22/10/2017
A real life dilemma was recently considered by the EPO Board of Appeal. The basics of the situation are as follows:
- A PCT application is filed;
- 30 months from the priority date the European phase is entered;
- The PCT filing fee then becomes due;
- The filing fee isn’t paid and the PCT application is declared to be considered as withdrawn long after the EP phase entry
The main question in this scenario is what happens with the Euro-PCT application, which by the time of event 4 has already entered the EP phase? Is the Euro-PCT application dependent on the fate of its PCT parent?
The facts
The timeline below outlines the key dates and occurrences in this case but has been simplified, showing only ‘important’ events.
2 May 2005: A PCT application is filed with USPTO, claiming priority of an application filed on 24 May 2004. The PCT application gets an EP number: EP ‘104.
23 Nov 2006: The PCT application enters EP national phase under the number EP ‘104. This happens almost exactly 30 months after the claimed priority, in accordance with R. 107 EPC 1973 (the predecessor of R. 159 EPC).
12 Feb 2008: USPTO finds that it is not a competent Receiving Office (RO) and transmits the PCT application to the International Bureau (IB), in accordance with Rule 19.4 PCT. R. 19.4(a) PCT provides that if the Office is not a competent RO, the application is deemed received by it on behalf of the IB. There is also a neat little trick which shifts the beginning of the time limit for payment of the PCT fees from the filing date to the date the PCT application is actually received by IB – R. 19.4(c) PCT – while the filing date itself does not shift. This is why the PCT fees in this case became due later than entry into national phase.
13 June 2008: The applicant is informed about their PCT application being transferred to the IB. The PCT application receives a new PCT application number PCT/IB instead of PCT/US, and therefore also a new EP application number: EP ‘797. This will cause minor troubles later.
24 Nov 2008: IB informs the applicant that the PCT fees have not been paid, and draws their attention to the possibility to pay the fees together with late payment fees. This is in accordance with PCT Rules 14-16bis.
11 Dec 2008: EPO sends a communication about loss of rights (R. 112(1) EPC) for EP ‘797, arguing that the PCT application did not enter the EP phase. This is the minor trouble caused by one application having two EP numbers. The applicant does not challenge this finding, and from this event, there is no communication between the applicant and the EPO until October 2013 – facts which will not go unnoticed by the Board of Appeal.
22 Jan 2009: IB informs the applicant that the PCT application is declared to be considered withdrawn, because the PCT fees have not been paid. The applicant does not do anything to fix the problem at this stage. Again a fact that will not go unnoticed by the Board of Appeal.
18 Sep 2014: EPO sends a communication which advises the applicant that
- the communication of 11 Dec 2008 (the loss of rights due to non-entry into EP phase) should be disregarded, and
- the Euro-PCT application based on the PCT application cannot proceed because the PCT application is considered withdrawn in the international phase.
The EPO draws the attention of the applicant to the possibility to review the withdrawal of the application (Art. 25 PCT), or to request an excuse (Art. 24(2) PCT), but also points out that the relevant time limits for both these remedies seem to have expired in 2009. Later, the Board will agree with this only partly.
5 July 2016: EPO sends the applicant a communication drawing their attention to unpaid renewal fee, and the possibility to pay with surcharge. The renewal is subsequently paid by the applicant.
17 Aug 2016: Upon the request of the applicant, an appealable decision that the application EP ‘797 is deemed to be withdrawn due to non-payment of the PCT fees in the international phase is issued.
16 Dec 2016: The applicant filed grounds of appeal, arguing that
- the PCT application was declared to be considered withdrawn only after the EP national phase entry, and the considered withdrawal of the PCT application therefore cannot influence the Euro-PCT application EP ‘797; and
- the principle of protection of legitimate expectations applies, the applicant is surprised by the deemed withdrawal of the application, because the EPO for some 7 years acted as if the application were pending (in particular accepting renewals as if nothing had happened).
The decision
If you file a PCT application and do not pay the PCT fees, your PCT application is declared to be considered withdrawn, and consequently ceases to have effect. If you then miss the time limits for the PCT review, your Euro-PCT application is deemed to be withdrawn – even if the European phase entry took place long before your PCT application was declared to be considered withdrawn. The ‘usual’ PCT rules saying that after the EP phase entry, withdrawal of the PCT application does not affect the corresponding Euro-PCT application, do not apply in this case.
The reasons for the decision
There have been three major issues:
- Is the Euro-PCT application influenced by the fate of the corresponding PCT application in this situation, i.e. when the national phase entry happens long before the declaration that the application is considered withdrawn?
The Board provided a nice reasoning (Reasons 4c and 4d) about why the RO is not prevented from taking procedural steps even after the application enters the national phase – this is not forbidden by the PCT, and the competences of the RO and the Designated Office may run in parallel in this case.
Here, the Board agreed with the findings of the EPO Receiving Section that the application EP ‘797 is deemed withdrawn.
- What is the applicable time limit for requesting the excuse (Art. 24(2) PCT), and is it the same as the time limit for requesting the review under Art. 25 PCT?
The Board disagreed with the Receiving Section, and stated that the time limit under Art. 24(2) PCT (excuse) is not the same as the time limit under Art. 25 PCT (review). According to the Board, the time limit, if any, for making a request to be excused under Article 24(2) PCT is subject to national law, and to national law only.
Therefore, we now know what the time limit isn’t, but it remains to be seen what the time limit officially is!
- Does the principle of the protection of legitimate expectations apply in this situation?
The principle of the protection of legitimate expectations always applies, and can be invoked any time – there is no time limit for this. However, this principle requires the parties to proceedings as well as the EPO to act in good faith. The applicant, by not responding to the IB communications about lack of payment and by not challenging the communication of 11 Dec 2008 (loss of rights), did not act in good faith. Therefore, the applicant cannot invoke the principle of the protection of legitimate expectations.
The (unexpected) lessons learned
Aside from the obvious lessons learnt from this case outlined above, we have identified some other interesting lessons which we share below:
- The Rules of Procedure of the Boards of Appeal are really increasingly important. They are cited four times in the second paragraph of the reasons (first par. being a single sentence saying that the appeal is admissible).
- There is a potentially important legal source – the archive of the PCT Rules changes which was discovered when checking the 2005-2008 wording of R. 19.4 PCT, to see the applicable law at that time. Could be suitable bedtime reading…
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.
