Earlier this year, two decisions were released — one from the Federal Court and another from the Federal Court of Appeal — which offer valuable guidance on the “due care” standard under the Canadian Patent Act.
Matco Tools Corporation v. Canada (Attorney General), 2025 FC 118
The Federal Court’s decision in Matco Tools Corporation addresses concerns about how the Canadian Intellectual Property Office (CIPO) is assigning responsibility when determining due care.
In Canada, if a maintenance fee for a patent application is not paid by the due date, it can be paid by the late due date along with payment of a late fee. If the maintenance fee and the late fee are not paid by the late due date, the application becomes abandoned and can only be reinstated if the failure to pay the maintenance fee occurred despite due care. The process is similar for patents.
In many of the due care reinstatement decisions, CIPO has apportioned a seemingly excessive duty of care to parties with only a minor role handling the maintenance fees. Further, CIPO has placed a disproportionate emphasis on the reason for missing the late fee due date with little consideration given to the reason that the original due date was missed.
Background
Matco Tools Corporation (“Matco”) relied on a third-party provider, Dennemeyer Group, to manage its patent maintenance fees. During a transition from its previous provider, Computer Packages Inc., a data migration error caused its Canadian Patent Application No. 3,086,194 (the “194 Application”) to be omitted from Dennemeyer’s system. As a result, Matco missed a maintenance fee deadline, and the application was deemed abandoned.
Although CIPO issued a notice regarding non-payment of the maintenance fee (the “Notice”), Matco was not made aware of this until after the six-month grace period specified in the notice. This was in part due to Matco’s management system for its patent portfolio, which involved three different parties:
- A Canadian patent agent, who had no direct communication with Matco and received instructions solely from US counsel. The Canadian patent agent was explicitly prohibited from managing maintenance fees.
- US counsel, who was explicitly instructed not to take action with regard to the payment of maintenance fees; and
- Third-party service providers, who were exclusively responsible for managing maintenance fees.
The Canadian patent agent received the Notice and transmitted it to US Counsel. However, the Notice was not forwarded to Matco in view of US Counsel’s instructions “to take no further action in these matters with regard to payment of annuities and maintenance fees.”
When Matco was later made aware of the abandonment, it requested reinstatement, attributing the failure to an unforeseen data migration error. The Commissioner of Patents denied reinstatement, ruling that Matco had not demonstrated “due care” as required under section 73(3) of the Patent Act.
Decision
The Federal Court set aside the Commissioner’s decision and remitted the matter for redetermination by a different decision-maker. It also permitted Matco to provide further submissions on the due care measures it had implemented.
In its decision, the Court reiterated that the “due care” standard under section 73(3) of the Patent Act requires an applicant to demonstrate that it took all measures that a reasonably prudent applicant would have taken, given the particular set of circumstances to avoid the failure – and despite taking those measures – the failure nevertheless occurred.
The Court outlined a structured, two-stage inquiry that the Commissioner should undertake when assessing “due care”:
- The Commissioner must determine the proximate cause of the failure to pay the maintenance fee and evaluate whether the applicant and/or its representative exercised due care to avoid that cause. If due care is demonstrated at this stage (i.e. at the time the maintenance fee was due), the application should be reinstated.
- If not, the Commissioner must proceed to the second stage (i.e. at the time the late fee was due), examining whether the applicant took due care after the failure to mitigate its effects before the application was deemed abandoned
The Court found that the Commissioner failed to conduct this two-stage inquiry, resulting in an incomplete evaluation of Matco’s efforts. The Commissioner focused too narrowly on Matco’s post-Notice actions, disregarding the broader chain of events, specifically the data migration error and the adequacy of Matco’s oversight and management protocols.
The Court also found that the Commissioner placed an undue burden on the US Counsel, effectively faulting a party that was not authorized to handle the matter, while overlooking the errors made by the third-party service provider that was authorized to manage it.
By overlooking these factors, the Commissioner’s decision did not fully assess whether Matco exercised due care in addressing the circumstances that led to the abandonment. The Court stressed the importance of assessing due care holistically, considering both the root cause of the failure and the applicant’s subsequent actions to address it.
However, this decision has been appealed, and a decision of the Federal Court of Appeal is currently pending.
Taillefer v. Canada (Attorney General), 2025 FCA 28
Whereas Matco addresses issues relating to when due care is decisive and how the responsibility for different actors should be weighted, in this case, the Federal Court of Appeal reaffirmed that the due care standard under the Patent Act is a high threshold to meet.
Background
The issue of due care arose after Canadian Patent No. 2,690,767 was deemed expired due to a missed maintenance fee. For years, Taillefer, the patent holder, relied on email communications from his patent agent to receive reminders and payment instructions. However, an email filtering issue caused the agent’s messages to be redirected to Taillefer’s junk mail folder, leaving him unaware of the missed deadline until after the period had passed to pay the maintenance fee along with a late fee.
Taillefer applied for reinstatement under section 46(5) of the Patent Act, arguing that the failure to pay occurred despite taking appropriate due care. The Commissioner of Patents denied the request, concluding that neither Taillefer nor his agent had taken sufficient precautions to ensure the fee was paid on time. The Federal Court upheld this decision, emphasizing that patent holders must implement back up systems or have alternative communication mechanisms in place to mitigate the risk of such failures.
Taillefer appealed, challenging the Commissioner’s interpretation of the due care standard and arguing that the breakdown in communications was unforeseeable.
Decision
The Federal Court of Appeal dismissed Taillefer’s appeal, affirming that the Commissioner reasonably applied the due care standard under section 46(5) of the Patent Act. The Court found that the Commissioner’s interpretation aligned with the international guidelines set by the World Intellectual Property Organization (WIPO). The Commissioner had adopted a standard whereby the patentee must take all measures that a reasonable patent holder would have taken in the circumstances to avoid the failure.
The Court agreed that due care would have required the patent agent to implement additional safeguards beyond a single email-based communication method to ensure the patentee was aware of the maintenance fee deadline. Due care would have also required the patentee to ensure that his chosen method of communication with his agent remained effective. The failure to establish these measures weighed against Taillefer’s claim of due care.
Commentary
Together, these decisions emphasize that although there is some question about when and to whom to apply the due care standard, the applicant or patentee is held to a strict standard in order to demonstrate due care.
Therefore, when managing patent portfolios and deadlines, it is important to have effective communication protocols in place between internal teams, external counsel, and service providers to ensure that important notices are escalated and addressed promptly. Multiple communication methods, such as secondary email addresses, phone calls, or physical notices, should be established. Applicants and patent holders should also implement independent safeguards such as docketing software, regular audits, and clear oversight procedures. Maintaining detailed records of these processes, including any corrective actions taken, can also assist with demonstrating due care.
If you have any questions about due care or require assistance in navigating reinstatement procedures, please contact Jonathan Pollack at info@pckip.com.
PCK IP is a leading North American intellectual property firm based in Canada, specializing in the preparation, prosecution, and strategic management of patent and trademark portfolios for global markets. Our team of seasoned patent agents, engineers, scientists, and IP lawyers supports clients across diverse technologies, with expertise in coordinating cross-border IP strategies. Contact us today to explore how we can help secure and manage your intellectual property.
The contents of this article are provided for general information purposes only and do not constitute legal or other professional advice of any kind.