"Small Entity" Relief About to Expire 

publication 

Winter 2006 - (Intellectual Property Brief Winter 2006)

Intellectual Property Brief Winter 2006

The Canadian patent regime, like many others, provides a 50% reduction in fees to eligible sole inventors, small companies and universities. Those who qualify for the fee reduction are called "small entities."1 Small entity status was considered in Barton No-Till and Flexi-Coil v. Dutch Industries (2003), 24 C.P.R. (4th) 157 (F.C.A.), reversing in part, 14 C.P.R. (4th) 499 (F.C.T.D.), which determined that the status of an applicant is determined once and for all when the applicant first "engages" the patent regime (usually by filing an application in Canada) and that the payment of the incorrect fee would result in the irreversible abandonment of the patent or application.

In response to this case, the Federal government announced that it would introduce legislation to provide a window of 12 months within which to retroactively permit the correction of the underpayment of filing, maintenance and other fees, based on a misapprehension of entity status. The corrective legislation, s 78.6 of the Patent Act , was proclaimed into force on February 1, 2006. It states:

78.6 (1) If, before the day on which this section comes into force, a person has paid a prescribed fee applicable to a small entity, within the meaning of the Patent Rules as they read at the time of payment, but should have paid the prescribed fee applicable to an entity other than a small entity and a payment equivalent to the difference between the two amounts is submitted to the Commissioner in accordance with subsection (2) either before or no later than twelve months after that day, the payment is deemed to have been paid on the day on which the prescribed fee was paid, regardless of whether an action or other proceeding relating to the patent or patent application in respect of which the fee was payable has been commenced or decided.

(2) Any person who submits a payment to the Commissioner in accordance with subsection (1) is required to provide information with respect to the service or proceeding in respect of which the fee was paid and the patent or application in respect of which the fee was paid.

(3) A payment submitted in accordance with subsection (1) shall not be refunded.

(4) No action or proceeding for any compensation or damages lies against Her Majesty in right of Canada in respect of any direct or indirect consequence resulting from the application of this section.
(5) For greater certainty, this section also applies to applications for patents mentioned in sections 78.1 and 78.4.

The Top-up Window Provided by section 78.6 Expires on January 31, 2007

It is, therefore, incumbent on all patent owners to review their patent portfolios for any patents or applications for which small entity fees may have been paid erroneously, and make use of the top-up opportunity before the window closes.

Please note that section 78.6 does not apply to payment errors that were made after February 1, 2006. Consequently, given the potential loss of patent rights that may occur if insufficient fees are paid, Lang Michener LLP will continue its policy of recommending the payment of large entity fees until further corrective legislation is passed by the federal government.

1  "small entity" in respect of an invention, means an entity that employs 50 or fewer employees or that is a university, but does not include an entity that
(a) has transferred or licensed, or is under a contractual or other legal obligation to transfer or license any right in the invention to an entity, other than a university, that employs more than 50 employees, or
(b) has transferred or licensed, or is under a contractual or other legal obligation to transfer or license, any right in the invention to an entity that employs 50 or fewer employees or that is a university, and has knowledge of any subsequent transfer or license of, or of any subsisting contractual or other legal obligation to transfer or license, any right in the invention to an entity, other than a university, that employs more than 50 employees.

This article appeared in Intellectual Property Brief Winter 2006.