In 2001, the case of Dutch Industries Ltd v Canada (Commissioner of Patents), 2001 FCT 879, 2003 FCA 121, sent shockwaves through Canadian patent practice when it was held that a simple error in paying a fee to the Canadian Intellectual Property Office (CIPO) could have a devastating effect on the ability to obtain or maintain a patent. To address this problem, section 3.1 of the Patent Rules was introduced on January 1, 2004 to provide the Commissioner of Patents with a means to avert the effects of such errors in some circumstances. The Federal Court has recently considered the scope of section 3.1 to remedy such an error.
Section 3.1 provides that where there is a “clear but unsuccessful” attempt to pay a fee, the Commissioner shall, in certain circumstances, notify the applicant that further fees are owing, and upon payment of the fees as specified, the application is deemed to be in good standing. In Karolinska Institutet Innovations AB v Attorney General of Canada, 2013 FC 715 (“Karolinska”), Justice Hughes of the Federal Court reviewed the application of section 3.1, particularly in regard to what constitutes a “clear but unsuccessful attempt” by an applicant to pay a fee. Justice Hughes indicated that “clear but unsuccessful” is to be provided a fair, large and liberal construction. In the circumstances of the case, Justice Hughes found that where the applicant attempted to pay a fee owing, but failed to do so, the Commissioner of Patents was required to send notice to the applicant to remedy those fee deficiencies before refusing processing on the grounds of insufficient payment.
The applicants’ Canadian patent agent was instructed to proceed with national phase filing of two Patent Cooperation Treaty (PCT) applications. As the 30 month deadline for national phase filing had passed, both applications were subject to late entry fees. However, due to a clerical error at the patent agent’s office, the applications submitted to CIPO included only the basic national phase filing fees.
Although both national phase entries were filed several days in advance of the 42 month deadline for late entry, no notice of deficiency was issued by CIPO pursuant to section 3.1. Rather, six weeks after the deadlines had passed, CIPO sent letters indicating that it had refused the national phase entries for failure to pay the necessary late entry fees. When CIPO advised the agent that it would take no further steps to remedy the situation, the applicants sought judicial review.
The Court found that, pursuant to section 3.1, CIPO was required to consider whether the Canadian patent agent had made a “…clear but unsuccessful attempt…” to pay the late fee. CIPO argued that it was not “clear” that the applicants wished to pay not only the PCT filing fee, but also the late entry fee. The Court disagreed.
Justice Hughes first noted that the purpose of the fees is not penal, but rather a means of recovering administration costs and ridding the system of deadwood patents. Justice Hughes then quoted section 12 of the Interpretation Act, which states that “(e)very enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.” Accordingly, he held that a reference to “the fee” in section 3.1 should be liberally construed to include not only a basic filing fee, but also the additional late filing fee. Moreover, Justice Hughes found that CIPO can easily recognize an application as one requiring payment of a late fee, and thus further recognize that the “filing fee” referred to by an agent must, on a fair, large and liberal interpretation, include not only the basic fee, but the additional fee, as well.
Therefore, the Court found CIPO’s decision unreasonable insofar as it misapplied section 3.1 to the circumstances, and ordered the Commissioner to issue notices under section 3.1(2) requiring payment of the deficient fees.
Despite Justice Hughes’ ruling in favour of the applicant in Karolinska, it is generally prudent to include language in correspondence with CIPO that broadly authorizes the Commissioner to withdraw any necessary funds and take any necessary action to maintain an application in good standing.