Proposed amendments to the Canadian Patent Rules published for public consultation

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Introduction

The Government of Canada has opened a public consultation on proposed amendments to the Canadian Patent Rules, running from August 1 to September 8, 2017.  The changes relate principally to pending amendments to the Patent Act intended to bring it into compliance with the Patent Law Treaty (PLT).  This article provides an overview of significant changes to Canadian patent practice that would result if the proposed Rules come into force in their present form. 

Timing

The federal government indicates that, after the present public consultation period, the proposed Rules will be pre-published in the Canada Gazette, Part I.  This will provide another opportunity for interested stakeholders to provide comments, although the Rules should be in close to final form at that time.  Subsequently, the final amendments will be published in the Canada Gazette, Part II.  The government currently estimates that these two further steps will occur in spring 2018 and late 2018, respectively.  This schedule, if it holds, would suggest that the amended Rules could be in force early in 2019. 

A complex legislative background

There are three outstanding legislative instruments effecting amendments to the Patent Act, none of which is yet fully in force.  The Patent Act is not routinely amended, so it is unusual to have multiple outstanding amendments in separate pieces of implementing legislation that must be coordinated. 

First, the Economic Action Plan 2014 Act, No. 2, Statutes of Canada 2014, Chapter 39 [Bill C-43, 41st Parliament, 2nd Session] is omnibus legislation, implementing aspects of the 2014 federal budget.  It contains not yet in force provisions amending the Patent Act, largely for compliance with the PLT.  The present proposed amendments to the Patent Rules are associated with these pending amendments to the Act.

Second, the Economic Action Plan 2015 Act, No. 1, Statutes of Canada 2015, Chapter 36 [Bill C-59, 41st Parliament, 2nd Session] is again omnibus legislation, this time implementing aspects of the 2015 federal budget.  It also contains provisions amending the Patent Act.  Some, such as those providing statutory privilege for communications between patent agents and their clients, are already in force.  Other provisions, permitting the Commissioner of Patents to extend deadlines in cases of force majeure events, such as floods or extensive power outages, are not yet in force.

Finally, before either of the above statutes could fully come into force, the Canada-European Union Comprehensive Economic and Trade Agreement Implementation Act, Statutes of Canada 2017, Chapter  6 [Bill C-30, 42nd Parliament, 2nd Session] received royal assent on May 16, 2017.  As its name indicates, this legislation gives effect to Canada’s obligations under the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union.  It is again omnibus legislation, amending numerous statutes.  Among other things, this legislation will amend the Patent Act to introduce a system of certificates of supplementary protection (CSPs), effectively extending the term of patent protection to account for delay in the drug approval process.  

As we recently reported, proposed Certificate of Supplementary Protection Regulations and Regulations Amending the Patented Medicines (Notice of Compliance) Regulations, 2017 were published for public comment in Canada Gazette Part I, Vol. 151, No. 28 on July 15, 2017.  In the same volume of the Gazette, proposed Rules Amending the Patent Rules were also published for public comment, making minor consequential amendments to the Patent Rules, relating to the requirement for the appointment of a representative.  It appears that these more modest changes to the Patent Rules could come into force with the CETA legislation, before the other amendments discussed herein.  The Canadian government and the European Commission recently issued a joint statement, announcing September 21, 2017 as the intended date for provisional implementation of CETA.

As a consequence, the transitional and coordinating provisions of the legislation are complex.

The complicated interplay between the Patent Act and Patent Rules

Subsection 12(2) of the Patent Act states that “Any rule or regulation made by the Governor in Council has the same force and effect as if it had been enacted herein.”  This is a possibly unique provision, not found in other Acts of Parliament.

Perhaps on the strength of this provision, the proposed Rules include many exceptions to provisions of the Act, stating that they do not apply in certain circumstances.  This makes for difficult reading, because the Rules do not merely fill in the details of procedure within the broad but fixed contours of the Act.  Rather, it is necessary to read the Act and Rules very much in concert to understand even basic requirements. 

Possibly this approach was necessitated by inclusion of the amendments to the Act in omnibus rather than stand-alone legislation.  Bills to implement initiatives set out in annual federal budgets and to give effect to international trade agreements have many parts and must move quickly through the legislative process.  There is little time or opportunity for revision, as this would hold up the entire bill.  Omnibus bills are often criticized for this reason.  Leaving substantial essential detail to the Rules provides additional time and flexibility.

So even after all the amendments come into force, the Patent Act and Patent Rules will be painfully complex documents.  While these are early days, it seems that understanding the new regime will be challenging for even the most diligent and informed reader.

Significant elements of the amended legislative scheme

Assuming the pieces of the puzzle fall neatly into place, significant elements of the amended legislative scheme reflected in the proposed Rules include the following:

Reduced requirements to obtain a filing date – Currently, the filing fee must be paid and a translation of the application into the English or French language submitted at the time of filing of a Canadian patent application.  Under the amended Act and Rules, it will be possible to defer payment of the filing fee and the translation.  It will also be possible to defer filing a specification at all by instead making reference to a previously regularly filed application.

24/7/365 electronic filing – It is currently not possible to obtain a filing date on a Saturday, Sunday, holiday or other day when the Patent Office is closed for business.  This could have negative consequences if the Canadian application is the first-filed application or the filing date is needed to benefit from the grace period.  Under the amended regime, it will be possible to secure a filing date on a day when the Patent Office is closed for business if the application is filed by electronic means.  For example, if a response to an Examiner’s Report falls due on July 1 (Canada Day), the response may be timely filed on July 2, the next day the Office is open for business (dies non practice).  But if the applicant needs a July 1 filing date (e.g. the invention was disclosed to the public by the applicant the previous July 1), it will be possible to secure a July 1 filing date by submitting the application by electronic means.

Addition to specification or addition of drawing – A procedure is introduced whereby the applicant may add to the specification or add a drawing, without loss of the original filing date, if the addition is wholly contained in a priority document, and the addition is made within two months from filing, or within two months from notice by the Commissioner of Patents that part of the application appears to be missing.

Restoration of priority – Under the current law, it is not possible to claim priority to an application filed more than 12 months prior to the filing date of a Canadian patent application.  Restoration of priority is introduced, such that it will be possible to claim priority to a previously regularly filed application filed up to 14 months before the Canadian (or PCT) filing date, if the request is made within the same time period, and the applicant states that the failure to timely file the application was unintentional.  Restoration of priority is subject to subsequent challenge in a court proceeding on the basis that failure to timely file the application was not in fact unintentional.

Shortened term for national phase entry – A PCT application must enter the Canadian national phase within 42 months from the priority date, although an additional “late” fee is payable if  the applicant enters the national phase more than 30 months from the priority date.  Under the proposed Rules, the late entry option is removed.  If the applicant fails to enter the national phase by the 30 month deadline, it is still possible to do this within 42 months of the priority date, but only upon submitting a declaration the failure to timely enter the national phase was unintentional and a statement of the reasons for the failure, and if the Commissioner of Patents determines that the failure was unintentional.

Shortened prosecution deadlines – There is a focus on reducing pendency.  The term for requesting examination will be reduced from five years to three years from the filing date.  Examiner’s Reports will have a standard term for response of four months rather than six months.  The final fee will be due four months rather than six months from the notice of allowance.  Some deadlines may be extended on payment of a $200 fee if the Commissioner of Patents is satisfied that the circumstances justify the extension.

Extension of time limits in unforeseen circumstances – Presently, the Patent Office may be declared “closed for business” by order of the Minister of Innovation, Science and Economic Development.  The amended patent regime will provide greater flexibility to deal with floods, power failures, and the like by permitting the Commissioner of Patents to extend time periods on account of unforeseen circumstances, if the Commissioner is satisfied that it is in the public interest to do so.  As noted above, it will still be possible to obtain a filing date, if needed, when the Patent Office is closed for business.

Notice of certain deadlines prior to abandonment or expiry – The Patent Office will be obliged to provide notice that certain deadlines have been missed before an application is deemed to be abandoned.  This will include e.g. failure to pay request examination, or to pay a maintenance fee on a pending application.  Notice will similarly be required before a patent is deemed to have expired for non-payment of a maintenance fee.  These are instances in which the Patent Office has not previously communicated with the applicant about the deadline.  No such notice will be required with respect to e.g. a missed deadline for responding to an Examiner’s Report, the Report itself having provided notice of the deadline.

“Due care” standard for reinstatement in some instances – Canadian patent applications become abandoned if action is not taken by the prescribed deadline.  At present, the application may be reinstated by requesting reinstatement, paying a fee, and taking the omitted action within 12 months of the date of abandonment.  That is, reinstatement is as of right.  Under the amended Act and Rules, the requirements for reinstatement will be more stringent in certain cases where abandonment only occurs after notice of the missed deadline—namely missed payment of the examination fee or a maintenance fee.  In such instances, the due care standard will apply if reinstatement is effected more than six months from the original deadline.  The applicant must state the reasons for the failure to take the action that led to abandonment, and the Commissioner must determine that “the failure occurred in spite of the due care required by the circumstances having been taken.”  What constitutes “due care” is currently unknown.  Reinstatement under the due care standard may be subsequently challenged in Federal Court.

Amendments after allowance – Only very limited amendments are permitted after an application is allowed under the current system.  In order to re-open prosecution, it is necessary to allow the issue fee deadline to pass such that the application becomes abandoned, and then reinstate the application.  An application reinstated in these circumstances is subject to amendment and further examination.  This is unnecessarily complex and time-consuming.  This procedure will be streamlined such that the notice of allowance can be withdrawn and prosecution re-opened simply upon payment of a fee within four months of the date of allowance. 

Issue fee calculation – Currently, the issue fee is $300 plus $6 for each page of specification and drawings in excess of 100.  The fee schedule in the Rules is to be amended to clarify that the excess page fee does not apply to pages of a sequence listing submitted in electronic form.  This will come as welcome news to biotechnology patentees who have in some instances been stuck with exorbitant issue fees.

Correction of errors – The current Act provides for the correction of “clerical” errors, ultimately in the discretion of the Commissioner of Patents.  This has led to a complicated body of law concerning whether an error truly is “clerical” and, if it is, what if anything the Commissioner ought to do about it.  The amended Act and Rules will instead provide for correction of “obvious” errors, where it is obvious that something else was intended than what appears in the patent and that nothing else could have been intended than the correction.   Errors by the Commissioner must be corrected within six months of grant and errors by the patentee corrected within four months of grant.  Mechanisms are also introduced for correcting errors in identifying or naming applicants and inventors.

Payment of maintenance fees – Currently, only the Canadian patent agent may pay a maintenance fee on a pending application.  This will change such that anyone, such as an annuity service, can pay maintenance fees on pending applications, as is presently the case for issued patents.

Transfers – It will be possible to record a transfer of ownership of an application or patent merely on the request of the applicant or patentee, respectively, without submission of evidence, such as an assignment document.  Where the request is by the transferee, it will still be necessary to submit an assignment, or other evidence of the change in ownership.

Third party rights – An exception from infringement of a patent is introduced for otherwise infringing acts that a third party, in good faith, first committed or made “serious and effective preparations” to commit during a prescribed period after an applicant or patentee failed to request examination or pay a maintenance fee by the original deadline.  It will be for the courts to clarify what constitutes “serious and effective preparations” to commit an infringing act.  The application of third party rights may be avoided by taking action within six months of the original deadline.

Conclusion

Many of the proposed amendments to the Rules are directed to simplifying formal requirements, and minimizing the risk of loss of rights, matters addressed by the PLT.  Applicants will likely notice few substantive changes to routine prosecution, other than that the pace will pick up somewhat with the proposed shortened time limits.  Perhaps the greatest trap for the unwary is the change to the PCT national phase entry deadline.  With removal of 42-month late entry as a matter of right, applicants will need to plan ahead for Canadian national phase entry no later than 30 months from the priority date.  It is at present difficult to anticipate the practical impact of the new third party rights regime, or what might constitute the “serious and effective preparations” to commit an infringing act that is exempted under these provisions.  This presumably will not be known until the defense is raised in future litigation.  In the interim, cautious applicants and patentees will wish to avoid missing deadlines that potentially trigger the prospect of third party rights.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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