Canada’s Patent Term Adjustment: A comparison to existing U.S. PTA practice

Patent Term Adjustment (PTA) is now available in Canada, following the implementation of regulatory changes introduced as a result of the Canada-United States-Mexico Agreement (CUSMA).^[1] However, despite CUSMA’s goal of harmonizing the patent prosecution systems across these countries, Canada’s approach to PTA differs significantly from that of the longstanding PTA practice in the United States.

Notably, in most cases, a patentee in Canada will not be compensated for prosecution delays in the way they would for delays before the U.S. Patent and Trademark Office (USPTO). This is primarily because, despite CUSMA’s equal obligations, the criteria for calculating PTA in the U.S. and Canada differ significantly.

Factors determining availability of PTA

The US PTA Calculation involves three “types” of delay:^[2]

• “A” type delay applies to target deadlines for the USPTO to take certain actions. The below represent the applicable target, such that for every day beyond this period PTA becomes available to the patentee:
  • Issue a first Restriction / Official Action / Allowance within 14 months of the filing date;
  • Respond to the patentee’s submission within 4 months; and
  • Issue the patent within 4 months of the fee being paid.
• “B” type delay applies to the “pendency” of the application, which the U.S. targets at 3 years. As such, every day beyond 3 years from the filing of the application and its issuance provides a period of PTA to the patentee; and
• “C” type delay relates to delays due to interferences, secrecy orders, and appeals.
• From the total of “A” + “B” + “C” delays, days are subtracted for (i) overlapping dates, and (ii) any “Applicant delay” which includes taking longer than 3 months to respond to the patent office, filing supplemental replies, and filing amendments after allowance.

In contrast, Canada’s PTA calculation is based solely on target issuance dates (similar to “B” type delays). Specifically, the target date for issuance in Canada is the later of: (i) 3 years from requesting examination, or (ii) 5 years from filing the application. PTA is available for each day that the applicable target issue date is exceeded. In addition, all days when the patentee is required to take any action (e.g., respond to the patent office or pay a fee) are subtracted from that period.

As these factors highlight, Canada and the U.S. have adopted significantly different approaches for what constitutes a "delay" in patent issuance. While the U.S. imposes deadlines on its processing steps through “A” type delays, Canada focuses solely on overall target deadlines for patent issuance. Additionally, Canada does not provide a reasonable allowance of time for the patentee to respond to the patent office, unlike the 3-month response period allowed for “A” type delays provided by the U.S. patent office.

The impact of these differences in calculating PTA is stark, and the availability of PTA in Canada is significantly curtailed compared to the longstanding approach in the U.S. This disparity is evident in the following two hypothetical scenarios.

Scenario 1: Single office action and accelerated applicant response

U.S. PTA determination:

• “A” type delay: 10 months for delayed first action + 2 months for delay allowance + 1 month for delay issuance = 13 months.
• “B” type delay: 3-year issuance target of January 1, 2028, exceeded by 3 months = 3 months.
• “C” type delay: not applicable.
• Subtractions: 1 month of overlapping “A” and “B” delays surrounding patent issuance timeline. No deductions for patentee response timelines = minus 1 month.
• PTA Term = 13 months + 3 months - 1 month = 15 months.

Canada PTA determination:

• As the application issued within 5 years of filing, PTA is not available.

In this scenario, the U.S. patent will receive 15 months of PTA to compensate for prosecution delays. In contrast, Canada’s approach to PTA concludes that the patent issued in a reasonable time, without delay, such that no adjustment is provided.

Scenario 2: Two office actions with applicant utilizing full response period

U.S. PTA determination:

• “A” type delay: 10 months for delayed first action + 4 months for delayed second action + 2 months for delayed allowance = 16 months.
• “B” type delay: 3-year issuance target of January 1, 2028, exceeded by 18 months = 18 months.
• “C” type delay: not applicable.
• Subtractions: 2 months of overlapping “A” and “B” delays relating to the timeline to issue allowance. Application response times resulted in a deduction of 3 months (3 x 1 month for taking 4 months to respond at each indicated step) = minus 5 months.
• PTA term = 16 months + 18 months - 5 months = 29 months

Canada PTA determination:

• As the application issued within 5 years of filing, PTA is not available.

In this scenario, the U.S. patent will receive 29 months of PTA to compensate for the delays in prosecution. In contrast, Canada’s approach to PTA again concludes that the patent issued in a reasonable time, without delay, such that no adjustment is provided.

As these results show, despite identical prosecution timelines, the overall life of the patent is shorter in Canada than it would be in the U.S. What constitutes a  “delay” in Canada is significantly different from a “delay” in the U.S., such that PTA in Canada will likely be a rare event.

Does Canada’s PTA favour delaying prosecution?

In the above two scenarios, the request for examination was filed with the filing of the application. However, Canada permits the request for examination to be delayed by up to 4 years from the filing date. This is expected to cause the applicable issuance target to be 3 years from requesting examination, rather than 5 years from the filing date, which should benefit the Canadian PTA calculation.

The below scenario compares the impact of deferring examination by the maximum of 4 years on any available PTA for Canadian patents.

Scenario 3: Impact of deferred examination (Canada only)

Delayed prosecution PTA determination:

When delaying prosecution, and requesting examination 4 years after filing:

• Target issuance of 3 years after requesting examination is January 1, 2032. As the patent issued on July 1, 2033, the application was delayed by 18 months.
• A total of 12 months is subtracted for period when the Applicant was required to respond (3 x 4-month response periods).

6 months of PTA is therefore available, which results in an adjusted expiry date of July 1, 2045. However, the resulting time period during which the patent is issued and can be asserted by the patentee (i.e., date of issuance to adjusted expiry) is shorter - 12 years.

Expedited prosecution PTA determination:

In comparison, when expediting prosecution by requesting examination at the time of filing:

• Target issuance of 5 years from filing is January 1, 2030. As such, the application issued prior to this date and no PTA is available.
• If any were available (e.g., by a later date of issuance), 12 months would have been subtracted for periods when the Applicant was required to respond, likely eliminating any potential for PTA.

As no PTA is available, the expiry date remains January 1, 2045. However, as a result of the earlier patent issuance, the time period during which the patent is issued and can be asserted by the patentee (i.e., date of issuance to adjusted expiry) is longer - 15 years and 6 months.

As this example highlights, while delaying examination may result in PTA becoming available, this comes at the trade-off of an overall shorter time-period during which the patent is issued.

Considerations underlying the PTA analysis and examination timing

These scenarios highlight that, despite CUSMA’s goal of harmonizing the U.S. and Canadian patent systems, the country-specific implementations of PTA practice have led to significantly different results. In situations where PTA would likely be available for a US patent, the same scenario in Canada would not be considered a “delayed” issuance and no PTA would be available. Even when PTA is available in Canada, it is expected to be significantly less than what is provided in the U.S.

While delaying examination in Canada may result in the availability of PTA, the downside is the overall reduction in the time period when the patent is issued and can be asserted. Therefore, the benefit of extending the patent’s expiration date with PTA must be weighed against the potential lost benefits of having an earlier issued patent.

As with many decisions, the preferred option will likely depend on the specifics of the patent and the patentee’s needs. However, when approaching PTA in Canada, one cannot simply adopt the long-standing experience from U.S. PTA practice. Instead, Canadian-specific considerations will have to be taken into account.