IP monitor: Canada’s patent term adjustment system comes into force in new year

Beginning January 1, 2025, patent owners in Canada will have access to a general system of patent term adjustment (PTA). The PTA system provides additional patent term to compensate patent owners for “unreasonable delays” by the Canadian Intellectual Property Office (CIPO) in issuing patents. The details of the PTA system were recently finalized when the federal government registered amendments to the Patent Rules. Unfortunately for patent owners, it appears that few patents are likely to qualify for additional term.

Background

PTA is new to Canada and a direct result of the Canada-United States-Mexico Agreement (CUSMA). Since 1989, Canadian patents have had a term of 20 years from their filing dates. In 2017, certain pharmaceutical patents became eligible for extended term via a Certificate of Supplementary Protection (see here). When CUSMA came into force on July 1, 2020, Canada was obligated to adopt a general system of PTA by January 1, 2025.

To that end, the Patent Act was amended in 2023 to create a legislative framework for the new PTA system (see here).¹ To fill in the details of the new PTA system, the federal government proposed amendments to the Patent Rules on May 18, 2024 (see here). The proposed amendments received vigorous feedback.² On November 29, 2024, the government registered the final amendments to the Patent Rules which, though overall much the same as those proposed in May 2024, had some changes that responded to the feedback received.

The amended Patent Act and Patent Rules will come into force on January 1, 2025. Below, we summarize the new PTA system and comment on why few patents are likely to qualify for additional term. Finally, for PTA enthusiasts, we highlight some of the changes that were made to the proposed PTA Rules from May 2024 to reach the final PTA Rules.

Overview of Canada’s new PTA system

Patents eligible for additional term

A patent owner must apply for PTA within three months of a patent issuing. To be eligible for PTA, a patent must have a filing date on or after December 1, 2020, and must have issued after the later of:

• the fifth anniversary of the “applicable day,” and
• the third anniversary of the day that examination was requested.

The “applicable day” depends on the type of patent application: for PCT applications, the “applicable day” is the national phase entry date; for divisional applications, the presentation date (i.e., the date the divisional application is submitted to CIPO); and in any other case (i.e., applications regularly filed in Canada), the filing date.

Calculating the duration of additional term

The duration of the additional term is calculated as the number of days between the later of the anniversaries above and the patent’s issue date subtracted by “the number of days that is determined under the regulations.” If the duration of the additional term is zero or less, the patent does not qualify for PTA.

The amended Patent Rules set out 38 time periods to subtract when calculating the additional term. As stated in the government’s Regulatory Impact Analysis Statement (RIAS), the subtracted periods include “days in periods that do not occur during the processing of, or the examination of, the patent application by CIPO, periods that are not directly attributable to CIPO as well as periods that are attributable to the patent applicant.” Some highlights from the list of subtracted periods include the number of days:

• Taken to request examination (when the additional term is calculated starting from the fifth anniversary of the “applicable day”);
• Taken to respond to notices from the Commissioner of Patents (Commissioner), such as examiner reports, including days that are within the statutory deadline for responding;
• Required to complete examination up to allowance following a request for continued examination (or following a third examiner report if examination was requested prior to October 3, 2022);
• During which the application is deemed abandoned;
• Taken to respond to a notice of allowance;
• During an appeal of the Commissioner’s refusal to grant a patent (even though the appeal is allowed); and
• Beyond the control of CIPO, such as in force majeure situations.

For overlapping periods, each day will only be subtracted once when calculating the duration of the additional term.

Application and maintenance fees

To apply for PTA, the patent owner must pay an application fee of $2,500 (standard) or $1,000 (small entity). If an additional term is granted, maintenance fees of $1,000 (standard) or $400 (small entity) will be due on the 20th anniversary of the patent’s filing date and each subsequent anniversary until the additional term expires.

Application process

After receiving an application for PTA and the application fee, the Commissioner will assess the patent’s initial eligibility for PTA. If ineligible, the application will be dismissed. Otherwise, the Commissioner will provide the patent owner with a preliminary determination of the duration of the additional term. The patent owner will then have two months to make observations on the preliminary determination.

Finally, the Commissioner will either issue a certificate of additional term or dismiss the application (e.g., because the duration of the additional term is calculated as zero or less). The Commissioner must provide reasons for the determination of the duration of the additional term or the dismissal of the application, as the case may be.

Challenging additional term

Under the amended Patent Act and Rules, “any person” can apply to have the Commissioner reconsider the duration of an additional term upon: (i) providing reasons why the additional term is too long, and (ii) paying an application fee of $2,500 (standard) or $1,000 (small entity). Alternatively, a person may bring an action in the Federal Court for an order to shorten an additional term. Notably, in these proceedings, the Commissioner and the Federal Court can only shorten an additional term. It appears that patent owners unhappy with the Commissioner’s determination of additional term will need to apply for judicial review to lengthen it.

Expect few applications for PTA

CIPO estimates there will be approximately 140 PTA applications filed each year from 2026 to 2034.³ If so, that would be well under 1% of the patents granted in Canada each year.⁴

CIPO’s predictions are consistent with the authors’ expectation that there will be relatively few PTA applications filed in Canada. First, few patents are likely to qualify for additional term, even if the patent application was prosecuted diligently. This is primarily because of the many days that must be subtracted when calculating the duration of the additional term, including any time taken to respond to a notice from the Commissioner. Second, the PTA application and maintenance fees are much higher than most other fees paid during prosecution, which may discourage PTA applications even where patent owners are entitled to additional term.

For PTA enthusiasts: The government’s changes to the PTA Rules proposed in May 2024

In response to feedback, the government did make some notable changes to the PTA amendments to the Patent Rules proposed in May 2024. These changes included:

• Removing from subsection 117.01(7) the ability of third parties to make observations regarding the Commissioner’s preliminary determination of the duration of additional term. Now, only the patentee can make observations;
• Revising subsection 117.03(8) such that, if the duration of additional term is calculated starting from the third anniversary of the request for examination, then periods of time occurring before the day examination was requested are not subtracted from the additional term; and
• Adding subsection 117.03(12), which provides a way for patent applicants to avoid having additional term subtracted under paragraph 117.03(1)(z.08) when CIPO fails to send a notice.

The authors would like to thank Daniel Wang, articling student, for his contribution to preparing this IP monitor.

For more information, please contact your IP professional at Norton Rose Fulbright Canada LLP.

For a complete list of our IP team, click here.