2006 FCA 195
A‑666‑04
Johnson & Johnson Inc., Expandable Grafts Partnership and Cordis Corporation (Appellants)
v.
Arterial Vascular Engineering Canada, Inc., Medtronic Ave., Inc. and Medtronic of Canada Ltd. (Respondents)
A‑667‑04
Johnson & Johnson Inc., Expandable Grafts Partnership and Cordis Corporation (Appellants)
v.
Boston Scientific Ltd./Boston Scientifique Ltée (Respondent)
Indexed as: Johnson & Johnson Inc. v. Boston Scientific Ltd. (See also: Johnson & Johnson v. Arterial Vascular Engineering Canada Inc.) (F.C.A.)
Federal Court of Appeal, Nadon, Sexton and Sharlow JJ.A.—Toronto, May 23, 2006.
Patents — Infringement — Appeals from Federal Court decisions granting summary judgment on basis appellants’ patents invalid because when applications first submitted, “small entity” fee paid when “large entity” fee required — Appellants later making top‑up payments to correct mistake — Federal Court relying on Dutch Industries Ltd. v. Canada (Commissioner of Patents) decision holding that when incorrect fee paid, Commissioner of Patents having no discretion to accept top‑up payment outside statutory time limit, and patent application deemed to be abandoned — Appeals allowed — Patent Act, s. 78.6(1) alleviating effect of Dutch Industries, providing that where top‑up payment made before or within 12 months of coming into force of that section, top‑up payment deemed to have been paid on day on which prescribed fee paid — Appellants’ patent applications therefore regarded as though deemed abandonment provision never applied.
Construction of Statutes — Patent Act, s. 78.6(1) providing that where incorrect application fee paid with respect to patent application and top‑up payment made before or within 12 months of coming into force of that section, top‑up payment deemed to have been paid on day on which prescribed fee paid — Presumption statute not having retroactive effect yielding to clear statutory language — Appropriate interpretation in case at bar literal one — Clear Parliament intending to alleviate effect of Dutch Industries Ltd. v. Canada (Commissioner of Patents) (i.e. that Commissioner of Patents having no discretion to accept top‑up payment outside statutory time limit) — Act, 78.6(1) sufficiently clear to reverse judgments under appeal.
statutes and regulations judicially
considered
Patent Act, R.S.C., 1985, c. P‑4, ss. 30(1), 78.6(1) (as enacted by S.C. 2005, c. 18, s. 2).
cases judicially considered
considered:
Dutch Industries Ltd. v. Canada (Commissioner of Patents), [2002] 1 F.C. 325; (2001), 14 C.P.R. (4th) 499; 209 F.T.R. 260; 2001 FCT 879; Dutch Industries Ltd. v. Canada (Commissioner of Patents), [2003] 4 F.C. 67; (2003), 24 C.P.R. (4th) 157; 301 N.R. 152; 2003 FCA 121; leave to appeal to S.C.C. refused, [2003] 3 S.C.R. vi.
APPEALS from two Federal Court decisions ([2005] 4 F.C.R. 110 and 2004 FC 1673) granting summary judgment motions against the appellants on the basis that their patents were invalid because the incorrect application fees had been paid when they were submitted. Appeals allowed.
appearances:
Donald M. Cameron, R. Scott MacKendrick and Allyson Whyte Nowak for appellants.
Richard E. Naiberg and Jason Wadden for respondents in A‑666‑04.
Ronald E. Dimock and Michael D. Crinson for respondent in A‑667‑04.
solicitors of record:
Ogilvy Renault LLP, Toronto, for appellants.
Goodmans LLP, Toronto, for respondents in A‑666‑04.
Dimock Stratton LLP, Toronto, for respondent in A‑667‑04.
The following are the reasons for judgment of the Court delivered orally in English by
[1]Sharlow J.A.: The appellants in these two appeals have interests in Canadian patent numbers 1281505, 1338303 and 1330186. The patent applications for the first two patents were submitted in 1986 and for the third in 1989. In each case the application fees were initially paid on the “small entity” scale. Those payments were deficient because they should have been paid on the “large entity” scale. Later, before any of the patents were issued, “top-up” payments were made and accepted in accordance with what was then the policy of the Commissioner of Patents. The result was that the correct fees were paid, but they were paid late (that is, after the statutory deadline).
[2]In Dutch Industries Ltd. v. Canada (Commissioner of Patents), [2002] 1 F.C. 325 (T.D.), the Federal Court held, among other things, that where a patent applicant that is a large entity incorrectly pays the prescribed application fee or maintenance fee on the small entity scale, the Commissioner of Patents has no discretion to accept a top‑up payment outside the statutory time limit for making up a deficiency in a fee payment. As the top‑up payment in that case could not correct the deficiency, the patent application was deemed to be abandoned under subsection 30(1) of the Patent Act [R.S.C., 1985, c. P-4], with the result that there was no valid application to support the issuance of the patent. That aspect of the decision was upheld on appeal: Dutch Industries Ltd. v. Canada (Commissioner of Patents), [2003] 4 F.C. 67 (C.A.). Leave to appeal was refused, [2003] 3 S.C.R. vi.
[3]The parties to these appeals were engaged in patent infringement litigation when the Federal Court decision in Dutch Industries was released. The pleadings in both cases were amended to take into account the new jurisprudence. The respondents in each case brought a motion for summary judgment on the basis that the patents were invalid. In judgments of the Federal Court dated November 30, 2004 [2004 FC 1673 and [2005] 4 F.C.R. 110], the motions were granted on the basis of Dutch Industries. In both cases, the order of the Federal Court reads in part as follows:
2. All claims in this action that are founded on Canadian Patent No. 1281505, Canadian Patent No. 1338303 and Canadian Patent No. 1330186 (the patents in suit) are dismissed.
3. The patents in suit are declared to be invalid, void and of no force and effect.
[4]The appellants have made a number of submissions in their written material to the effect that Dutch Industries is incorrect or that it should not apply in this case. We do not consider it necessary to deal with any of those arguments in the face of subsection 78.6(1) of the Patent Act, R.S.C., 1985, c. P‑4. Subsection 78.6(1) was added to the Patent Act by section 2, S.C. 2005, c. 18, and came into force on February 1, 2006 by Order in Council 2005‑1871. It reads as follows:
78.6 (1) If, before the day on which this section comes into force, a person has paid a prescribed fee applicable to a small entity, within the meaning of the Patent Rules as they read at the time of payment, but should have paid the prescribed fee applicable to an entity other than a small entity and a payment equivalent to the difference between the two amounts is submitted to the Commissioner in accordance with subsection (2) either before or no later than twelve months after that day, the payment is deemed to have been paid on the day on which the prescribed fee was paid, regardless of whether an action or other proceeding relating to the patent or patent application in respect of which the fee was payable has been commenced or decided.
[5]In our view, the legal effect of subsection 78.6(1) is that the top‑up payments made for the patents in issue in this case must be treated for the purposes of the Patent Act as though they had been made on the date of the original deficient payments. It follows that there was no deficiency in the payment of the application fees. That means that the principle in Dutch Industries cannot apply, and the patent applications must be regarded as though the deemed abandonment provision never applied to the patents.
[6]This interpretation of subsection 78.6(1) is based on its literal meaning. That is appropriate in our view, because it is abundantly clear that Parliament intended subsection 78.6(1) to alleviate the effect of Dutch Industries retroactively if a top-up payment is made that meets the conditions stated in subsection 78.6(1). It is undisputed that the statutory conditions were met in this case.
[7]The respondents have argued on a number of grounds that subsection 78.6(1) should not be given that interpretation. In our view, all of the respondents’ arguments are defeated by the clear language of subsection 78.6(1).
[8]The respondents argue that they have vested rights in the form of judgments of the Federal Court that cannot be taken away by the retroactive application of subsection 78.6(1). We disagree. The presumption that a statute does not have retroactive effect must yield to clear statutory language. Subsection 78.6(1) clearly establishes a deemed date of payment, with retroactive effect, even in cases where an action relating to the payment “has been commenced or decided” [emphasis added].
[9]The respondents argue that the summary judgment decisions were correct when they were decided because at that time subsection 78.6(1) was not in force, and therefore it is not open to this Court to say that the judgments are wrong in law. We cannot accept this argument. Even if the summary judgments were granted on the basis of a legal analysis that was correct when it was done, the judgments cannot be permitted to stand in the face of subsection 78.6(1).
[10]The respondents argue that subsection 78.6(1) should be interpreted as retrospective, not retroactive. This would treat the patents as invalid for the purposes of this case, but not necessarily for other cases. In our view, this proposed interpretation is not consistent with the language of subsection 78.6(1). It is the nature of a deeming rule that, for certain purposes, something must be treated as a fact when it is not a fact. In this case, the fact is that the correct payments were not made on time, but subsection 78.6(1) requires this Court to determine the rights of the parties as though the correct payments had been made on time. It would not be consistent with the language of subsection 78.6(1) to adopt an interpretation that does not recognize the top-up payments as though they were made at the same time as the initial deficient payments.
[11]Finally, the respondents say that subsection 78.6(1) does not expressly say that judgments, such as the summary judgments in this case, must be set aside, and therefore the provision lacks the necessary clarity to defeat the judgments under appeal. In support of that argument, the respondents submit a number of examples of statutes in which judgments are abrogated with language that specifically refers to judgments. In our view, the language of subsection 78.6(1) is sufficiently clear to compel this Court to reverse the judgments under appeal.
[12]For these reasons, we will allow these appeals with costs, set aside the orders under appeal, and dismiss with costs the respondents’ motions for summary judgment.