In Canada, maintenance of a patent or application requires payment of annual maintenance fees. Failure to pay the annual maintenance fees can lead to the abandonment of a patent or application. Canada’s patent regime provides a mechanism for patentees and applicants to reinstate an abandoned patent or application. One condition for reinstatement is that the failure to pay the required annual maintenance fees occurred in spite of “due care” exercised by the patentee or applicant.
In Matco Tools Corporation v. Canada (Attorney General), 2025 FC 118, the Federal Court expanded the due care standard to “[…] cover the entire chain of events, from the earliest root cause to the final opportunity for correction.” Last week, the Federal Court of Appeal restored the previous due care standard. In this article, we assess the Federal Court of Appeal’s interpretation of the due care standard in Canada (Attorney General) v. Matco Tools Corporation, 2025 FCA 156 and the obligations of Canadian patentees, applicants, and their agents.
Events leading up to the Appeal
Matco Tools Corporation (“Matco”) was required to pay annual maintenance fees for its 194 Application. When the third annual maintenance fee became due, Matco did not pay it.
Since Matco failed to pay the third annual maintenance fee, the Commissioner of Patents issued a Notice to Matco’s Canadian patent agent (the “Notice”). The Notice informed Matco’s Canadian patent agent that the 194 Application would be deemed abandoned six months after the third annual maintenance fee was due, unless Matco paid the maintenance fee and a late fee.
Matco’s Canadian patent agent forwarded the Notice to Matco’s US Counsel. Matco’s U.S. Counsel did not forward the Notice to Matco. Why? Matco’s US Counsel was following instructions by Matco to “take no further action with regard to payment of annuities and maintenance fees”.
Matco’s 194 Application was ultimately deemed abandoned. The Commissioner refused to reinstate Matco’s 194 Application because Matco did not meet the due care standard. Matco brought a proceeding for judicial review of the Commissioner’s decision to the Federal Court.
At the Federal Court, Matco argued that “but for” an administrative error, the third annual maintenance fee would have been paid. The Federal Court agreed, stating that a “robust due care inquiry should cover the entire chain of events, from the earliest root cause to the final opportunity for correction.” The Federal Court found that the Commissioner had overlooked the administrative error and set aside the refusal to reinstate Matco’s 194 Application.
The Attorney General of Canada appealed the Federal Court’s decision.
Key findings of the appeal
The Federal Court of Appeal allowed the appeal and set aside the Federal Court’s decision. The Federal Court of Appeal made the following findings on the due care standard and the relevant timeline for the due care standard:
Finding #1: Due care standard extends to recipients of a Commissioner’s notice
Matco argued that the due care standard does not extend beyond Matco itself. In response, the Federal Court of Appeal stated that the due care standard applies to the recipient of a notice regarding the failure to pay a maintenance fee. For a patent agent of record to meet the due care standard, the patent agent is expected, “at a minimum”, to forward correspondence from the Commissioner to the applicant or patentee. Forwarding correspondence from the Commissioner to another agent would meet the due care standard only if that agent had an attendant duty to send it to the applicant or patentee.
The recipient of the Notice regarding the failure to pay the 194 Maintenance fee was Matco’s Canadian patent agent, who forwarded the Notice to Matco’s US counsel. Therefore, the due care standard extended to Matco’s Canadian patent agent and Matco’s US counsel.
The Federal Court of Appeal found that either Matco’s Canadian patent agent did not meet the due care standard by forwarding the Notice to someone who could not be expected to forward it to Matco, or Matco’s US Counsel did not meet the due care standard by not forwarding the Notice to Matco. Additionally, the Federal Court of Appeal stated that Matco’s instructions to US Counsel to “take no further action” did not amount to instructions not to forward the Notice to Matco.
Finding #2: Relevant timeline for the due care standard
The Federal Court of Appeal then considered the administrative error that Matco attributed to its failure to pay the 194 Application’s third annual maintenance fee.
For reinstatement of an abandoned patent or application, the applicant must include “the reasons for the failure to take the action that should have been taken in order to avoid the abandonment”. The Federal Court of Appeal stated that in the reinstatement context it is important to focus on the failure to take the action that was required to avoid the abandonment.
The action that Matco was required to take to avoid the 194 Application’s abandonment was paying the maintenance fee and late fee after the Notice was issued by the Commissioner. Since the administrative error occurred before the Notice was issued, it was not relevant to the due care standard. Accordingly, the Federal Court of Appeal restored the previous understanding that the only actions relevant to demonstrating due care are those taken after the Notice is issued.
Practical implications for patentees, applicants, and their agents
The Federal Court of Appeal’s decision reaffirms the previous approach to the due care standard referenced in s. 73(3)(b) of the Patent Act.
Key takeaways for patentees and applicants are:
- The time period after a notice is issued by the Commissioner is the relevant time period for due care obligations. Events that occur before the notice is issued by the Commissioner, including events that caused the failure to pay maintenance fees, are not relevant to the due care standard.
- Applicants and patentees should be careful when issuing standing instructions regarding maintenance fees. Standing instructions to “take no further action” may be construed by the agent to relieve the responsibility of forwarding correspondence from the Commissioner to the patentee or applicant.
Matco has until November 3, 2025 to appeal this decision if they wish to do so.
If you have questions or need assistance with your patents or applications, please contact DLA Piper (Canada) LLP’s Intellectual Property group.