2018-01-15
The patent application process requires you to pay multiple fees, such as yearly maintenance fees, an examination fee and an issue fee. These fees must be paid by a specified deadline. Non-payment of the required fees within the stipulated period can lead to the abandonment of your patent application. While the Canadian Patent Act and Patent Rules set out requirements for fee payments, there have been issues regarding incorrect fee payments that have questioned the validity of a patent. The question here is whether an unintentional fee mistake can invalidate a patent?
Can a Failure to Pay the Correct Final Fee Invalidate the Patent?
In the case of Apotex Inc. v. Pfizer Inc., 2016 FC 136, the Federal Court held that there was no legal basis to invalidate an issued patent due to non-payment of an administrative fee while the application was pending. Once a patent application successfully passes the examination, the Canadian Intellectual Property Office issues a notice of allowance that requires you to pay a final fee, commonly referred to as an issue fee, for issuance of the patent. The final fee must be paid within 6 months of the notice otherwise, the application is deemed abandoned. The rules currently outline two types of fee, one for small entities and the other for large entities.
In Apotex Inc. v. Pfizer Inc, Pfizer erroneously paid the final fee on the basis of a small entity and it was found that no top-up fee for large entity was paid. Apotex argued that since the final fee was not paid in full and the error was not corrected prior to the deadline that the issued patent in question was invalid. The allegation made by Apotex relied on a 2003 decision of Dutch Industries, where the Federal Court held that there was no statutory provision to accept top-up payments once the deadline is crossed even for unintentional errors. However, several developments happened after the 2003 decision, including provisions made in the Patent Act to allow top-up payments during a one-year grace period.
While Apotex argued on the basis of the 2003 decision, the court rejected the argument saying that the 2003 case applied to patent applications. In addition, once the application is granted, administrative irregularities during the application stage cannot be used to challenge validity of the issued patent. The primary basis for this conclusion was the 2011 decision in Corlac Inc. v. Weatherford Canada Inc., which held that non-compliance with s. 73(1)(a) during prosecution of a patent application did not invalidate an issued patent. Although section 73(1)(a) deals with the requirement of good faith and not the fee payment issue, the Federal Court held that the various subsections in s. 73(1) of the Act were not so different as not to carry over the teachings from the Weatherford case.
The decision of the Federal Court in Apotex Inc. v. Pfizer Inc., 2016 FC 136, provides greater clarity to patent owners in terms of fee payment problems. It clearly highlights that administrative issues regarding the payment of fees can only be fatal to patent applications and not issued patents. It also appears to remove all consequences for the failure to pay top-up fees during the grace period and raises questions about administrative fees during the patent process. While these questions may be addressed in the future, it is best to adhere to correct and timely fee payments to avoid the risk of patent invalidity or abandonment.
