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"What we heard" report on the Canadian Intellectual Property Office fee adjustment consultations

From: Canadian Intellectual Property Office

August 2022

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Introduction

Canada's intellectual property (IP) ecosystem relies on, and benefits from, services provided by the Canadian Intellectual Property Office (CIPO). CIPO provides services related to the examination, granting and registration of IP rights, thus covering the entire IP rights lifespan, from the initial filing to the expiration of the right. These services cover a range of IP rights: patents, trademarks, industrial designs, copyright, official marks and geographical indications.

The fees for CIPO's IP services have not been substantively updated since 2004 and thereby have not been adjusted for the impact of 18 years of inflation. This situation has resulted in a structural deficit, where revenues from fees no longer cover the costs required to deliver services. To address this challenge, CIPO has proposed increasing fees by 25% in an effort to catch up with the near 30% increase in inflation since 2004.

The proposed fee adjustment is central to supporting Canada's IP Strategy, meeting growing demand, fulfilling trade and treaty obligations, providing internationally comparable services and addressing the critical capacity and technological investments needed to provide improved services to CIPO's domestic and international clients. This report summarizes the feedback received from clients and stakeholders during CIPO's public consultation on its draft fee adjustment proposal.

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Objective

The goal of CIPO's 2022 fee adjustment consultation was to solicit stakeholder feedback on a draft proposal to increase most fees by 25% in light of CIPO's structural deficit, increasing inflation and the need for service improvements. The consultations were designed to collect feedback from a range of clients and stakeholders on the general approach and specific proposed fee adjustments. This consultation feedback will be considered prior to the fee proposal being finalized.

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Consultation approach

CIPO launched an online public consultation on , for a period of 30 days. During this time, CIPO reached out to approximately 5,000 clients and stakeholders to solicit their feedback through the following channels:

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Target audience

The consultation was open to all members of the public. However, CIPO also proactively solicited input from the following core client and stakeholder groups:

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Primary feedback mechanisms

Most of the feedback received by CIPO was through the online survey made available on the CIPO website, which allowed CIPO to collect solicited respondent feedback in the form of structured responses to an electronic questionnaire.

The questionnaire had three sections:

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Consultation respondents

Consultation respondents provided responses through three points of collection.

Online survey

CIPO received 134 responses to an online questionnaire along with an additional 355 free-form comments to the survey's open-ended questions. The demographic breakdown is shown below.

Client segments

Place of residency

Underrepresented groups

Email submissions

CIPO also received email submissions from an IP agent law firm and 3 industry associations:

Meetings with key stakeholders

To complement the feedback collected through the online questionnaire and email submissions, CIPO organized virtual meetings with 3 key business stakeholders to discuss the published draft fee adjustment proposal:

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Findings

This report of findings offers a high-level thematic overview of the feedback, ideas, opinions and perspectives submitted throughout the consultation process. It specifically outlines key findings related to CIPO's general approach to fee adjustments and presents a discussion on specific proposed changes and a summary of discussions with key stakeholders.

Section 1: Discussion on CIPO's general approach to raising fees

Clarity of CIPO's messaging

In general, has CIPO provided clear reasons as to why its adjusting fees ?
Segment Yes No
IP agents, n = 83 69% 31%
IP professionals (non-agent), n = 29 76% 24%
Represented and unrepresented clients, n = 8 Footnote * Footnote *
Jurisdiction Yes No
Canada, n = 119 68% 32%
All respondents, n = 134 70% 30%

The majority of survey respondents (70%) understood the reasons why CIPO is proposing fee adjustments. Non-agent IP professionals (76%) and licensed IP agents (69%) were amongst the most likely client groups to understand CIPO's reasons.

Anticipated impact arising from adjusting fees

Do you foresee any potential impacts to you or your business arising from the introduction of the fee adjustments?
Segment Yes No
IP agents, n = 83 76% 24%
IP professionals (non-agent), n = 29 41% 59%
Represented and unrepresented clients, n = 8 Footnote * Footnote *
Jurisdiction Yes No
Canada, n = 119 68% 32%
All respondents, n = 134 67% 33%

Two-thirds of respondents (67%) indicated that they foresee potential impacts arising from the proposed fee adjustments. IP agents were the segment most likely (76%) and non-agent IP professionals were far less likely (41%) to foresee impacts. The General suggestions section of this report provides details on the foreseen impacts

Reasonableness of proposed adjustment

In general, do you find the change in fees reasonable?
Segment Yes No
IP agents, n = 83 43% 57%
IP professionals (non-agent), n = 29 59% 41%
Represented and unrepresented clients, n = 8 Footnote * Footnote *
Jurisdiction Yes No
Canada, n = 119 47% 53%
All respondents, n = 134 49% 51%

When asked if the proposed fee adjustment of 25% across-the-board change in fees was reasonable, respondents were split on their views. Almost half of respondents (49%) indicated the proposed fee adjustment was reasonable, with non-agent IP professionals (59%) being the most supportive client group. Similarly, the other half of respondents (51%) expressed some degree of non-support to the proposed fee adjustments. IP agents were the most non-supportive client group, with 57% indicating the proposed fee adjustments are not reasonable.

General suggestions

The following themes and suggestions were raised.

Rounding of fees

54 respondents, 39 of whom are licensed IP agents and 12 of whom are non-agent IP professionals, indicated a strong preference that fee adjustments be rounded to the whole dollar versus dollars and cents. This is in the interest of mitigating the administrative burden on clients and of reducing potential confusion and unintended consequences such as a loss of IP rights.

Phasing in of fee increases

51 comments, 43 of which were from IP agents and 6 of which were from non-agent IP professionals, indicated that the proposed 25% fee adjustment may be difficult for businesses to absorb, particularly for smaller and medium-sized enterprises. Financial pressures resulting from the COVID-19 pandemic were mentioned as factors. IP agents (n = 30) suggested the fee adjustment could result in fewer filings at CIPO, which could lead to less business for IP practitioners.

Foreign applications

Given that international applicants represent the majority of the filings in Canada for patent and trademark applications, a key consideration for many respondents was the potential impact of the proposed fee adjustment on the demand for IP services from foreign clients. These comments were expressed primarily by Canadian respondents given that there were only 2 respondents who resided in international jurisdictions. Thus, the below commentary is based upon the perceived impact to international clients from the perspective of Canadian IP agents who have clients abroad.

Overall, 72 of the IP agent respondents had international clients, with 64% of them foreseeing an impact on their foreign client base. 32 IP agents submitted 46 comments voicing opinions that a large increase may serve as a deterrent to international applications.

The notion that Canada is a jurisdiction of secondary filing was repeatedly raised. Consequently, international clients will always file in larger international jurisdictions first before they consider filing in Canada. In this context, many agents were concerned that higher fees overall could serve as a potential deterrent to international applicants.

Furthermore, 26 IP agents raised the point that Canada is a smaller market. Consequently, IP rights have a lesser perceived value compared with larger international markets. They recommended that the small size of the Canadian market be considered when making fee adjustments in order not to deter international applicants.

A few shared the insights that, in larger markets such as the United States, IP applications are subject to a more rigorous examination process. Therefore, higher costs are to be expected given the more labour-intensive processes at international IP offices.

Overall, the general theme was that the value proposition for filing in Canada could be negatively impacted by significantly higher fees. This concern was frequently raised for consideration.

Linking fees to service standards

The topic of CIPO's service was raised repeatedly throughout the consultation. It was top of mind for many when the proposal for CIPO to raise its fees was announced. Respondents submitted 39 comments on the subject of CIPO's services, with the vast majority coming from IP agents (n = 37).

As mentioned earlier, there was mixed support for the proposed fee adjustment of 25%. Several respondents (n = 6) submitted supportive comments on the proposed fee adjustment, indicating an opportunity for CIPO to generate the necessary funds to improve services through initiatives such as aligning with international standards, addressing service delivery challenges and introducing modern IT systems.

Additionally, 14 respondents expressed concern that CIPO was planning to raise fees by a large margin at a time when service was perceived to be declining in some areas of the business. Most notably, they cited prolonged wait times for trademark examination. It was clear that some clients would have preferred that CIPO address its service delivery challenges before introducing increased fees.

Regardless of the views towards the proposed adjustment and its timing, it was clear that clients and stakeholders are expecting to see tangible service improvements arising at CIPO as a result of the increase in fees.

Section 2: Discussion on adjustments to specific fees

CIPO solicited feedback to determine the level of comfort with the adjustments being proposed across specific services. The summary below focuses on responses for the core offerings of trademark, patent and industrial design services, which represented the majority of the feedback collected.

Trademark fees

The trademark fee schedule has 16 fees. Overall, 24 respondents reviewed the proposed adjustments to the specific fees in the trademark schedule. Approximately half (51%) found the proposed fee adjustments to trademark fees reasonable on average, which aligned with the overall mixed support for the proposed 25% adjustment.

It was clear that many were comfortable with increases to certain trademark fees more so than other fees. The fee adjustments that drew the most opposition were related to services perceived to be less labour intensive, such as trademark renewals.

Patent fees

The patent fee schedule has 44 fees. Overall, 18 respondents commented on the proposed adjustments to the changes to the patent fee schedule.

Relatively speaking, clients were more sensitive to the proposed adjustments to patent fees when compared with other service lines. With respect to the planned adjustment, the fee area that drew the most opposition was patent fees in respect of international applications. Here, only one-quarter of respondents (25%) found the proposed fee adjustment to be reasonable.

Several respondents indicated that the fees for patent examination, assignments and patent cooperation treaty applications are already considered to be expensive and thus perceived the proposed 25% increase to be unreasonable.

Industrial design fees

The industrial design fee schedule contains 12 fees. Overall, 11 respondents reviewed the proposed adjustments to the specific fees in the industrial design schedule.

On average, most found the proposed 25% adjustment to industrial design fees to be reasonable. Relatively speaking, the 11 respondents who completed this part of the questionnaire seemed more open to an increase to industrial design fees compared with other services, such as patents and trademarks, with over two-thirds of respondents (66%) indicating the fee adjustments to industrial design fees were reasonable.

There was, however, sensitivity to the degree of the price adjustment. When asked whether a 40% increase would be reasonable, the vast majority of respondents (82%) opposed the idea, citing negative impacts to demand for industrial design services and poor timing (note that the 40% adjustment proposal reflects the true cost recovery of providing Industrial design services).

Section 3: Discussion on adjustments with key stakeholders

CIPO held meetings with the Canadian Bar Association, the Fédération internationale des conseils en propriété intellectuelle and the Intellectual Property Institute of Canada in order to solicit more detailed feedback on the proposed fee adjustment.

Key stakeholders expressed their views on the overall plan to increase fees and on the degree of and timing of the increase and provided specific feedback by service type. Notably, many of the themes raised by key stakeholders further echoed comments received through the online survey.

Overall, stakeholders support CIPO's plan to adjust fees and appreciate that the accumulated surplus would give CIPO the continual investments needed to improve its service standards.

In addition to offering their general support, they

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Conclusions

CIPO successfully obtained feedback from a wide range of client groups and stakeholders to help inform decisions about administering proposed fee adjustments as CIPO strives to overcome its structural deficit and invest in improving its IP services.

Most consultation respondents understood the reasons CIPO is proposing to increase fees and felt that that CIPO was providing clear messaging on the fee increases. A significant number of respondents were supportive of the overall proposal to increase fees, with many recognizing that increased fees could improve services.

For those who voiced opposition, many agreed with the plan to increase fees in principle but opposed how the fee increases were to be administered. Many voiced opinions that the increase could deter the demand for IP services, particularly from international applicants.

Respondents were clear that the fees would be less burdensome and more absorbable if CIPO were to introduce adjusted fees rounded to the whole dollar and phased in over multiple years.

With respect to feedback received from the key stakeholders, they expressed their support for the proposed fee adjustments to increase fees 25% by 2024 while echoing many of the same comments received from survey respondents. They understood that service improvements could not occur until CIPO's fees were increased to account for many years of inflation.

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Next steps

The information received through this consultation has been documented and will be considered as the CIPO fee adjustment proposal is finalized and regulations are developed. There will be further opportunities for public input when the proposed fee adjustments are pre-published in the Canada Gazette, Part I.

Further, CIPO's Regulatory Impact Assessment Statement will explicitly convey how stakeholder feedback was taken into consideration, prior to finalizing the fee proposal.

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