Technical Consultation Paper on Changes to Patent Fees
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From: Canadian Intellectual Property Office
Part II: Changes to fee-related services
A) How will implementing the Economic Action Plan 2015 Act, No. 1 impact CIPO's patent schedule of fees?
The Economic Action Plan 2015 Act, No. 1 (EAP 2015), received royal assent on June 23, 2015. EAP 2015 introduces several amendments to the Patent Act in order toimprove its alignment with modern business practices and increase clarity and legal certainty for users of the patent system. Implementing these amendments is resulting in changes to two of CIPO's service offerings.
The EAP 2015 provides for a more flexible approach to the correction of errors made in documents submitted to or prepared by CIPO, consistent with the approach used for other IP rights (trademarks and industrial designs). Provisions in the Patent Act concerning the correction of clerical errors – errors introduced, for example, during mechanical transcription and are not necessarily self-evident – were repealedFootnote 4, to be replaced by regulatory provisions concerning the correction of obvious errors. This change will permit correction of errors beyond those that are strictly clerical in nature.
The EAP 2015 also amends the Patent Act to remove the provisionFootnote 5 tying the requisition of a patent issuance fee (a "final fee") to the sending of a notice of allowance, allowing for changes to the regulations in relation to the amendment after allowance process.
The current provisions create market uncertainty for rights seekers and third parties by delaying finality in the determination of a patent right, and place administrative burdens on both CIPO's clients and the patent office. This can be discouraging for businesses attempting to navigate the application process unassisted.
CIPO is not proposing to change the fees for corrections of errors and amendment after allowance from their current levels, but rather is modifying each of these services in order to strengthen IP rights for patent applicants and ownersFootnote 6. This is accomplished by reducing the administrative burden on rights holders and providing greater flexibility to make changes to patent-related records. At the same time, the new processes will provide a balance between the interests of rights holders and marketplace certainty for third parties. CIPO will also benefit by the streamlining of the processes derived from the changes. By changing the services, the existing fees are expanded in application, or apply to a different segment of CIPO's client base.
It is important to note that not all of the changes to Canada's patent regime associated with implementing EAP 2015 will have an effect on CIPO's fee structure. The following sections focus on proposed changes to fee-related services, which, due to the potential expansion of the application of these services, require a review as dictated by the UFA.
B) How did CIPO modify its services?
Preserving service offerings, improving market certainty, and reducing application pendency
With the proposed changes precipitated by EAP 2015, CIPO is introducing changes to its existing fee-based services for the correction or errors and amendments after allowance in order to make those services more flexible and responsive to client needs. At the same time, the changes are intended to reduce the time between filing of an application and the grant of a patent with the added benefit of promoting market certainty for third parties. CIPO aims to preserve its service offerings and minimize disruptions to clients by maintaining the existing fee levels associated with the current service offerings.
Correction of errors
Canada's current patent regime permits an applicant or patentee to request correction of an error in an application or patent at any time in the patent lifecycle when the error is considered to be clerical in nature. A clerical error is an error that arises in the mechanical process of writing or transcribing and excludes errors such as errors in translation. The present restriction to errors that are clerical in nature constrains an applicant's or patentee's options for correcting errors. If the applicant is the source of the clerical error, a fee of $200 is levied for the processing of the request by CIPO regardless of whether the correction is accepted or refused. In fairness to a requestor, and similar to the practices of other IPOs, CIPO does not require the payment of the correction fee to correct an error introduced by CIPO or by other IPOs.
Under the proposed regime, CIPO will move to allow for a request to correct obvious errors in a patent within 6 months of issuance of the patent. An obvious error is one that, from the perspective of a person skilled in the art which forms the basis of the patent, would be clearly incorrect in view of all of the information available in the corresponding file at CIPO on the relevant date. The fee for processing the request will remain at the current level of $200.
At the same time, CIPO is proposing other changes to the error correction scheme in order to promote earlier action by applicants in correcting their records. These changes include introducing means for making corrections during the application stage without requiring payment of a fee for errors such as errors in the naming of an applicant, errors in the name of an inventor and errors relating to priority claims. Other changes include restricting the time for making a request to correct an obvious error in a granted patent to a period within 6 months after the patent is issued. This limitation will promote earlier action by the applicants or patentees and give finality to the content of a patent record. The ability to correct errors beyond the 6-month period will be eliminatedFootnote 7.
Amendment after allowance
Canada's current regime permits an applicant to amend an application that has been determined by a patent examiner to be ready to mature to a patent but for which a patent has not yet been issued (i.e., the application has been deemed "allowable" and a corresponding notice of allowance (NOA) has been sent to the applicant).
There are two ways to amend an application following a determination of allowability:
Amendment after allowance: Within 6 months of the sending of a NOA by CIPO, an applicant may request an amendment to the application, provided that the requested amendment does not require an additional search of the prior art, would not broaden or shift the scope of the invention, and would not cause the application to not comply with the Patent Act and/or Rules in any other way. Examples of acceptable amendments include inserting the text of approved claims into the description, cleaning up language and providing clearer drawings. The current fee for requesting such an amendment is $400. This fee is levied for the processing of the request and is not refunded if CIPO determines that the proposed amendment does not meet the relevant criteria, for example if it broadens or shifts the scope of the claims. There are no limits on the number of requests to amend after allowance that can be made within 6 months of the sending of the NOA by CIPO.
Amendment via abandonment and reinstatement: If the applicant wishes to make more substantive amendments that do not meet the above criteria, for example if new claims are to be introduced or if approved claims are to be broadened in scope, the only means of introducing such amendments is to withhold payment of the final fee (required in order to issue the patent) until the time limit for payment has expired (6 months from the date the NOA is sent). After the expiry of that time limit the application becomes abandoned and the applicant must request that the application be reinstated and pay a reinstatement fee of $200 together with the final fee.Footnote 8 A substantive amendment request must be submitted along with the reinstatement request, but no additional fee is required with the amendment and the application returns to regular examination.
Under the new regime, CIPO is proposing a single, streamlined process for amending an application after allowance which will remove restrictions on the types of amendments that can be made after the sending of a NOA by CIPO, thereby eliminating the need to abandon an application in order to introduce substantive amendments. In the proposed regime, on payment of the amendment after allowance fee of $400, the applicant may file an amendment within 6 months of issue of the NOA. The amendment must be accompanied by an explicit request that the NOA be withdrawn by the Office, and the amendment will be subject to full examination. Amendments that would have been acceptable during the normal course of examination prior to the generation of a NOA will be acceptable after the NOA is sent even if the amendment requires further searching of prior art by the examiner. Applicants who permit an application to become abandoned for failure to pay the final fee will still be able to reinstate the application, but will not have the option of introducing any amendment before the patent is granted. Figure 3 illustrates the amendment after allowance process under the current and proposed regimes.
C) Fee for service proposal
In order to maintain fee levels that are competitive with those of foreign IPOs and which encourage investment in IP by small and medium enterprises, CIPO's fees are structured to promote cost-recovery over the life cycle of a patent.
Corrections of errors
CIPO currently provides the service to correct clerical errors at a financial loss since not all error correction requests that CIPO processes require a fee. From fiscal year (FY) 2012‒13 to FY 2014‒15, CIPO received an annual average of 560 requests to correct a clerical error, with an average of 144 of those requests requiring payment of the $200 request fee. Over this three-year period, the total cost to CIPO in processing all error correction requests was $592,465. The average unit cost to CIPO in processing a request to correct clerical errors, regardless of whether they are caused by the applicant or by CIPO, was $352. Total volumes of corrections represent less than 0.3% of all applications or patents eligible for correction. This is in line with, or lower than, volumes reported by other IPOsFootnote 9.
As the scope of the service is changing due to the move from correction of clerical errors to the correction of obvious errors, CIPO is proposing to maintain the current fee of $200 for processing requests in order to minimize the impact on clients who will use this service. As well, the move to correction of obvious errors is intended to remove discretion as to the nature of the error when evaluating a request. This is expected to reduce processing times and associated costs.
Amendment after allowance
Currently, the volumes of requests received by CIPO for both regular amendments after allowance and amendments via abandonment and reinstatement after allowance are low relative to the total number of applications that are allowed in a given year. On average, 660 allowed applications are subject to an amendment after allowance request per year. There are an average of 275 amendments submitted following abandonment and reinstatement after allowance; this represents an average of 15.5% of all abandonments for failure to pay the final fee (1,778), or 1% of all allowed applications (25,264) in a year. The volume of these amendments after allowance has more than doubled since 2010‒11. This is likely due to reduced availability of completed corresponding foreign prosecution ‒ often relied on by Canadian examiners in assessing the Canadian application ‒ due to decreasing application pendency (the time between filing and grant) at CIPO over this period.
The costs to CIPO of processing a regular amendment after allowance (approximately $380) are similar to the current fee charged for that service ($400). However, the costs of processing an amendment submitted via the abandonment and reinstatement process are notably higher than the fee charged for this service, which is simply the reinstatement fee ($200). Amendments submitted this way tend to be more complex, requiring more substantive examination, yet the fee to introduce amendments in this way is half that of the fee for simpler amendments that meet the criteria for an amendment after allowance. The changes to the amendment after allowance procedures are expected to better align costs and revenue for this service.
|Correction of obvious errors||
Moving from correction of clerical errors at any time to obvious errors
Eliminating corrections beyond 6 months after grant
Fee applicable only after grant
|$200 per request|
|Amendment after allowance||
Simplified amendment after allowance procedure
Expanded scope of permissible amendment after allowance
Elimination of amendment after post allowance abandonment
|$400 per submission|
As has been previously noted, CIPO's primary motives for altering its services for error correction and amendment after allowance services are to streamline each process, reduce individual application pendency and promote market certainty.
Correction of errors
The overall proposed changes to the error correction scheme are such that the impact on the costs incurred by applicants and patent holders will vary based on applicant/patentee behaviour. The changes are intended to encourage applicants to take early action to correct errors in their records at CIPO. Applicants who avail themselves of opportunities to correct errors at the application stage will avoid paying a fee. Presently, all records in relation to applications and patents in the active inventory are eligible to be corrected on request. The average number of correction requests received annually is 560, representing less than 0.14% of the total inventoryFootnote 10.
The shift from correction of clerical errors to obvious errors may enlarge the applicability of the service, allowing more clients to improve the clarity and quality of their patents. To offset potential increases in fees for clients who would rely on the new service, CIPO is providing error correction services for certain types of errors without a fee during the application stage to promote earlier action by applicants in correcting their records. Applicants who discover errors and move to rectify them prior to the proposed deadlines will avoid unnecessary fees. Limiting corrections to no later than 6 months following the grant of a patent will incentivize early action and provide certainty to third parties with interest in a subject patent. Currently, 40% of requests to correct errors in a patent are received from clients who submit their requests more than 6 months after issuance of their patent and who will therefore need to submit requests earlier, i.e., before the proposed 6-month time limit to do so. There should be no increase in direct costs to clients due to the introduction of the aforementioned changes which will permit correction of errors currently subject to payment of the $200 request fee to be made without charge.
From CIPO's perspective, the changes may result in a loss of revenue in respect of changes that remove the fee requirement for specific types of error correction. Because the volumes of requests – especially those that require the request fee – are extremely low relative to other processes such as application filing, requesting examination or paying a maintenance fee, the revenue impact to CIPO is expected to be minimal relative to overall revenues and expenses.
The nature of the service being provided (rectification of mistakes made by the user) makes it impossible to identify specific clients who will rely on the service or forecast expected volumes of requests. This is not a service that is required by all applicants as part of the normal course of seeking a patent, in contrast to services such as request for examination and payment of a maintenance fee. Further, while the move from clerical to obvious errors potentially changes the scope of errors that may be corrected, a reliable forecast of the magnitude of the effect is not practical. Finally, due to the low volume of request presently received, even a proportionally large increase (e.g., 25%) in fee-generating requests will not impact Office revenues significantly.
Table 4 shows the projected three-year revenue and costs associated with processing requests to correct obvious errors in a patent within 6 months of the date of issue. Volumes are based on the average of the prior three-year period and assume that affected clients will take note of the established time limit, take earlier action and, as a consequence, all requests will be received within the 6-month deadline following grant. As the general level of effort for correcting an obvious error is expected to be similar to that for correcting a clerical error, the average unit cost for the prior three-year period is expected to remain constant.
|Total revenue||Total cost||Variance|
Amendment after allowance
The proposed elimination of the requirement to abandon an application after allowance in order to substantially amend it will expose clients who would elect this route to an increase in fees from $200 to $400. However, these clients will benefit from the proposed regime for amendments after allowance by avoiding potential legal consequences associated with abandonment — preserving rights that could be lost through abandonment — and will have the opportunity to amend their applications immediately, without enduring a 6-month delay as is presently the case.
A client who would, under the current regime, file an amendment that meets the criteria for a regular amendment after allowance will see no change in the fee for such amendments under the modified regime. However, these clients will benefit from increased certainty that the amendments will be accepted for further examination under the new regime. Currently the amendment after allowance fee is not refunded if the examiner determines that the amendment does not meet the criteria, which has the effect of costing the client without any benefit. The client then faces the options of filing another amendment after allowance request or proceeding with an amendment via the abandonment and reinstatement process, at additional expense.
The proposed system will reduce costs for a client in this situation as the client will have the opportunity, for the payment of a single amendment after allowance fee, to submit as many amendments as required to satisfy the client and examiner while complying with the requirements of the Patent Act and Rules.
For CIPO, the change in revenue will better reflect the cost of processing more substantive amendments compared to the revenue generated by the current process for amendment via abandonment and reinstatement after sending a notice of allowance.
It is expected that CIPO's costs to process amendments after allowance will increase due to the expanded scope of permissible amendments, which may require additional searches by the examiner. At the same time, cost savings will be realized as a result of the elimination of additional processing steps required to process notification of abandonment (for failure to pay the final fee) and the subsequent reinstatement request in the case of amendments currently submitted via abandonment and reinstatement. The proposed changes to the amendment after allowance process will also have the tangential effect of normalizing the corresponding examination and processing costs, i.e., there will be a single process for entering an amendment after allowance.
As with corrections, submitting an amendment after allowance via either of the currently available processes does not occur as part of the normal course of acquiring a patent. There are no means for establishing patterns in respect of specific clients currently exploiting this route for amending applications prior to grant, nor are year-over-year volumes stable. CIPO anticipates an increase in the use of the proposed amendment after allowance option as clients have indicated a desire for a more modern approach to amending an application after allowance. Furthermore, internal efforts to reduce application inventory has resulted in a significant decrease in average application pendency which impacts the capacity to draw on the results of corresponding foreign prosecution to identify or interpret relevant prior art; applicants may be inclined to harmonize their patents across jurisdictions.
The three-year projection presented in Table 5 is based on the average volumes for amendments filed after reinstatement following abandonment for failure to pay the final fee. The analysis assumes that the volume of amendments after reinstatement following failure to pay the final fee are transferred to the proposed amendment after allowance process (with the effective cost to clients changing from $200 to $400) and will increase by 20% each year for the first three years. The projection assumes that unit costs for processing an amendment after allowance will not change.
|Total revenue||Total cost||Variance|
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