Court of Appeal affirms agents and applicant must exercise due care
The Federal Court of Appeal allowed the appeal and restored the Commissioner of Patents’ decision not to reinstate Canadian Patent Application No. 3,086,194, owned by Matco Tools Corporation.
The Commissioner was not satisfied, under s 73(3)(b) of the Patent Act, that Matco met the due care standard required to reinstate the patent. Matco’s patent had gone abandoned for failure to pay the maintenance fees.
In Canada, failure to pay the annual maintenance fee can result in the abandonment of the patent or application. In order to reinstate an abandoned patent or application, the patentee must show that the failure to pay the fees occurred in spite of due care being exercised.
At the Court of Appeal, Matco argued that the due care standard only applies to it and not to its Canadian patent agent, Ridout & Maybee LLP, and its US counsel, Hahn Loeser & Parks LLP. The Court of Appeal disagreed, finding that these other entities must also exercise due care to satisfy the s 73(3)(b) standard and reinstate the 194 Application.
The Patent Office had sent a notice to Ridout under s 27.1(2)(b) of the Patent Act, warning that the 194 Application would be deemed abandoned within 6 months if the third maintenance fee and a late fee was not paid. Ridout forwarded the Notice to Hahn, as Ridout obtained its instructions from Hahn and had no direct contact with Matco. Hahn did not forward the Notice to Matco, because Hahn had instructions to take no further action with respect to the payment of maintenance fees. Matco had delegated maintenance fee payment to a service provider, Dennemeyer, who did not have the relevant information about the 194 Application due to a data migration error.
The Court of Appeal found that Ridout, as the agent of record before the Patent Office, was the point of contact for the Patent Office concerning the 194 Application. In its view, for the obligation of due care to have any practical effect, the duty to exercise due care must apply to the recipient of the Notice (i.e., Ridout).
The Court found it difficult to imagine that Ridout “took all measures that a reasonably prudent applicant would have taken”, by forwarding the Notice to someone who was not Matco (the applicant) and who had no obligation themselves to advise Matco of the Notice. It found a prudent agent would forward the Notice to Hahn only if it expected that Hahn would ensure that Matco was made aware of the Notice.
For Hahn, in the Court’s view, “[i]t would be problematic […] if an applicant were able to reduce or evade the strict requirements of due care by simply citing the limited scope of its instructions to its agents and other representatives. Patent applicants should not be encouraged to limit the scope of their instructions for this purpose.”
The Court concluded, “either Hahn failed to exercise due care by not forwarding the Notice to Matco, or Ridout failed to exercise due care by forwarding the Notice to someone who could not be expected to forward it to Matco.”
The Court of Appeal also considered the relevant time when due care must be exercised: when the maintenance fee was originally not paid, or when the maintenance fee was not paid after the Notice was sent.
The Court of Appeal held that the Commissioner was reasonable when it found a data migration error (i.e. the error in transferring the 194 Application data to Dennemeyer) was not relevant. The Court of Appeal agreed with the Commissioner’s focus on the parties’ actions between the Notice (February 21, 2022) and the deemed abandonment deadline (July 11, 2022). It is this latter period that the Federal Court of Appeal found relevant. In other words, the only actions which are relevant to demonstrating due care are those taken after the Notice is issued by the Commissioner.
A copy of the decision can be found here.
