Proposed Amendments to the Patent Act and to the Industrial Design

Proposed Amendments to the Patent Act and to the

Industrial Design Act per Part 4, Clauses 102 to 142 of

Bill C-43 (Economic Action Plan 2014 Act, No. 2)

Submission to the

Senate Standing Committee on National Finance

November 14, 2014

Introduction

The Intellectual Property Institute of Canada (IPIC) is the professional association of patent

agents, trademark agents and lawyers practicing in all areas of intellectual property law. Our

membership totals over 1,700 individuals, consisting of practitioners in law firms and agencies

of all sizes, sole practitioners, in-house corporate intellectual property professionals, government

personnel, and academics. Our members’ clients include virtually all Canadian businesses,

universities and other institutions that have an interest in intellectual property (e.g. patents,

trademarks, copyright and industrial designs) in Canada or elsewhere, and also foreign

companies who hold intellectual property rights in Canada.

IPIC is pleased to provide comments on the proposed amendments to the Patent Act and to the

Industrial Design Act per Part 4, Clauses 102 to 142 of Bill C-43 (Economic Action Plan 2014

Act, No. 2).

It is important for Canadian businesses, universities and other institutions that our intellectual

property (IP) system remains competitive with those of other jurisdictions. The government’s

interest in modernizing and improving the IP framework is therefore noteworthy and welcome.

Research by the Canadian Intellectual Property Office has shown that the awareness of IP among

SMEs is too low. They miss opportunities to benefit from their IP or they risk problems and costs

by not being aware of the IP owned by others. Furthermore, the awareness of industrial design

protection is even lower than that for patents and trademarks. Yet it is a form of IP that provides

unique and useful protection. Awareness has slowly begun to increase with news stories about

high profile court cases involving smartphones and tablets. However, to best serve Canadian

innovators, our Industrial Design Act is in need of modernization. The accession to the Geneva

(1999) Act of the Hague Agreement Concerning the International Registration of Industrial

Designs and the consequential changes to the Industrial Design Act are a step in the right

direction and are welcome by IPIC.

Regarding patents, IPIC has advocated for a solution to the inadvertent loss of rights. Patent

rights have been lost because of a force majeure situation like the 2003 blackout in Ontario or

because a patent was deemed abandoned following a minor administrative error and the owner

learned of its abandonment when it was too late to remedy the situation. IPIC is therefore pleased

to see that the amendments to the Patent Act will help mitigate these problems.

We provide below additional comments about the changes.

Patent Act

Sections 114 to 142 of Bill C-43 amend the Patent Act in order to implement the Patent Law

Treaty (PLT).

Among other things, the PLT standardizes and simplifies the requirements for obtaining a filing

date for a patent application and provides procedures for avoiding the unintentional loss of

substantive rights resulting from failure to comply with formality requirements or time limits.

Also, if an applicant fails to pay certain fees, there will now be an obligation to send a notice to

the applicant before the application is deemed abandoned. IPIC welcomes these improvements to

Canada’s patent laws.

Many critical aspects of PLT implementation depend on future amendments to the Patent Rules.

Until proposed amendments are published, it is not possible to comment in detail on the

measures adopted by Bill C-43. Accordingly, this submission is confined to commenting on

broad changes to Canadian patent law resulting from Bill C-43.

Reinstatement

A significant aspect of Bill C-43 concerns the procedure to be followed when a deadline is

missed during the prosecution of a patent application or during the life of a patent, and the

consequences thereof. Examples of prosecution deadlines include the deadline for responding to

an examiner’s report (also known as an “office action”) or paying the final fee. After grant, the

ongoing deadlines largely relate to the payment of annual maintenance fees.

Under the current law, if a deadline on a pending application is missed, the application becomes

abandoned. The applicant may reinstate the application within 12 months by requesting

reinstatement, paying a fee of $200, and taking the missed step (e.g. responding to an office

action). The applicant’s entitlement to reinstate is clear and unambiguous. Reinstatement is

permitted as of right, and requires only a timely request for reinstatement, payment of the

reinstatement fee, and performance of the missed step.

Bill C-43 changes the reinstatement procedure very substantially. In some circumstances,

reinstatement is only permitted upon a determination by CIPO that the applicant’s failure to take

action “occurred in spite of the due care required by the circumstances having been taken.”

CIPO’s determination of due care is subject to later review by the Federal Court (Bill C-43,

section 137).

The due care standard is not mandated by the PLT. It is inherently uncertain and subjective.

Assessment of due care will consume CIPO resources. Moreover, there is no finality, as it

appears a positive determination of due care could be later reversed by the Federal Court.

IPIC believes that the circumstances in which a due care standard applies ideally would be

limited to the greatest possible extent, and recommends that the amended Patent Rules provide a

suitable opportunity for reinstatement prior to any requirement to meet a due care standard.

Intervening Rights

Current patent law does not provide any relief to others who have relied to their detriment on the

abandonment of the application, for example by making, using or selling the claimed invention

during the period of abandonment in the belief that no patent will issue. Such “intervening

rights” are not required as the current conditions for reinstatement are clear and unambiguous as

described above.

Although the PLT does not mandate intervening rights, Bill C-43 introduces them into Canadian

patent law for the first time. This is a substantive change to the scope of protection under a

Canadian patent.

IPIC considers that intervening rights are inherently uncertain for all involved. For example, they

arise in Bill C-43 in connection with infringing acts committed “in good faith” or where there

have been “serious and effective preparations to commit [such an] act” (Bill C-43, section 136).

This is terminology requiring judicial interpretation and the circumstances are highly fact-

dependent.

Moreover, the consequences can be long-lasting, going well beyond the period in which the

patent application was abandoned. For example, the right to continue otherwise infringing

activity is extended to subsequent purchasers of a business.

The impetus for introducing intervening rights in Canadian patent law by way of Bill C-43 is

unclear to IPIC. It is true that the conditions for reinstatement become less absolute, requiring in

some instances compliance with a due care standard as described above. Moreover, in some

instances provisional loss of rights is triggered only by a notice, which is a substantial change

from the current law, under which an application can be abandoned absent notice from CIPO of a

missed deadline.

IPIC does not object in principle to intervening rights provided reasonable opportunities are

afforded to restore an application or patent to good standing before the possibility of intervening

rights arises. This would include sufficient time to take action after notification of a missed

deadline, and an unfettered opportunity to reinstate as of right, without a showing that the

deadline was missed unintentionally or despite the exercise of due care.

By way of example, unless relief is provided under anticipated amendments to the Patent Rules,

it appears from Bill C-43 that intervening rights could arise immediately upon failure to respond

to an examiner’s report, and that reinstatement would require establishment of due care. By

current standards, this would be a draconian reinstatement procedure, only made worse by the

complication of potential intervening rights.

IPIC is hopeful that the requirements for reinstatement and circumstances in which intervening

rights may arise will be favorably clarified in the amended Patent Rules.

On the whole, IPIC believes that intervening rights reasonably should not arise where they do not

exist under the current law (e.g. the current 12-month term to reinstate an abandoned application

as of right or during the 12-month period of grace for a maintenance fee on a patent). To do

otherwise is to diminish the existing scope of protection under a Canadian patent.

Industrial Design Act

IPIC is encouraged by the government’s interest in modernizing and improving the Industrial

Design Act as exemplified by the proposed revisions to the Industrial Design Act contained in

sections 102 – 112 of Bill C-43.

In particular, IPIC welcomes the steps taken by the government to accede to the Geneva (1999)

Act of the Hague Agreement Concerning the International Registration of Industrial Designs,

and to modernize the language of the Industrial Design Act.

There are two issues that should be considered in the context of the proposed legislation:

possible loss of priority rights in connection with Canadian design applications for similar or

related designs that are filed in quick succession; and possible omission of countries/states with

which Canadians currently enjoy a right of priority.

By way of background, Canada is a member of the Convention of the Union of Paris (1883). The

Convention provides for a right of priority to the first filed industrial design application in any

one of the member states. This means that an applicant may, within 6 months of filing the first

application, apply for protection in any of the other member states and claim priority to the first

filed application. Any such subsequent applications will be regarded as if they had been filed on

the same day as the first application. In other words, they will have priority (hence the expression

"right of priority") over applications for the same industrial design filed by others during that

6 month period. Moreover, these subsequent applications, being based on the first application,

will not be affected by any event that takes place in the interval, such as publication of the

design. One of the great practical advantages of this provision is that applicants seeking

protection in several countries are given 6 months to decide in which countries they wish to seek

protection, and to take the steps necessary for securing protection.

Loss of priority rights

Section 105 of the Bill replaces section 8 [Repealed] of the Industrial Design Act with a new

section that includes subsection 8.2(1)(c). Subsection 8.2(1)(c) provides that “A design in an

application for the registration of a design [the application being examined] is novel if the same

design, ... (c) subject to the regulations, has not been disclosed in an application filed in Canada

for the registration of a design [the earlier application] whose priority date is before the priority

date … [of the application being examined]”.

Take the example of an applicant with two applications, the first for the overall shape of a new

product, such as a smartphone, where the drawings include the body of the smartphone along

with a keyboard and display screen, and the second application for just the keyboard of the

smartphone. If the priority date is the same for both applications then there is no problem. But if

the priority date for the first application depicting the overall shape is even one day earlier, then

the first application will destroy the novelty of the second application. The design for the

keyboard alone cannot be registered. Historically, the Canadian Industrial Design Office would

associate related design applications, such as the smartphone and keyboard applications, so that

both would register on the same day. That effectively prevented the earlier design from

destroying the novelty of the later design (referred to as ‘self-collision’). The Office would do

this as a courtesy. Proposed subsection 8.2(1)(c) does not permit the Office to adopt such a

practice.

One possible solution would be to specify that subsection 8.2(1)(c) only applies to design

applications filed by different applicants. Alternatively, we note that subsection 8.2(1)(c) states

that it is “subject to the regulations”. We have not studied whether the regulations could be

drafted in such a way as to avoid self-collision.

Possible omission of countries/states

In addition to the right of priority resulting from membership in the Convention, Canadians also

currently benefit from priority rights resulting from membership in other treaties, such as the

World Trade Organization (WTO).

Section 112 of the Bill removes the priority provisions currently contained in section 29 of the

Industrial Design Act, while section 102 of the Bill adds new priority provisions to section 2 of

the Industrial Design Act.

Current section 29 defines “priority country” to mean (a) “a country that by treaty, convention or

law affords a privilege to citizens of Canada that is similar … with respect to the effective date of

an application for the registration of an industrial design”, and (b) “includes a WTO Member”.

Therefore, current section 29 honours all of Canada’s treaty obligations having regard to priority.

Proposed section 2 defines “country of the Union” to mean “(a) a country that is a member of the

Union for the Protection of Industrial Property constituted under the Convention, or (b) a

member of the World Trade Organization as defined in subsection 2(1) of the World Trade

Organization Agreement Implementation Act”. Therefore, proposed section 2 excludes any

country or state that is not a party to the Convention or a member of WTO.

Section 3.4.2 of the Industrial Design Office Practices published by the Canadian Intellectual

Property Office currently states that design applications filed in the Benelux Union may serve as

the basis for priority. We query whether Benelux (and any other country /state/union with which

Canada has a bilateral treaty) would no longer qualify as a “country of the Union” under

proposed section 2.

Other Measures

Thank you for the opportunity to provide input on the IP-related aspects of Bill C-43. We look

forward to working with the government as the necessary amendments to the Patent Rules and

Industrial Design Regulations are made to bring the changes into effect. We recommend that

stakeholders be involved early, and throughout the regulation drafting process.

We also encourage the government to continue in its work to improve the Canadian IP system.

We support a robust IP system, a vibrant culture of innovation in Canada, and a strong and

highly-skilled Canadian IP profession.

IPIC has made detailed proposals for improvements to the IP system relating to, by way of

example, the protection of confidential communications between IP advisors and their clients,

and amendments to the Patent Act to address the law of double patenting.

For industrial designs, further modernization is needed to provide protection for types of designs

not contemplated when the Act was originally drafted, such as animated electronic icons and

graphical user interfaces. There are other areas of possible protection such as unregistered

designs and protection for colour. Consideration should also be given to allowing applicants to

amend applications to change the scope of protection applied for, comparable to utility patent or

US design patent practice.

We would welcome the opportunity to cooperate further on these and other issues.

Contact information: Michel Gérin, Executive Director, Intellectual Property Institute of Canada

60 Queen Street, Ottawa, ON, K1P 5Y7, 613-234-0516, [email protected]