Montréal, Quebec April 23, 2007
PRESENT: The Honourable Maurice E. Lagacé
BETWEEN:
and
HER MAJESTY IN THE RIGHT OF CANADA
AS REPRESENTED BY
THE ATTORNEY GENERAL
AND THE COMMISSIONER OF PATENT
REASONS FOR JUDGMENT AND JUDGMENT
[1] Actelion Pharmaceuticals Ltd. (the “Applicant”) is seeking judicial review of a purported decision of the Commissioner of Patents (“Commissioner”) dated August 1, 2006, in which the Commissioner refused to accept payment of the patent application maintenance fee and the reinstatement fee during the one year reinstatement period for the Canadian Patent Application No. 2,454,417 (“417 Patent”).
[2] The Applicant requests a Writ of Certiorari to quash the Commissioner’s decision and a Writ of Mandamus requiring the Canadian Intellectual Property Office (“CIPO”) to reinstate the application of Actelion.
BACKGROUND
[3] The 417 Patent relates to the use of benzo-fused heterocycles as the active ingredient in pharmaceutical compositions of a particular general formula which are useful as endothelin receptor antagonists. The 417 Patent originated from a PCT International Application (No. PCT/EP02/08523) bearing an International filing date of July 31, 2002. It entered the National Phase in Canada on January 20, 2004; however, the effective date of filing of the 417 Patent is the same date as the International application (July 31, 2002).
[4] The second anniversary of filing on July 31, 2004 was the first date on which payment of the maintenance fee was to be paid; however, the maintenance fee was not paid and the application was deemed abandoned on August 2, 2004. According to the Applicant, this error was a result of a clerical input error in the Applicant’s Canadian agents diary database A clerk at the firm entered the filing date as July 31, 2003 instead of 2002, and as a result, the due date for the second anniversary maintenance fee was shifted from 2004 to 2005 in its records
[5] CIPO had sent a Notice of Abandonment to Applicant on September 27, 2004; however, the Applicant maintains that this notice was never actually received. Thus, the Applicant submits that there was no reason to believe that the application was in a state of abandonment.
[6] In due course, the Applicant wrote a letter [AR,Vol. 1 at p.0014] to the Commissioner on July 15, 2005 indicating:
Included in today’s payment is the maintenance fee of $100.00 which is required for anniversary 2 for this case. The applicant has elected to pay this fee as a Regular Entity.
The Commissioner is hereby authorized to debit any additional fee or credit any overpayment associated with this communication directly from or to our deposit account …
[7] In response, CIPO sent a letter [AR, Vol. 1, 5 at 0016] on September 7, 2005 refusing to accept the maintenance fee or to deduct a reinstatement fee from the Applicant. The letter stated in part:
The maintenance fee was due on August 2, 2004.
Therefore, please note that if the fee to maintain a patent application is not totally paid before the start of a scheduled period, Canadian practice allows 12 months grace period within which the required maintenance fee and a $200.00 reinstatement fee payment may be paid. According to our records that period ended on August 1, 2005. Consequently, we regret to inform you that this application is now dead.
In accordance with section 4(1) of the Patent Rules, a refund in the amount of $100.00, will be issued upon request. ….
[8] The 12-month period referred to in CIPO’s letter lapsed on August 2, 2005. What followed was an exchange of letters between the Applicant and CIPO from September 22, 2005 to August of 2006. An October 24, 2005 letter from CIPO stated that since CIPO did not receive a request for reinstatement pursuant to subsection 73(3) of the Patent Act within the prescribed period, then the application was considered abandoned. In a reply letter dated February 13, 2006, the Applicant posited that its July 15, 2005 letter was a general authorization statement and inherently contained a request for reinstatement.
[9] In a subsequent letter dated April 21, 2006 [AR, Vol.1 at p.0034], CIPO deemed that it no longer had the legal authority to reinstate the application. Further, CIPO stated that Notices of Abandonment are sent as a courtesy only and it should not be assumed that one is sent every time. In addition, to give effect to any general authorization statement, CIPO maintained that the request must be, on its face, “…clear and obvious…” And since there was nothing in the letter dated July 15 2005 to suggest that a reinstatement was being requested, the Commissioner’s delegate made no error in not deducting any additional fees since “… the Office no longer ha(d) legal authority to reinstate the application…”
[10] The last letter by CIPO dated August 1, 2006 merely reiterated its original stance.
ISSUES
[11] The Applicant submits the issue as follows:
a. What is the appropriate standard of review from the Commissioner’s decision;
b. Did the Commissioner err in law in refusing to recognize Applicant’s letter of July 15, 2005 was an instruction to pay all fees associated with the 2nd anniversary maintenance fee, including any necessary reinstatement fee;
c. Did the Commissioner err in law in declining to recognize Applicant’s letter of July 15, 2005 as a clearly implied request to reinstate the application; and
d. Are the Commissioner’s reasons supporting the impugned decision manifestly unreasonable?
[12] The Respondents have characterised the issues as follows: whether the evidence establishes that the Applicant in fact took the actions that the law requires to avoid abandonment of the application or to reinstate the abandoned application?
[13] The regime for payment of fees in relation to patent applications is firmly established by the Patent act [R.S.C. 1985, c.P-4, as amended] and the Patent Rules [SOR/96-423, as amended]. Together, the various legislative provisions set out a complete code governing the duty to pay certain fees, the consequences of a failure to pay, and the steps that may be taken to avoid those consequences.
[14] The provisions of section 27.1 of the Patent Act impose on an applicant for a patent the duty to pay prescribed fees:
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27.1 (1) An applicant for a patent shall, to maintain the application in effect, pay to the Commissioner such fees, in respect of such periods, as may be prescribed. |
27.1 (1) Le demandeur est tenu de payer au commissaire, afin de maintenir sa demande en état, les taxes réglementaires pour chaque période réglementaire. |
[15] The prescribed fees and timing are set out in the Patent Rules and in Schedule II to the Rules. In particular, under Item 30 of Schedule II, an applicant must generally pay a maintenance fee of a specific amount by the anniversary date of the application each year. The amount here is not an issue.
[16] Due to a clerical error the maintenance fee here was not paid by the anniversary date with the consequence that the “417 Patent” in issue was deemed to be abandoned under the provisions of section 73 of the Patent Act itself stating that:
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73. (1) An application for a patent in Canada shall be deemed to be abandoned if the applicant does not… (c) pay the fees payable under section 27.1, within the time provided by the regulations; |
73. (1) La demande de brevet est considérée comme abandonnée si le demandeur omet, selon le cas : c) de payer, dans le délai réglementaire, les taxes visées à l’article 27.1 ; |
[17] Applicant admits that the “417 Patent” was deemed abandoned without its knowledge when Applicant sent the letter of July 15, 2005 to the Commissioner with instruction for the payment of the maintenance fee required at the anniversary 2 of said Patent.
[18] But Applicant insists that when the maintenance fee was offered it was acting within the prescribed twelve-month period specified in section 152 of the Patent Rules to obtain a reinstatement of the Patent in accordance with all the conditions set out in subsection 73(3) of the Patent Act reading as follows:
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73.(3) An application deemed to be abandoned under this section shall be reinstated if the applicant: (a) makes a request for reinstatement to the Commissioner within the prescribed period;
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73. (3) Elle peut être rétablie si le demandeur : a) présente au commissaire, dans le délai réglementaire, une requête à cet effet;
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(b) takes the action that should have been taken in order to avoid the abandonment; and |
b) prend les mesures qui s’imposaient pour éviter l’abandon;
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(c) pays the prescribed fee before the expiration of the prescribed period. |
c) paie les taxes réglementaires avant l’expiration de la période réglementaire.
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[19] In turn, the prescribed fee, and the prescribed period, mentioned in subsection 73(3) of the Patent act are specified in section 152 of the Patent Rules :
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152. In order for an application deemed to be abandoned under section 73 of the Act to be reinstated, the applicant must, in respect of each failure to take an action referred to in subsection 73(1) of the Act or section 151, make a request for reinstatement to the Commissioner, take the action that should have been taken in order to avoid the deemed abandonment and pay the fee set out in item 7 of Schedule II before the expiry of the twelve-month period after the date on which the application is deemed to be abandoned as a result of that failure. |
152. Pour que la demande considérée comme abandonnée en application de l'article 73 de la Loi soit rétablie, le demandeur, à l'égard de chaque omission mentionnée au paragraphe 73(1) de la Loi ou visée à l'article 151, présente au commissaire une requête à cet effet, prend les mesures qui s'imposaient pour éviter la présomption d'abandon et paie la taxe prévue à l'article 7 de l'annexe II, dans les douze mois suivant la date de prise d'effet de la présomption d'abandon. |
[20] The mandatory and declaratory effect of the provisions cited above contrast with a number of provisions in the Patent Act that explicitly confers on the Commissioner a duty of power and whereby he is called upon to do something. In contrast, in the provisions relating to abandonment and reinstatement, the result occurs solely by virtue of the legislation, and, according to Respondents, not by virtue of any decision made by the Commissioner.
ARGUMENT
[21] While Applicant concedes that the Patent in issue was effectively in a state of deemed abandonment without any discretionary power left to the Commissioner when the payment of the maintenance fee was offered, still, Applicant insists that the Commissioner made nevertheless a reviewable decision when he refused without any valid reasons to receive payment of the prescribed fee for reinstatement of the application.
[22] The Applicant submits that since the application was in a state of abandonment, reinstatement was necessary in order to pay the second anniversary maintenance fee. Therefore, it was obvious, according to the Applicant that a reinstatement fee was required, and that the request to pay the maintenance fee clearly implied a request to pay the reinstatement fee.
[23] The Applicant submits also that all three requirements under subsection 73(3) have been met as there was an implied request to reinstate with instructions for both the second anniversary maintenance fee and the reinstatement fee from its’ agent deposit account. Therefore an explicit reinstatement request was not necessary. The Applicant cites United States v. Commissioner of Patents, unreported T-1995-04, [United States] to support its position.
[24] The Respondents do not accept these arguments. For them the Applicant’s application was deemed abandoned as a result of the operation of the Patent Act and its subordinate legislation, without any intervention or exercise of discretion on the part of the Commissioner. This is also true of the non-reinstatement of the application.
[25] According to Respondents and although the statute in subsection 73(3) (a) requires only a request, that request must be explicit for a reinstatement to be made; and there was no such request here. So the Commissioner had neither the duty nor the authority to infer such a request. And since timely action to reinstate the application was not taken, as a matter of law, it cannot be reinstated.
[26] Further, the Respondents submit that the Applicant cannot rely on the decision in United States as the facts in that case are not analogous.; since in that decision the Applicant was simply asking a Commissioner to infer a specific payment instruction within a more general one; and he was not seeking to have the Commissioner infer a statutory precondition as is the case here.
ANALYSIS
[27] The question therefore is whether the Commissioner, by his Acting Director, was correct to refuse the payment of the 2nd anniversary maintenance fee since Applicant had not made a specific request for reinstatement as required by subsection 73(3)(a) of the Patent Act.
[28] The statutory regime for the payment of maintenance fees, the rules for when applications are deemed abandoned, and reinstatement of patent applications, are governed under the Patent Act, R.S.C. 1985, c. P-4, as amended and the Patent Rules, SOR/96-423, as amended.
[29] In Barton No-till Disk Inc. v. Dutch Industries Ltd., 2003 FCA 121, [2003] 4 F.C. 67 (C.A.), 201 N.R. 152 [Dutch Industries], the Court stated that the proper approach to the interpretation of these two statutes is the principle outlined in Driedger, Elmer A., Construction of Statutes, (2nd ed., Toronto: Butterworth’s, 1983), at page 87:
Today there is only one principle or approach: namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.
And at para. 30, the Court stated the objective behind the required fees as follows:
There is no dispute about the statutory objectives in play in this case. The fees payable under the Patent Act and Patent Rules are intended to defray part or all of the cost of the Patent Office. Fees are set at a lower scale for "small entities" to provide modest monetary relief to inventors that are presumed to be of limited means. The regime of annual maintenance fees was put in place to discourage the proliferation of deadwood patents and patent applications by requiring patentees and patent applicants, at least on an annual basis, to take steps to keep them in good standing.
[30] Section 73(3) makes it clear that three conditions must be met if an abandoned patent application is to be reinstated as stated in Pfizer Inc. v. Canada (Commissioner of Patents), [2000] F.C.J. No. 1801 (C.A.)(QL). If these three conditions are not met, then the patent application lapses through no action on the part of the Commissioner. The time limits to carry out these three requirements have been set out in section 152 as a 12-month period after the date of abandonment. In this case, the deadline for the request of reinstatement was August 2, 2005.
[31] Section 152 of the Rules requires that the request for reinstatement of a patent application be made within 12 months from the date on which a patent application was deemed to be abandoned. In this case the deadline for making a request for reinstatement was August 1, 2005. On that date the only document received by the Commissioner was the letter dated July 15 from the Applicant’s agent with instructions for payment of the maintenance fee due.
[32] The Applicant argues that this letter contains an implied request for reinstatement. Respondents for their part submit that an explicit request for reinstatement must be made pursuant to the Patent Act and the Patent Rules.
[33] Since Respondents do not contest that payment of the maintenance fee was offered before the expiry of the twelve-month period after the date on which the application was deemed to be abandoned as a result of that failure it appears therefore that the only issue left for the Court to decide is whether the request for reinstatement can be implied or must be made explicit ?
[34] The parties were unable to find any decision on this precise issue.
[35] The argument made by the Applicant on this issue is unacceptable for the following reasons:
a. First, the letter dated July 15, 2005 only made reference to payment of the maintenance fee and “any additional fee”. It does not specifically indicate a desire for reinstatement or that a reinstatement fee is to be debited from its account.
b. Second, there is no authority provided under the Patent Act or Patent Rules to allow the Commissioner to accept a general authorization statement in place of a specific letter indicating a request for reinstatement. Section 73(3)(a) explicitly requires from an Applicant to “make a request for reinstatement”. This was not done, notwithstanding the Applicant’s argument that the request was “implied”.
c. Third, the Applicant failed to take steps “that should have been taken in order to avoid the abandonment” as specified in Section 73(3)(b). In particular, a request was not made and payment was not submitted for reinstatement prior to the expiry of the prescribed period.
d. Fourth, the Applicant did not know, at the time the letter dated July 15 was addressed to the Commissioner, that the Patent in issue was deemed to be abandoned; so why the Commissioner should have seen in this letter an implied request when the Applicant had in mind then only the payment of the maintenance fee and certainly not a request for reinstatement?
e. Six, if Applicant’s reasoning was to be followed, the consequence for the future would mean, every time payment of a maintenance fee is offered during the twelve-month period after the date on which an application is deemed to be abandoned, that the Commissioner should read in the payment an implicit request for reinstatement. But what happens then with the other conditions (a) and (b) of Subsection 73(3) of the Patent Act?
[36] The Court cannot ignore that Section 4 of the Patent Act states that the Commissioner is to act pursuant to the provisions under the Patent Act. The Act leaves him no discretion to exercise here. The statutory provisions are to be read strictly; and it is the Applicant’s duty to maintain the patent application in good standing. Any failure to comply with the strict nature of the law will not authorize the Commissioner nor the Applicant to deviate from fulfilling the precise terms of the law.
[37] No decision determinative of the appellant's rights was made by the Commissioner here. The rights of the appellant were affected by the operation of the Act. The Commissioner simply informed the Applicant that the conditions for a reinstatement of Subsection 73(3) had not been met within the 12 months prescribed period and that consequently there was nothing he could do to reinstate the application.
[38] The Court sees no reason to intervene. On the contrary the Commissioner refusal to reinstate the application was correct and there are no grounds for intervention by this Court.
JUDGMENT
THIS COURT ORDERS that this application for judicial review, a Writ of Certiorari to quash the Commissioner’s decision and a Writ of Mandamus requiring the Canadian Intellectual Property Office (“CIPO”) to reinstate the application is dismissed. Costs to the Respondents.
“Maurice E. Lagacé”
Deputy Judge
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-1561-06
STYLE OF CAUSE: Actelion Pharmaceuticals Ltd v. Her Majesty in the right of Canada
PLACE OF HEARING: OTTAWA, Ontario
DATE OF HEARING: April 12, 2007
AND JUDGMENT: The Honourable Maurice E. Lagacé, Deputy Judge
APPEARANCES:
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Mr. Bruce E. Morgan
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Ms. Sharon Johnston
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SOLICITORS OF RECORD:
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Gowling Lafleur Henderson Ottawa, Ontario
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John H. Sims, Q.C. Deputy Attorney General of Canada
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