Duly noted: Federal Court affirms that “due care” for patents is a high standard

In Taillefer v. Canada (Attorney General), the Federal Court of Canada undertook the first judicial review of a refusal of the Commissioner of Patents to reinstate Canadian Patent No. 2,690,767 (the 767 Patent), which was deemed to be expired for failure to pay the tenth annual maintenance fee. The Commissioner denied the request to reinstate the 767 Patent on the basis that the steps taken did not meet the “due care” standard, thus underscoring the high bar that patent owners must meet to obtain reinstatement.

What you need to know

• This is the first time Canada’s Federal Court has considered the due care standard, which was first introduced in Canadian patent law in October 2019.
• The Court held that the Commissioner’s refusal to reinstate the 767 Patent was reasonable and that there had been no breach of procedural fairness.
• Due care is a high standard, requiring that both patentees and agents take steps to try to ensure that communication channels remain effective and that fees are paid on time.
• Patent owners should promptly inform their patent agent and/or annuity service provider of any changes to their contact information.
• The Court’s decision underscores that “due care” is a difficult test to meet. In practice, the Canadian Patent Office has found that the due care standard has been met in only approximately 17% of all petitions for reinstatement to date¹, which illustrates that the due care standard is being strictly applied.
• The Court’s decision is currently under appeal.

The “due care” standard

In October 2019, Canada’s patent legislation was amended to introduce a new “due care” standard. The due care requirement applies in the following circumstances:

1. to reinstate an application that was abandoned for failure to pay a maintenance fee;
2. to reinstate an application that was abandoned for failure to request examination; or
3. to reverse the expiry of a patent that was deemed to be expired for failure to pay a maintenance fee.

In order to bring an application or patent back into good standing, the applicant or patentee must show that the failure occurred “in spite of the due care required under the circumstances having been taken”².

Our bulletin on 2019 amendments to the Patent Act provides further insights on the due care standard.

Background

Starting in 2012, Robert Taillefer, an applicant of the 767 Patent, was required to pay annual maintenance fees, which were due on January 20 every year. Mr. Taillefer had appointed a Canadian patent agent to pay the fees, who required instructions from Mr. Taillefer prior to making the annual payments.

Between 2010 and 2019, Mr. Taillefer and the agent corresponded with each other consistently by email, including about payment of the annual maintenance fees. Mr. Taillefer used the same email address throughout this entire period, and never experienced any issues receiving emails from the agent.

However, in the months leading up to the January 2020 deadline, the agent sent four emails to Mr. Taillefer seeking instructions to pay the maintenance fee. The agent did not receive a response from Mr. Taillefer, and as a result did not pay the 2020 maintenance fee by the deadline. The agent sent Mr. Taillefer three further reminders about the maintenance fee, advising Mr. Taillefer that payment had not been made and that the deadline for correction through payment of a late fee was July 21, 2020. The agent still did not receive any correspondence from Mr. Taillefer.

On October 29, 2020, Mr. Taillefer found the emails from the agent in his junk folder and immediately instructed the agent to seek reinstatement of the 767 Patent. On November 16, 2020, the agent filed a request to reinstate the patent.

The Commissioner’s decision

The Commissioner refused to reinstate the patent, finding that the efforts made by the agent and Mr. Taillefer were limited and insufficient to meet the standard of due care.

In their reasons, the Commissioner stated that both the patent owner and the agent must act with due care in their communication with each other. Since the reinstatement request only focused on email efforts to reach the patentee and did not describe any other action that was taken, or even considered, by the agent or the patentee to ensure that communication channels remained effective and the fees were paid on time, the Commissioner’s view was that the required due care was not taken.

The Federal Court’s decision

Mr. Taillefer brought an application for judicial review of the Commissioner’s refusal to reinstate the patent. Justice Furlanetto dismissed this application, holding that the Commissioner’s decision was reasonable and that there had been no breach of procedural fairness.

The Court found that it was reasonable for the Commissioner to expect that the agent would have additional communication mechanisms in place to ensure they could always correspond with the patentee. Further, Justice Furlanetto stated that it was reasonable to expect the agent to use alternative means to contact the patentee to ensure he was aware of the deadlines at issue, particularly since it was unusual that numerous emails had gone unanswered, and because non-payment of the maintenance fee could lead to a loss of patent rights.

The Court also found that it was reasonable for the Commissioner to expect that a reasonably prudent patentee would have a system in place to make sure their email was operating effectively if they were relying on it as the primary means of paying their maintenance fees. The Court stated that since the patentee had retained the responsibility to instruct his agent to pay the maintenance fee on a yearly basis, it was reasonable to expect that the patentee would take steps to ensure that his email was working properly, so that he could provide instructions to his agent in a timely manner.

Next steps

The Federal Court’s decision is currently under appeal.