IP monitor: Amendments to the Patent Rules: Now in force!

Today marks the coming into force of the second and final part of the Rules amending the Patent Rules. The first part adopting the St.26 sequence listing format came into force July 1, 2022. This second part now institutes a number of changes to Canadian patent practice, the most significant being the introduction of excess claim fees, a conditional notice of allowance mechanism and a request for continued examination (RCE) practice. You can find our previous report on these changes here. 

In this IP monitor, we further discuss RCE practice and excess claim fees, which are likely to have the most significant impact on applicant prosecution strategy given their associated costs.

Request for continued examination 

The amended Rules introduce a new continued examination scheme that limits the number of examination reports that may be issued before examination ceases. Applicants will have to file an RCE and pay a prescribed fee (the standard fee is $816 CAD, which is halved for small entities) for a response to a third examination report to be considered. After filing this initial RCE and paying the prescribed fee, an applicant will be required to file an additional RCE and pay the prescribed fee for every second examination report issued thereafter. Failure to timely file an RCE will result in deemed abandonment of the application.

In some scenarios, applicants may consider proactively and voluntarily amending the application, in view of corresponding foreign patent applications, at any time prior to cessation of examination, so as to minimize the need to file an RCE.

Filing an RCE will also replace the current option of withdrawing a notice of allowance as the mechanism to return an allowed application to examination (at which time it may be voluntarily amended to present new or amended claims).

Excess claim fees

Excess claim fees will apply to any application for which a request for examination is filed from October 3. Excess claim fees will be assessed at two points in the application process. Applicants will pay: 

• an excess claim fee of $100 CAD (or $50 for a small entity) for any claim in excess of 20 claims at the time of the request for examination; and
• an excess claim fee of $100 CAD (or $50 for a small entity) upon paying the final fee for each claim in excess of 20 for which an excess claim fee was not paid at the time of requesting examination, based on the highest number of claims pending at any time during examination.

Although it is not possible to avoid excess claim fees at the time of paying the final fee, as these are calculated on the highest number of claims pending at any time during examination, the number of claims can be limited before examination to avoid excess claim fees by simply filing a suitable voluntary amendment at any time before requesting examination. 

The introduction of excess claim fees presents a particular challenge for applicants given the strict double patenting rules in Canada. In Canada, there can be double patenting as between voluntarily filed divisional applications, and it has been common practice to include claims directed to all embodiments of interest in the application of first instance with the goal of eliciting a unity objection, which has a shielding effect on any responsive divisional filings. Evidently, this common prosecution strategy will now have to be balanced against associated cost, and structuring of claim sets will need to be carefully considered.   

Mitigating costs

In addition to thoughtful structuring of claim sets and the strategic pursuit of voluntary amendments, some applicants may wish to revisit the issue of claiming small entity status in Canada, which reduces most government fees by 50%. Briefly, a small entity has 50 employees or less or is a university, and is neither controlled directly or indirectly by a non-qualifying entity nor has transferred or licensed, or has a non-contingent obligation to transfer or license, any right or interest in a claimed invention to a non-qualifying entity. Entity status is determined once at the time of filing the patent application.  

Many applicants abandoned claiming small entity status in Canada following the Dutch Industries court decision (Dutch Industries Ltd. v. The Commissioner of Patents, 2001 FCT 879, aff’d 2003 FCA 121), which invalidated a patent for underpayment of fees based on an erroneous small entity claim. 

Since this decision, there have been two important developments: 1) while at the discretion of the commissioner, the Patent Rules now provide for a (retroactive) extension of time to pay at the standard rate a fee that was erroneously, but in good faith, paid at the small entity rate, provided that the application for the extension is filed without undue delay after the applicant or patentee became aware that the standard fee should have been paid; and 2) ensuing case law has made clear that the grounds for attacking the validity of a patent are limited to those delineated in the Patent Act. 

Given the evolution of the law in this area and the increased fee burden expected under the amended Rules, applicants who can legitimately claim small entity status in Canada may want to consider taking advantage of this option.