A practical guide to Canada’s new Patent Term Adjustment (PTA) system

On January 1, 2025, Canada will implement a patent term adjustment (PTA) system to account for unreasonable delays by the Canadian Intellectual Property Office (CIPO) in issuing a patent. The final regulations were published on December 18, 2024.

This article provides a practical overview of the new PTA system, and guidance for avoiding loss of potential PTA and assessing whether an application for PTA is justified.

Table of contents

• Key takeaways
• Background
• PTA is concerned only with the time that “the ball is in CIPO’s court”
• Eligibility for PTA and duration of the additional term
• Most applicant delay is irrelevant to PTA
• Deferring examination to maximize PTA
• Issuance of a third Examiner’s Report or filing a Request for Continued Examination effectively terminates accrual of PTA
• Few patents will benefit from significant PTA
• PTA application procedure
• Maintenance fees during PTA term
• Reconsideration of duration of additional term and powers of the Federal Court
• Concurrent term of PTA and certificates of supplementary protection
• Preliminary PTA calculations

Key takeaways

1. PTA is available only for a patent granting on an application having a filing date on or after December 1, 2020.
   
2. Only patents issued after December 1, 2025 can be eligible for PTA, and no application for PTA will become due before March 2026.
3. An application for PTA must be filed within three months after issuance of the patent, and an official fee of CAD $2500 must be paid.
4. If PTA is granted, annual maintenance fees are payable to maintain the patent in force during the additional term that extends beyond the original 20-year term of the patent.
5. PTA is concerned with the cumulative time CIPO has the application in its hands for processing. Applicant delay has minimal effect on PTA.
6. Deferring the examination request and fee until closer to the deadline for requesting examination improves the likelihood that PTA will be available and minimizes deductions from PTA.
7. Because issuance of a third Examiner’s Report or filing a Request for Continued Examination (RCE) effectively terminates potential accrual of PTA, applicants should consider making early amendments that facilitate compact prosecution.
8. It is likely that few patents will qualify for substantial PTA. Given the cost of a PTA application, patentees may wish to make their own preliminary calculations using the guidance provided in the Appendix to this article to assess whether a full calculation and PTA application are justified.  
   

Background

The PTA system has been enacted for compliance with Canada’s obligations under the Canada-United States-Mexico Agreement (CUSMA), which entered into force on July 1, 2020, replacing the North American Free Trade Agreement (NAFTA) of 1994.

Article 20.44 of CUSMA requires the parties to provide PTA to compensate the patentee for unreasonable delay in the issuance of a patent. An “unreasonable delay” 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.” 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 granting authority (i.e. CIPO);
• periods of time that are not directly attributable to the granting authority; and
• periods of time that are attributable to the patent applicant.
  

PTA is concerned only with the time that “the ball is in CIPO’s court”

Underpinning Canada’s PTA system is the principle that “unreasonable” delay by CIPO in granting a patent can be attributed only to those periods of time when the application is in CIPO’s hands for examination, and CIPO is not waiting for the applicant to take action or fulfil an outstanding obligation.

Conceptually, the PTA system operates like a chess clock as White (CIPO) and Black (the applicant) play. White’s clock runs as White ponders its move. Completing its move, White stops its clock, which automatically starts Black’s clock. Black’s clock then runs until Black makes its move and stops its clock, once again starting White’s clock. Only the time that accrues on White’s clock is relevant to acquiring PTA.

The PTA calculation is concerned only with those periods of time when CIPO can examine the application, such that any delay is wholly attributable to CIPO. Accordingly, as discussed in greater detail herein, the applicant’s behaviour will have little bearing on PTA.

Eligibility for PTA and duration of the additional term

There are two prerequisites that must be met before a patent can be eligible for PTA.

First, the patent must be based on a Canadian patent application having a filing date on or after December 1, 2020. The Canadian filing date of a PCT national phase application is deemed to be the PCT international filing date, and the filing date of a divisional application is deemed to be filing date of the earliest parent application.

Second, the patent must issue after the date determined in accordance with the following table:¹

The additional patent term is calculated by determining the number of days taken for the patent to issue beyond the date determined in accordance with the table above, and then subtracting the (non-overlapping) sum of 38 periods of time enumerated in the PTA rules.³ These 38 periods cover essentially every instance in which the applicant could (but did not) take action to comply with a requirement of the Patent Act or Patent Rules and encompass matters ranging from delay in submitting the application fee, a translation, a priority document, or a response to an Examiner’s Report, through to delay involved in appeals through the courts.

The applicant is afforded no grace period or minimum time for response. Every day attributable to the applicant is counted. For example, if an Examiner’s Report issues and the applicant files its response the next day, that is already one day to be subtracted in the PTA calculation. This is consistent with the overarching principle that the PTA calculation measures the time that CIPO has the application in hand for processing and is not waiting for the applicant to act.

The additional term begins on the expiry of the normal 20-year term of the patent, provided the patent remains in force at that time.⁴

Most applicant delay is irrelevant to PTA

Although all applicant delay is subtracted in the PTA calculation, and there are no grace periods, applicant delay is ultimately largely irrelevant and should not result in reduced PTA. Delay by the applicant will result in delay in grant of the patent by CIPO, and the two are offset against each other.

Applicant delay that is most difficult to avoid should not result in reduced PTA. This includes steps taken by the applicant during active substantive examination, such as responding to Examiner’s Reports or paying the final fee (issue fee) after the application has been allowed. Even though it will take the applicant time to prepare its response to an Examiner’s Report or assess whether the final fee should be paid, delay by the applicant should be offset by corresponding delay in the grant of the patent.

For example, an applicant might respond to an Examiner’s Report the day after it issues (very difficult) or instead on the final four-month deadline for response (fairly routine). In the latter case, the application is returned to the Examiner’s queue four months later and, everything else being equal, the patent likely also will issue four months later than had the applicant responded immediately. The applicant’s four-month delay in responding to the Examiner’s Report is subtracted from the additional four months it took for the patent to grant, such that the applicant’s delay has no effect on PTA.

Even if the applicant delays very substantially during substantive examination, the result is the same. Perhaps instead of responding to the Examiner’s Report on the deadline, the applicant allows the application to become abandoned and only reinstates it 12 months later, responding to the Examiner’s Report at that time. Again, this additional 12-month period is added to the pendency of the application, and the patent issues 12 months later than it otherwise would have. The applicant’s further 12-month delay is subtracted from CIPO’s corresponding 12-month delay in granting the patent, the net result being zero.

In limited circumstances, applicant delay could result in a reduction of accrued PTA. This includes applicant delay in completing formal requirements that should not affect the total time it takes CIPO to process the application and issue a patent. For instance, if, prior to requesting examination, the applicant delays filing a required translation of the application into English or French, delays submitting a required priority document, or delays paying a maintenance fee, none of these delays should result in delay in grant of the patent—they all occurred and will be resolved before substantive examination commences. Yet they would be deducted in the PTA calculation. Fortunately, most such potential delays concern matters that are in the control of the applicant and are readily (and usually) avoided.

To avoid loss of potential PTA, applicants should aim to file patent applications complete, leaving no formal requirements outstanding, and avoid delay in complying with any CIPO requirements that arise. But the delay that is most difficult to avoid (delay in responding to Examiner’s Reports or paying the final fee) should not have a negative impact on the PTA calculation.

Ultimately, consistent with the chess clock analogy described above, PTA is concerned only with the total time CIPO has the application in its hands for processing. Unreasonable delay by CIPO results in entitlement to PTA. Delay by the applicant is mostly of little consequence and is taken into account simply to calculate the total time the “ball was in CIPO’s court” to process the application and grant the patent.

Deferring examination to maximize PTA

Practice tip: To maximize the opportunity for PTA, defer requesting examination so that three years from the examination request expires later than five years from the filing date or five years from entry into the national phase, as applicable.

The examination request and payment of the examination fee may be deferred up to four years from the filing date of a Canadian patent application⁵ and many applicants defer the examination request until close to the final deadline. Deferral of examination can be relevant to the PTA calculation.

Delay in requesting examination is one of the 38 types of delay subtracted in the PTA calculation.⁶ For instance, if the applicant delays the examination request in a PCT national phase application by 12 months after national phase entry, that 12-month delay is subtracted in the PTA calculation. This would also be the case if the applicant delayed the examination request by 12 months after the filing date of a non-PCT application. This likely does not matter greatly, as delay in requesting examination should also result in delay in the patent issuing, the two canceling each other out.  

But there are certain circumstances in which, if the examination request is to be deferred, it should be deferred long enough to benefit from an exception in the PTA Rules as to the periods of time to be subtracted in the PTA calculations. Applicant delay during the period before examination is requested is not subtracted in the PTA calculation if:

1. In the case of a PCT national phase application, three years from the date of the examination request is later than five years from the date of national entry.
2. In the case of an original Canadian patent application that is not a PCT national phase application, three years from the date of the examination request is later than five years from the filing date. 
3. In the case of a divisional application, three years from the date of the examination request is later than five years from the “presentation date” of the divisional application.⁷
   

Stated differently, when three years from the date that examination is requested is the date that determines eligibility for PTA, no periods of applicant delay occurring before examination was requested are subtracted in the PTA calculation.

For the typical PCT national phase application claiming Convention priority to a priority application filed close to 12 months before the PCT filing date, this requirement will be met when the examination request is deferred the full four years from the PCT filing date (i.e. the maximum deferral permitted).

In the case of an original non-PCT application, this requirement will be met if the examination request is filed more than two years from the filing date. As the examination request may be deferred four years from the filing date, this condition can readily be met.

It will likely be difficult to defer examination in a divisional application to meet this condition, as examination must be requested within the later of four years from the original parent filing date and three months from the divisional application presentation date, so three years from the date examination is requested rarely can be later than five years from the presentation date because divisional applications are often filed years after the parent application was filed.

In sum, deferring the examination request should not have a negative impact on PTA and in many cases may have a positive impact, shortening the time in which CIPO must examine and issue the patent, and eliminating deductions from the PTA calculation for applicant delay occurring before examination is requested (e.g. delays in filing a translation or priority document). From the PTA perspective, the applicant is likely better off when examination is substantially deferred such that the PTA calculation is based on the patent having granted more than three years from the date examination was requested.

Issuance of a third Examiner’s Report or filing a Request for Continued Examination effectively terminates accrual of PTA

Practice tip: Because issuance of a third Examiner’s Report or filing a Request for Continued Examination effectively terminates potential accrual of PTA, applicants should consider making early amendments that facilitate compact prosecution.

Amendments to the Patent Rules that came into force on October 3, 2022 introduced the requirement that the applicant submit a Request for Continued Examination (RCE) and pay the associated official fee in order to respond to the third Examiner’s Report. In the third Examiner’s Report, CIPO must notify the applicant of this RCE requirement. This provision applies only to applications in which examination was requested on or after October 3, 2022.

The applicant must also file an RCE if the applicant wishes to re-open prosecution after a notice of allowance has issued, and this requirement applies irrespective of when examination was requested. 

These provisions came into force together with new rules requiring payment of excess claim fees and are all part of a rules package enacted in contemplation of the new PTA system. These rules encourage the applicant to reduce the number of claims and Examiner’s Reports to avoid payment of additional official fees. This promotes compact prosecution and reduces the likelihood that PTA will be granted.

Under the PTA Rules, the following periods of time are subtracted in the PTA calculation:

1. The period from the date CIPO notifies the applicant that an RCE is required (e.g. in the third Examiner’s Report) until the date the RCE is filed (e.g. with the response to the third Examiner’s Report).
2. The period from the date the first RCE is filed (e.g. when responding to the third Examiner’s Report or when re-opening prosecution after allowance) to the date the final fee (issue fee) is paid.
3. If examination was requested prior to October 3, 2022, the period from the date of the third Examiner’s Report to the date the final fee is paid.¹⁰

Taken together, the effect of these provisions is that the entire period from the earlier of the issuance of the third Examiner’s Report or the filing of the first RCE until payment of the final fee is subtracted from the PTA calculation.
As a consequence, difficult or complex applications that issue only after extensive prosecution (or even after review by the Patent Appeal Board or on appeal to the courts) are unlikely to benefit from significant PTA.¹¹ If a third Examiner’s Report is issued, any further delay in allowance of the application becomes irrelevant to PTA.

Likewise, PTA accrual ends if the applicant files an RCE at any stage in prosecution earlier than in response to the third Examiner’s Report. For instance, an application could be allowed without CIPO issuing an Examiner’s Report. If the applicant then wanted to amend the claims, it would be necessary to file an RCE, and the entire time between the RCE and payment of the final fee would be deducted in the PTA calculation, even if CIPO delayed significantly in the interim.

Few patents will benefit from significant PTA

Because PTA concerns only the time when “the ball is in CIPO’s court” to examine the application, and potential accrual of PTA effectively ends with issuance of a third Examiner’s Report, it is possible to determine the minimum amount of time CIPO will have to complete a few basic steps in examination and avoid the possibility of any PTA being granted.

In all cases, CIPO will have a minimum of a cumulative total of 36 months to carry out the following tasks:

• Issue the first Examiner’s Report after examination is requested
• Issue the second Examiner’s Report after applicant’s response to the first Examiner’s Report
• Issue the third Examiner’s Report or Notice of Allowance after applicant’s response to the second Examiner’s Report
• Issue the patent after payment of the final fee
  

Based on CIPO’s current published performance targets and customary processing times, in 90% of cases the above steps should be completed within a cumulative total of 39 months for an application in the biotechnology or electrical divisions, where the backlogs are highest, and examination is slowest. In other disciplines, these tasks should be completed within 33 months.¹² In fact, the average time between the request for examination and grant of the patent in the period from 2017-2024 was only 31.7 months, including the time taken by the applicant, and which is not counted towards PTA.¹³  

It therefore appears likely that few applications will qualify for any or significant PTA, as CIPO will usually be able to carry out the requisite steps in substantive examination in less than the minimum 36 months required before any PTA can accrue. Indeed, the Regulatory Impact Analysis Statement (RIAS) accompanying the final regulations suggests that the government expects that PTA applications will be filed in no more than 0.5% of granted patents.¹⁴

PTA application procedure

An application for PTA must be filed by the patentee within three months after the date a patent is granted. The application fee is $2,500 ($1,000 for a small entity).¹⁵ This is a substantial fee, when one considers that that the sum of the filing fee, examination fee, and final fee is only $2173.¹⁶

Only patents issued after December 1, 2025 can be eligible for PTA, and no application for PTA will become due before March 2026.¹⁷

CIPO will send the patentee a notice with a preliminary determination of the duration of PTA. The patentee may make observations regarding the preliminary determination within two months of the notice. CIPO will then issue a certificate of additional term or dismiss the application, in either case providing reasons for the determination of the additional term or for dismissing the application.¹⁸

Maintenance fees during PTA term

Annual maintenance fees are payable on Canadian patent applications and patents from the second through nineteenth anniversaries of the filing date. 

Further annual maintenance fees of $1,000 ($400 for a small entity)¹⁹ are required to maintain a patent in force during the additional PTA term. 

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

The Commissioner of Patents can 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.²⁰

An action may be brought in Federal Court for an order shortening (but not lengthening) the duration of the additional term granted for a patent.²¹   

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 CSP term commences on the expiry of the 20-year patent term. 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 due to PTA.²²  

Preliminary PTA calculations

Given the substantial official fee of $2500 for a PTA application and the likelihood that few patents will qualify for PTA, patentees may wish to perform their own preliminary calculations using the guidance provided in the Appendix to this article. In many cases, it should be possible quickly to rule out the prospect that PTA would be granted, avoiding the need to pay the official fee to have this confirmed by CIPO.

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.