IP Monitor: Federal Court clarifies “due care” standard to reinstate patent rights

The Federal Court has rendered the first decision related to the newly enacted “due care” standard in the Patent Act – the standard applicable to the reinstatement of patent rights after a failure to pay a maintenance fee. The decision reveals that the “due care” standard is a high one: a missed maintenance fee will likely not be excused absent extreme and unforeseeable circumstances. The court also made clear that the onus in complying with maintenance fee deadlines falls on both patentees and patent agents. 

Missed maintenance fees and the “due care” standard

The maintenance fee regime requires that patentees and patent applicants pay annual maintenance fees to keep their patents and patent applications in good standing. When a maintenance fee is missed and not remedied, a patent will be deemed expired, and a patent application will be deemed abandoned.  

Canada’s maintenance fee regime was amended in 2019 to comply with the international Patent Law Treaty. Under the amendments, if a maintenance fee is missed, the Commissioner of Patents (the Commissioner) must provide a written notice advising that the patent will be deemed expired (or the application abandoned) if the maintenance fee and a late fee are not paid within a prescribed time.¹  

If the patent is deemed expired (or application abandoned), the Commissioner can still reinstate the patent provided that the patentee pays the requisite fees within 12 months after the end of the late fee period, and establishes that the failure to pay the fee “occurred in spite of the due care required by the circumstances having been taken.”²  

In practice, the Commissioner has only found that the “due care” standard has been met in approximately a third of all reinstatement applications.³ Examples of where “due care” has been met have been in situations with unforeseeable errors such as internet outages, unexpected deaths, or technical system malfunctions.    

Prior to the 2019 amendments, reinstatement of a patent was permitted as a right and only required a timely request for reinstatement along with payment of the missed maintenance fee and a reinstatement fee.

Federal Court guidance on “due care” 

Taillefer v Canada (Attorney General), 2024 FC 259, is the first case from the Federal Court to address the “due care” standard. The case is a judicial review of the Commissioner’s decision refusing to reinstate a patent after finding the patentee did not take “due care” in paying maintenance fees. 

The patentee was an individual who had hired a patent agent to diarize and pay the maintenance fees. For nearly 10 years, the patent agent paid the maintenance fees on behalf of the patentee after receiving annual instructions to do so from the patentee via email. However, in 2020, due to an unknown technical error, the patent agent’s emails were redirected to the patentee’s junk mail and, without instructions, the maintenance fee payment was not made by the agent. The patentee did not find these emails until it was too late and the patent was deemed expired. The patentee then immediately instructed his agent to seek reinstatement of the patent. 

In assessing the patentee’s request, the Commissioner referenced the Canadian Intellectual Property Office’s (CIPO) Manual of Patent Office Practice (MOPOP), which provides some guidance as to what constitutes “due care” – specifically: “the Commissioner will assess whether the patentee took all measures that a reasonably prudent patent holder would have taken – given the set of circumstances related to the failure – to avoid the failure, and for the failure to have occurred despite having taken those measures.”⁴  

Importantly, the Commissioner will only examine actions taken by a party before a failure occurred, not after. On the facts, the Commissioner found that the patentee failed to show he had taken “all possible actions” to avoid missing the fee payment. The Commissioner stated that, “The prudent patentee must possess the requisite knowledge to conduct the patent affairs, including fulfilling elementary obligations such as the timely payment of annuities, otherwise it could not be suggested that the patentee acted with due care.” 

On judicial review, the Federal Court upheld the Commissioner’s decision. The court held that both the patentee and the agent must ensure mitigation systems are in place to ensure the maintenance fee gets paid on time. Specific to patentees, the court noted that patentees are required to understand the importance of the yearly maintenance fee and the associated deadlines. This is so even if the patentee is an individual that pays a small entity fee and has hired a patent agent to take care of the maintenance fees. 

In the circumstances, the court held it was reasonable for the Commissioner to expect that a reasonably prudent patentee would ensure email correspondence was operating effectively if this was the means of communicating the maintenance fee payment instructions. It was also reasonable for the Commissioner to expect the agent to have used another form of communication after numerous notices to the patentee went unanswered.  

Overall, the Taillefer decision makes clear that the “due care” standard is a high one. Patentees must keep track of maintenance fee deadlines and patent agents must consider different forms of communication to obtain instructions. Lapses or breakdowns in communications between patentees and agents will not amount to “due care” without evidence of further precautions taken by the parties. In light of this decision, patentees and patent agents should work together to implement robust backup systems to avoid the inadvertent loss of patent rights.  

The patentee from the Taillefer decision has until March 18, 2024, to appeal the court’s decision.

Links to decisions

Taillefer v Canada (Attorney General), 2024 FC 259