No Right to Appeal Determination That a Substantial New Question of Patentability Is Raised by Re-examination Request

Cusitar v. Canada (Attorney General) 2019 FC 1641 McVeigh J

2,876,770 / Oil Sand Mining and Haulage Method

This decision, affirming a decision of the re-examination board cancelling all 15 claims of the 770 patent for obviousness [23], turned largely on the facts, but the patentee did raise one novel argument relating to the scope of an appeal. 

Re-examination is governed by s 48.1-48.5 of the Act. A request for re-examination may be made by any person who submits prior art and pays the required fee: s 48.1(1). After such a request is made and the re-examination board is established, the first task of the Board is to determine whether the request raises a “substantial new question of patentability” (SNQP) affecting any claim: 48.2(2). If not, the person who made the request is so notified, and the re-examination proceeding is closed. A negative decision is final, expressly without right of appeal or review: 48.2(3). (Dismissal of the re-examination request does not bar the requesting party from bringing a subsequent impeachment action.) If, as in this case, the Board finds that an SNQP is raised, the Board notifies the patentee and the re-examination goes ahead. At the conclusion of the process, the Board issues a certificate that may cancel, confirm or amend the claims: s 48.4(1). This is subject to appeal: specifically, the patentee may appeal any decision “set out in a certificate issued under subsection 48.4(1)” to the Federal Court: 48.5(1).

In this case, the patentee appealed the adverse decision pursuant to 48.5(1), but one of the grounds of appeal was the threshold determination by the Board that the request raised a substantial new question of patentability [29.A.1]. McVeigh J held that this is not a proper ground of appeal. As noted, the Act provides expressly that there is no appeal from a determination that there is not an SNQP; but it does not expressly state that there is no appeal from a determination that there is an SNQP. However, as McVeigh J noted, the Act only provides for an appeal from “[a]ny decision of a re-examination board set out in a certificate issued under 48.4(1) [34, original emphasis], and the decision that there is an SNQP is not a decision set out in the certificate, which merely states (in this case) that “claims 1-15. . . are unpatentable” [35]. Moreover, re-examination is intended to be a “relatively summary and inexpensive alternative to an impeachment process by litigation,” and allowing an appeal from the SNQP determination would introduce delay and undermine this aim [36]. Thus textual and purposive considerations both support the conclusion that there is no right of appeal of a determination by the Board that the re-examination request raises an SNQP.

Background Information in the Specifications May Be Evidence of the CGK

Corning Cable Systems LLC v. Canada (Attorney General) 2019 FC 1065 McVeigh J
            2,679,996 / 2,754,149 / Optical Splitter Module

In this decision McVeigh J, applying a reasonableness standard, upheld the Commissioner’s decision to refuse the 996 and 149 applications on the ground of obviousness [107]. The decision applied settled law to the facts.

The applications at issue relate to a “Local Convergence Point” which is a box that receives a cable supplied by an internet service provider as an input and splits and distributes that cable to several units in a building [5]. The claimed invention took advantage of recently developed “bend performance optical fibers,” which can be bent to a smaller radius than traditional fibers without incurring a marked loss in signal quality [6]. This permitted design of a smaller box. As the application explained as part of the “Background of the Invention” “Conventional LCPs . . . require large, expensive LCPs that may be difficult to install and/or transport. In addition, conventional LCPs often require skilled technicians to install the LCP and route the associated subscriber cables. Therefore, a need exists for LCPs that are cost-effective, are relatively small in size, and may be installed and maintained by relatively unskilled technicians” [15]. The Commissioner relied on this statement in finding that identifying the need for a smaller box was common general knowledge [47].

Corning argued that adopting information provided in the background of the patent applications as CGK, without some evidence beyond information in the patent applications themselves, was an error of law [51], [53]. While the decision was not entirely explicit on this point, as I understand it, this issue was important because Corning wanted to argue that identifying the problem – the need for a smaller box – was or contributed to the inventive step necessary to support a patent. I must say that arguing that it was inventive to thinking of trying to shrink the size of electronic equipment strikes me as pretty desperate. In any event, McVeigh J held, correctly in my view, that this point had been settled by Newco Tank 2015 FCA 47, which held, on essentially identical facts, that it was “open to the Board to conclude that the skilled person’s CGK was reasonably described by reference to the language presented as background information in the Patent” [62], quoting Newco at [13] (and see my post on Newco here). McVeigh J did note, however, that “This is not to say that it is always appropriate for the Commissioner to find that information presented in the specifications of a patent application is the CGK of a person skilled in the art. While I disagree with Corning that concluding that such information is CGK – without further evidence – necessarily amounts to a reviewable error, there may certainly be cases in which such a finding is unreasonable” [64].

Corning also argued that the Commissioner erred in finding that actually implementing the smaller box did not require inventive ingenuity. McVeigh J affirmed that this finding was reasonable, noting that “it was insufficient for Corning’s counsel to set forth, during the requisition process and at the hearing, a number of alleged experimental difficulties without concrete evidence” [105].

Late Request to Amend Priority Date

Bayer Cropscience LP v. Canada (Attorney General) 2018 FCA 77 Nadon JA: Webb, Gleason JJA aff’g 2017 FC 178 O'Reilly J
            2,907,271

In this decision the FCA has affirmed O'Reilly J’s decision affirming the Commissioner’s decision to refuse Bayer’s request to amend the priority date, essentially for the same reasons given by O’Reilly J, namely that the request was outside the sixteen month window set in by Rule 88(1)(b).

As discussed here, this case turned on a narrow point of law in the context of unusual facts. Bayer filed a US patent application on 3 April 2012. The USPTO refused to assign a filing date for it on the basis that Bayer had failed to file accompanying drawings. Bayer filed the drawings on 19 April 2012, and the USPTO assigned that as the filing date. The following year, on 15 March 2013, Bayer filed a PCT application claiming priority from the US application. Bayer asked for a filing date of 3 April 2012, but WIPO pointed out that the US application had a filing date of 19 April. Therefore Bayer requested, and was given, a filing date of 19 April 2012. Two years after that, Bayer persuaded the USPTO that the drawings were not required after all, and on 14 April 2015, the USPTO amended the filing date for the US application to 3 April 2012. However, the USPTO, which acted as the international receiving office for the PCT application, refused to amend the PCT filing date. On 7 August 2015, the PCT application entered the national phase in Canada as Canadian Patent Application No 2,907,271. Bayer requested that the ‘271 application be given a filing date of 3 April 2012 on the basis that it was claiming priority from the ‘691 US Priority Application, which had an amended filing date of 3 April 2012.

Bayer’s argument was essentially that it had physically filed the complete and proper US application on 3 April 2012, and it should therefore be entitled to claim priority based on that date [47], [76]. The problem is that Rule 88(1)(b) provides that the request for priority must be made “before the expiry of the sixteen-month period after the date of filing of [the US application].” Bayer’s request was simply out of time. It was in effect asking for a waiver of the sixteen month period set out in the Rules, and there is no basis for such a waiver [77].

FCA Affirms that Dead Application is Dead

University of Alberta v. Canada (Attorney General) 2018 FCA 36 Near JA: Webb, Laskin JJA aff’g 2017 FC 402 Russell J
            Application 2,804,560

S 37 of the Patent Rules provides that a patent application “must contain. . . a declaration that the applicant is the legal representative of the inventor.” The ‘560 application, filed by an agent on behalf of TEC Edmonton, had no such declaration. CIPO timely issued a requisition to TEC’s agent. TEC’s agent did not respond do that requisition or to a subsequent notice of abandonment, which stated that the application could be reinstated within a further 12 months pursuant to s 73(3). TEC then assigned the its right in the 560 Application to the University of Alberta, and a new agent was appointed, but the new agent did not respond to the original requisition or to the Notice of Abandonment. Two years after the requisition was issued, the 560 application was marked as dead, meaning that the time for reinstatement had passed. A year after that, the University of Alberta filed a petition effectively asking CIPO to reinstate the ‘560 Application. CIPO refused on the basis the 560 application was beyond the period of reinstatement. As discussed here, Russell J refused. The University appeal to the FCA, which, unsurprisingly, affirmed. The FCA did hold that Russell J had erred in holding that the appellants were seeking judicial review of the requisition, and consequently the FCA held that CIPO’s decision should be reviewed on the merits [15]. That did not help the applicant, because the FCA held, on a straightforward reading of the relevant provisions, that the application was deemed abandoned once the applicant failed to timely respond to the requisition [23], and CIPO has no discretion to reinstate a patent application once it is deemed abandoned and the period for reinstatement has passed [24].

Dead Application is Dead

University of Alberta v. Canada (Attorney General) 2017 FC 402 Russell J
            Application 2,804,560

S 37 of the Patent Rules provides that a patent application “must contain. . . a declaration that the applicant is the legal representative of the inventor,” if the applicant is not the inventor. The ‘560 application, filed in Feb 2013 by an agent on behalf of TEC Edmonton, had no such declaration. Two weeks after the 560 Application was filed, CIPO issued a requisition to TEC’s agent requiring compliance with s 37 within 12 months [3]. TEC’s agent did not respond. A year later, CIPO issued a Notice of Abandonment, which stated that the application could be reinstated within a further 12 months pursuant to s 73(3) [4]. TEC’s agent did not respond. Two months later, TEC Edmonton assigned its right in the 560 application to the University of Alberta. A new agent was appointed. The new agent did not respond to the original requisition or to the Notice of Abandonment. (You can see where this is going.) In Feb 2015, two years after the requisition was issued, the 560 application was marked as dead, meaning that the time for reinstatement had passed. A year after that, in Feb 2016, the University of Alberta filed a petition for a correction of the patent records to show the ‘560 Application was in good standing [8]. CIPO replied that the 560 application was beyond the period of reinstatement.

On this application for judicial review, the University of Alberta in effect sought to have the 560 application reinstated. Russell J refused. To get around the clear legislative scheme the University advanced “esoteric” arguments [58], [80], more or less to the effect that there was no obligation to respond to the requisition because there was really nothing wrong with the application in the first place. The statutory interpretation argument, which I won’t go into in detail, turned on a distinction between substantive and formal compliance with the requirements of the Act. Russell J pointed out that, whatever the merits of such a distinction in theory, it had no basis in the Act [86]. He also noted that the notion that there was nothing substantively wrong with the application in the first place was a purely after-the-fact rationale, which wasn’t really the reason TEC’s agent had not responded [61], [80]. More importantly, even if the applicant had been of the view that the requisition was improper, the proper recourse would have been an application for judicial review of the decision to send the requisition, in a timely manner [54]. Allowing this collateral attack on that original decision would circumvent those procedures and limitations. Moreover, there was no unfairness in this result in principle, as the statutory scheme provided ample opportunity for the applicants to correct the record by simply replying to the requisition, or rectifying within the generous legislative time-limits [89]. Nor was there any unfairness on the facts, as the record was clear that the requisition was sent and noted on the prosecution register and there was no evidence it was not received or understood by the then patent applicants and/or their then agents [54].

Late Request to Amend Priority Date

Bayer Cropscience LP v. Canada (Attorney General) 2017 FC 178 O'Reilly J
            2,907,271

In this case O'Reilly J affirmed the Commissioner’s decision to refuse Bayer’s request to amend the priority date, on the basis that the request was outside the sixteen month window for such a request under Rule 88(1)(b). This case turned on a straightforward reading of the Rules in the context of unusual facts.

Bayer filed a US patent application on 3 April 2012. The USPTO refused to assign a filing date on the basis that Bayer had failed to file accompanying drawings. Bayer filed the drawings on 19 April 2012, and the USPTO assigned that as the filing date. The following year, on 15 March 2013, Bayer filed a PCT application claiming priority from the US application. Bayer asked for a filing date of 3 April 2012, but WIPO pointed out that the US application had a filing date of 19 April. Therefore Bayer requested, and was given, a filing date of 19 April 2012. Two years later (April 2015), on Bayer’s request, the USPTO conceded that the drawings were not required after all, and it amended the filing date for the US application to 3 April 2012. However, the USPTO, which acted as the international receiving office for the PCT application, refused to amend the PCT filing date. On 7 August 2015, the PCT application entered the national phase in Canada as Canadian Patent Application No 2,907,271. Bayer requested that the ‘271 application be given a filing date of 3 April 2012 on the basis that it was claiming priority from the ‘691 US application, which had an amended filing date of 3 April 2012 [4].

The problem was that under Rule 88(1)(b), a request for priority must be made with sixteen months of the filing from which priority is claimed [15]. Bayer had made a request within that period, namely on 15 March 2013, but there was no basis for it at that time, as the US application was still dated 19 April 2012 [14]. The US application had been amended by the time of Bayer’s August 2015 request to CIPO, but that second request was well out of time [15].

Bayer also argued that the priority date should be amended pursuant to the Commissioner’s duty to ensure the Register is correct. O’Reilly J dismissed this argument, noting that the failure to request an amendment in a timely manner does not create an inaccuracy in the Register [16]. That conclusion must be right, or the time limits would be nugatory.

Protests Do Not Result in a Higher Burden in Subsequent Litigation

Pollard Banknote Limited v BABN Technologies Corp 2016 FC 883 Locke J
            2,752,551

Pollard v BABN raised two issues related to the standard of review. The more significant holding was that a party which protests or submits prior art during prosecution, pursuant to s 34.1, will not be disadvantaged by a higher burden of proof if it subsequently challenges the same patent in litigation. I believe this is the first decision to address this issue.

In Wellcome / AZT 2002 SCC 77 [42]-[44], the SCC apparently held that a challenge to the validity of a granted patent was somehow a form of judicial review of the Commissioner’s decision to grant the patent, and that decision should be treated with deference, so that the patent would only be held invalid if the Commissioner’s decision to grant it was unreasonable. The SCC’s conclusion was rejected by Gauthier J in Cefaclor 2009 FC 991 [350]-[370], who, after a devastating critique of the SCC’s reasoning, held that the correct standard was the traditional balance of probabilities. Subsequent decisions of the FC addressing this issue have consistently followed the lead of Gauthier J, essentially (and rightly, in my view) treating the SCC statements in Wellcome / AZT as having been made per incuriam. Locke J in this case did the same, citing Cefaclor and recognizing, as the SCC did not, that “[t]here is no standard of review applicable to Pollard’s challenge to the validity of the 551 Patent because this is not a judicial review of the decision to allow the 551 Patent to issue. . . . The standard is the balance of probabilities” [129].

The more interesting issue related to s 34.1. Pollard had been involved in challenging the patent during prosecution by filing 12 protests pursuant to s 34.1, including both prior art submissions and argument [128]. SG argued that “in view of the depth of Pollard’s involvement in challenging the patented invention during prosecution, it benefited from what was effectively a patent opposition process. For this reason, and because of the extraordinary delay SG experienced in obtaining allowance of its patent application, SG argues that a degree of deference to the examiner’s decision to allow the 551 Patent to issue should apply” [128].

Locke J rejected SG’s argument. He noted that SG could not be held accountable for the delay:

[131] Its protests contributed to the delay in the 551 Patent’s issuance only inasmuch as the examiner accepted the arguments contained in those protests and included them in the rejection letters that were sent to the applicant. A more direct reason for the delay in the issuance of the 551 Patent is that it took many exchanges with the patent examiner before the applicant found the claim language that would be accepted. I see no basis for criticizing Pollard for having filed its protests.

The delay should not be attributed to the protests, because if they are well-founded, the examiner should have raised them in any event, and if they are not, the examiner need not and should not require the applicant to respond.

Locke J also raised an important policy issue:

[133] Another concern I would have about raising the burden on Pollard for its validity challenge is that it would, as a result, have a higher hurdle than other interested members of the public who might wish to mount a similar challenge. It should also be noted that an impeachment action, if successful, is a benefit not just to the plaintiff, but also to the public as a whole since an unjustified monopoly is thereby removed from the patent register.

If a party faced a higher burden for issues it raised during prosecution, that would no doubt affect its decision whether to protest or submit prior art under s 34.1, and as Locke J pointed out, it is in the interest of the public as a whole to ensure that unjustified patents are not granted. The flip side of the coin is that a interested party like SG gets two kicks at the can – though that is perhaps not a serious problem if its contribution to the prosecution imposes no significant additional burden on the applicant, as Locke J indicated. 

Locke J also noted on the facts that the applicant was apparently not concerned about the delay, because it “responded at or near the end of the six-month deadline for responding to the examiner’s action in every case but one” [132]. Quare whether this would form the basis for a distinction in a future case? I think not, given the rest of Locke J's reasoning, but the fact that he mentioned this point leaves the question open. And of course, future judges might see the whole issue differently.

How (Not) to Cure an Inadvertent False Promise in a Granted Patent

F. Hoffmann-La Roche AG v. Commissioner of Patents 2013 FC 1001 Roy J

            Capecitabine / XELODA / 2,103,324

As reaffirmed in the recent FCA decision in Sanofi-Aventis v Apotex / clopidogrel 2013 FCA 186, the promise of the patent doctrine is now firmly established in Canadian law. If a patent promises a particular utility, utility will be measured against that promise: ibid [47]. However, there is no requirement that a patent contain a promise, and if it does not, the invention need have a “mere scintilla” of utility: ibid [49]. In the future, applicants may be able to draft patents that will avoid making promises, but what can be done about patents that have already been granted, but not yet litigated? This was the question faced by Hoffmann-La Roche, the applicant in this motion. While Roy J refused the application, the decision suggests the possibility that s 53(2) of the Act might be available to rectify a false promise in litigation.

Named Co-inventor Has No Right to Be Heard Before Being Removed from Application

Baksh v Probiohealth LLC 2012 FC 1388, O’Reilly J

            Application 2,503,510

It seems that a named co-inventor has no right to be heard before being removed from an application. In 1999 Mr Bing Baksh was involved in helping Probiohealth develop a probiotic nutritional supplement involving bacteria suspended in oil and packaged in a particular encapsulation system. Mr Baksh had been primarily responsible for the encapsulation system, while a Dr Naidu was primarily responsible for developing the oil suspension [3]. In 2002 Priobiohealth filed a patent application, that became the ‘510 application, in which Mr Baksh and Dr Naidu were named as co-inventors [4]. In 2006 Dr Naidu assigned his rights to Probiohealth, but Mr Baksh refused to do so [5]. Probiohealth filed a voluntary amendment cancelling the claims related to the encapsulation system [6]. Probiohealth then filed a request under 31(3) of the Act to remove Mr Baksh as a co-inventor on the application [9], supporting this with an affidavit from Dr Naidu swearing that he was the sole inventor of the remaining claims. The Commissioner granted the request, and sent Mr Baksh a letter confirming that he had been removed as a co-inventor [11]. Mr Baksh appealed that decision and also sought judicial review. Both the appeal and the application for judicial review were addressed in O’Reilly J’s reasons.

Speculative Prejudice to Third Parties in Reinstating a Patent

Repligen Corporation v. Canada (Attorney General) 2012 FC 931 Near J

Repligen’s former patent agent transposed two digits of Repligen’s patent 1,341,486, to 1,314,486, when it engaged Computer Patent Annuities to pay maintenance fees on the patent. Consequently, the fees were paid against the “14" patent, which was held by Rolls-Royce. Sometimes the fees would be paid first on behalf of Rolls-Royce, sometimes on behalf of Repligen. The second payor would to be told that fees had already been paid and would request a refund. While duplicate fees were paid on the "14" patent, no fees were paid on Repligen’s “41" patent and CIPO sent a Maintenance Fee Notice to Repligen’s former agent advising that the patent would lapse unless payment was made within twelve months. Repligen’s former agent did not respond [5], and the “41" patent lapsed.

Repligen then switched agents. Its new agent attempted to have the patent reinstated, arguing that the Commission should exercise her discretion to correct the clerical error under s 8 of the Act and reinstate the patent. The Commissioner refused, primarily on the basis of the lengthy delay and the potential for prejudice to third parties who might have relied on the register showing the patent as lapsed [#1 59].

In Repligen #1 2010 FC 1288 Lemieux J held that the Commissioner had not properly exercised her discretion. A crucial point was that the Commissioner’s concern regarding prejudice to third parties was speculative as she had no evidence of third party prejudice. Lemieux J contrasted this with Bristol-Meyers (1998), 82 C.P.R. (3d) 192 (FCA) in which two other companies had filed priority claims for similar drugs [#1 60(f)]. Lemieux J noted the “catastrophic consequences” of the loss of patent rights [#1 59], and insisted that the Commissioner take into account the impact on Repligen in deciding whether the patent should be reinstated [#1 60(a)].

I am inclined to think that the Commissioner was right on this point. There may be many cases in which a third party would have relied on the lapse of the patent in a way that could not come to the attention of the Commissioner. For example a third party might have done patent clearance search before deciding to invest in developing a new product and then proceeded after having determined that its product would infringe the Repligen patent, but that the patent had lapsed. Given the nature of third party rights, it seems likely that it would be only in relatively unusual circumstances, such as those in Bristol-Meyers, that the Commissioner could become aware of the prejudice to third parties. It is true that the consequences to Repligen of the loss of its patent rights can be catastrophic, but it is also true that infringement of those rights could be catastrophic to a third party.

In any event, this was not the view of Lemieux J, who remitted the matter to be reconsidered by a different official in the Patent Office. The Commissioner once again refused to correct the error, and Repligen once again sought judicial review, leading to this decision in Repligen #2. This time the Commissioner focused on potential prejudice to Rolls-Royce. The Commissioner argued that “‘[c]orrecting Repligen's error today could retroactively have the effect of causing the Rolls-Royce patent to have expired in 2008' since the payments originally applied to it would automatically turn over to the Repligen Patent” [# 2 16]. Near J rejected this argument, rightly in my view. Fees were always paid in respect of Rolls-Royce’s patent, which never lapsed and has now expired [# 2 31]. I see this argument by the Commissioner as a way of attempting to point to an actual prejudice rather than a speculative prejudice in order to satisfy the direction by Lemieux J. It is an unsatisfactory attempt, as the Commissioner identified the real issue correctly in the first instance; the real question is whether the Commissioner should consider harm to third parties who may have relied on the lapse, unbeknownst to the Commissioner. Lemieux J, and now Near J, have held that it should not.

The matter had been remitted to the Patent Office once again. Even if the patent is reinstated, I am not sure Repligen’s troubles are over. Loss of patent rights is not “catastrophic” if those rights are never exercised. But if Repligen has the patent reinstated and then brings an infringement action against a competitor who can show that it did in fact rely on the lapsed patent, there is a a very strong argument that that defendant should have some kind of equitable defence. If the defendant can say “I searched for patents before undertaking my business, I found this patent that I would have infringed, I determined that it had lapsed, and I then invested $10 million in reliance on that,” it would be a serious failure of the patent system to allow Repligen to enforce against that defendant.

Post-Final Action Prosecution: Belzberg Distinguished

CD1317 Balloon Catheter / Declath Systems (PAB & Comm'r of Patents)

In Belzberg 2009 FC 657 Simpson J held that “the defects identified in a final action are comprehensive rather than a mere selection” [43], or, as Hughes J put it in Bartley 2011 FC 873 (blogged here) “a ‘Final Action’ must be final” [71]. In both Belzberg and Bartley a Final Action report had been issued, a PAB hearing was convened and concluded that none of the defects identified in the report were substantiated. The Commissioner returned the application to the examiner for further prosecution, though without identifying any problems, after which the examiner issued a new report with new requisitions. In both cases the Federal Court held that this was improper, and the patent should be granted. In CD1317 Balloon Catheter / Declath Systems the applicant invoked Belzberg and Bartley to argue that the patent must be granted when the applicant had responded to all defects identified in the Final Action, even though in so doing new problems had been introduced. The PAB and Commissioner held, rightly in my view, that Belzberg and Bartley were distinguishable, and remanded for further prosecution.

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.)

Fraud on the Patent Office: Lessons Learned from the US Experience

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

As noted in yesterday’s post, in Corlac v Weatherford the Court of Appeal held that paragraph 73(1)(a) of the Act cannot be relied upon to attack the validity of a granted patent. Corlac is also an important decision on the doctrine of fraud on the patent office under subsection 53(1). The decision has a thorough treatment of materiality of false attribution of inventorship under this provision, and it will now be the leading case on this point. More broadly the decision of the FCA also signals a generally cautious approach to subsection 53(1).

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.)

“Final” means Final

Bartley v. Canada (Commissioner of Patents) 2011 FC 873 Hughes J 

The facts in Bartley are essentially the same as those in Belzberg v Canada (Commissioner of Patents), 2009 FC 657, with only one twist, and in Bartley Hughes J affirmed and applied Simpson J’s holding in Belzberg that a “Final Action” report must be final: all defects must be raised, not just a selection [71]. If the PAB and Commissioner find no merit in the defects raised in a Final Action report, the patentee is entitled to have the patent granted without further objections being raised. In addition, Bartley settles an important point regarding the time for seeking judicial review in the circumstances.

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.

Maintenance Fees Must be Paid by the Authorized Correspondent: Why?

Unicrop Ltd. v. Canada (Attorney General) 2011 FCA 55 Noël JA: Pelletier, Trudel JJA affm’g 2010 FC 61 Boivin J

In Unicrop the FCA affirmed that maintenance fees must be paid by the authorized correspondent, and that the Commissioner is entitled, and indeed apparently required, to refuse payment from anyone else. It is difficult to argue with this conclusion, given the text of the Patent Rules; the question is why the Rules impose such a stringent requirement.

Unicrop’s representatives on filing were Bereskin & Parr LLP, who also paid the first two annual maintenance fees. The third annual fee was not paid in time and the application was deemed abandoned. Just prior to the one year grace period for reinstatement, the applicant attempted to reinstate the application through their new agent, Furman & Kallio. However, the notice of appointment of agent had not been submitted to CIPO prior to the grace period deadline [FC 27]. CIPO therefore refused to accept the fee payment, on the basis that it had not been submitted by the authorized correspondent. The Appointment of Agent form was submitted to CIPO after the deadline, but CIPO was of the view that the application could not be reinstated, as the grace period had elapsed.

The FCA affirmed Boivin J, who had upheld the Commissioner’s decision: "the relevant provisions of the Rules could not be clearer. Subsection 6(1) provides that “for the purpose of prosecuting or maintaining an application the Commissioner shall only communicate with, and shall only have regard to communications from, the authorized correspondent.” The wording of section 3.1, which deals with the late payment of fees, makes it clear that this prohibition extends to communications relating to all such payments as it operates ‘subject to subsection 6(1)’” [34]. The decision of Hughes J in Sarnoff Corp. v. Canada (Attorney General), 2008 FC 712, aff'd 2009 FCA 142 was persuasively distinguished on the basis that Hughes J, faced with ambiguous evidence, had found as a fact that the notice of appointment of agent had been received by CIPO [29, FC 20].

The Court’s analysis is entirely convincing as a matter of law, but the result is not satisfactory. As Hughes J pointed out in Sarnoff “The seemingly minor fault in having maintenance fees actually paid, received and recorded by a firm which, arguably, at the time was not the patent agent or associate agent of record, results in the wholly disproportionate result of loss of all rights to receive the grant of patent monopoly rights should the application otherwise prove to be acceptable.” [32]. It is true that the facts in Unicrop were different enough to compel a different result, but the point remains that the loss of all rights is disproportionate to the fault.