Reviewing CIPO’s Procedural Decisions – Federal Court’s Judicial Anxiety to Uphold Patents

In conducting the public function of granting Patents, CIPO’s actions are often called into question in private disputes, as well as by individual applicants. Although the “high stakes” of patent litigation may often create novel arguments to invalidate a particular patent, broader policy consequences ultimately arise as to how to temper CIPO’s independent administrative functions with the ability of third parties to raise administrative noncompliance as a ground of patent invalidity. The court’s predilection to review, at the request of individual applicants, administrative type decisions regarding fees, may be contrasted with judicial reluctance to revisit CIPO’s actions once a patent has issued. At the same time, technical challenges appear to still be raised and result in some interesting procedural matters such as attempting to subpoena a Patent Examiner.

Post Dutch Industries 2003, Weatherford 2011

Consistent with the Federal Court of Appeal’s reluctance to review procedural actions of the Patent Office during prosecution once a patent has successfully issued, more recent decisions on fees further support the court’s somewhat benevolent attitude in working to avoid invalidating applications and issued patents for what may be considered “technical violations”.

Weatherford v Corlac 2011 FCA 228 (“Weatherford”) supports the position that an issued patent cannot be retroactively attacked based on procedural (and arguably substantive) challenges during prosecution. Although Weatherford dealt with good faith prosecution requirements of s.73(1)(a) of the Patent Act, the “hands off” attitude of the FCA can arguably be extrapolated to other situations where a third party is trying to later (often much later) question the Patent Office’s stamp of approval of a patent:

[142] The grounds for attacking the validity of a patent are delineated in the Act. Specifically, they relate to: utility, section 2; novelty (anticipation), section 28.2; obviousness (inventiveness), section 28.3; and sufficiency of disclosure, subsection 27(3). In addition to validity grounds, a patent can be found to be void if the conditions of subsection 53(1) are met.

[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. To conclude otherwise would result in absurdity. An issued patent would be subject to retroactive scrutiny by the courts in relation to the submissions made by an applicant to the Patent Office during prosecution (generally many years prior), judged against unknown criteria. It is for the Commissioner to determine whether an applicant’s response to a requisition from an Examiner is made in good faith, not for the courts. The courts do not issue patents.

Consistent with Weatherford, earlier decisions had demonstrated a reluctance to allow 3rd parties to “interfere” during prosecution by seeking judicial intervention at the time (as opposed to retroactively/post issuance as in Weatherford).

Fees Issues

The same reluctance, post issuance, may indeed apply to fees issues, arguably based on obiter from Weatherford. Notably Weatherford distinguished an earlier significant FCA case (Dutch Industries Ltd. v. Canada (Commissioner of Patents), 2003 FCA 121, [2003] 4 F.C. 67) where procedural issues arose regarding fees, on the basis that only an Application was deemed abandoned. The Dutch Industries’ Application was abandoned for failure to pay “large entity”[1] fees, as the applicant was a “”large entity” (as opposed to a small entity) at the time of filing. Although it is certainly correct that, as a result of the Dutch Industries decision, an issued patent was upheld and a pending application was invalidated, the basis for the issued patent being upheld had nothing to do with the patent being issued. Instead, small entity fees were correctly paid in respect of the issued patent.

Following Dutch Industries, 2006 statutory amendments provided options to avoid “harsh consequences” of loss of patent rights associated with issues regarding past fee payments. Where there was a “fatal error” failing to pay fees on the “large entity” scale, s. 78.6 Patent Act provided a 1 year “grace period” to correct such errors with top-up payments.

Patent Rule 3.1 was also introduced to provide, on a prospective basis, further options to “fix” a fee error where there was a clerical type error. Where there is a “clear but unsuccessful” attempt to pay a fee, an applicant/patentee has additional time to correct its error upon notification by CIPO. As a remedial provision, Rule 3.1 has been interpreted in a “fair, large and liberal construction” so as to save a patent application where there was apparently a calculation/transactional type error in the filing fee payment (Karolinska Institutet Innovations AB v. Canada (Attorney General) 2013 FC 715). In its reasoning, the court characterized fees as simply administrative (arguably in contrast to the result in Dutch Industries):

32 The purpose of such fees, as has been stated by the Federal Court of Appeal in Actelion Pharmaceuticals Ltd v Canada, 2008 FCA 90 at paragraph 13, is not only to provide the Patent Office with a means of recovering administration costs, but also to rid the proliferation of deadwood patents. There is nothing penal in the fee system. [emphasis added]

Consistent with this pro-patentee approach, the Federal Court has also liberally construed the remedial nature of s. 8 of the Patent Act (directed at CIPO’s discretion to correct clerical errors). Repligen Corp. v. Canada (Attorney General) 2012 FC 931 found an issued patent had never lapsed where the correct fees had been repeatedly paid for several years, but to the wrong patent, after an admitted clerical error providing an incorrect patent number to an annuity payment service. The court found CIPO incorrectly put too much weight on a patent agent ignoring CIPO’s notice regarding non-payment, as well as possible prejudice to 3rd parties, including the owner of the “wrong patent” whose fees had been paid, given this “wrong patent” had now expired.

Novel Procedural Implications

Although there may be increased certainty once an issued patent is considered to have the stamp of CIPO’s approval, and despite the government’s 2006 benevolent “top up provisions”, recent examples illustrate how the “large entity” vs “small entity” issue may still continue to be a viable challenge.

Apotex [2] has attempted to subpoena CIPO in order to obtain further details regarding a 1997 final fee payment. Apotex argues there was a failure to pay the final fee, arising from the “large entity v small entity” issue discussed above, with the result that an issued patent is invalid. Apotex intends to argue this technical issue as a summary judgment motion. Compelling the CIPO Examiner to provide evidence regarding fee payments made to her almost 20 years ago is notably a rare request. It is even more interesting to consider that this request follows 7 years of NOC/post NOC litigation, and involves Pfizer’s highly successful Xalatan (latanoprost) [3].

Pfizer apparently accepts that its agents correctly paid “large entity” fees for its latanoprost patent, with the notable exception of the final fee payment (a $350 difference). Apotex argues the remedial requirements of s. 78.6 Patent Act (discussed above) were not met. According to available correspondence, although the Patent Office “form letter” suggests the necessary top up payment was made, the earlier agent letter in fact only provides notification of large entity status, and does not even refer to a payment [4]. According to Apotex, the CIPO examiner in fact advised (presumably verbally/informally) that her form letter incorrectly referred to a payment, however would not provide an affidavit unless compelled under court order. Aside from the apparent procedural novelties involved in compelling an affidavit (or oral testimony) for its summary judgment motion (where recent SCC jurisprudence favouring summary judgment may assist), there is the added complexity of compelling the patent examiner (or another CIPO representative) to provide specific evidence regarding a particular patent. (For example, in the Dutch Industries case, where the Commissioner was a responding party as the case was a judicial review, the Commissioner did not appear at the hearings, however filed an affidavit directed at its general practices regarding maintenance fees/errors regarding entity status.)



[1] A “large entity” has, inter alia, more than 50 employees.

[2] Apotex v Pfizer, Court File No. T-1064-13, T-393-14 (s. 8 damages/infringement/validity action Re: latanoprost for glaucoma). The decision on the subpoena is pending following a May 12, 2015 hearing.

[3] Apotex’s Claim refers to Canadian sales of approximately $50 million/year (T-393-14).

[4] The patent agency firm apparently has no “recollection” (and presumably no definitive documents) on this matter. Despite the technical deficiency, it would be unusual that a patent agent, in response to s.78.6 notification from CIPO, would merely advise that an entity is large, and not pay the required top-up fee. (If such an error did occur, query whether such an error would qualify as clerical; also query the Patent Office’s actions at having continued to accept a small entity final fee after being advised almost 10 years later that the patentee was in fact large entity, consistent with its “stand-offish” approach discussed in Dutch Industries.) As part of its summary judgment motion, Apotex relies on the principle that parties are to bring their best evidence to a summary judgment motion. If, according to documentary and affidavit evidence, the fee issue is unclear, one could argue this merits a full trial (or at least a summary trial) in the circumstances.

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