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Federal Court Dismisses Application to Preserve Patent which Lapsed for Failure to Pay Timely Maintenance Fees

In a decision released on November 25, 2003, the Federal Court has confirmed that the provisions of the Patent Act governing the payment of maintenance fees require strict compliance.

Payment of annual maintenance fees are required to maintain patent applications and patents. For patents issued on or after October 1, 1989, from an application filed before this date, annual maintenance fees must be paid commencing on the second anniversary of the issue date of the patent. The required maintenance fee may be paid up to one year late, provided an additional late payment fee is also submitted. Under the Patent Act, a patent may be reissued with a new patent number. However, the patent term remains the same and the maintenance fee provisions continue to apply to the reissued patent as if it were the original patent.

In F. Hoffmann-La Roche AG ("Roche") v. The Commissioner of Patents (2003 FC 1381), Roche mistakenly classified a reissued patent as a new patent. As a consequence, it did not pay the maintenance fee due on the original patent's eighth anniversary (October 29, 1999) on the belief that no maintenance fee was required on the first anniversary of the reissued patent. The Commissioner of Patents (the "Commissioner"), also through error, did not advise Roche of the overdue maintenance fees until well after the one year period during which the maintenance fee could have been submitted with an additional late fee. It was not until November 5, 2001 that the Commissioner advised Roche that its patent had lapsed for non-payment of fees.

Roche brought an application to preserve its patent having regard to the purpose and context of the Patent Act. The Court found that the Patent Act provides no legal basis on which Roche might avoid the catastrophic consequences of non-payment of fees, stating:

[27] Patent holders … must shoulder certain burdens and obligations. Among them is the duty to pay maintenance fees to keep a patent in good standing.

[28] Still, courts have recognized that the maintenance fee regime is complicated, the risk of innocent errors is great, and the failure to comply with the strict rule in s. 46(2) has "catastrophic" consequences. Accordingly, courts should give patent-holders the benefit of any omissions or ambiguities in the legislative provisions: Barton No-till Disk Inc., above.

[29] In this case, while I find it lamentable, I see no omissions or ambiguities that might be resolved in Hoffmann-La Roche's favour. Nor do I find any legal basis on which the applicant might avoid the catastrophic consequences of failing to comply with s. 46(1). The legislation is clear. Indeed, provisions of the Patent Act relating to the duration of patents are expressly subject to the terms of s. 46, ss. 43, 44, 45.

Roche also relied on the principles of fairness, legitimate expectations, equity, and estoppel, in view of the failure of the Commissioner to provide timely notice of non-payment. The Court rejected these arguments, stating that there is no legal basis for imposing a duty on the Commissioner to provide a notice of the status of maintenance fee payments and the Court cannot otherwise grant a remedy that contradicts the plain terms of the Patent Act.

The Court in its reasons referred to the Federal Court of Appeal decision Barton No-till Disk Inc. (Dutch Industries Ltd. v. Canada (Commissioner of Patents) ("Dutch Industries") (2003 FCA 121), which also related to the payment of maintenance fees and which was reported in the June 2003 issue of our IP Perspectives newsletter. In that case, the Court of Appeal held that if a small entity maintenance fee is incorrectly paid where a large entity maintenance fee was in fact required, and the time for reinstatement has passed, the patent is irrevocably lapsed and the payment of a "top-up" payment is not possible. In our October 2003 issue of IP Perspectives, we reported that, on August 8, 2003, the Government of Canada announced its intention to amend the Patent Act and Rules in order to address this issue (see announcement). Most recently, on December 11, 2003, the Supreme Court of Canada denied Dutch Industries leave to appeal the Court of Appeal's decision.

Both the Roche and Dutch Industries decisions highlight the importance of strictly adhering to the maintenance fee provisions of the Patent Act and Rules. While legislative amendments, if passed, may provide relief for mistakes made in determining whether an applicant or patentee is a small entity, amendment of the legislation to address missed deadlines for payment of maintenance fees would seem unlikely. Roche has appealed the Court's decision. We will report on the progress of this appeal in future issues of our Rx IP Update newsletter.