Date: 20080606
Docket: T-1436-07
Citation: 2008 FC 712
Ottawa, Ontario, June 6,
2008
PRESENT: The Honourable Mr. Justice Hughes
BETWEEN:
SARNOFF
CORPORATION
Applicant
and
THE ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
[1]
The
Applicant seeks judicial review of a decision of the Patent Office (Commissioner
of Patents) who retroactively refused to accept maintenance fees in respect of
a pending patent application and deemed the application to be abandoned. For
the reasons that follow, I find that the decision was not correct and that the
application should be re-instated.
FACTS
[2]
A
patent application was filed in the Canadian Patent Office by the Applicant in
these proceedings, Sarnoff Corporation, on March 12, 1999 and assigned number
2,265,256 (the ’256 application). Because of its filing date, the ’256 application
is governed by the provisions of the Patent Act, R.S.C. 1985, c. P-4 in
force after October 1, 1996 and the Patent Rules, SOR/96-423, in respect
thereof. At the time of filing, the Gowlings firm was named by the Applicant
as its patent agent. Gowlings paid all maintenance fees up to the fifth
anniversary of the ’256 application.
[3]
In
March, 2004, the Applicant Sarnoff Corporation transferred responsibility for
the ’256 application to another firm, Dimock Stratton. On March 2, 2005 and
March 8, 2006, respectively the Dimock Stratton firm paid the 6th
and 7th anniversary maintenance fees by submitting them to the
Patent Office. These were fees received, accepted and processed by the Patent
Office.
[4]
For
unexplained motivations, a fee clerk in the Patent Office, after receiving the 7th
anniversary fee and one year after accepting the 6th anniversary fee
without complaint, contacted the Dimock Stratton firm to advise that firm that
the Office had no record of change of agent or appointment of associate agent
respecting that firm. The evidence as to whether the Dimock Stratton firm
filed a notice of change of agent or appointment of that firm as associate
agent is unclear. The evidence is that the online Canadian Patents Database as
of April 21, 2006 listed the Dimock Stratton firm as the “agent” in respect of
the ’256 application. On April 27, 2006, the Patent Office wrote to the Dimock
Stratton firm (and not the Gowlings firm, thus apparently accepting that it was
appropriate to communicate with the Dimock Stratton firm) deeming the ’256
application to be abandoned because maintenance fees had not been paid by what
it believed to be the appropriate person. The Dimock Stratton firm replied on
February 6, 2007, requesting reinstatement and again submitting the 7th
anniversary fee as well as the 8th anniversary fee. On February 26,
2007 the Patent Office responded saying that the fee could only be accepted by
an authorized correspondent thus the application had been completely abandoned.
As noted above, a print out of the Patent Office website record for the ’256
application current as of April 21, 2006 shows, however, that the Patent Office
had recorded the Dimock Stratton firm as agent of record as of that time.
[5]
There
is no evidence from the Patent Office to explain why it accepted the 6th
anniversary fees from the Dimock Stratton firm or why it continued to
communicate with that firm or whether it received an Appointment of Associate
Agent form or not or why its website showed that firm as agent of record.
[6]
On
March 7, 2007 the Gowlings firm sent a letter to the Patent Office requesting
reinstatement of the ’256 application and again submitting the 7th
and 8th anniversary fees. By letter dated July 3, 2007, the Patent
Office stated that no maintenance fees had been paid, the one year grace period
had expired and the application was deemed abandoned.
ISSUE
[7]
There
is only one issue, was the Patent Office – Commissioner of Patents – correct in
deeming the ’256 application to have been abandoned because maintenance fees
had been paid by an improper person.
STANDARD OF
REVIEW
[8]
The
parties are in agreement, and I agree, that the decision of the Patent Office
in this case turns on a question of law and must be determined on the basis of
correctness (Dunsmuir v. New Brunswick, 2008 SCC 9 at para. 60).
ANALYSIS
[9]
It
is appropriate to begin this analysis with a review of some of the persons mentioned
in the Patent Act and Patent Rules :
·
“Inventor”
– is not specifically defined in the Act or Rules. Section 2 of
the Act defines an “applicant” as including an inventor. Section 27 of
the Act says that any “inventor” meeting certain criteria may obtain a
patent. Section 49 of the Act says that a patent may be granted to any
person to whom an “inventor” has assigned his right.
In Canada, the
language of the jurisprudence assumes that an “inventor” is a natural person as
opposed to a juridical person such as a corporation. A good example is the
decision of the Supreme Court of Canada in Apotex Inc. v. Wellcome
Foundation Ltd., [2002] 4 S.C.R. 153 at paras. 94 to 109. I repeat
paragraph 95 of that decision to show that a natural person is clearly contemplated:
95 Inventors
come in all shapes and sizes. As long ago as 1831, the London
Journal of Arts and Sciences commented (with gender
assumptions no doubt common at the time):
Useful
inventors are of three classes; the first are men of genius, capable of
producing important inventions that involve the entire projecting of new
machines, or remodelling of existing ones, and the organization of new or
complicated processes and systems of working. These are very few.
The
second are men who have not so extensive a scope of imagination and intellect
as to project new systems or great changes, and to organize the means of
effecting them, but who are capable of making marked improvements upon existing
systems and machinery, or partial changes in them. This class is considerable.
The third
class is made up of men of small imagination, who are not capable of any great
originality of thought, but who have a certain ingenuity which they can apply
to the things that come within the range of their observation, and possess a
tact for correctly and accurately executing that which they conceive.
...
Happily this class is immense, being spread thickly over the whole body of
mechanics, from the manufacturer and engineer down to the lowest workman. Such
men constitute expert mechanicians, who are never at a loss for expedients for
overcoming the practical difficulties of detail that occur in their business,
and are perpetually making trifling inventions which they require for immediate
application.
(Quoted in
Godson on Patents (2nd ed. 1851), at pp. 33-34.)
I note that some European applications for patents are filed naming
corporate entities as the inventor. Not so in Canada or the United
States.
There can, of course, be more than one natural person named as an inventor
in a patent application.
·
“Applicant”
is defined in section 2 of the Act as that which “includes an inventor
and the legal representatives of an applicant or inventor”. In respect of
maintenance fees, section 27.1 of the Act says that the “applicant”
shall pay the fees. Section 49 of the Act, previously referred to,
speaks of the assignment by an “inventor” of his entitlement to a patent but
such person is described simply as “assignee” and not as an “applicant”. As
previously discussed with respect to section 27, that section speaks of an
“inventor’ who may be entitled to a patent. Section 28.2 is the first to make
mention of an “applicant” in respect of prior disclosures. Section 28.4 uses
the word “applicant” when speaking of priority afforded to foreign applications.
Section 29 requires non-resident “applicants” to provide a Canadian
“representative” for purpose of service of proceedings.
·
“Representative”
is a person or firm, sometimes called “nominee” appointed by an “applicant”
under section 29 of the Act who can receive service of proceedings taken
under the Act. There is no suggestion that a “representative” and a
“patent agent” (discussed later) must be one and the same person or firm.
·
“Patentee”
is defined in section 2 of the Act as “the person for the time being
entitled to the benefit of a patent.” Section 42 of the Act provides
for the grant of a patent to “the patentee and the patentee’s legal
representatives” providing for certain exclusive rights.
·
“Legal
representatives” are defined in section 2 of the Act as including “heirs,
executors, administrators, guardians, curators, tutors, assigns and all other
persons claiming through or under applicants for patents and patentees of
invention.” Thus an “applicant” is a person who exists before a patent is
granted and a “patentee” is a person who exists once the patent is granted.
Each can have legal representatives.
·
“Patent
agents” are provided for in section 15 of the Act as persons “entitled
to represent applicants in the presentation and prosecution of applications for
patents or in other businesses before the Patent Office”. Sections 12 to 15 of
the Rules provide for qualification of persons to act as patent agents
by the successful completion of certain examinations known to be extremely rigorous.
Section 20(1) of the Rules requires “an applicant who is not an
inventor” to appoint a patent agent to prosecute the application for the
applicant. Section 20(3) of the Rules provides that the appointment of
a patent agent may be revoked. Section 21 of the Rules provides that,
in addition to the appointed patent agent, an associate agent may be
appointed. Section 23 of the Rules requires that where an applicant has
not appointed a patent agent or associate agent residing in Canada, the
Commissioner of Patents shall require appointment of an appropriate agent
within three months after providing notification that an agent is required.
[10]
Two
sections of the Rules require close attention, sections 6(1) and 22. Section
6(1) provides:
6(1) Except as provided by the
Act or these Rules, for the purpose of prosecuting or maintaining an
application the Commissioner shall only communicate with, and shall only have
regard to communications from, the authorized correspondent.
[11]
An
“authorized correspondent” is defined in section 2 of the Rules as
being:
·
the
inventor provided that he or she has not assigned his rights or appointed an
agent;
·
a
patent agent appointed by the inventor or applicant; or
·
an
associate patent agent.
[12]
Section
22 of the Rules provides:
22. Any act by or in relation
to a patent agent or an associate patent agent shall have the effect of an act
by or in relation to the applicant.
[13]
Thus
the scheme of the Act and Rules is that an inventor, (who is a
natural person) or his or her legal representative can file and prosecute a patent
application personally and, if the inventor does not have a Canadian address, a
“representative” residing in Canada must be appointed by the inventor for all
purposes under the Act including receiving legal process and the like.
[14]
Once
the inventor has been assigned his or her right to receive a patent, the
assignee becomes the “applicant” and the “applicant” according to section 20(1)
of the Rules must appoint a patent agent “to prosecute the application for the Applicant”.
Section 20(3) provides that the appointment of a patent agent may be revoked by
the applicant or patent agent and a notice to that effect must be submitted to
the Patent Office.
[15]
Rule
21(1) requires a patent agent who does not reside in Canada but has been
appointed by an applicant to appoint an associate agent who does reside in Canada. This
provision is mandatory.
[16]
Rule
21(2) is permissive, not mandatory, and permits a patent agent residing in Canada to appoint
an associate patent agent who also resides in Canada. A notice
of such appointment must be filed with the Patent Office. This is what
happened in the present case. The patent agent of record, Gowlings, appointed
Dimock Stratton as associate agent. A notice to that effect was submitted by
the Gowlings firm.
[17]
The
Patent Act sections 27.1 and 73(1)(c) require that the applicant
pay maintenance fees. Those fees were paid by an agent of the Applicant, the
Dimock Stratton firm. The fundamental laws of agency allow an agent to act on
behalf of a principal. One needs only to reference the definition given by
Professor Gerald Fridman in his text The Law of Agency (Toronto: Butterworths,
1996) at the beginning of Chapter 1, page 11:
Agency is the relationship
that exists between two persons when one, called the agent, is considered in
law to represent the other, called the principal, in such a way as to be able
to affect the principal’s legal position in respect of strangers to the
relationship by the making of contracts or the disposition of property.
[18]
This
is not a case such as F. Hoffmann-LaRoche AG v. Canada (Commissioner of
Patents), [2004] 2 F.C.R. 405 (F.C.) or Eiba v. Canada (Attorney
General),
[2004] 3 F.C.R. 416 (F.C.) where no fee was paid in a timely way.
[19]
Here
the fees were paid, and acknowledged and accepted by the Patent Office.
[20]
The
only point at issue is the consequence of the fact that the Patent Office says
that at the time the fees were paid by the Dimock Stratton firm, it did not
have on file a notice to the effect that this firm had been appointed as
associate agent. As previously discussed, the evidence from the Patent Office is
curiously lacking as to why its website indicated that the Dimock Stratton firm
was the agent of record and why it communicated with that firm.
[21]
Section
21(2) of the Rules permits the appointment of an associate agent.
Section 21(3) requires that notice of such appointment be submitted to the
Patent Office. What section 21 does not say, and what no other provision of
the Act or Rules addresses, is when the notice has to be
submitted or the effect of actions taken, importantly on the facts of this
case, payments received and acknowledged by the Patent Office.
[22]
The
instructions given by the Federal Court of Appeal in Dutch Industries Ltd.
v. Canada
(Commissioner of Patents), [2003] 4 F.C. 67 must be carefully
considered. Where an interpretation of a statue or regulation would lead to an
absurd result or unjust consequences that interpretation should be rejected. I
repeat paragraphs 41 and 42 of the unanimous judgment of that Court given by
Sharlow J.A.:
41 Considering
the ease with which innocent errors as to status can occur, and that the
Commissioner has no authority to relieve against the consequences of
underpaying a maintenance fee, I give much more weight to the consequence of interpreting
the Patent Rules to mean that the status of a person as a "small
entity" is changeable. This is the kind of situation that invites
reference to the comments of La Forest C.J., as he then was, in Estabrooks
Pontiac Buick Ltd., Re (1982), 44 N.B.R. (2d) 201 (C.A.), at page 210:
There
is no doubt that the duty of the courts is to give effect to the intention of
the Legislature as expressed in the words of the statute. And however
reprehensible the result may appear, it is our duty if the words are clear to
give them effect. This follows from the constitutional doctrine of the
supremacy of the Legislature when acting within its legislative powers. The
fact that the words as interpreted would give an unreasonable result, however,
is certainly ground for the courts to scrutinize a statute carefully to make
abundantly certain that those words are not susceptible of another
interpretation. For it should not be readily assumed that the Legislature
intends an unreasonable result or to perpetrate an injustice or absurdity.
42 A
more succinct expression of the same thought is found in Ruth Sullivan,
Sullivan and Driedger on the Construction of Statutes, 4th ed. Toronto:
Butterworths, 2002), at page 247:
Interpretations
that result in a lack of fit between conduct and consequences may be rejected
as absurd.
This
comment is made in the context of a chapter entitled "Consequential
Analysis", which among other things surveys the jurisprudence to discover
the circumstances in which the consequence of a particular statutory
interpretation provides a ground for rejecting that interpretation for
"absurdity". Here, the word "absurdity" is used almost as a
term of art, signifying a result that is so unreasonable as to be unacceptable.
The categories of absurdity recognized by Professor Sullivan are indicated by
the following subheadings: "Purpose is defeated", "Irrational
distinctions", "Misallocation and disproportion",
"Contradictions and anomalies", "Inconvenience",
"Interference with the efficient administration of justice", and
"Consequences that are self-evidently irrational or unjust". The
quoted comment is made under the heading "Misallocation and
disproportion".
[23]
I
am aware of the decision of my brother Justice de Montigny in Rendina v. Canada (Attorney
General),
2007 FC 914. In that case the Patent Office refused to accept payment of
maintenance fees tendered by the applicant and not the patent agent of record
however those fees had not been tendered in a timely fashion. The judge refused
to quash that decision.
[24]
I
am also aware of the decision of my brother Justice Mosley in DBC Marine
Safety Systems Ltd. v. Canada (Commission of Patents), 2007 FC 1142 where,
by apparent oversight, the patent agent of record failed to respond to one of
two requests made by the Patent Office in a timely way and, after the
redemption period had gone by, the application was deemed abandoned even though
maintenance fees had been accepted. He said at paragraphs 25 and 26:
25 In
Pfizer, above, the applicant had been sent an erroneous notice of reinstatement
with respect to a patent application deemed to have been abandoned for
non-payment of fees. This was subsequently corrected in further correspondence.
Justice Cullen concluded that as the correspondence was issued by a federal
body pursuant to a statutory power and clearly affected the rights and
interests of the applicant, the letters constituted an "act or
proceeding" subject to review. His determination that the application had
been validly reinstated through the initial correspondence was overturned on
appeal. The Court of Appeal did not question whether the Commissioner's actions
were reviewable but held that as the statutory requirements for reinstatement
under section 73 had not been met, the erroneous notice was of no force or
effect.
26 By
analogy to Pfizer, the Commissioner's errors in this case including the
acceptance of the 2005 maintenance fee and failure to issue a notice of
abandonment can't be relied upon to revive an application which the statute has
deemed abandoned.
[25]
In
DBC, the failure to respond to the request was unrelated to the payment
of maintenance fees. The fact that the fees had been accepted did not “redeem”
the unrelated event of failure to respond.
[26]
In
the present case, there is a single event, payment of maintenance fees. The
evidence is far from clear as to the Dimock Stratton firm not being in fact the
agent of record or associate agent. The Respondent has failed to file any
evidence that would assist in determining why it showed the Dimock Stratton
firm as agent on its website and why, for about two years it communicated with
that firm. I find that these circumstances are sufficient to determine that the
Patent Office acted unreasonably in the circumstances of this case.
[27]
I
should add, although it is unnecessary to do so in view of my decision above,
that an unduly restrictive approach as to Rule 6(1) respecting persons with
whom communications should be regarded does not accord with the generally
accepted laws of agency. A principal can act directly or through an agent.
Patent agents are skilled in matters of technology, patent draftsmanship and
dealing with the Patent Office and its procedures. The payment of maintenance
fees is a routine clerical matter, requiring no particular skill. A principal
should be able to pay those fees, it is, after all, the principal’s patent or
patent application and the principal should decide whether to keep it alive or
not. Similarly, an agent of the principal, whether or not a patent agent,
should be able to do so on behalf of the principal. Rule 6(1) should not be
read so restrictively so as to prohibit a principal or a principal’s agent from
engaging in matters so routine and clerical in nature as paying maintenance
fees.
[28]
Here
the circumstances are different. Maintenance fees were tendered and accepted.
Only after the fact did the Patent Office attempt a reversal of that acceptance.
It appears that at the time of attempted reversal the Patent Office had treated
the Dimock Stratton firm as the agent of record and had to have had an
appointment of associate agent.
[29]
Given
the ambiguity in the legislation and regulations as to who can pay maintenance
fees and when a notice of an appointment of associate agent can be given, and
given the initial acceptance by the Patent Office of the fees and treatment of
the Dimock Stratton firm as agent, it would be absurd and lead to dire
consequences to interpret the Rules as nullifying any correspondence and
payment actually accepted by the Patent Office in the circumstances of this
case.
[30]
Accordingly,
the application will be allowed, the decision of the Patent Office (Commissioner
of Patents) deeming the ’256 application to be abandoned is set aside. The
acceptance by the Patent Office of maintenance fees tendered March 2, 2005 and
March 8, 2006 is confirmed and the Patent Office shall continue to process the
’256 application including the acceptance of such further fees as are necessary
to keep the application current.
[31]
There
is a second and different point to make that would only be necessary if I were
to be wrong in my conclusion that the Patent Office acted improperly in deeming
the patent application to be abandoned. This second point is that of affording
relief from forfeiture.
[32]
The
seemingly minor fault in having maintenance fees actually paid, received and
recorded by a firm which, arguably, at the time was not the patent agent or
associate agent of record, results in the wholly disproportionate result of
loss of all rights to receive the grant of patent monopoly rights should the
application otherwise prove to be acceptable. This is not a case where no fees
were tendered on time and not a case where substantive office actions went
unanswered. Here the fees were paid on time and in full, but by A rather than
B.
[33]
This
case can be contrasted with that of Hoffman-La Roche AG v. Canada
(Commissioner of Patents), 2003 FC 1381, aff’d 2005 FCA 399 where there was
a patent actually granted and insufficient fees had been paid. In that case it
was argued that the Patent Office was estopped from claiming the patent was
expired and beyond resuscitation because the Patent Office had adopted an
informal reminder system, which it failed to use in that case. That argument
failed.
[34]
In
the present case we may assume that the Patent Office acted properly in
belatedly returning the fees paid and declaring the application to be
abandoned. The question then becomes whether the consequence of abandonment of
the patent application can be the subject of relief by way of a Court Order.
[35]
The
Federal Courts Act, R.S.C. 1985, c. F-7, section 3 provides that the
Federal Court is a superior court of record in law and equity. Relief against
forfeiture is an equitable remedy that may be granted in the exercise of the
Court’s discretion having regard to factors such as the conduct of the
Applicant, the gravity of the breach, and the disparity between the value of
that which is forfeited and the damage, if any caused by the breach, (e.g.
Supreme Court of Canada in The Maritime Life Assurance Company v.
Saskatchewan River Bungalows Ltd., [1994] 2 S.C.R. 490 at pages 503-505).
[36]
In
the present case the conduct of the Applicant cannot be criticized: it paid the
fee, its agent was apparently recognized by the Patent Office as the
appropriate agent at the time, there was no loss, monetary or otherwise to the
Patent Office and no loss to the public since a patent had not yet been
granted, the loss, however, to the Applicant could potentially be large as it
loses an opportunity to obtain a patent. The Applicant tried, unsuccessfully,
to remedy the perceived error without delay.
[37]
Equitable
remedies can be invoked even in respect of public authorities exercising
statutory duties providing that there is no clear positive duty on the
authority to act in a manner that would otherwise conflict with the principles
of common law and fairness. Justice Major speaking for the majority of the
Supreme Court of Canada in Kenora (Town) Hydro Electric Commission v.
Vacationland Dairy Co-Operative Ltd., [1994] 1 S.C.R. 80 said at page 111:
A statute can only affect the
operations of the common law principles of restitution and bar the defence of
estoppel or change of position where there exits a clear positive duty on the
public utility which is incompatible with the operation of those principles.
[38]
Here,
even assuming that the Patent Office exercised what it believed to be its duty
under the Patent Rules, the Applicant is in an equitable position to
obtain relief from forfeiture in the circumstances of this case. Granting
relief from forfeiture does not conflict with any clear duty on the Patent Office
to serve patent applicants and the public.
JUDGMENT
FOR THE REASONS given:
THIS COURT ADJUGES that:
1.
The
application is allowed;
2.
The
decision of the Patent Office (Commissioner of Patents) deeming the Applicant’s
patent application 2,265,256 to be abandoned is set aside;
3.
The
Patent Office shall accept the maintenance fees tendered on behalf of the
Applicant on March 2, 2005 and March 8, 2006 and shall continue to process the
said application including the acceptance of any further fees as may be
necessary to keep the application current;
4.
In
accordance with the wish of both parties, there is no order as to costs.
"Roger
T. Hughes"
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