The uncertain effect of failure to pay excess claim fees on an Australian patent application

IP Australia implemented a new fee schedule in October 2024, as reported in our earlier article here. A key change was that, for any applications on which examination was requested after 1 October 2024, excess claims fees are now due one month after the issue of the first examination report.

The notification of the fee change was accompanied by an information sheet, which noted that:

“If the fee is not paid within 1 month of the date the first report was issued, the application will lapse. The application can only be revived if the payment of the fee is made prior to the final date of acceptance (which is 12 months from the date that the first report was issued, or a later date extended by s223). No late payment or extension fees apply in the situation where fees are paid within the 12-month period.”

Australian patent applicants may therefore be tempted to pay any excess claim fees together with a response to the examination report, which may be filed anywhere up to 12 months from the date that the first report is issued (noting that it is prudent to file it much earlier!).

However, it is important to note that there is some uncertainty as to how this lapsing and subsequent revival may be treated. Some guidance may be found from the approach taken with regards to payment of annuity (continuation/renewal) fees.

In Australia, payment of a continuation or renewal fee can be made up to six months after the deadline, without requesting an extension of time, so long as the relevant late payment fees are also paid (sections 142 and 143 and regulations 13.3 and 13.6). In such a case, the patent/patent application lapses only after the grace period passes (though this lapse is backdated to the original deadline in the event of non-payment of the continuation/renewal fee). If payment of the continuation/renewal fee and late fees is made within the grace period, the application/patent is treated as if it had not lapsed.

If this is how the lapse of a patent application due to late payment of the excess claims fees will be treated, then it may indeed be convenient to pay excess claims fees together with a response to the first examination report. However, the wording of information sheet implies that this may not be the case. In addition to the lack of late payment fees (implying that this period is not governed by the rules of the late payment grace period), the information sheet notes that the application will “lapse” and subsequent payment of the excess claims fees is a “revival” (or indeed, as noted in the flowchart provided in the same information sheet, a restoration).

This indication that the application could lapse immediately after the one-month deadline if payment is not made means that late payment could have significant impact on the rights granted from such an application. Under section 223(10) of the Patents Act, infringement proceedings cannot be brought in respect of an infringement committed between the day on which a patent application lapses and the day on which it is restored. Furthermore, people who availed themselves of, exploited, or took definite steps (by contract or otherwise) to avail themselves or exploit inventions within the period of time that the application was lapsed, may apply to the Commissioner for a licence to exploit the invention under section 223(9) and regulation 22.21. While this application may be opposed, the decision to grant the licence, the scope, and the terms of the licence are up to the Commissioner.

Thus, while the information sheet implies that the revival of a patent application which lapsed due to non-payment of excess claims fees is neither governed by the rules of the late payment grace period nor the rules of an section 223 extension of time through its disclaiming of late payment or extension fees, there is a distinct possibility that patent rights could be compromised depending on when exactly the patent application lapses.

While we await case law or at least practice guidelines clarifying the position, patent applicants should be careful not to allow a lapse of this nature to occur in order to avoid the possibility of their rights being compromised by opportunistic third parties.

Takeaways:

Late payment of the excess claims fees due after a first examination report is issued could cause your patent application to lapse.

Allowing a patent application to lapse can create a gap in your rights which third parties could potentially use to:

(i) infringe your rights without consequences; and then
(ii) leverage any interim infringement to obtain a licence to the invention from the patent office (on reasonable, but perhaps less advantageous terms).