Carrots or Sticks: New Laws for Missed Patent Maintenance Fees

October 8, 2019 | Karen Durell

For several years, Canadian legislators have been engaged in a project to modernize Canadian intellectual property laws and ensure compliance with Canada’s treaty obligations. The latest step in this modernization initiative involves amendments to the Canadian patent laws. Upcoming changes to the Canadian patent laws, to be in force as of October 30, 2019, will have significant implications for patentees. In particular, changes to the patent maintenance fee process under the new laws may introduce a mesh of effects that create both pros and cons for patentees. It is unclear at this point which will outweigh the other – the pros or the cons.

Under present patent laws, maintenance fees are required to be paid annually to keep a patent application or issued patent in good standing. If a maintenance fee is not paid for a patent or an application by the due date for such fee, the outcome is that a patent is deemed expired, or an application is deemed abandoned, for a period of 12 months after the missed maintenance fee due date (the “deemed abandonment period”).

The amended patent laws introduce a new period of time after a missed maintenance fee, during which the missed fee can paid with a late fee (a “late fee period”). This late fee period occurs before a deemed abandonment period will be initiated. As an example, the late fee period allotted for a patent is six months. Therefore, the total time to pay a missed maintenance fee for a patent will be 18 months (a combination of the six month late fee period and the 12 month deemed abandonment period). This addition of a late fee period, at least on its face, appears to benefit a patentee – offering more time to pay the missed maintenance fee before any deemed abandonment period is initiated.

However, the new patent laws alter more than the amount of time allotted to pay a missed maintenance fee. The laws create consequences that extend during the deemed abandonment period. Such consequences can diminish the positive effect of the increased time to pay a missed maintenance fee. In particular, the following three aspects of the new laws, each of which occurs during a deemed abandonment period, could incentivize a patentee to avoid a deemed abandonment period altogether and ensure all missed maintenance fees are paid during the late fee period.

  1. Under the new patent laws, to effect a revival of a patent or application, a request must be filed along with the maintenance fee, late fee and a revival fee. Thus, additional fees are being introduced under the new laws.
  2. To revive a patent or application under the new laws, a patentee will be required to state the reasons why the failure to pay the maintenance fee occurred. Such a statement will be reviewed by the Patent Commissioner to determine if the reasons for the failure indicate that the failure occurred despite due care in the circumstances being taken by the patentee. Notably, this standard of “due care” is a new concept in Canadian patent law, so it will be worth watching how this evolves over time through both (i) the application of the standard by the Patent Office, and (ii) the review and interpretation of the standard by the courts.
  3. During a deemed abandonment period, third party rights may apply. Third party rights can allow a third party to take actions in good faith that otherwise would result in infringement during the deemed abandonment period. The basis for the grant of such rights to a third party may be the uncertain status of the patent or application generated during the deemed abandonment period. Third party rights will continue as long as such uncertainty persists, and will end only when the patent or application is revived.

Notably, similar changes to those in place for missed maintenance fees are also applied under the new laws to other missed due dates that lead to the initiation of a deemed abandonment period.

Thus, the effect of the new patent laws may prove to be a double-edged sword for patentees. On one hand, a patentee is granted more time to pay missed maintenance fees; but on the other hand, a deemed abandonment period no longer offers twelve months for a patentee to revive an application or patent with limited consequences. Although the provision of more time to pay a missed maintenance fee may initially appear to offer a carrot to patentees, this first impression may be misleading due to the significant consequences posed by the deemed abandonment period. These consequences can put a patent or application at risk (e.g., if third party rights are put into effect, or a standard of due care is not met by a patentee). Ultimately patentees may choose to always pay a missed maintenance fee during the late fee period, rather than risk incurring significant consequences, evoking a result whereby a patentee has less time to pay a missed maintenance fee than under the current laws. Thus, the new fees, standard of due care and third party rights effects imposed by the amended laws potentially may prove to be more of a stick than a carrot for patentees.

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