Consultation document – Abandonment & reinstatement of patent applications, deemed expiry and reversal of deemed expiry of patents

In the current Canadian patent system, patent applications and patents are subject to consequences which could lead to the loss of rights when required actions are not taken within a prescribed time limit. For patent applications the consequence is abandonment whereas for patents it is deemed expiry.

Abandonment may happen inadvertently, but it can also be used intentionally as a strategy to extend the prosecution time when more time is needed to make a decision as to whether to pursue the rights for the invention in Canada. There are many factors that could play into this decision, such as:

  • The applicant may not want to pursue the invention, believing that it might not hold any value in the future, especially if the patent is not in the core areas of their business.
  • Firms may keep acquiring patents and patent applications to show an innovative culture and gain market power, but abandon them later.
  • To gain additional time to make decisions and take strategic action for their firms.
  • To reduce organizational costs – firms review their IP portfolios regularly to assess the potential of their inventions and drop applications that may not be deemed financially promising so they don't have to pay yearly maintenance fees.

Patent applications : abandonment

Current state

An application is deemed to be abandoned. The required action may be the result of a notice or requisition from the Office such as an examiner's requisition or a notice of allowance that provides a due date for which a reply is required. Alternatively, the deemed abandonment may be the result of operation of law where applicants are not notified that an action must be taken by a particular due date. For example, applicants are not officially notified when a maintenance fee is due or when a request for examination is due. However, failing to take action by the prescribed due date will also result in the deemed abandonment of the patent application.

Regardless of the failure that led to the abandonment, the applicant has 12 months from the date of abandonment within which to take the action(s) that should have been taken to avoid abandonment and to reinstate the application. The reinstatement function in effect acts as a safety net. If an application is not reinstated within 12 months of the date of abandonment it is irreversibly abandoned and the application is considered dead.

Proposed new state

The notice requirements in the PLT obligate patent offices to notify applicants of a non-compliance with procedural requirements before any sanction, such as abandonment, can take effect. Currently in some instances the Patent Office already complies with the PLT notice requirements. For example, when the application does not comply with certain formalities or is defective in a substantive way (e.g. lacking novelty) the Patent Office requisitions the applicant, in a notice (Examiner's Requisition), to comply within a specified time limit. Failure to respond to such a notice before the expiry of the time limit causes the application to be deemed abandoned. In these instances where CIPO already complies with the PLT notice requirements, no changes to notifications are envisioned other than to shorten the time limits for the applicant to comply.

In the current system there are instances where abandonment of an application may occur without notification. Where the Patent Office does not currently notify the applicant that an action must be performed, such as when a maintenance fee is due, to comply with the PLT the Patent Office will be required to notify the applicant and provide additional time within which the applicant must take the action. In the new regime abandonment can only occur if the applicant fails to comply with the requirements of the notice before the expiry of the time period stated in the notice. Thus after the coming in force of the new legislation, the Patent Office will provide new notifications and additional time to comply in those instances where currently abandonment may occur without notification.

When, for example, a maintenance fee for an application is not paid by the due date, the Patent Office will notify the applicant of the non-payment. The time limit to rectify the non-payment (payment of the fee and the late fee) in this case will be the later of: two months from the date of the notification or six months from the original maintenance fee due date. Similarly, if an applicant fails to request examination by the due date, the Patent Office will notify the applicant of the failure and require payment of the fee and a late fee within 2 months of the date of the notice. Failure to pay the fee and the late fee before the expiry of the time limit will cause the application to be deemed abandoned. Thus the abandonment will no longer be an operation of law, but will be linked to the notice informing the applicant of the non-payment. The remedy to rectify the abandonment of an application is reinstatement of the application, similar to the current system.

The new notice regime will cause applications to be abandoned later than they would in the present system, and therefore will increase legal uncertainty for third parties. Because the abandonment and reinstatement regime should be used as a safety net, and in order to reduce the amount of legal uncertainty for third parties, there is a provision allowing for third party rights which will be a disincentive to the abonnement of applications. Importantly, third parties who take certain actions during specific time periods could be exempted from actions for infringement of any resulting patent. For a more complete explanation of the third party rights provision see the consultation paper on this topic.

Proposed new state
Examples of common causes of abandonment for an application for patent Current state Proposed new state
Failure to reply in good faith to an examiner's report. Abandoned if applicant does not reply in good faith before the time specified in the report (typically 6 months). Abandoned applicant does not reply in good faith before 4 months after the date of the examiner's report.Footnote *
Failure to comply with a notice with respect to completion requirements for filing an application for patent. Abandoned if applicant does not reply in good faith to the notice within 3 months after the date of the notice. Abandoned if applicant does not reply in good faith to the notice within 3 months after the date of the notice.
Failure to pay a maintenance fee on time. Abandoned immediately if fee is not paid on or before the due date.Footnote 1 Abandoned on the later of 2 months from the date of a notice requiring payment or 6 months from the original maintenance fee due date.
Failure to request examination and pay the prescribed fee on time. Abandoned if required actions are not taken before the expiry of 5 years after the filing date. Abandoned if actions are not taken before the end of 2 months after the date of a notice which will be sent after the 4 year time limit to request examination.
Failure to provide a required translation of a reference filing or an application filed in a language other than English or French. Reference filings and the ability to file a description in a language other than English or French does not exist in current state Abandoned if applicant does not comply with the notice before 2 months after the date of the notice.
Failure to comply with a notice requiring appointment of a patent agent. Abandoned if applicant does not comply with the notice before 3 months after the date of the notice. Abandoned if applicant does not comply with the notice before 3 months after the date of the notice.

Patent applications: reinstatement

Current state

Reinstatement of an abandoned application currently requires the applicant to request the reinstatement within 12 months of the abandonment, pay the reinstatement fee, and take the action that should have been taken to avoid the abandonment.

Proposed new state

Applicants will still be required to request reinstatement within 12 months of the abandonment and the current reinstatement requirements will essentially remain unchanged in the proposed new state. However, the new linkage between the notice regime and the abandonment of an application, while enhancing the safety net for applicants, does also create some additional market uncertainty for third parties as a result of increased time limits. In order to balance these opposing tensions, additional requirements for reinstatement of an abandoned application will further help ensure that the extended periods of uncertainty (the additional time provided by the notice and the time provided to remedy the failure) remain a safety net only used where necessary, rather than a default approach that may otherwise be used strategically in the prosecution of an application for a patent.

Demonstrating due care will be an additional requirement for the reinstatement of an application when an application is deemed to be abandoned for failure to pay a maintenance fee. Where an application is abandoned for failure to request examination, demonstrating due care will be an additional requirement when the applicant reinstates the application at a date that is more than 6 months from the date the request for examination should have been made.

If demonstrating due care is a condition to reinstate an application the applicant will be required to provide the reasons for failing to pay their maintenance fee or failing to request examination in time. The Commissioner will reinstate the application if all the requirements are met and if the Commissioner determines that the failure occurred in spite of the due care required by the circumstances.

Patents: about to lapse and lapsed/deemed expiry and reversal of deemed expiry

Current state

In the current system, applicants are not officially notified by the Office that a maintenance fee is due on a patent. Applicants are responsible for ensuring that they are aware of the maintenance fee payment schedule and must take action accordingly. If the patentee does not pay the maintenance fee on a patent on or before the anniversary date, the patent is considered to be "about-to-lapse". Unless the maintenance fee and an additional fee for late payment are paid within one year following the anniversary date, the patent will be considered lapsed.

A lapsed patent cannot be revived.

Proposed new state

Under the new regime, the Patent Office will be required to notify the patentee that they failed to pay the maintenance fee by the due date and provide additional time within which the patentee to pay the fee and the late fee.

When a maintenance fee for a patent is not paid by the due date, the Patent Office will send a notice requiring payment of the maintenance fee and the late fee the later of two months from the date of the notice or six months from the original due date to pay the fee and the late fee.

If both fees are not paid before the end of the late fee period, the patent will be deemed to have expired retroactively at the due date of the fee. After the patent is deemed to have expired, it will be possible to make a request to the Commissioner to reverse the deemed expiry.

In order to reverse the deemed expiry, the patentee will be required to, within the 12 months period after the six-month late period:

  • request that the term limited for the duration of the patent to never have been deemed expired;
  • pays the prescribed fee (MF fee), the late fee ($150.00) and any additional fee ($200.00)
  • state the reasons for failure to pay the prescribed fee and late fee within the prescribed time period (this allows the Commissioner to determine whether due care was taken)

Demonstrating due care will always be a requirement for requesting the reversal of a deemed expiry when the patentee has failed to respond to the notice to pay the maintenance fee and the late fee.

For a complete understanding of this topic please consult the Bill C-43 and Bill C-59 legislative amendments not in force in the Patent Act and the public consultation draft of proposed amendments to the Patent Rules available on our website.

References:

  • Bill C-43: Abandonment and Reinstatement - Section 73 of the Patent Act (not yet in force)
  • Bill C-59: Abandonment and Reinstatement - Section 73 of the Patent Act (not yet in force)
  • Proposed Patent Rules: Abandonment and Reinstatement - Sections 132-136