Fee Payments in Canada

Most university and small organisation clients will be aware that they may be entitled to pay Canadian official patent and application fees at a reduced rate compared to non-University applicants which have more than 50 employees. A recent Canadian court case, followed by new patent legislation, has thrown doubt on the advisability of such an approach.

The court decision indicated that incorrect payment of fees on the small entity scale has the result that the application/patent is deemed to have been abandoned. The applicant's entitlement to small or large entity status is determined once, at the time of filing the application. However, it should be noted that the status of cases filed by a large entity but subsequently converted to a small entity case, with small entity fees subsequently paid, may also be in doubt.

In light of this court decision, an amendment to the patent legislation in Canada came into force on 1^st February 2006. This legislation allows previous incorrect payment of small entity fees to be corrected by payment of a "top up" fee. However, such corrections are only possible for the 12 month period after the legislation came into force (i.e. until 1^st February 2007). Thereafter, any patents or applications which have had fees paid at the incorrect rate risk being found to have lapsed.

Therefore, it is important to ensure that any currently pending Canadian applications, or any patents which are in force in Canada, have had their fees paid at the correct rate. It is necessary to determine the entity status of the applicant at the time of filing the application.

An applicant is considered to be a small entity if it is an organisation having 50 employees or less, or if it is a university. However, if, at the time of filing the application, any right in the invention has been transferred or licensed to a party which is a large entity, or if the applicant is under a contractual or legal obligation to transfer or license a right in the invention to a large entity, then fees must be paid at the large entity rate. In addition, where the invention has been transferred or licensed to a small entity, but that small entity has granted a sublicence or further transferred rights in the invention to a large entity, fees must also be paid at the large entity rate.

In light of the complexity of the issues and of the possible vulnerability of an application or a patent to being deemed to have lapsed, Canadian patent agents are currently recommending that all fees are paid at the large entity rate. If there is any question as to the rate at which previous fees should have been paid, these should also be "topped up". Canadian Patent Office fees are not, generally, prohibitively large and so clients may prefer to have the security which payment of fees at the large entity rate would give.

In any case, each of your cases in Canada should be carefully reviewed to determine the status of the applicant at the time of filing and to determine at which rate the fees have been paid so far. If you would like our assistance in reviewing your Canadian patent portfolio, please get in touch with your usual Withers & Rogers contact.

20 March 2006