No Discretion to Extend Time Limits for Reinstatement of Abandoned Applications

Cloutier c Thibault 2014 CF 1135 St-Louis J
            2,437,612, 2,470,139, 2,553,144

Mr Cloutier invented a new type of crimping tool for use in plumbing. He entered into a partnership with Mr Thibault to patent the invention and commercialize it [5]. Mr Thibault filed three patent applications for the invention without informing Mr Cloutier, and naming himself rather than Mr Cloutier as the inventor [6], [9]. Mr Cloutier successfully moved to have the partnership dissolved and to establish his entitlement to the inventions [11], but during and shortly after that litigation the applications were abandoned for failure to pay maintenance fees, in accordance with s 27.1 and 73 of the Act [12]. No application for reinstatement was made within the 12 month grace period provided by s 98 of the Rules.

In this case, Mr Cloutier asked the court to reinstate the application, and to name him as the inventor. St-Louis J refused, on the ground that the court has no jurisdiction in law or equity to extend the mandatory time limits established by the Act [23-24]. That proposition is well-established by the authorities cited by St-Louis J: see in particular Hoffmann-La Roche AG v Canada (Commissioner of Patents), 2003 FC 1381 [41-45] aff’d 2005 FCA 399 [7-8].

Given the mandatory nature of the time limits, this conclusion would evidently follow regardless of whether Mr Cloutier would have been in a position to seek relief in a timely manner, but the court noted that the evidence suggested that Mr Cloutier could have taken steps before the applications were irrevocably abandoned [25].

The court also refused to order the application amended to show Mr Cloutier as the inventor, as this would have been pointless given the refusal to reinstate the application [27].

Canadian Duty of Candor in Response to a Requisition is Not the Same as the US Duty to Disclose Material Prior Art

Varco Canada Ltd v Pason Systems Corp 2013 FC 750 Phelan J
            2,094,313

The main invalidity argument made by the defendants in Varco v Pason was that the patent had been abandoned pursuant to s 73(1)(a) of the Act by reason failure to reply in good faith to the Examiner’s requisition [341]. The requisition asked for “an identification of any prior art cited in respect of the corresponding United States and European patent applications.” This reply to requisition duly provided the references cited to the USPTO [342]. The defendant argued that the disclosure to the USPTO did not comply with the US disclosure requirements, because it failed to disclose material prior art, and this failure to comply with the US disclosure requirements implied lack of good faith in responding to the Canadian requisition, even though even though the response did respond strictly to the requisition, in that all references cited to the USPTO had been identified [345].

The first difficulty with this argument is that in Corlac v Weatherford 2011 FCA 228 [150] the FCA held that s 73 cannot be used to attack the validity of a granted patent. Curiously, Phelan J did not rely on this holding, even though he had made the same point at trial in Weatherford 2010 FC 602, [344].

Instead, Phelan J emphasized that the US disclosure requirements are different from the Canadian disclosure requirements [348-49]:

Section 73 of the Canadian Patent Act requires a good faith response to a requisition from one examiner, rather than the free standing duty as described in US law.

It is not accurate to say or suggest that Canada does not have a duty of candor – it is just not of the same nature as the US principle. The question is “good faith in respect of what?” In Canada the good faith and duty of candor is in response to a question or inquiry. The response has to be fair and responsive, but it need not respond beyond that which is requested.

Whether or not the US disclosure requirement had been complied with, the relevant question was whether the Canadian requirement had been complied with [352]. In this case, it had been: “the term 'prior art cited', as used in the examiner’s requisition, meant the prior art reviewed by an examiner and applied against a foreign application. It does not mean any prior art listed in a search report; nor does it mean all the prior art of which an applicant is aware,” [357] and “There is no requirement to go beyond answering that which is asked or requested” [360].

Phelan J made it clear that he did not regret the narrower scope of the Canadian requirement:

[364] Despite the not so veiled invitation of the Defendants to have this Court go down the US route of “inequitable conduct”, I will not do so. The Canadian legislation is clear, the obligation is to respond directly and honestly. The US principle is highly unsatisfactory, not supported by Canadian principles or practice, and has been described by US witnesses as a “mess”.

This embraces the message of the FCA in Weatherford: the US experience with the inequitable conduct doctrine shows that an expansive duty of good faith disclosure is a cure worse than the disease, and it will not be judicially read into the Canadian Act.

FCA Takes a Hard Line on Payment of Fees by the Wrong Agent

Excelsior Medical Corporation v. Canada (Attorney General) 2011 FCA 303 Pelletier JA: Noël, Layden-Stevenson JJA, aff’g 2011 FC 407 Hughes J

Patent Rule 6(1) states that the Commissioner shall only have regard to communications from the authorized correspondent. This means that if the patentee changes its agent, but does not notify the Patent Office of the change, the original agent remains the agent of record. In these circumstances the Patent Office will refuse payments made by the new agent. The result is that the patent may be deemed to be abandoned for non-payment of fees, even though payment has been tendered, albeit by the wrong agent. This point has recently been affirmed by the FCA in Unicrop.

In the decision under appeal in this case Hughes J had created a glimmer of hope for a patentee in this situation. He held that if the Patent Office accepts the fees from the wrong agent and sends a notice to the agent of record stating that the application had been reinstated, the application is thereby reinstated and the Commissioner cannot “undo” the reinstatement. In my post on that decision, I suggested that while this result seems fair, it is difficult to reconcile with the mandatory language of Rule 6(1), which states that the Commissioner “shall only have regard to communications from[] the authorized correspondent.” On appeal, the FCA extinguished that glimmer of hope, faint though it was:

The acceptance of maintenance fees, whether within or outside the reinstatement period, from someone other than the applicant’s authorized correspondent does not reinstate a patent application. Contrary to the application judge’s view, the Patent office’s acceptance of those fees did not create rights and its return of those fees did not extinguish rights. To hold otherwise would be to create a situation in which the Patent office’s administrative errors created or extinguished rights independently of the statutory scheme. [5]

Nor did the FCA show any sympathy for the patentee in this situation: “there is no basis for invoking the Federal Court’s equitable jurisdiction on the facts of this case. This is simply another in a line of case where the most elemental precautions were not taken when accepting a patent prosecution mandate” [8]. It is therefore clear that there is no prospect of judicial relief in cases in which fees have been paid by the wrong agent.

(Note that on the facts Hughes J refused to order the patent reinstated, as the new agent had subsequently requested and accepted a refund, and the application then became incurably dead. Thus the FCA dismissed the appeal.)

Deemed Abandonment under Section 73 Cannot Be Used to Attack a Granted Patent

Corlac Inc v Weatherford Canada Ltd 2011 FCA 228 Layden-Stevenson JA: Nadon, Evans JJA substantially affirming 2010 FC 602 Phelan J 

In Corlac v Weatherford the Court of Appeal has clarified a controversial point of law regarding misrepresentations to the Patent Office. Two provisions of the Act bear on misrepresentations to the Patent Office: subsection 53(1), which provides that “[a] patent is void” if there are material misrepresentations in the application, and paragraph 73(1)(a) which provides that “[a]n application for a patent in Canada shall be deemed to be abandoned if the applicant does not reply in good faith to any requisition made by an examiner.” Relying primarily on the distinction between a patent and an application apparent in these two sections, the Federal Court of Appeal held that paragraph 73(1)(a) cannot be relied upon to attack the validity of a granted patent [150]:

To be clear, the concept of abandonment in paragraph 73(1)(a) operates during the prosecution of the application for a patent. Its operation is extinguished once the patent issues. Post-issuance, the provisions of subsection 53(1) must be utilized with respect to allegations of misrepresentation.

Two earlier decisions of the Federal Court, Lundbeck Canada Inc. v. Ratiopharm Inc., 2009 FC 1102 Mactavish J at [298]-[352], and G.D. Searle & Co. v. Novopharm Ltd., 2007 FC 81 at [62]-[78] rev’d 2007 FCA 173 had held that abandonment under section 73 could be invoked post-grant. These cases were specifically overruled on this point: [151]. (Note that the FCA decision in G.D. Searle reversed Hughes J without comment on this point, and the FCA noted at [5] that its decision had been released subject to time constraints and had to be read accordingly.)

Payment of Fees by the Wrong Agent – A Glimmer of Hope

Excelsior Medical Corporation v. Canada (Attorney General) 2011 FC 407 Hughes J

Hot on the heels of Unicrop 2011 FCA 55 affm’g 2010 FC 61 (discussed here), Excelsior Medical is another case in which an applicant changed patent agent but failed to notify the Patent Office of the change, with the result that maintenance fees were not tendered by the “authorized correspondent,” as required by Rule 6(1), prior to the expiry of the grace period for reinstatement of an application that has been deemed abandoned for failure to pay those fees. Unicrop held that the Commissioner is entitled to refuse payment, with the result on the facts that the application was held to be incurably abandoned.

Excelsior Medical provides a slender ray of hope for such an applicant. Where in Unicrop the Patent Office had refused the fees paid by the wrong agent, in Excelsior Medical the Patent Office accepted the fees and sent a notice to the agent of record stating that the application had been reinstated [6]. This was apparently an automatic response, generated without substantive review. On review, the Patent Office sent a further letter rescinding the reinstatement, on the basis that the fee should not have been accepted [4.12]. By the time this letter was received, the grace period had expired. Hughes J held that when the Commissioner receives and acts upon a communication, the application is reinstated, and the Commissioner cannot “un-perform” that function [38], [41]. (Unfortunately for the applicant, on the facts the new agent had subsequently requested and accepted a refund, and the application then became incurably dead [42].) 

While this result is fair and reasonable, it is perhaps difficult to reconcile with the mandatory language of Rule 6(1), which states that the Commissioner “shall only have regard to communications from[] the authorized correspondent.” But a line must be drawn somewhere; it seems inconceivable, for example, that a patent could be declared invalid ab initio after having been granted and enforced, if it were discovered that fees had been paid by the wrong agent at some point during the application process. On the modern approach to statutory interpretation, the text must be interpreted in light of its purpose, and not in a purely literal fashion.

Hughes J also indicated that if detrimental reliance had been established, which it had not been on the facts, he would have considered the possibility of ordering equitable relief. The difficulty with this thought is that both levels of court in Unicrop refused to invoke equitable principles to order the reinstatement of the application despite expiry of the deadline: “equitable relief cannot be invoked in order to counter the application of a clear statutory rule” [FCA 38].

In the end, Hughes J did his best to temper the application of Rule 6(1), but all he could do was to provide a narrow window that will benefit few applicants. The root of the problem lies with the rule itself.

An Application Deemed Abandoned by Application of Law Cannot be Reinstated

M-Systems Flash Disk Pionerers Ltd v. Commissioner of Patents 2011 FCA 112 affm’g 2010 FC441


This brief decision of the FCA affirms its prior holding in DBC Marine Safety Systems Ltd. v. Canada (Commissioner of Patents), 2008 FCA 256 affm'g 2007 FC 1142, that the Commissioner has no discretion to reinstate an application that has been deemed abandoned by application of law. The only twist is that the applicant in M-Systems had argued that Rule 29, permitting the examiner to require identification of additional prior art raised in a foreign application, is inconsistent with the Act and “unconstitutional” under the s 2(e) of the Canadian Bill of Rights. Both of these last ditch arguments were rejected by de Montigny J at first instance and this was affirmed by the FCA.