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Patent applications must not languish in limbo: Federal Court

|Written By I. John Harvey

How long is long enough for the patent commissioner to examine an application and make a decision?

In patent cases, it’s not just a question of civil service sloth and annoying delays; it’s a question of time because patents expire 20 years from the date of application  - not the date of issuance.

Fraser Rowand says it is unusual for the courts to order the government to pay costs in these types of cases.

Since applications can take a couple of years to be processed, holders would then have 17 to 18 years to exclusively monetize their invention.

In the event of extraordinary delays, time is money, big money. Sidney Belzberg’s patent application for an electronic stock trading system seemed to drag on forever, and in the end only a stern rebuke from the Federal Court prevented it from being delayed even further.

His 1994 patent application dragged on and apparently would have continued even after the commissioner’s Jan. 25, 2007 decision sent it back for “further prosecution.”

In effect, the court was told, about 15 years of the patent would have lapsed by the time Justice Michel Shore would make his decision in Belzberg v. Canada (Commissioner of Patent).

Belzberg Technologies Inc.’s computerized stock exchange trading system is a spreadsheet-based program for electronic trading.

The company holds several patents for it in the United States. It was developed in 1993 by Sid and Alicia Belzberg and was first to market as a real-time, desktop trading system that was nimble, faster, and simpler than the mainframe system common at brokerages up to that point.

However, the company struggled with its Canadian application. Still, confident it would win a patent, it also engaged Don Stout  -  co-founder of NTP, a company famous for squeezing  more than US$600 million from Waterloo, Ont.’s Research In Motion Ltd. over patent infringements   -  with a view to enforcing its intellectual property claim.

Belzberg asserts systems and processes used by most of the world’s financial securities traders infringe on its patent.

The commissioner had a report from the Patent Appeal Board in hand before making the 2007 decision, court was told. In it, the board held the previous rejection of Belzberg’s patent should be reversed:

“In summary, the board finds that the invention is disclosed in sufficient detail and is claimed sufficiently clearly to allow an ordinary worker who is skilled in the art to implement the invention.

The claimed invention is not obvious in view of the prior art, and the application is directed to subject matter which falls under the definition of invention.”

Further, it said: “This board therefore recommends that the examiner’s rejection of the application be reversed and that the application be returned to the examiner for further prosecution consistent with these recommendations.”

And, as Shore noted, the commissioner simply adopted the last paragraph as the ultimate decision: “I concur with the recommendation of the board that the examiner’s rejection of the application be reversed and return the application to the examiner for further prosecution consistent with the board’s recommendation.

” Indeed, the application was referred back because there was a problem that was not part of the final action report and not part of the appeal board considerations and two more reports followed.

By the fall of 2007, the applicants’ frustration boiled over when the Patent Office raised objections around the area of obviousness, an issue that had already been considered and cleared by the January 2007 report.

The result was an application to the Federal Court for judicial review under s.  18.1 of the Federal Courts Act of the failure, refusal and/or neglect of the commissioner of patents to grant a patent.

The case also asked the court to rule where the commissioner may restart an examination of a patent application after disposing of all the defects alleged in an examiner’s rejection labelled “final action” under s. 30 of the Patent Rules.

The answer from Shore was a strongly worded rebuke. In allowing the review, he set aside the commissioner’s Jan. 25, 2007 decision as well as the ensuing reports, ordered the patent application actively reinstated, and threw out any demands for outstanding fees or suggestions that the application was deemed to be abandoned.

Further, he ordered the application to be granted with costs to the applicant despite arguments from the Department of Justice that as a federal agency it is immune from such orders.

“That’s pretty unusual,” says Fraser Rowand, a partner with Ridout & Maybee LLP and counsel to Belzberg. The courts rarely award costs in these cases, he says. “That’s a sign.”

“My first impression is that it’s a curious case that took a lot longer than usual - even though it’s not unusual for applications to take an extremely long time in examination,” says Jung-Kay Chiu a partner at Ogilvy Renault LLP who focuses on patents. “Still, in the high-tech field, these applications can be very difficult to assess.”

Canada is generally slower than most countries with its patent process, he adds, calling the pace “glacial at times. It’s not unusual for applications to take five years,” he says.

Moving forward, he says, the case should be good news for applicants because it sets out a process that can’t be looped back into further examination or bring up issues that have already been dealt with.

The net effect should be to get a decision faster and, even if the decision is unfavourable, move on to appeal.

The question, he says, will be whether in rejecting applications the board will be willing to take on the extra work of preparing for the inevitable appeals.

“They might be willing to resolve issues earlier rather than go through that,” he says.

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