Date:
20120727
Docket:
T-338-11
Citation:
2012 FC 931
Ottawa, Ontario, July 27, 2012
PRESENT: The Honourable Mr. Justice Near
BETWEEN:
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REPLIGEN CORPORATION
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Applicant
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and
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THE ATTORNEY GENERAL OF CANADA
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Respondent
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REASONS FOR
JUDGMENT AND JUDGMENT
[1]
The
Applicant, Repligen Corporation, contests a second refusal by the Commissioner
of Patents (Commissioner) to correct clerical errors under section 8 of
the Patent Act, RSC 1985, c P-4 (the Act). The errors at
issue are in two maintenance fee payment documents and relate to numbers
initially transposed in Canadian Patent No. 1,341,486 (the Repligen Patent).
I. Background
[2]
The
series of events leading to this application began with Repligen’s Canadian
agent, MacRae & Co. They erroneously advised their United States counterpart, Saliwanchik IP, that the Repligen Patent for Modified Protein A was
issued under the number 1,314,486 as opposed to 1,341,486. Saliwanchik
IP therefore provided the same incorrect number to Computer Patent Annuities
(or CPA) in engaging its services for the payment of required maintenance fees.
[3]
When
CPA proceeded to pay these fees mistakenly referring to the 1,314,486 patent,
it was informed by the Canadian Intellectual Property Office (CIPO) that
payment had already been made by Dennemeyer & Co Ltd on behalf of
Rolls-Royce PLC - the true registered owner of that number patent. CPA
requested a refund of its payment for Repligen which was later received from
CIPO.
[4]
Thereafter,
issues continued to arise in correspondence related to the payment of
maintenance fees for the incorrect patent number. An annual cycle emerged
whereby CPA, on behalf of Repligen, and Dennemeyer, on behalf of Rolls-Royce,
would attempt to pay the required fee on the 1,314,486 patent. Often the second
payor, Dennemeyer would be informed that the fees were already accounted for
and request a refund.
[5]
Meanwhile,
CIPO sent a Maintenance Fee Notice in relation to the correct patent number to
MacRae & Co on August 30, 2007. The Notice advised that the prescribed
fees had not been paid and the Repligen Patent would lapse unless payment was
made within twelve months of the anniversary date. There was no response from
Repligen’s Agent. On July 21, 2008, unbeknownst to its registered owner, the
Repligen Patent formally lapsed due to non-payment of the prescribed fees.
[6]
By
April 23, 2009, Repligen revoked MacRae & Co as its agent and appointed MBM
Intellectual Property LLP (MBM). MBM wrote to CIPO questioning the
notification on its database that the Repligen Patent had lapsed for a failure
to pay maintenance fees. MBM insisted that the maintenance fees were timely
paid and the Repligen Patent was in good standing. It also requested that a
clerical error in fee payment documents be corrected under section 8 of the
Act. MBM referenced the transposed numbers as well as the “Date”, “Year”, and
“Fee” information as being generated incorrectly.
[7]
On
July 8, 2009, MBM also attempted to pay the annual maintenance fee on the
Repligen Patent. In response, CIPO confirmed that the Repligen Patent had
lapsed within one year of the anniversary date as per the Maintenance Fee
Notice. Its letter stated “no further action can be taken with regard to this
patent.”
[8]
On
February 4, 2010, the Commissioner declined to correct the error cited by MBM,
despite acknowledging that the transposition in fee payment documents was
clerical in nature. It was noted that “the delay in addressing the errors has
resulted in an extensive period of time where third parties may have relied
upon publicly available documents and the information contained therein.” The
Commissioner continued “effecting said correction has the potential to
negatively affect the rights of others.”
[9]
Repligen
was successful on an application for judicial review of that decision before
this Court (see Repligen Corporation v Canada (Attorney General), 2010
FC 1288, [2010] FCJ no 1647). Justice François Lemieux found the
Commissioner did not consider certain relevant factors as identified at
paragraph 60 of his reasons. These included:
a) The impact on Repligen - the loss of its patent;
b) The fact Repligen's payment was received by the
Commissioner and appropriated to another patent in circumstances which
are unknown to Repligen and which were not considered by the Commissioner and,
in that context, whether there was a slip at CIPO;
c) The fact that Repligen's payments were made on
the due date;
d) Her failure to appreciate, that if she properly
exercised her discretion to correct the error, the remedial scope of section 8
would have the effect that the '486 patent never lapsed for non-payment
under paragraph 46(2) of the Act because those fees were paid in the
appropriate amount and on time, a result which was achieved in Dutch
Industries, above, without the recourse to section 8. In other
words, she erred in her appreciation of the remedial powers available to her
under section 8 of the Act;
e) The Commissioner did not take into account the
purpose and object of the maintenance fee provision in the Act. Repligen paid
on time and CIPO accepted those payment; Repligen contributed to defraying the
costs of the Patent office. The fact that Repligen made those payments and the
Commissioner recognized that paying it to the wrong account was an indicator
Repligen did not consider its '486 issued patent as deadwood;
f) Simply invoking possible third party
rights without more would, in my view, fundamentally impair the remedial
power Parliament conferred upon the Commissioner to remedy clerical errors. The
reason is obvious: in the case of every issued patent the disclosure will have
been made; in the case of a patent application, it is open to the public
inspection after a certain date. Justice Desjardins in Bristol-Myers did not
endorse a speculative determination of third party rights. She had hard facts
before her which pointed to the likehood third parties would be affected
- the nature of the remedy sought which was the addition of a new priority date
had the effect in a document, that had been opened in 1994, of permitting the
entry in 1997 of a priority date of July 1992. Justice Desjardins said that
"the retroactive effect of the correction if admitted, clearly preoccupied
the Commissioner. She also had evidence that, before the correction was sought,
two other companies filed priority claims for similar drugs under foreign
patents predating the U.S. patents relied on by Bristol-Myers. Here, as I see
it the Commissioner's assessment of third parties rights being affected was
based on pure speculation, without more, such as determination whether patent
applications had been filed in Canada by third parties for patents similar to
Repligen's Modified Protein A. The view I take is consistent with what
is written in CIPO's Manual of Patent Office Practice at item 23.04.02 when
giving examples of cases where third parties are likely to be affected.
See also section 23.04 of that same Manual where the Commissioner indicates she
will decide whether or not to correct based on the nature of the error
made; and
g) Finally, the Commissioner failed to weight and
balance all relevant factors before exercising her discretion.
[Emphasis in original]
[10]
Based
on Justice Lemieux’s decision, another official in the Patent Office considered
the request for a correction, but reached the same overall conclusion. The
Commissioner would not exercise discretion to correct the error. The Applicant
now asks this Court to review the Commissioner’s re-determination as discussed
in detail below.
II. Decision
under Review
[11]
While
the Commissioner recognized that the original transposition of the patent
number met the definition of a clerical error; the incorrect “Date”, “Year” and
“Fee” information did not, as this was substantive in nature.
[12]
Turning
to the object and purpose of the provisions, the Commissioner faulted the
Applicant for not being sufficiently diligent in ensuring that payment
arrangements with the professional maintenance fee company were adequate. It
was concluded that:
The patentee was in the best position in 2006 to
recognise that the arrangements it had made to pay its maintenance fees were
not working properly. The clerical error in the patent number, as well as the
incorrect “Date”, “Year” and “Fee” information should have been apparent to the
patentee upon a cursory review of the correspondence sent by CPA and received
from the Office, and confirmation of the date provided by MacRae & Co. The
apparent lack of action in response to the 2007 Office letter alerting the patentee
to the risk of loss of rights suggests a lack of due diligence inconsistent
with the object and purpose of the maintenance fee provisions and of the Patent
Act as a whole.
In considering the object and purpose of the
maintenance fee provisions, the making of arrangements with CPA to pay the
maintenance fees weighs in favour of effecting the correction; this must be
balanced, however, against the apparent lack of due diligence in ensuring the
payment arrangements were adequate before the expiry of the grace period
provided under the maintenance fee regime.
[13]
The
Commissioner also considered the role of CIPO in processing the payments
despite the error. It was nonetheless found that CIPO had followed CPA’s
explicit instructions in the maintenance fee documents, did not conceal the
duplicate fee payments and processed a refund in each instance.
[14]
The
overall effect of the correction was another factor weighing heavily against
granting the Applicant’s request. The Commissioner suggested that using the
clerical provisions of the Act to retroactively deem the patent never to have
lapsed constituted “an extraordinary remedy that requires careful
consideration.”
[15]
Similarly,
the potential prejudice to third parties weighed against effecting the correction;
given information relating to the Repligen Patent expiry had been publicly
available for two years along with the specific implications for Rolls-Royce.
[16]
The
Commissioner summarized the impact by stating “[c]orrecting Repligen’s error
today could retroactively have the effect of causing the Rolls-Royce patent to
have expired in 2008” since the payments originally applied to it would
automatically turn over to the Repligen Patent.
[17]
The
Commissioner acknowledged that some factors were in favour of correction, but
others weighed against it. It was ultimately concluded, however, that
correction “would not be an appropriate use of discretion.”
III. Relevant
Provisions
[18]
This
application centres on two primary provisions of the Act. The Commissioner’s
decision was based on section 8 providing that “[c]lerical errors in any
instrument of record in the Patent Office do not invalidate the instrument, but
they may be corrected under the authority of the Commissioner.”
[19]
Also
at issue is section 46 requiring the patentee “to maintain the rights accorded
by the patent, pay to the Commissioner such fees, in respect of such periods,
as may be prescribed.” The consequence for failing to pay these
maintenance fees within the time provided is that the “term limited for
the duration of the patent shall be deemed to have expired at the end of that
time.”
IV. Issue
[20]
The
main issued raised is whether the Commissioner erred in not exercising
discretion to correct the clerical error.
V. Standard of Review
[21]
The
parties agree that the standard of review for the Commissioner’s decision was
resolved by this Court in Scannex Technologies LLC v Canada (Attorney
General), 2009 FC 1068, [2009] FCJ no 1326 at para 22 and later
confirmed by Justice Lemieux in the previous judicial review related to this
matter (Repligen Corporation, above at para 37).
[22]
As
for the interpretation of section 8, the applicable standard is correctness. By
contrast, the application of the law to the facts involves a review based on
reasonableness.
[23]
This
approach reflects the frequently quoted passage from Dunsmuir v New
Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 at para 51 that “questions of fact,
discretion and policy as well as questions where the legal issues cannot be
easily separated from the factual issues generally attract a standard of
reasonableness while many legal issues attract a standard of correctness.”
VI. Analysis
[24]
At
the outset, the Applicant asserts that recourse to section 8 is unnecessary as
it paid the maintenance fees in a timely manner. Despite the clerical error,
the Commissioner cannot ignore the tender of fees and continued validity of the
patent as a result. Moreover, the Applicant suggests that the finding of a
clerical error in the transposition of the numbers has the implied legal effect
of demonstrating that the payments were correctly tendered towards the Repligen
Patent. Relying on the decision of Justice Robert Barnes in Procter &
Gamble Co v Canada (Commissioner of Patents), 2006 FC 976, [2006] FCJ no
1258, the Applicant insists that the Commissioner has an obligation under
section 4 of the Act to ensure the records are accurate and make corrections
accordingly.
[25]
I
note, however, that Justice Lemieux expressly rejected these arguments for
valid reasons in Repligen Corporation, above at para 55. He stated:
[55] […] I cannot accept counsel for the
Applicant's argument that the '486 patent remained in good standing
notwithstanding the fact that, because of the clerical error, the fees paid
were paid to the wrong patent. That is the very reason he brought this
section 8 application. The Commissioner accepted the fact the error in the
inverted patent numbers was a clerical error. In my view, it is also to late in
the day to argue that under section 8 the Commissioner did not have a
discretion whether to correct or not. Counsel for the applicant did not make
such argument. Moreover, I cannot accept that the legal effect of the finding
the inverting of the patent numbers was a clerical error meant that the fees
tendered and accepted for the 1, 314, 486 patent were, without more,
paid to the '486 patent. Such a holding would render meaningless the discretion
the Commissioner has under section 8 of the Act.
[Emphasis in original]
[26]
His
reasoning is further supported by repeated pronouncements from this Court
underlining the discretion afforded to the Commissioner in the correction of
clerical errors under section 8. The use of the word “may” in the
provision is permissive; it is not directory nor mandatory (see Bayer
Aktiengesellschaft v Commissioner of Patents, [1981] 1 FC 656 at para 9; Dow
Chemical Co v Canada (Attorney General), 2007 FC 1236, [2007] FCJ no 1590
at para 15; Bristol-Myers Squibb Co v Canada (Commissioner of Patents)
(1997), 138 FTR 144, [1997] FCJ no 1424 at paras 10-14 aff’d on appeal
(1998), 82 CPR (3d) 192 (CA)).
[27]
This
principle is even acknowledged in Procter & Gamble, above as cited
by the Applicants. Justice Barnes suggests at para 31 that “it would be
somewhat incongruous if the Commissioner did not have the discretionary authority
under section 8 of the Act to amend the Patent Office records accordingly” to
reflect the correct the date of issue but ultimately found that it was
unnecessary for the Commissioner to consider the matter under section 8
authority based on other duties arising under the legislation in that
particular case. However, regarding the discretionary nature of section 8, he
subsequently opined:
[34] The
correction of obvious recording errors made within the Patent Office would not
normally engage the kinds of concerns reflected in the Bayer decison,
above, and, in such situations, section 8 relief should ordinarily be
available to the Commissioner. That relief is, however, discretionary and the
Commissioner cannot be required to do any more than to apply his section 8
authority to the facts before him.
[28]
The
Commissioner retains discretion to determine, based on the factual
circumstances, whether correction should be made of a particular clerical error
by virtue of section 8. Without the correction of the clerical error in this
instance, the tendering of the fees alone is insufficient to maintain the Repligen
Patent in good standing.
[29]
I
must therefore turn my attention to whether the Commissioner reasonably chose
not to exercise discretion under section 8 to correct the errors in the
Applicant’s circumstances. In doing so, I am guided by the factors outlined
for specific consideration by Justice Lemieux in Repligen Corporation,
above. While the Respondent maintains that all of these factors were properly
considered by the Commissioner on re-determination, the Applicant disputes many
of the central findings.
[30]
Prior
jurisprudence suggests that the maintenance fee provisions are generally
applied in a strict manner (see Barton No-Till Disk Inc v Dutch
Industries Ltd, 2003 FCA 121, [2003] FCJ no 396; PE Fusion LLC v
Canada (Attorney General), 2004 FC 645, [2004] FCJ no 799). In this
instance, however, the Commissioner should have more directly addressed some of
the distinguishing factors in relation to Repligen since it proceeded to pay
the prescribed maintenance fees, albeit to the wrong patent. Indeed,
Repligen’s interests were completely discounted on the basis of a lack of due
diligence. While Repligen’s role in the error, or at least in identifying it
sooner, cannot be ignored by the Commissioner; it does not eliminate the
presence of other factors in its favour given the stated purpose of section 8.
[31]
The
decision clears CIPO of its involvement and proceeds to focus on the potential
impact for Rolls-Royce. The Commissioner considers the purpose and object of
the legislation in relation to Rolls-Royce, as well as that company’s intention,
by way of Dennemeyer, to pay the prescribed fees on the patent. It is
important to note that Rolls-Royce suffered no prejudice in this matter and
that their patent expired in 2010. The possibility that Rolls-Royce may have
suffered some unknown prejudice does not in my view offset the requirement that
the Commissioner balance this possible prejudice to Rolls-Royce with the impact
on Repligen, i.e. the loss of the patent, in a way that reflects the
remedial nature of section 8 of the Act in addressing clerical errors.
[32]
Repligen
is never given the benefit of consideration based on these same factors,
despite Justice Lemieux’s express direction to do so in Repligen Corporation,
above. He insisted that the Commissioner address the impact on Repligen of the
loss of its patent and the fact that payments were made in furtherance of the
purpose of the legislation, namely to defray the costs of the Patent office and
avoid deadwood patents. These issues cannot be discounted solely on the basis
of a lack of due diligence. In reality, the approach taken by the Commissioner
suggests that the standard with respect to the payment of fees and related
clerical errors is one of perfection. If this was accepted as correct, then
there would be no need for section 8 of the Act.
[33]
Similarly,
in Repligen Corporation, above, Justice Lemieux faulted the Commissioner
for failing to appreciate the remedial powers available to her under section 8
of the Act that correction would have the effect of the patent never having
lapsed under subsection 46(2). Justice Lemieux implied this would be relevant
to the Applicant as it reinforced the importance of its patent rights. However,
the Commissioner seemed to turn this in a different direction by stating “it
seems reasonable to conclude that retroactively causing a patent to be deemed
never to have expired, through the correction of a clerical error, is an extraordinary
remedy that requires careful consideration.” This statement had the effect of
creating a further barrier to correction for Repligen. In my view, that was not
what was intended by Justice Lemieux’s comments in this regard.
[34]
Despite
the Commissioner’s claim to have considered all of the factors outlined, by concentrating
on due diligence, this was ultimately not done in a manner that reflects
justification, transparency, and intelligibility (Dunsmuir, above at
para 47). The Commissioner failed to focus its attention on the central issue
of Repligen’s continued payment of fees in line with the legislative scheme and
intent to maintain its patent rights despite this being appropriated to another
patent. The Commissioner’s determination should reasonably reflect the
interests of Repligen and Rolls-Royce in circumstances where both attempted to
comply with maintenance fee provisions.
VII. Conclusion
[35]
For
these reasons, the application for judicial review is allowed, with costs, and
the matter is remitted back to a different decision-maker within the Patent
Office.
JUDGMENT
THIS
COURT’S JUDGMENT is that this
application for judicial review is allowed, with costs, and the matter is
remitted back to a different decision-maker within the Patent Office.
“
D. G. Near ”
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