Small entity status in Canada, permitting one to pay patent fees at a reduced rate, encompasses a much more limited group of entities than in the United States and, in fact, it is quite difficult for any business to qualify for this status. The previous decision of the Federal Trial Court in Dutch Industries Ltd. v. Canada (Commissioner of Patents) made it dangerous to make a claim for small entity status unless one is sure that, at the time of making the payment at a reduced rate, the patent applicant or owner properly qualifies for the reduction. That court held that the Commissioner of Patents had no power to correct an error of the payment of a fee at an incorrect small entity rate. Incorrect payment of a fee at a small entity rate thus was held to result in abandonment of the application which could only be revived within one year of the abandonment.

On appeal, the Court of Appeal upheld the decision of the Trial Court that the Commissioner does not have the power to allow correction of an incorrectly paid fee. However, the Court of Appeal further stated that the determination of small entity status should be made “when the patent system is engaged” (typically at filing), and that status is retained throughout the life of the patent. Thus, a re-examination of small entity status need not be made each time a subsequent fee is paid, even if the applicant’s status changes after filing.