Federal Court Holds Issued Patent Valid Despite Erroneous Issue Fee Payment

In a February 4, 2016 decision, Apotex Inc v Pfizer Inc ("Apotex"), 2016 FC 136, the Federal Court found that an erroneous underpayment of a "final fee" to issue a patent did not invalidate the issued patent. In so doing, the Court distinguished between substantive breaches of the statute that go to the heart of the patent and administrative breaches of the statute in dealings with the Canadian Intellectual Property Office (CIPO).

Background

Once a patent application is deemed to comply with the Patent Act and the Patent Rules, CIPO issues a notice of allowance which requires the applicant to pay a final fee for issuance of the patent. The Rules currently outline two tiers of fees, one for "small entities" and a higher fee for entities other than small entities, i.e., "large entities". If the final fee is not paid within six (6) months of the notice of allowance, the application is "deemed abandoned" under s. 73(1)(f) of the Act.

In Apotex, the Federal Court considered whether an erroneous final fee payment could invalidate a subsequently issued patent. Pfizer is the current owner of Canadian Patent No. 1,339,132 (the '132 patent) which was issued on July 29, 1997 and is directed to latanaprost, a drug used for the treatment of glaucoma and marketed in Canada as XALATAN. The final fee was erroneously paid based on small entity status and the Court found that no "top-up" fee for large entity was ever paid.

Apotex brought a motion for partial summary judgment, alleging that the final fee was not paid in full, that Pfizer failed to correct this issue within the prescribed time period and that, since this final fee was a prerequisite for valid issuance, the '132 patent was invalid.

Does the failure to submit the proper final fee payment invalidate an issued patent?

To answer this question of law, the Court addressed two conflicting lines of jurisprudence. In the Dutch Industries Ltd v Canada ("Dutch Industries"), 2001 FCT 879, aff'd 2003 FCA 121, line of cases, the Federal Court and the Federal Court of Appeal found that the Commissioner lacked the statutory authority to accept top-up payments for maintenance fees after the six-month deadline where a large entity applicant erroneously paid maintenance fees as a small entity. Under the Dutch Industries rationale, any error in the determination of small entity status, "could lead to the loss of all rights under the patent application and any resulting patent, unless the error is discovered and...