The Federal Court (per Furlanetto J.) has held that the Commissioner of Patents (“Commissioner”) acted reasonably in denying a request for reinstatement of a patent that lapsed due to non-payment of an annual maintenance fee. This decision underscores the importance of having multiple lines of communication between a patent agent and a client – and the unfortunate consequences that can arise when instructions are not provided on a timely basis.
Taillefer v. Canada (Attorney General) – Federal Court (fct-cf.gc.ca)
In Canada, an applicant/patentee must pay an annual maintenance fee to keep its patent rights in good standing. In the case of an issued patent, if the fees are not paid by the deadline, or within the six-month late period (with a penalty), the patent will be deemed to have expired. A patentee can seek reinstatement of the expired patent within twelve months after the end of the late fee period. This relief will only be granted if the Commissioner is satisfied that the failure to pay the maintenance fee “occurred in spite of the due care required in the circumstances having been taken.” (emphasis added).
“Due care” is not defined in the Patent Act. However, the Manual of Patent Office Practice and Procedure (“MOPOP”) says that when a request for reinstatement is filed, the Commissioner will “review the reasons for the failure to pay the maintenance fee and the late fee to determine whether the failure occurred in spite of the due care required by the circumstances having been taken” and will “consider whether anything else could have been reasonably expected to have been done to avoid the failure while taking into consideration the particular set of circumstances surrounding the failure to take the required action.” In making this determination, the Commissioner will “consider the customary diligence that a prudent party would have exercised in the circumstances”, including any “considerations that are taken into account by the International Bureau and Receiving Offices as described in paragraph 166M of the Receiving Office Guidelines” for priority applications.
This was the first reported decision to consider the “due care” standard since it was enacted in 2019. In this particular case, a registered patent agent was responsible for paying the annual maintenance fees for an issued Canadian patent, but only upon receipt of instructions from the patentee. Every year, the agent would email the patentee, get instructions, and pay the fee prior to the deadline. This system worked well from 2012-2019. However, in 2020, the agent’s four emails seeking instructions went unanswered and the maintenance fee wasn’t paid. Likewise, the patentee did not respond to any of the agent’s three emails for instructions during the six-month late fee period. As a result of the non-payment, the patent was deemed to have expired. The agent then forwarded to the patentee a notice from the Patent Office advising that the patent had expired and requesting instructions to file a request for reinstatement. The patentee found this email in his “junk folder” and immediately instructed the agent seek reinstatement. In December 2022, the Commissioner refused the request for reinstatement because he was not “satisfied that the failure to pay the prescribed fees on or before the due date occurred in spite of the due care required by the circumstances having been taken”.
The patentee filed an application for judicial review for an Order setting aside the Commissioner’s decision and reinstating the patent. The Federal Court rejected the patentee’s arguments and held that:
- To show due care, it was reasonable for the Commissioner to require that a patentee must take “all possible actions, considering the circumstances of the case”, and to make this assessment from the perspective of a reasonably prudent patentee. This is the same standard as in MOPOP, which requires “all measures” that a reasonably prudent patentee would have taken in the circumstances.
- It was reasonable for the Commissioner to consider steps that could have avoided the communication failure and to expect that the agent would have additional communication mechanisms in place to ensure they could always correspond with the patentee, particularly since numerous notices from the agent had gone unanswered, non-compliance could lead to expiry of patent rights, and there had been a consistent pattern of payment since 2012.
- It was reasonable for the Commissioner to expect that a reasonably prudent patentee would have a system in place to ensure that their email was operating effectively, particularly since it was relying on this means of communication to instruct the agent on a yearly basis to pay the maintenance fee. The efforts made by the agent and the applicant were limited and insufficient to meet the standard of due care in the circumstances at issue.
The patentee also argued that there had been a breach of procedural fairness due to delay because 764 days had elapsed between the date when the agent first filed a request for reinstatement and when the Commissioner ultimately denied the request. The Court rejected this argument, holding that the patentee knew the legal standard that would be applied and had an opportunity to respond. The patentee did not have a “legitimate expectation” that the Commissioner would follow a particular procedure or reach a particular result. There was no evidence of any direct prejudice caused by the delay in the Commissioner’s decision-making process.
The patentee has thirty days from the date of decision to file an appeal in the Federal Court of Appeal.