Canadian Innovation Deserves Robust Roster of Canadian Patent Agents Registered Before the USPTO

Canadian Innovation Deserves Robust Roster of Canadian Patent Agents Registered Before the USPTO

Canadian flag waving in front of the Parliament buildings in Ottawa.

Andrew Currier, CEO PCK Intellectual Property

April 20, 2021

Abstract

Proposed changes to the regulation of Canadian Patent Agents has put into question whether Canadian Patent Agents will be permitted to retain their US Patent Agent registrations.  It is difficult to assess the wisdom of such a change, because there is a significant lack of empirical data as to the amount of work that is done by Canadian Patent Agents in the Canadian Intellectual Property Office (“CIPO”) versus the United States Patent and Trademark Office (“USPTO”).  This paper uses publicly available filing statistics and a professional survey in an attempt to gather such data.  The data as gathered and evaluated suggests that a significant portion of work done by Canadian Patent Agents is performed before the USPTO.  Notably, 73% of respondents said that at least half of their practice was before the USPTO.  90% of respondents said they did not want to lose their US registrations, regardless of whether or not the College was implemented.  43% of respondents favoured the status quo altogether, eschewing a College and preferring to keep their US registrations.  66% of surveyed Canadian Patent Agents either agreed or strongly agreed that it will be harder for them to obtain and retain Canadian clients if they lose their US registrations.  The paper also rebuts convention wisdom that the current reciprocal regime unfairly favours Canadian Patent Agents because of the Canadian local representative requirement, by looking to the fact that the US foreign filing license regime tends to keep US drafting within the US and the lack of such a regime in Canada allows US agents to compete directly with Canadian Patent Agents in Canada and that controlling originating drafting from Canadian applicants has far greater economic value than controlling Canadian applications, such that the net effect of the current reciprocal regime ultimately favours the US.

Discussion

The proposed Regulations in the College of Patent Agents and Trademark Agents Regulations proposed in the Canada Gazette (Part I, Vol. 155, No. 11, pgs. 1141 to 1167) on March 13, 2021 (“Proposed Regulations”) have stirred significant controversy over a contemplated requirement that Canadian Patent Agents must reside in Canada.  If implemented, it would have the effect of stripping Canadian Patent Agents of their reciprocal registrations as US Patent Agents, a tradition going back to at least 1938.  The Globe and Mail covered the controversy on April 11, 2021.

The Intellectual Property Institute of Canada (“IPIC”) responded to the Proposed Regulations firmly with submissions “… for the preservation of the status quo to permit existing …” reciprocal recognition of US Patent Agents in Canada. This position is clearly and unequivocally stated in IPIC’s formal written submissions (which also address other issues of concern to IPIC members).

At this point all indications are that, in some form another, US Patent Agent registrations will be preserved.  But there are no guarantees being offered.  The stakes are high for the many members of the profession who rely on their US registrations.  The negotiations between IPIC and Innovation, Science and Economic Development Canada (“ISED”) are held in secret and so it is very challenging for the average Canadian Patent Agent to understand what is really going on.  When the issue is pressed with IPIC leadership, IPIC has repeated asked that we trust the process, citing their inability to speak openly due to the secrecy of the negotiations.  My chief concern is that, to my knowledge, no one at ISED or IPIC has come out publicly with a guarantee that the US Patent Agent registrations will be preserved.  The concern is real, even if the risk is low, as hundreds of US Patent Applications could be found instantly without a valid agent-of-record. In the short term, this would create a potential loss of rights for applicants and errors and omissions liability for Patent Agents navigating inextensible deadlines on cases that may lack a validly appointed agent.  In the long term, it would permanently and harmfully alter the way in which originating patent drafting services are offered to Canadian innovators.

The fact that The Proposed Regulations appeared at all, without adequate consideration of this issue, shows a staggering failure in the process of formulating the College of Patent and Trademarks.  Learning from our mistakes, I believe a significant gap has been a lack of empirical data to guide the profession, IPIC and ISED in understanding the practice and needs of Canadian innovators and Canadian Patent Agents.  (In the future, I believe that IPIC should have a standing committee that gathers and publishes statistics like this.)

In particular, there are several factors that I believe are important to quantify, and their collective dynamics should be considered and articulated.  Specifically:

  1.  What is the breakdown of originating patent activity versus inbound associate activity?
  2.  How much of the Canadian profession is principally serving applicants before CIPO?
  3.  How much of the Canadian profession is principally serving Canadian applicants before the USPTO?
  4.  How do these numbers translate into economic activity for the profession and Canada as a whole?

In the few weeks I have been immersed on this topic, I have attempted to assemble some empirical data to try and address some of these questions.  In this blog, I refer to two sources.  First, is the marvelous website maintained by Alan Macek of DLA Piper, to whom the profession owes a great debt of gratitude for his work in maintaining a treasure trove of IP statistics, found at www.ippractice.ca.  The second source is a survey in which approximately 200 agents responded out of a universe of approximately 900 registered Patent Agents.

Turning to the first set of data, I relied on the data found here. With the assistance of Wendy Low of PCK, we also tried to determine the average number of Canadian patent applications being handled per agent. This involved manually counting the number of Patent Agents listed on firm websites.  I believe even with the margins of error, the results are meaningful.  I attach those results at the end of this blog post.  Here are some interesting takeaways:

1.  Approximately 60% of Canadian patent applications are handled by 8 firms with a total of about 227 Patent Agents out of the roughly 900 Canadian Patent Agents.

a.  An average of 100 applications per Patent Agent are found within this group.

2.  Approximately 33% of Canadian patent applications are handled by 42 firms with a total of about 217 Patent Agents.

a.  An average of 64 applications per Patent Agent are found within this group.

Each group of firms has roughly the same number of Patent Agents, but the second the group is handling about 40% of the total universe of Canadian patent applications.  So what is keeping the second group of Patent Agents busy?  The likely options would be litigation, licensing, trademarks and US Patent Agency.  Speaking for our firm, I can confirm that the vast majority of what is keeping us busy is US Patent Agency, and very little of the other items.   From this data set, we cannot quantify the total amount of US Patent Agency work is being done, but the answer is clearly a lot.  The answer is supported by the fact that there are roughly 13,000 patent applications filed in the USPTO by Canadian applicants every year compared to roughly 36,000 patent applications filed in CIPO by all applicants, of which about 4,000 are Canadian applicants. Of the 13,000 applications filed in the USPTO by Canadians, unfortunately we do not know how many are handled directly by a Canadian Patent Agent, but the total universe of patent applications that could be handled by Canadian Patent Agents is roughly the total of the two: 49,000.  To me, this suggests at least a double-digit percentage of all work done by Canadian Patent Agents is before the USPTO.  The data gets even more interesting when one considers the lifetime financial value in professional fees of prosecuting one Canadian patent application versus drafting and prosecuting one US patent application.  The drafting fees alone tip the economic scales in favour of finding that drafting and filing a US patent application far outweighs the economic value of prosecuting a Canadian patent application.

Turning to the survey, now the data gets interesting and supports the suppositions from above.  At the time of writing, there were 203 respondents out of a total universe of approximately 900 registered agents.  Using an online sample size calculator this suggests a 95% confidence level with a 6% margin of error based on a sample size of 206.  The actual universe of registered agents who are actually practicing before CIPO is significantly lower, given that 444 Patent Agents seem to handle about 93% of all Canadian patent applications.   All to say that I believe that the sample size is meaningful.

Highlights:

1.  The majority of respondents were dually qualified before CIPO and USPTO.

a.  See Question 1: 83% of respondents said they were registered Canadian Patent Agents with a US Patent Agent registration based on their Canadian registration.

2.  The number of Canadian Agent respondents who practiced nearly exclusively before CIPO was almost the same as the number of Canadian Agent respondents who practiced nearly exclusively before the USPTO.

a.  See Question 2:

i. 12% of respondents said that the vast majority of their practice is before CIPO, while 10% of respondents said that the vast majority of their practice is before USPTO.

3.  An overwhelming majority of respondents said that at least half of their practice was before the USPTO.

a.  See Question 2.

4.  An overwhelming majority of respondents said that they did not want to lose their US registrations.

a.  See Question 4:

i.  47% of respondents were in favour of a College as long as it did not require them to sacrifice their US registrations.

ii.  44% of respondents favoured the status quo, preferring no College at all.

5.  An overwhelming majority of respondents were flexible on requiring Canadian Patent Agents to reside in Canada provided it preserved their ability to be US Patent Agents.

a.  See Question 6.

6.  An overwhelming majority of respondents were comfortable allowing foreign Patent Agents of any country to be Canadian Patent Agents provided that Canadian Patent Agents were also allowed to practice in that foreign country.

a.  See Question 7.

7.  An overwhelming majority of respondents felt that if they lost their US registrations, it will be harder for them to obtain and retain Canadian clients for drafting patent applications.

a.  See Question 9.

8. Question 8 caused the most confusion and many respondents felt its inclusion was improper. Question 8 asked whether Canada should implement a foreign filing license or other regime to force Canadian applicants to file in CIPO first. 51% percent of respondents either disagreed or strongly disagreed.  The question was included because when we consider whether the Canadian versus US agent-reciprocity regimes are “fair” it is often said the current Canadian regime is unfair to Americans because it requires Americans to use a Canadian address.  However, when looked at as a whole, the US foreign filing license makes it administratively easier for Americans to file first in the USPTO, and our US licenses only allow us to act on behalf of Canadians. Canadian applicants have no such limitation, allowing Canadians to file first in any country they choose.  Accordingly, American Patent Agents can and do seek work from Canadian applicants in a way that Canadian Patent Agents are unable to equally seek from Americans.  This imbalance drastically favours Americans because the lifetime financial value of controlling an originating application in the US and around the world is worth far more economically than handling a single Canadian patent application.  There is thus an overall lack of understanding of both patent systems, as a whole, when considering the “fairness” of the two reciprocity regimes, and the reciprocity regime is weighted far more heavily in favour of Americans.

In summary, the studies show the overwhelming majority of Canadian Patent Agents rely heavily on their ability to practice before the USPTO to provide them with a full practice.  While ISED and IPIC have stated their goals to preserve the US registrations, it is hoped that this study and the accompanying survey will show with some objectivity that removing US registrations will gut the profession and render the resulting College a paper tiger that principally regulates Canadian Patent Agents at eight firms controlling 60% of the market, with the majority of that work being foreign inbound patent filings into Canada, all of which would leave Canadian innovators woefully unrepresented by local Canadian Patent Agents.  We must preserve the US Patent Agent registrations for Canadian Patent Agents for the sake of Canadian innovation and the Canadian Patent Agent profession as a whole.

Results

The data from the professional survey can be found here.

A breakdown of Canadian patent applications by law firm can be found here.


PCK IP is one of North America’s leading full-service intellectual property firms with offices in Canada and the United States. The firm represents large multinational companies, scaling mid-size companies, and funded innovative start-up entities. PCK IP professionals include seasoned patent and trademark agents, engineers, scientists, biochemists and IP lawyers having experience across a broad range of industries and technologies. Contact us today.

The contents of this article are provided for general information purposes only and do not constitute legal or other professional advice of any kind.

Canadian flag waving in front of the Parliament buildings in Ottawa.