In Matco Tools Corporation v Canada (Attorney General), 2025 FC 118 (Matco Tools), the Federal Court found that a decision by the Commissioner of Patents to refuse to reinstate a patent application following the failure to pay a maintenance fee was unreasonable for adopting an inappropriate approach to assessing due care, failing to consider all the circumstances that led to the failure to pay the maintenance fee, and disregarding facts provided by the applicant.
Key takeaway: The Federal Court set out a two-stage framework that provides an applicant or patentee an opportunity to show that the due care required by the circumstances was taken: (1) prior to the original maintenance fee deadline; and/or (2) after receiving notice from the Canadian Intellectual Property Office (CIPO) that a maintenance fee was missed. Provided that due care was taken at either time, an application should be reinstated or the deemed expiry of a patent reversed. The framework should provide greater flexibility for applicants and patentees and ensure that the focus of the due care inquiry remains on the appropriate issues and parties.
The due care standard
On October 30, 2019, the Patent Act and Patent Rules were amended to bring the Patent Law Treaty into force in Canada. The most consequential changes have proven to be the handling of missed maintenance fee payments, requiring in some instances a showing of “due care” by the applicant or patentee to excuse a missed payment. A detailed discussion of the due care standard can be found in our article “Canadian patents: establishing ‘due care’ after failure to pay a maintenance fee”.
CIPO has adopted an exacting standard when assessing whether the due care required by the circumstances was taken. Notably, less than 15% of the over 300 CIPO final decisions have concluded with a finding of due care. CIPO final decisions can be appealed to the Federal Court, and Matco Tools is the second decision of the Court regarding due care.
The first due care decision by the Federal Court reflected CIPO’s high standard. In Taillefer v Canada (Attorney General), 2024 FC 259 (Taillefer), the Federal Court dismissed an application for judicial review of the Commissioner’s refusal to reverse the deemed expiry of a patent, finding that the Commissioner’s decision to refuse to reverse the deemed expiry after a maintenance fee was missed due to the patentee’s spam filter preventing the patentee from receiving correspondence from the Canadian agent was not unreasonable. The patentee’s appeal was dismissed by the Federal Court of Appeal (Taillefer v Canada (Attorney General), 2025 FCA 28).
The circumstances that led to the failure to pay the maintenance fee in Matco Tools
Matco Tools Corporation (Matco) is the applicant for Canadian patent application no. 3086194 (the Application). As is often the case for Canadian patent applications, Matco relies on multiple parties to handle different aspects of the Application, namely:
- The Canadian Agent;
- US Counsel; and
- An annuity service provider, Dennemeyer Group (Dennemeyer).
Dennemeyer was responsible for paying maintenance fees based on instructions from Matco, while US Counsel had instructions from Matco that they were “to take no further action […] with regard to payment of […] maintenance fees”, and the Canadian Agent was instructed by US Counsel that maintenance fees would be handled by a third-party service provider. However, when responsibility for payment of maintenance fees was transferred to Dennemeyer from a different annuity service provider, a data migration error prevented the Application from being entered into Dennemeyer’s database. This was noted in an automatically generated error notice provided to Matco but was missed by the individual at Matco responsible for instructing Dennemeyer. As a result, the 2022 maintenance fee was not paid by the original deadline.
CIPO sent a Commissioner’s Notice – Maintenance Fee for a Patent Application Not Paid (the Commissioner’s Notice) to the Canadian Agent, who forwarded it to US Counsel. Based on their instructions to take no further action in respect of maintenance fees, US Counsel did not send the Commissioner’s Notice to Matco. The maintenance fee and late fee therefore were not paid prior to the deadline, and the Application became abandoned.
The Commissioner’s reasons for refusal
The Commissioner refused Matco’s request to reinstate the application, focusing on the fact that US Counsel did not forward the Commissioner’s Notice to Matco; this despite acknowledging that US Counsel had instructions “to take no further action […] with regard to payment of […] maintenance fees”. The Commissioner suggested that the failure to forward the Commissioner’s Notice was a communication issue and questioned whether the importance of the notice was relayed to US Counsel by the Canadian Agent. While the Commissioner briefly questioned what was done prior to the original maintenance fee deadline, this period of time received little attention, with the Commissioner concluding that the data migration error prior to the Commissioner’s Notice was not relevant since it could have been cured if the Commissioner’s Notice had been forwarded to Matco.
The Federal Court’s decision
The Federal Court set aside the Commissioner’s decision and returned the Application to CIPO for reconsideration by a different person, if possible. In doing so, Justice Zinn noted that at least two aspects of the Commissioner’s decision point to the decision as being unreasonable for lacking “justification, transparency and intelligibility,” namely:
- The Commissioner’s conclusion that the initial data-migration error is not relevant to the assessment of whether due care was taken; and
- The Commissioner’s statement that no explanation was provided as to why the Commissioner’s Notice was not forwarded to Matco.
Significantly, regarding the first point, Justice Zinn set out a framework for assessing whether an application was deemed abandoned despite the due care required by the circumstances having been taken.
First, it is necessary to ask what caused the failure to pay the maintenance fee by the original deadline—i.e. to identify the “Proximate Cause” of the failure to pay the maintenance fee in the first place. Once the Proximate Cause has been identified, the inquiry shifts to assessing whether due care was taken to avoid the Proximate Cause. If due care was taken to avoid the Proximate Cause, then the application should be reinstated.
Second, if due care was not taken to avoid the Proximate Cause, then it may be appropriate to assess whether due care was taken after the missed deadline to ameliorate the effect of the Proximate Cause prior to the application being deemed abandoned. If due care was exercised at this later juncture, then reinstatement may still be justified.
Importantly, Justice Zinn noted that neither paragraph 166M of WIPO’s Receiving Office Guidelines nor CIPO’s Due Care Observations policy document, guidance that is routinely relied on by CIPO when assessing due care submissions, “recommend that the Commissioner may disregard an initial root error (the Proximate Cause) simply because the final notice offers a subsequent opportunity for correction.” Justice Zinn also highlighted that “[a] robust due care inquiry should cover the entire chain of events, from the earliest root cause to the final opportunity for correction.”
Regarding the second point noted above, Justice Zinn found that the Commissioner’s conclusion disregarded Matco’s submissions, which had expressly noted that the Canadian Agent would communicate only with US Counsel, and that US Counsel had no knowledge of the original error and was under strict instructions that Dennemeyer alone was responsible for payment of the maintenance fees.
Analysis
The framework set out by Justice Zinn in Matco Tools addresses a common theme in CIPO’s due care decisions—disregarding actions taken prior to the maintenance fee deadline and focusing only on the handling of the Commissioner’s Notice.
However, as noted by Justice Zinn, focusing on the handling of the Commissioner’s Notice can result in faulting a party that is not responsible for maintenance fee payments, and overlooks the impact of an error made prior to the issuance of a Commissioner’s Notice.
Focusing on the handling of the Commissioner’s Notice also disregards the complexities of the maintenance fee regime, which permits any authorized person to pay the maintenance fee for a patent or application. Where there are several parties involved, as there were in Matco Tools, there can be confusion not only as to whether a maintenance fee should be paid or has been paid, but also to who should be paying.
Overall, the two-stage framework set out in Matco Tools provides greater clarity for applicants and patentees as to what may be required to establish that due care was taken and should ensure that all circumstances relevant to the missed maintenance fee payment are considered.
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.