A first look at Canada’s proposed patent term adjustment system

Update: Bill C-47 received royal assent on June 22, 2023: An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023. The Bill’s provisions amending the Patent Act to implement patent term adjustment were not amended from the initial proposed legislation, and are scheduled to come into force no later than January 1, 2025.  

Bill C-47, entitled “An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023,” had its first reading in the House of Commons on April 20, 2023. This omnibus bill includes proposed amendments to the Patent Act required for Canada to comply with its international obligations concerning patent term adjustment.

Table of contents

Background

Patent term adjustment provisions of Bill C-47

• Calculation of the adjusted term
• Application procedure
• Maintenance fees
• Reconsideration of duration of additional term and powers of the Federal Court
• Concurrent term of PTA and certificates of supplementary protection
• Do the CSP provisions of Bill C 47 comply with CETA?

Historically, Canada has not provided patent term adjustment to account for delay in the processing of patent applications. However, on July 1, 2020, the Canada-United States-Mexico Agreement (CUSMA) entered into force, replacing the North American Free Trade Agreement (NAFTA) of 1994.

Article 20.44 of CUSMA requires the Parties to provide patent term adjustment (PTA) to compensate the patentee for unreasonable patent office delay. An “unreasonable delay” at least includes “a delay in the issuance of a patent of more than five years from the date of filing of the application in the territory of the Party, or three years after a request for examination of the application has been made, whichever is later.”¹ Certain periods of time may be excluded from the determination of a delay:

• periods of time that do not occur during the processing or examination of the application by the patent office;²
• periods of time that are not directly attributable to the patent office;³ and
• periods of time that are attributable to the patent applicant.
  

The PTA provisions of CUSMA must come into force no later than January 1, 2025,⁴  and they will apply to all Canadian patent applications filed on or after December 1, 2020.⁵

Patent term adjustment provisions of Bill C-47

Calculation of the adjusted term

Under the proposed legislation, starting no later than January 1, 2025, additional term shall be granted for a Canadian patent issuing on an application filed on or after December 1, 2020, if the Patent Office delays in granting the patent.

Patent Office delay is keyed to the date examination is requested, or to the filing date of the application, with exceptions for divisional applications and for PCT national phase applications, the latter making up the majority of Canadian patent filings.

A patent will be eligible for the granting of additional term if the patent issues after the later of:

• three years from the date examination was requested; and
• five years from:
  

1. in the case of a divisional application or PCT national phase application, a “prescribed day” to be established in future regulations;
2. in any other case, the filing date of the application.
   

Divisional applications and PCT national phase applications are treated differently than other applications, presumably in view of how the “filing date” is defined for such applications.

The Patent Act provides that the “filing date” of a divisional application (relevant for the purposes of determining, inter alia, the citable prior art and the 20-year patent term) is the filing date of the parent application, or that of the earliest grandparent or great-grandparent application etc. in the case of serial divisional applications. Because a divisional application may be filed at any time before the grant of a patent on the parent application, and divisional applications may be filed serially, divisional applications may be filed late in the 20-year patent term.

Similarly, the effective legal “filing date” of a Canadian PCT national phase application, as defined in the Patent Rules, is the PCT international filing date. A PCT application must enter the Canadian national phase within 30 months of the earliest priority date, or within 42 months of the earliest priority date if the applicant pays a late fee and submits a statement that failure to enter the national phase by the 30-month deadline was unintentional. If there is no priority claim and the applicant enters the national phase late, the national phase application may not be submitted to the Patent Office until 3.5 years after the “filing date.”

Notably, Article 20.44 of CUSMA permits the five-year period for triggering PTA to run from “the date of filing of the application in the territory of the Party” rather than the “filing date” per se. Possibly the “prescribed day” for a PCT national phase application to be set by regulation will be the date on which entry into the Canadian national phase is requested, and the “prescribed day” for a divisional application will be the “presentation date” on which the divisional application is submitted to the Patent Office.

The additional term will be the number of days of delay in grant of the patent after the relevant date above minus “the number of days that is determined under the regulations.” These regulations will presumably detail the various types of applicant delay that will count against additional patent term. This might include e.g., extensions of time obtained for responding to Examiner’s Reports or abandonment and reinstatement of the application after failure to meet a deadline.

Application procedure

The additional term is not automatically granted by the Patent Office. Rather, the patentee must apply for the additional term⁶ and pay a prescribed fee within three months after the day on which the patent is issued. The application procedure and fee will be set by regulation.

A certificate of additional term, separate from the patent, will be issued to the patentee.

Maintenance fees

Maintenance fees are payable on Canadian patent applications and patents. Currently, the first maintenance fee is due on the second anniversary of the filing date and the last is due on the nineteenth anniversary of the filing date.  

Further maintenance fees will be required to maintain a patent in force during the additional term. The further maintenance fees will presumably also fall due on successive anniversaries of the filing date. For example, if a patent application is filed on April 27, 2024, absent grant of additional term, the last maintenance fee would be due on April 27, 2043 (19th anniversary of the filing date). But if an additional term of 370 days is granted, maintenance fees presumably also would be due on April 27, 2044 (20th anniversary) and April 27, 2045 (21st anniversary). However, the prescribed dates and fees payable remain to be set by regulation.

The requirement to pay maintenance fees during the additional term may prove to be one of the more difficult aspects of the proposed legislation, particularly in view of the involvement of third-party maintenance fee payors such as annuity services. Unlike now, the complete maintenance schedule will not be known at the time of filing or even at grant. Instead, months after the patent has issued, it will be necessary to check for any certificate of additional term issued to the patentee and adjust maintenance fee dockets accordingly. Particularly as most CIPO fees are expected to increase 25% in 2024,⁷ perhaps forgoing additional maintenance fee revenue during the additional term would have been the better approach in Bill C‑47 in aid of simplicity.

Reconsideration of duration of additional term and powers of the Federal Court

The proposed legislation includes a provision allowing the Commissioner of Patents to reconsider the duration of the additional term granted on the Commissioner’s own initiative or upon the application of any person. Upon reconsideration, the additional term may remain the same or may be shortened, but it cannot be lengthened.

There is also a provision permitting an action to be brought in Federal Court for an order shortening the duration of the additional term granted for a patent. Again, there is no mention of the possibility of correcting the additional term by lengthening it.

Oddly, there are no corresponding provisions permitting the patentee to request reconsideration and lengthening of an additional term that has been incorrectly calculated such that it is too short. If provisions are needed to permit correction of errors by the Commissioner resulting in an additional term that is too long, reasonably there would be provisions to correct the Commissioner’s errors that result in an additional term shorter than that to which the patentee is entitled in law. Indeed, it seems that the Commissioner is just as likely to make an error resulting in an additional term that is too short as an error resulting in an additional term that is too long.

Concurrent term of PTA and certificates of supplementary protection

A certificate of supplementary protection (CSP) may be granted on a Canadian patent to account for delay in the regulatory approval process for medicines. The term of a CSP is determined as [the date of marketing authorization for the medicine] – [the filing date of the patent application] – [five years], with a maximum CSP term of two years. Thus, the maximum CSP term can be obtained if the marketing authorization for the medicine is issued by Health Canada at least seven years after the filing date of the patent application. 

The CSP term commences on the expiry of the 20-year patent term. For example, if a patent has a filing date of April 27, 2024 and an expiry date of April 27, 2044, and a CSP is issued for a term of two years, the term of the CSP commences on April 28, 2044 and expires on April 27, 2046.

Under the proposed legislation, the CSP and PTA terms run concurrently. Specifically, the term of the CSP commences at the expiry of the basic 20-year patent term, not at the expiry of the additional term acquired as a result of PTA. Thus, in the above example, if 800 days of additional term were awarded, the two-year CSP term would still expire on April 27, 2046 even though the patent term expires only later on July 6, 2046.

Do the CSP provisions of Bill C‑47 comply with CETA?

It may warrant careful study as to whether the proposal for concurrent CSP and PTA terms in Bill C‑47 is consistent with Canada’s other international obligations.  Canada’s CSP regime was established effective September 21, 2017, consequent to the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union. Article 20.27 of CETA, requiring the Parties to provide sui generis protection for pharmaceuticals, is the basis for the CSP regime. Paragraph 4 of Article 20.27 provides that “…the period of sui generis protection shall take effect at the end of the lawful term of [the] patent” (emphasis added). 

Compliance with CETA requires an interpretation of the “additional term” granted as a result of PTA as being excluded from the “lawful term” of the patent. Conversely, if the lawful term of the patent were to include the additional term granted under PTA, compliance with CETA would require the term of the CSP to commence only at the end of the PTA-adjusted patent term—they could not run concurrently as in Bill C‑47. 

But excluding the additional term acquired by PTA from the “lawful term” of the patent is not a particularly intuitive interpretation, given that the patent is valid and in force during the additional term. Indeed, the proposed requirement to continue to pay maintenance fees during the additional term certainly suggests that it is part of the “lawful term” of the patent. Perhaps this issue will be elucidated during the Parliamentary review of Bill C-47.

Outlook of proposed amendments to the Patent Act

As noted above, pursuant to CUSMA, Canada’s new PTA system need not come into force until January 1, 2025. The proposed amendments to the Patent Act will be subject to public comment and review by committees of the House of Commons and the Senate and may be revised before becoming law. Moreover, important details, such as the date on which PTA may start to accrue for PCT national phase applications and divisional applications, and the types of applicant delay that reduce PTA, remain to be set out in proposed regulations. We will report further as Bill C-47 progresses.

If you have questions or require further information, please contact a member of the Patents group at Smart & Biggar. 

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.

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