Canada to introduce new patent term adjustment regime to comply with CUSMA

Canadian patents may be granted an additional patent term due to unreasonable delays in the patent ‎prosecution process. ‎

On June 22, 2023, the federal government passed Bill C-47, which includes amendments to the Patent Act to implement a new patent term adjustment (PTA) regime. The new regime is intended to compensate patentees for unreasonable delays by granting them an additional patent term if conditions are met.

Background

The proposed amendments were introduced as part of Canada’s obligations under the Canada-United States-Mexico Agreement (CUSMA), which came into force on July 1, 2020. CUSMA requires Canada to adopt a PTA system by January 1, 2025, whereby patent owners are compensated for “unreasonable delays” in the processing of their patent applications. CUSMA considers a delay unreasonable when the patent office does not grant a patent within five years after a patent application is filed or within three years after a patentee requests ‎examination of the patent application, whichever is later. ‎

The PTA system will be provided for in new sections 46.1 to 46.4 of the Patent Act. However, a number of details regarding the framework to practically implement the system will be addressed by future regulations. The Canadian Intellectual Property Office (CIPO) sought preliminary views on elements of the proposed regulatory framework and launched a public consultation period, which ended on September 8, 2023. It is expected that the draft regulations will be published at some point next year.

The terms of the new PTA system are scheduled to come into force on or before January 1, 2025. The United States has long had a patent term adjustment regime. Mexico also has plans to introduce a PTA system to comply with its obligations under CUSMA.

The terms

Eligibility

Patents filed on or after December 1, 2020 will be eligible for an additional patent term. The patent will be granted a PTA if it was issued the later of:

• the fifth anniversary of the “applicable date” (i.e., the filing date for Canadian applications or a prescribed date for divisional and PCT national phase applications to be determined by future regulation); and
• the third anniversary from the date an examination was requested and the prescribed examination fees have been paid.

Application deadline and fees

CIPO will not automatically grant a PTA. A patentee must apply for the additional term and pay the prescribed fee within three months of the patent being issued. Patentees may also be required to pay annual maintenance fees during the PTA term. The fees and fee payment deadlines will be established by the regulations.

Duration of the additional term

The additional term begins once the regular term of the patent expires (i.e., 20 years from the filing date of the patent). The patent must remain valid until its expiry for the PTA to apply.

The PTA term will be determined by calculating the difference in the number of days between the patent’s issue date and the later of the two anniversaries mentioned above. This period may then be shortened by “the number of days to be determined under the regulations”. CUSMA states the subtracted days will account for any prosecution delays caused by the applicant, rather than the patent office. If the calculation results in a zero or negative value, a PTA will not be granted.

Reconsideration of a PTA term

After an additional term is granted, CIPO may reconsider the duration of the PTA term, but only to shorten it. Reconsideration may be initiated by the Commissioner’s own initiative or by application by any person. The application must be filed in accordance with the regulations and payment of the prescribed fee. A notice of reconsideration is also given to the patentee in accordance with the regulations. Alternatively, a person may bring an action in the Federal Court against a patentee for an order to shorten the duration of a PTA term. As such, both CIPO and the Federal Court may shorten the additional term if satisfied the duration is longer than authorized.

Certificates of Supplementary Protection

Currently, a patent term may only be extended in the form of a Certificate of Supplementary Protection (CSP), which are intended to compensate patent owners for time spent on research and delays in obtaining regulatory approval for new drugs. PTAs, on the other hand, will compensate for unreasonable delays in the grant of a patent. With the amendments, a PTA term is to run concurrently with any extension provided by a CSP.

Considerations

For the first time, patentees will be able to obtain recourse for delays in the patent prosecution ‎process. ‎However, since this imposes an obligation on the patentee to review the prosecution history to determine whether they would be eligible for a PTA, it is unclear whether this will be a worthwhile exercise for some patent applicants.

Moreover, many details of the framework to implement the PTA system will be established by future regulations, which have not yet been published. The system may still undergo changes through such regulations or additional amendments before the changes come into force. Therefore, there is still much that is unknown as we continue to wait for a finalized version.