME

A key aspect of the Amendments relates to changes to the provisions concerning reduced fees for small entities. The need for these changes arose following the decision in Dutch Industries Ltd. v. Canada (Commissioner of Patents),1 which held that an owner of rights in a patent or patent application can lose those rights if maintenance fees are paid at the reduced rate applicable to a small entity when the owner does not qualify as such. The Federal Court of Appeal ruled that such an incorrect payment is equivalent to non-payment and results in abandonment of the application. The Court also ruled that, after the 12-month period provided for in the Patent Rules for reinstatement of an abandoned application, the abandonment becomes irreversible. Similarly, a patent becomes irretrievably lapsed if an incorrect small entity payment is not corrected within the prescribed 12-month grace period.

The changes to the Patent Rules that are specific to the small entity regime are found in Rules 3, 3.01, 3.02, 26 and 26.1. The new provisions are rather long and complicated to read but, in essence, they provide that 

an applicant or patentee may pay fees as a small entity only if it has filed a small entity declaration in accordance with Rule 3.01; 

a small entity declaration may be filed as part of the petition or as a separate document and shall contain a statement that the applicant or patentee believes it is entitled to pay fees at the small entity level (Rule 3.01(1)(b) and (d)); 

a small entity is one that (i) has 50 or fewer employees or is a university, (ii) is not controlled by an entity, other than a university, that has more than 50 employees, and (iii) has not transferred or licensed and does not have an obligation, other than a contingent obligation (such as a mortgage), to transfer or license any right in the invention to an entity, other than a university, that has more than 50 employees (Rule 3.01(3));

 the status of an entity as small or not is to be assessed only once, on the Canadian filing date or, in the case of a PCT national phase application, the date of national entry, and that status cannot change regardless of subsequent transactions or developments (Rule 3.01(2)); 

where a fee is paid at the small entity level improperly, the Commissioner may accept a corrective payment to the standard fee level provided (i) the applicant or patentee files a statement that the small entity fee was paid in good faith and that it made the correction request without undue delay after becoming aware of the error; and (ii) the applicant or patentee pays an additional fee of $200 for each corrected payment (Rule 26(4)).

With regard to this last bullet point, it should be noted that, even if the criteria for making a corrective payment are met, the Commissioner nevertheless retains discretion as to whether or not the correction should be accepted. Because of this discretion, there remains a danger that a patentee or applicant could lose its patent rights as a result of an error, even an error in good faith, in determining whether it is a small entity.

It should be noted that these Amendments have effect going forward only.

SEQUENCE LISTINGS

Currently, Rules 111 to 131 deal with sequence listings and requirements in relation to same. These Rules differ in some respects from those under the PCT and that has given rise to difficulties because of the existence of two different standards. The Amendments will replace all of the detailed requirements in Rules 111 to 131 with a single new Rule 111 requiring that sequence listings comply with the PCT sequence listing standard. Canada will henceforth have a single standard. As mentioned above, it should be noted that these Amendments have effect going forward only.

EVIDENCE OF ASSIGNMENT OF PATENT RIGHTS

Currently, a patent applicant who is not the inventor is required to file evidence, in the form of affidavits or statutory declarations, of its right to file the application. In addition to the administrative burden this represents, the associated registration fees entail a financial burden for applicants. Rule 37, which required that such evidence be filed, is to be repealed under the Amendments. In its place, a declaration by a non-inventor applicant must be filed, either with the petition or separately, detailing the chain of title from the inventor to the applicant. Though the applicant need not file the relevant documents, it must identify the transactions (i.e. agreements, assignments, consents, court orders, transfers or name changes) that give it rights in the invention.

Because a patentee may one day be required, in the context of litigation, to give evidence of its right to a patent, it will remain advisable to prepare assignments from inventors and other assignors confirming the patentee’s right and to keep these documents available for use if and when needed. Further, it should be noted that, though the Amendments change the requirements for registration of documents affecting title for the purposes of a patent application, there is no change to subsection 50(2) of the Patent Act which provides as follows:

Every assignment of a patent, and every grant and conveyance of any exclusive right to make and use and to grant to others the right to make and use the invention patented, within and throughout Canada or any part thereof, shall be registered in the Patent Office in the manner determined by the Commissioner. (emphasis added)

Because the failure to comply with the requirement to register assignments and other grants of exclusive rights could result in the loss of rights to a subsequent assignee who registers the assignment first, it will remain advisable to register such documents prior to the issue of the patent.