Dutch
Industries Ltd. V. Canada (Commissioner Of Patents), [2001]
F.C.J. No. 1250 (F.C.T.D.)
The Canadian Intellectual Property Office (CIPO) has recently
changed its earlier practice of accepting corrective payments
from patentees and applicants (hereinafter
"Patentees") who failed to pay the prescribed amount
of fees by the appropriate deadlines. A recent notice from IPO
advises, "CIPO will not accept any corrective payments
which are submitted after a due date, unless the appropriate
actions are taken as required by legislation .". In certain
instances in the past, when a fee was paid in an incorrect
amount, and when a Patentee later sought to rectify the error by
offering corrective payment, CIPO accepted such payment and even
went so far as to adjust its records to indicate that the fee
had been appropriately paid. Apparently, in certain instances,
this occurred when all deadlines, and extensions of deadlines
had been exhausted. Although the issue may appear technical and
trite, there are potentially significant ramifications in that
the interests of Patentees could be significantly and
retroactively prejudiced. Furthermore, protection from such
prejudice requires the diligence of Patentees as well as that of
their patent agents to ensure that the proper fees are paid at
all times.
The Canadian Intellectual Property Office was prompted to
adopt its current (changed) position by the decision of the
Federal Court of Canada in Dutch Industries Ltd. v. Canada
(Commissioner of Patents) (2001), FCT 879; [2001] F.C.J. No.
1250 (FCTD). That case involved CIPO's acceptance of corrective
payments for fees assessed based on the declared entity status
of a Patentee.
Patentees are recognized by CIPO as being either large or
small entities. The principle use of that distinction is to provide a benefit to Patentees who are
small entities. CIPO assesses lower fees to small entities for
various actions and services. Authority for such discrimination
is found in the Patent Act and the Patent Rules.
However, CIPO does nothing to determine or verify the entity
status any Patentee. Rather, the legislation puts the onus on
each Patentee to correctly identify its entity status and
thereby verify its entitlement or disentitlement to the benefits
of small entity status.
The Patent Act defines a small entity as follows:
"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 definition encompasses individual inventors and small
entities such as corporations and partnerships that employ 50 or
fewer employees. Large entities are those that do not fit within
the definition of a small entity.
The Dutch Industries Ltd. case dealt with the
particular circumstances following:
1. A small entity ("B") acquired rights in an
invention and filed a patent application.
2. B properly declared itself a small entity.
3. B then assigned its interests in the invention to a
large entity ("F").
4. The application for a patent was granted by the
Canadian Intellectual Property Office.
5. After the assignment, B paid fees to CIPO to maintain
in good standing the application (during the pendancy
period) and, later, the issued patent. The fees paid were
those assessed on a small entity.
6. After various maintenance fees were finally due (after
the expiry of all legislated reinstatement periods), B
realized that, because of the assignment of its rights in
the invention to F, the fees that should have been paid were
those assessed on a large entity.
7. B sought to correct its error by remitting to CIPO the
difference between the amount paid (small entity) and the
amount due (large entity).
8. CIPO accepted the corrective payment and amended its
records to show that large entity fees were due and had been paid.
9. B and F sought to assert their patent rights against
an alleged infringer ("D").
10. D defended itself by seeking judicial review of the
decision of the Commissioner of Patents to accept corrective payment. D argued that any
rights that B and/or F may have had in the invention
irrevocably lapsed with B's failure to pay the appropriate
fees within the times established by the Act and the Rules.
11. B and F argued that it was within the scope of the
Commissioner's discretion to accept corrective payment.
12. Although the Com missioner chose not to participate
at the hearing, evidence was presented indicating that it
was a regular practice of CIPO to, in similar circumstances,
accept corrective payment and amend its records to indicate
compliance with the Act and Rules.
The Court ruled in favor of Dutch and set aside the decision
of the Commissioner to accept corrective payment. Madam Justice
Dawson noted that the statutory regimen establishes a mandatory
requirement to pay the prescribed fees and, upon failure to pay
the specified fees before the expiration of the prescribed time
periods, a mandatory consequence of deemed abandonment.
Furthermore, she held that, while the Rules give broad
discretion and authority to the Commissioner to extend the time
for doing anything, they also withhold the exercise of such
discretion and authority to extend the time both for paying
maintenance fees and for reinstating an application deemed
abandoned for failure to pay maintenance fees. Therefore,
Dawson, J. concluded that the Commissioner (CIPO) lacks
jurisdiction to accept corrective payment when a Patentee fails
to meet the legislated requirements respecting the payment of
fees.
Notice has been given of an intention to appeal the decision.
However, in the event that the Court's decision stands, any
Patentee that is in arrears for fees consequent to a past error
in the determination of its entity status or failure to advise
of a change in status (small to large) would find its rights to
be lapsed from the date of such arrears. Such lapsing of rights,
consequent to deemed abandonment of a patent or application,
would be not be reversible once all reinstatement periods
expired. The decision would be applicable to issued patents and
applications. It the latter case, no valid patent could issue
from a lapsed application. All Patentees should carefully review
their entity status and put in place appropriate systems to
ensure regular review. The definition of a small entity
contained in the Patent Act (reproduced above) can give rise to
confusion with regard to the determination of employment. For
example, the attribution of part time and temporary employees
must be considered and the status, within firms of individuals
who may be employees, independent contractors, directors,
shareholders or others must be evaluated. Also, firms that have
grown or that have assigned or licensed any right in their
invention to another entity may be required to change their
recorded status. Should you require assistance in reviewing your
portfolio for compliance with these new rules, please do not
hesitate to contact us.
Monsanto V. Schmeiser—Update
Monsanto Canada and its U.S. parent company, Monsanto
Company, were successful in their patent infringement suit
against Percy Schmeiser, a Saskatchewan farmer who was found to
have grown patented Round-Up® resistant canola on 1100 acres of
land without a license. Schmeiser has also sued Monsanto in the
Court of Queen’s Bench in Saska-toon claiming damages for
contamination of his crops, defamation, trespass and conversion
of his property. Monsanto filed a Statement of Defence on
October 4, 1999, but the public record does not indicate whether
any other steps have been taken to pursue the matter. It has
been reported that Monsanto has, since the decision, begun
pursuing other farmers for similar infringement. There have been
reports in the press of a farmer at Birsay, Saskatchewan who
com-plained of Round-Up® resistant canola growing in his field
when he had not planted any of this type of canola. According to
the report, Monsanto had sent people into his field to pick the
offending canola by hand. While the Schmeiser decision was in
Monsanto’s favour, they were not successful in obtaining
punitive damages against Mr. Schmeiser. Monsanto originally
claimed both profits from growing the infringing canola for the
parent U.S. company in the amount of $105,000, and damages for
the Canadian company in the amount of $15,450, being the
established royalty rate of $15.00 per acre on his 1,030 acres
of infringing canola. The Court did not accept that both
remedies were available, and ordered that Monsanto was entitled
to profits in an amount the parties agreed to. If no agreement
was reached, the award would be to Monsanto Canada for $15 per
acre. The parties agreed that the profits were $19,000.00 or
$18.50 per acre on his 1,030 acres of infringing canola. The
court also ordered delivery up of any crop still in Mr.
Schmeiser’s possession however it is likely that all that crop
had by then been sold. In the end, Mr. Schmeiser paid $3.50 per
acre more than he would have paid for a license from Monsanto.
Given that approximately half of the canola grown in western
Canada is patented Round-Up® resistant canola, and given that
it seems generally accepted that the patented canola will
cross-pollinate with other canola or even other plants, it will
be interesting to see in the future what Monsanto’s reaction
is if the problem becomes much more widespread, which seems
highly likely.
United States: Festo Deci
Sion Limits Doctrine Of Equivalents
In U.S. patent law, the doctrine of equivalents has in the
past allowed for a finding of patent infringement when patent
claims were not literally infringed, but instead an
"equivalent" was substituted for an element in the
claim. A basic illustrative example would be where the claimed
element was a screw and a competitor’s product used a bolt or
rivet, it would still infringe the claim unless there was a
functional difference between the substituted equivalent and the
originally used item. In recent years, the application of the
doctrine of equivalents has been limited by arguments and
amendments made by the patentee during prosecution of the patent
(prosecution history estoppel). Where an element of a patent
claim was amended during prosecution for reasons of
patentability, for example to avoid prior art, then the doctrine
of equivalents was not applicable to that element. The court
then looked at the amendment that was made during prosecution
and decided whether it was made to avoid prior art and whether
the doctrine of equivalents could be applied to that element or
not. For example, if the applicant for a
patent specifically argued that they used a screw for a
particular functional purpose (referencing the example above),
in order to distinguish their invention from something which
used a different fastener such as a bolt or a rivet, they cannot
then turn around in enforcement of their patent and argue that a
bolt or rivet is covered within the scope of their patent claim
as an equivalent fastener.
In Festo Corp. v. Schoketsu Kinzoku Kogyo Kabushiki Co.,
November 29, 2000, a divided Court of Appeals for the Federal
Circuit in the United States (the body that handles appeals in
patent cases) effectively extended prosecution history estoppel
by denying the application of the doctrine of equivalents in any
case where a claim element was amended for any reason
whatsoever. Many articles have been published which claim that
this means the death of the doctrine of equivalents in the
United States. With over 1 million patents in effect in the
United States at this time, almost all of those patents were
amended to some extent during prosecution, very often for
reasons other than to avoid prior art, such as to more clearly
define the invention. Patent agents routinely amended claims
where the Examiner requested clarification, regardless of
whether the agent felt the Examiner was justified. It was just
easier, and in most cases made no substantive change in the
claim. What the Festo decision appears to do is to deny
the application of the doctrine of equivalents to the majority
of patent claims that now exist.
There are many arguments in favor of the Festo decision,
the main one being that it provides certainty respecting what is
protected. The doctrine of equivalents has always caused
considerable uncertainty regarding the scope of a claim and the Festo
decision essentially removes much of that uncertainty.
Arguments against the Festo decision are of course that
it drastically reduces the value of a vast number of patents,
and gives free rein to competitive products with only
insignificant differences. The United States Supreme Court, in
June of 2001, agreed to hear an appeal from the case, which will
likely be heard this coming winter.
In Canada, in contrast, the prosecution history of a patent
application is not admissible in an infringement action to
determine the extent or construction of the patent claims. The
Court interprets the patent claims using a "purposive
construction" as was recently affirmed by the Supreme Court
of Canada in the Freeworld Trust and Whirpool cases.
Any amendments made by an applicant during prosecution are
totally irrelevant. It is only the final language of the claims
construed, if necessary, in light of the disclosure that governs
the protection afforded by the patent.
Since most Canadian patent applicants wish to protect their
inventions in the U.S. market as well as Canada, or even instead
of Canada, the scope of protection afforded by the same patent
can differ considerably in each country. In view of the fact
that prosecution estoppel has been known for some time to limit
the doctrine of equivalents where prior art is concerned, agents
prosecuting patent applications in recent years have generally
avoided making amendments unless absolutely necessary. It
remains to be seen where the Supreme Court comes down on this
issue.
Our New Look
Over the summer we have completed the conversion to our new
web site and adoption of our new corporate identity. We hope you
like it as much as we do! We welcome you to check out our new
web site. We are particularly excited about our upcoming client
area, where clients will be able to access docket and status
information and other particulars regarding matters we are
handling on their behalf, in a secure environment. This
functionality should be available by the end of the year—please
let us have your comments on the content of our web site so that
we can continue to improve its value to you as an information
source.
United States: Patent
Applications To Be Laid Open To The Public
Prior to enactment of the American Inventors’ Protection
Act of 1999, a new patent application filed in the United
States was maintained secret until it was issued. If the Patent
Office refused to issue a patent, the contents of the patent
application were never made public. This essentially allowed an
inventor to maintain his invention in confidence and secrecy
until he was assured that a patent would be issued, and if the
patent was refused then he could continue to maintain it’s
secrecy. The recent changes to legislation in the U.S. now
require that any patent that will be filed in the United States
and in other countries will be laid open 18 months after the
filing date, as are patent applications in substantially all of
the rest of the world. The change was made in the U.S. to bring
practice there into line with the practice in other countries. A
significant exception to the publication rule is where the
applicant for the patent states that there will be no
applications filed in any other country. In that case, the
application will remain secret until it is issued. One practical
effect of this on our clients has been with respect to formal
drawings. Previously, patent applications were often filed with
sketches or informal drawings. Formal drawings were only
required in the United States after the patent was allowed and
prior to issue. The Patent Office will now requires formal
drawings of "publication quality" prior to laying open
the application to the public. Practically speaking, these new
rules require that formal drawings be submitted either with the application or within a couple of months thereafter.
Filing the drawings after the application incurs extra expense,
and so we are now advising clients that the formal drawings
should be prepared at the time of filing of the U.S. patent
application to minimize delay and extra expense.
Cyber- Squatting In
Canada
Cyber squatting activities in Canada or by Canadian parties,
both in the .ca domain as well as other top level domains, has to date in Canadian courts
been dealt with on a case by case basis. Several recent court
decisions illustrate the present state of the law in Canada with
respect to cyber squatting. The handling of cyber squatting
situations within the .ca domain will be simplified to some
extent once a dispute resolution policy is adopted by the
Canadian Internet Registration Authority.
Canadian judicial treatment of cyber
squatting cases:
Trademark owners or domain name applications seeking dispute
resolution services within the .ca TLD are limited to taking
court action at this time, since the ADR policy of the .ca TLD
has not yet been implemented. There have been other judicial
treatments of cases in Canada involving Canadian parties within
the .com domain for example, and others.
The decision of the Saskatchewan Court of Queen’s Bench in
the case of Saskatoon Star Phoenix Group Inc. v. Noton (12
C.P.R. (4 th ) 4) deals with
a cyber squatter in the .com domain. The Saskatoon Star Phoenix
is a city newspaper. It came to their attention that the
defendant was holding domain names including
saskatoonstarphoenix.com, thestarphoenix.com and starphoenix.com,
and offering them for sale, and also had a web site up on at
least one of these domain names which basically mirrored the
content of the plaintiff’s actual website but replaced the
banner advertising of the plaintiff’s with that of the
defendant. The plaintiff sought an interlocutory injunction,
which the Court granted and the defendant obeyed. The defendant
did not appear, however, to present any defense to the action.
His only defense, noted by the judge in his decision and learned
through newspaper articles related to the defendant and the
case, was that the defendant thought that trafficking in domain
names was a legitimate commercial activity. The judge indicates
that prior to the WIPO decision in favor of Celine Dion,
"there was very little, if any, precedent to guide would-be
entrepreneurs of domain names prior to this and other recent
decisions." The Court was satisfied on the basis of the
plaintiff’s material that the
another
domain name ownership conflict. The plaintiff, a Canadian
company, operated a travel business at itravel2000.com. The
defendant registered the domain name itravel.ca with CIRA. Both
plaintiff and defendant had Canadian trademark applications
pending claiming rights in the mark for use on online travel
services, amongst others, with the plaintiff claiming an earlier
date of first use. The Court’s decision indicates that the
defendant was primarily engaged in the windshield repair
business, and did not do any travel-related business, yet he
claimed a date of first use of March 9, 1999. On this basis it
is submitted that the validity of the trademark application of
the defendant is questionable at best. The application was only
filed around the time of receiving a cease and desist letter or
other communication from counsel for the plaintiffs. The
plaintiff sought interim and final relief prohibiting the
defendant from selling or using the itravel.ca domain name, or
alternatively ordering the transfer of that domain name to the
plaintiff. The Court issued an injunction prohibiting the
defendant from using or transferring the domain name pending
final resolution of the matter.
In another cyber squatting case, the cyber squatter has been
enjoined from selling the domain name in question pending the
outcome of the action. The Alberta Court of Queen’s Bench
issued this injunctive relief in Innersense International
Inc. v. Manegre (7 C.P.R. (4 th )
107). The facts of that case involved a consultant who developed
the innersense.com website and domain name for the plaintiff and
subsequently resigned from her position. The plaintiff received
no notice from NSI regarding the upcoming renewal deadline for
the domain name (which notice was presumably directed to the
defendant), and the defendant’s brother registered the domain
name when it expired for non-renewal and proceeded to offer it
back to the plaintiff for sale for $20,000, as well as to
advertise it elsewhere for sale.
Dispute resolution in the .ca
domain:
Since transfer of control of the .ca domain to the Canadian
Internet Registration Authority (CIRA) late last year, CIRA has
not yet implemented a dispute resolution policy. There is a
Canadian Dispute Resolution Policy (CDRP) which has been drafted
and circulated for public comment, loosely modeled on the ICANN
UDRP. Expressions of interest have been received from potential
ADR service providers, and these are now under consideration
along with the issue of the number of service providers which
should be chosen. The CIRA has recently completed the election
of their first Board of Directors and indicates that the CDRP
should be finalized and implemented by the end of this year. The
draft policy and status documentation is available on the CIRA
website, cira.ca. Pending completion of the CIRA dispute
resolution policy, trademark owners with Canadian cyber
squatting issues will need to continue to seek remedies in the
courts.
Joining Our Firm
Furman & Kallio are pleased to welcome Dr. Tom Roberts as
an associate to the firm. Tom joins us to practice in the
biotechnology area and his practice involves Canadian and
foreign patent prosecution (biotechnology, biologics, chemical);
regulatory compliance, technology licensing, due diligence and
related portfolio matters.
Prior to joining the legal profession Tom was a
virologist/molecular biologist involved in biotechnology
research in industrial and quasi-industrial settings and, later,
in the man-agement
of intellectual and industrial property with a corporation
engaged in the devel-opment of advanced electronics
technologies. He was engaged in the general practice of law for
about three years before joining Furman & Kallio in May
2001. Tom’s recent accomplishments include working with the
University of Saskatchewan in the establish-ment of their
Virtual College of Biotechnology, as well as publication of Life
Forms as Patentable Subject Matter: Is a Divergence in Canadian
and U.S. Laws Warranted? Occasional Paper No. 7, Centre for
Studies in Agriculture, Law and the Environment, Saskatoon,
Saskatchewan.
Tom’s research background and credentials will assist our
clients in the development and enforcement of
biotechnology-related intellectual properties in Canada and
abroad.
Trademark Registration
Basics—Canada:
The following are some of the basic information required for
domestic or foreign trademark practitioners to have a basic
understanding of Canadian trademark registration practice.
Application Basis: A
trademark application in Canada can be filed claiming prior use
in Canada (provided such prior use is substantial, the prior
user might also exercise common law trademark rights in
canceling subsequent trademarks and suing for infringement, even
in the absence of registration, although the cost and difficulty
of such an action is more difficult than if a trademark
registration is in place). Other bases of a trademark
application in Canada can include intent to use the mark in
Canada, making a trademark well known in Canada, or filing an
application in a home country and using the trademark in a Paris
Convention country. Also, an existing or pending home
registration can serve as a basis for a Canadian application.
Approximate Pendency Time:
It is our current experience that trademark applications remain
pending for approximately 18 to 24 months from start to finish,
in cases lacking protracted examination or opposition
difficulties.
Assignments of Trademark Applications
or Registrations: It is possible to assign Canadian
trademark applications and registrations. Assignments can be
recorded in the Canadian Intellectual Property Office and it is
advisable to do so.
Claiming Priority to a Foreign
Application or Registration: It is possible to claim
Paris