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Patents - Infringement Remedies
MORE CASES
Part 2
. Rovi Guides, Inc. v. Telus Corporation
In Rovi Guides, Inc. v. Telus Corporation (Fed CA, 2024) the Federal Court of Appeal dismissed a patent infringement appeal, here where the trial court "dismissed Rovi’s actions against the respondents, Bell Canada (Bell) and Telus Corporation, Telus Communications Inc., and Telus Communications Company (collectively, Telus) for patent infringement and granted the respondents’ counterclaims for declarations of invalidity and non‑infringement".
Here the court makes several points on awarding an 'accounting' remedy for patent infringement remedies:[107] I disagree. While complexity is not a factor that, alone, can justify denying an accounting, Justice de Montigny, then writing for the Federal Court, confirmed that "“an accounting of profits may be inappropriate where the accounting exercise would be complex and contentious, and where a reference on profits would result in a lengthy and complicated procedure and related disputes which would complicate and further delay a final resolution of the matter”": Philip Morris Products S.A. v. Marlboro Canada Ltd., 2015 FC 364, [2015] F.C.J. No. 1564 at paras. 25-26, aff’d 2016 FCA 55, 264 A.C.W.S. (3d) 186 at paras. 12-14, citing Laboratoires Servier, Adir, Oril Industries, Servier Canada Inc. v. Apotex Inc., 2008 FC 825, 67 C.P.R. (4th) 241 at paras. 507-508, aff’d 2009 FCA 222, 75 C.P.R. (4th) 443, leave to appeal to SCC refused, 33357 (25 March 2010); Eurocopter at paras. 409-416.
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[111] This Court has summarized the jurisprudence on this factor as considering "“the defendant’s knowing and intentional infringement”" as a factor that may favour granting an accounting of profits: Apotex Inc. v. ADIR, 2020 FCA 60, 172 C.P.R. (4th) 1 at para. 120, leave to appeal to SCC refused, 39172 (24 September 2020), citing Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34, [2004] 1 S.C.R. 902 at para. 95; Rivett v. Monsanto Canada Inc., 2010 FCA 207, 325 D.L.R. (4th) 107 at para. 32. Given this, it cannot be said that the Federal Court was wrong to consider "“wilful infringement”" as a factor that might be considered in favouring an accounting of profits.
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[115] I agree with Rovi that the case law has yet to recognize delay in patent prosecution as a factor that would militate against an accounting of profits. Nevertheless, as I stated in Videotron, I would not completely foreclose the possibility that this sort of delay could be relevant to refusing an accounting of profits. If there were ever a basis to determine that a plaintiff had unclean hands in seeking to extend the prosecution time to allow a defendant to accumulate profits that the plaintiff would then obtain, such conduct could well be sufficiently inequitable to disentitle a plaintiff to an accounting of profits.
[116] Importantly, however, to come to this conclusion, this Court requires factual and/or expert evidence to demonstrate whether the length of time taken to obtain the Canadian patent was unduly long or short and evidence from which inferences may be drawn as to the patentee’s intentions in delaying prosecution of its patents. As stated in Videotron, "“[w]ithout evidence as to what patent prosecution practice is and means in each country this Court cannot draw meaningful inferences as to delay or wilfulness”": Videotron at para. 125, citing Merck & Co. v. Apotex Inc., 2006 FC 524, [2006] F.C.J. No. 1490 at para. 39, rev’d (on other grounds) 2006 FCA 323, [2006] F.C.J. No. 1490, leave to appeal to SCC refused, 31754 (10 May 2007). Experts could be retained to consider a number of factors to assess the adequacy of the explanation for a delay in prosecution, including the actual duration of the applicant’s delay, how it compares to delays typically seen, and whether the delay was caused by the Canadian Intellectual Property Office (CIPO). In addition, evidence as to the purpose behind the use of delay tactics would be relevant.
[117] In the instant case, the Federal Court had no evidence about normal practice and delays typically seen before the Patent Office, nor about Rovi’s motives in prosecuting the Patents the way it did. The Court could not infer merely from the time it took to prosecute the patents that Rovi was engaged in delay tactics. Therefore, it was a reviewable error for the Federal Court to have relied in its remedial analysis on the length of time it took to prosecute the Patents before the Patent Office. . Rovi Guides, Inc. v. Videotron Ltd.
In Rovi Guides, Inc. v. Videotron Ltd. (Fed CA, 2024) the Federal Court of Appeal dismissed a patent infringement appeal, where the trial court dismissed the patent infringement claim and granted a "counterclaim for declarations of invalidity and non‑infringement".
Here the courts (trial and appeal) usefully (and extensively) consider patent infringement remedy doctrine:[38] In deciding against an accounting of profits, the Federal Court cited the decision of this Court in Philip Morris Products S.A. v. Marlboro Canada Limited, 2016 FCA 55, [2016] F.C.J. No. 175 [Marlboro FCA], at paragraph 8, for the proposition that while the remedy of an accounting of profits is a discretionary one, a court should not refuse an accounting in the absence of compelling reasons. The Federal Court found that factors relevant to awarding an accounting of profits include: (i) whether there has been undue delay in commencing or prosecuting the litigation; (ii) the patentee’s conduct; (iii) the infringer’s conduct; (iv) whether the patentee practiced the invention of the patent in Canada; and (v) the complexity of calculating an accounting of profits: Federal Court Decision at para. 581.
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(1) Remedies for Patent Infringement
[91] Remedies available for patent infringement are set out in sections 55 and 57 of the Patent Act.
[92] Section 55 provides for damages for patent infringement and for reasonable compensation for damage sustained between the date that a specification is laid open for public inspection under the Patent Act and the date that the patent is issued, when the patent cannot yet be infringed because it has not yet been granted. Subsections 55(1) and (2) of the Patent Act provide:"Liability for patent infringement "
"Contrefaçon et recours "
"55.(1) A person who infringes a patent is liable to the patentee and to all persons claiming under the patentee for all damage sustained by the patentee or by any such person, after the grant of the patent, by reason of the infringement. "
"55.(1)"" Quiconque contrefait un brevet est responsable envers le breveté et toute personne se réclamant de celui-ci du dommage que cette contrefaçon leur a fait subir après l’octroi du brevet. "
"Liability damage before patent is granted "
"Indemnité raisonnable "
"(2) A person is liable to pay reasonable compensation to a patentee and to all persons claiming under the patentee for any damage sustained by the patentee or by any of those persons by reason of any act on the part of that person, after the specification contained in the application for the patent became open to public inspection, in English or French, under section 10 and before the grant of the patent, that would have constituted an infringement of the patent if the patent had been granted on the day the specification became open to public inspection, in English or French, under that section. "
"(2) Est responsable envers le breveté et toute personne se réclamant de celui-ci, à concurrence d’une indemnité raisonnable, quiconque accomplit un acte leur faisant subir un dommage après la date à laquelle le mémoire descriptif compris dans la demande de brevet est devenu accessible au public, en français ou en anglais, sous le régime de l’article 10 et avant la date de l’octroi du brevet, dans le cas où cet acte aurait constitué une contrefaçon si le brevet avait été octroyé à la date où ce mémoire descriptif est ainsi devenu accessible." [93] Turning more particularly to the principles applicable to the assessment of damages under subsection 55(1) of the Patent Act, such damages focus on the loss suffered by a plaintiff—i.e. the patentee or a party claiming under the patentee, such as a licensee—and are compensatory in nature. More specifically, damages for patent infringement under subsection 55(1) of the Patent Act are aimed at compensating the plaintiff for the losses incurred by reason of the infringement. Among other things, such damages may take the form of compensation for lost profits associated with sales lost or price suppression suffered by the plaintiff by reason of the infringement or compensation for income lost by the plaintiff where it has a practice of entering into licencing arrangements: Nova Chemicals Corp. v. Dow Chemical Co., 2022 SCC 43, 199 C.P.R. (4th) 107 at para. 7 [Nova Chemicals]. Where the plaintiff has a past practice of licencing its patents, the licence fees it typically charges are often used to establish the quantum of damages for lost licencing income: Nova Chemicals at para. 7.
[94] However, there may be circumstances where a plaintiff cannot establish that it has lost sales and has no relevant practice of licencing the invention that the court accepts as the basis for measuring damages. In such circumstances, a court may award damages calculated via a hypothetical "“reasonable royalty”" on the sales made by the infringer: Nova Chemicals at para. 7, citing AlliedSignal Inc. v. Du Pont Canada Inc. (1998), 1998 CanLII 7464 (FC), 78 C.P.R. (3d) 129 (F.C. (T.D.)), at para. 199 [AlliedSignal]; Unilever PLC et al. v. Proctor & Gamble Inc. [1993] F.C.J. No. 117, 47 C.P.R. (3d) 479 (FC), aff’d [1995] F.C.J. No. 1005, 61 C.P.R. (3d) 499 (F.C.A.) at 571 [Unilever]. Setting the hypothetical reasonable royalty rate in this fashion requires the court to determine the terms that the parties would have agreed to had they negotiated a royalty. As noted in AlliedSignal, "“[t]he test is what rate would result from negotiations between a willing licensor and a willing licensee”": at para. 199.
[95] In addition to the remedy in damages, the Patent Act also provides for equitable remedies, notably an accounting of profits (or disgorgement) and injunctions. Subsection 57(1) of the Patent Act states as follows:"Injunction may issue "
"Interdiction "
"57.(1) In any action for infringement of a patent, the court, or any judge thereof, may, on the application of the plaintiff or defendant, make such order as the court or judge sees fit, "
"57.(1)"" Dans toute action en contrefaçon de brevet, le tribunal, ou l’un de ses juges, peut, sur requête du plaignant ou du défendeur, rendre l’ordonnance qu’il juge à propos de rendre : "
"(a) restraining or enjoining the opposite party from further use, manufacture or sale of the subject-matter of the patent, and for his punishment in the event of disobedience of that order, or "
"a)"" pour interdire ou défendre à la partie adverse de continuer à exploiter, fabriquer ou vendre l’article qui fait l’objet du brevet, et pour prescrire la peine à subir dans le cas de désobéissance à cette ordonnance; "
"(b) for and respecting inspection or account, "
"b)"" pour les fins et à l’égard de l’inspection ou du règlement de comptes, "
"and generally, respecting the proceedings in the action "
"et d’une façon générale, quant aux procédures de l’action." [96] Courts may award both an interlocutory accounting of profits (typically in place of an interlocutory injunction) and a final accounting of profits. A final accounting is often coupled with a permanent injunction when the patent is still in force: see Apotex Inc. v. Bayer Inc., 2018 FCA 32, [2018] 4 F.C.R. 58 at para. 66 [Bayer], citing Vidi v. Smith (1854), 118 E.R. 1404, 3 El. & Bl. 969 (U.K.Q.B.); Beloit Canada Ltd. v. Valmet-Dominion Inc., 1997 CanLII 6342 (FCA), [1997] 3 FC 497, 73 C.P.R. (3d) 321 (F.C.A.) [Beloit FCA 1997].
[97] An accounting of profits, under paragraph 57(1)(b) of the Patent Act, unlike a damages award, is not compensatory. Instead, an accounting of profits focuses on the profits wrongfully earned by the infringer and not on the losses suffered by the plaintiff. It requires the infringer to disgorge to the plaintiff the profits the infringer earned by reason of the infringement. As the Supeme Court explained in Nova Chemicals, at paragraph 47, the accounting of profits remedy is a necessary tool to deter infringement, especially by those who could make profits in excess of the damages they would cause to a patent holder. Without the availability of the remedy of an accounting of profits, infringers who stand to make substantial profits could be tempted to deliberately infringe a patent if they stood to earn sums that exceed their damages exposure. The accounting of profits remedy is therefore an important tool in a court’s arsenal to deter infringement and protect patentees and the patent bargain. The remedy of an accounting of profits may be particularly appropriate in situations where large companies infringe patents owned by much smaller companies or individuals.
[98] Damages and an accounting of profits are alternate remedies; thus, a wronged plaintiff cannot receive both for the same period: Fox at § 14:10, citing Betts v. Neilson (1871), L.R. 5 H.L. 1 (H.L.) at 22 and 27; De Vitre v. Betts (1873), L.R. 6 H.L. 319 (H.L.) at 321; United Horse Shoe and Nail Company Limited v. Stewart and Company (1888), 5 R.P.C. 260 (H.L.) at 266; American Braided Wire Company v. Thomson (1890), 7 R.P.C. 152 (C.A.) at 158.
[99] It is up to a plaintiff to seek an accounting of the infringer’s profits since damages are the default remedy under the Patent Act, and an accounting cannot be awarded by the Court unless a plaintiff elects to seek the remedy: Bayer at para. 34.
[100] That said, plaintiffs are not automatically entitled to an award for an accounting of profits following an election. As with any equitable remedy, a court possesses the discretion to decline to award an accounting of profits where it would be inequitable to make the award: see, regarding discretion to award equitable remedies generally, Wewaykum Indian Band v. Canada, 2002 SCC 79, [2002] 4 S.C.R. 245 at para. 107[Wewaykum], citing Frame v. Smith, 1987 CanLII 74 (SCC), [1987] 2 S.C.R. 99, 42 D.L.R. (4th) 81, at 144; Canson Enterprises Ltd. v. Boughton & Co., 1991 CanLII 52 (SCC), [1991] 3 S.C.R. 534, 85 D.L.R. (4th) 129, at 589; Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, [2002] 1 S.C.R. 678 at para. 66; and regarding discretion to award an accounting of profits in the case of patent infringement, more particularly: Lubrizol Corp. v. Imperial Oil Ltd., 1992 CanLII 8530 (FCA), [1992] F.C.J. No. 1110, 98 D.L.R. (4th) 1 (F.C.A.) at para. 69; Unilever at para. 183; Beloit FCA 1997 at 545; Marlboro FCA at paras. 8-10; Bayer Aktiengesellschaft and Miles Canada Inc. v. Apotex Inc., 2002 CanLII 18194 (ON CA), [2002] O.J. No. 193, 16 C.P.R. (4th) 417 at paras. 13–14 (ONCA).
[101] A court’s discretion in this regard applies not only to the availability of the remedy, but also to its terms, such as the duration of its application: McGuiness Abrams, Canadian Civil Procedure Law, 2nd ed. (Lexis QuickLaw, 2010) at §2.32.
[102] The discretionary nature of the award of an accounting of profits is recognized in the wording used in paragraph 57(1)(b) of the Patent Act, itself, which provides that a court "“may”" make "“such order as the court … sees fit”" for an account. By virtue of the breadth of this wording, this Court held in Beloit FCA 1997 that a court is not obliged to rely on the maxims of equity in order to deny a successful plaintiff its election of an accounting of profits: at 547.
[103] However, this does not mean that a trial judge may arbitrarily deny the remedy. As Justice Pelletier of this Court found in Apotex Inc. v. Bristol-Myers Squibb Co., 2003 FCA 263, [2003] F.C.J. No. 960 [Bristol-Myers] at paragraph 14:"The fact that equitable remedies are discretionary means that the respondent cannot elect an accounting of profits as of right. That said, a discretionary remedy is not an arbitrary remedy. In the absence of proof of a bar to equitable relief, a claimant can expect to be granted the remedy it seeks in accordance with the principles governing its availability". Nor does the issue of a bar to equitable relief require the claimant to disprove every ground which could possibly disentitle it to that relief. It is not open to a party to argue that its opponent has not sufficiently disproven a given bar. All this to say that there is no reason why the issue of the respondent's right to elect an accounting of profits cannot be dealt with in the liability portion of the trial. The appellant having denied that it relies upon particular facts to say that the respondent is not entitled to an accounting, the trial judge can deal with the question of entitlement on the basis of the respondent's own evidence. [Emphasis added.] [104] In a somewhat similar vein, according to one commentator, the discretion to deny or award an equitable remedy such as accounting of profits does not refer to a judge’s personal discretion or mean unfettered, unbridled discretion to do what the judge feels is best. Rather, as the legal scholar Karl Llewellyn once wrote, judicial discretion should be exercised with "“reasoned regularity…In exercising judicial discretion, as opposed to personal discretion, courts apply established principles of equity to the facts presented by the particular case”": Karl Llewellyn, The Common Law Tradition: Deciding Appeals (Little, Brown & Co., 1960) at 216.
[105] In other words, despite the discretionary nature of equitable remedies such as an accounting of profits, they should not be denied arbitrarily. Reasoned regularity is expected from the court in its exercise of discretion in deciding whether to award the remedy.
[106] Professor Norman Siebrasse has noted that, for several decades, an accounting of profits has been the dominant monetary remedy for patent infringement in Canada and the Commonwealth: see Norman Siebrasse et al., "“Accounting of Profits in Intellectual Property Cases in Canada (2007)”", (2008), 24 Canadian Intellectual Property Review 83 at 85 (recently cited with approval by the Supreme Court in Nova Chemicals at para. 37).
[107] Even though plaintiffs are not entitled to an accounting of profits as of right (see Bristol-Myers at para. 14), this Court has held that compelling reasons are required to deny the remedy. In Marlboro FCA, this Court agreed with Chief Justice de Montigny, then of the Federal Court, that a court needs "“… to ‘weigh the relevant factors in light of the equitable purposes of the remedy, bearing in mind that the [respondents] have no right to an accounting of profits but that they should not be denied that option in the absence of any compelling reasons’”": see Marlboro FCA at para. 8 (emphasis added), citing to Philip Morris Products S.A. v. Malboro Canada Limited, 2015 FC 364, [2015] F.C.J. No. 1564 at para. 21 [Marlboro FC]. While Marlboro FCA involved the infringement of a trademark, the need for compelling reasons to deny accounting of profits applies equally to cases where patents are infringed.
[108] As to what such compelling reasons might be in an action for patent infringement, the case law sets out some of the instances where an accounting has been refused to a successful plaintiff. Prior to the case at bar, these included situations where:. there was delay in the pursuit of the action by the plaintiff or in instituting proceedings once the plaintiff became aware of the infringement: Bayer Inc. v. Cobalt Pharmaceuticals Company, 2016 FC 1192, 142 C.P.R. (4th) 374 at para. 10 [Bayer FC], aff’d 2018 FCA 32, [2018] 4 F.C.R. 58 at para. 68; J.M. Voith GmbH v. Beloit Corp. (1993), 1993 CanLII 2941 (FC), 47 C.P.R. (3d) 448, 61 F.T.R. 161 (F.C.T.D.) at 548 [Beloit FC 1993], aff’d on this point in Beloit FCA 1997 at para. 111; Merck & Co., Inc. v. Apotex Inc., 2006 FCA 323, [2007] 3 F.C.R. 588, leave to appeal to SCC refused, 31754 (10 May 2007) at para. 129 [Merck FCA];
. the plaintiff had "“unclean hands”" in respect of conduct that related directly to the claim for infringement or its conduct of the action: Nova Chemicals at para. 7; Bayer FC at para. 10, citing Varco Canada Ltd. v. Pason Systems Corp., 2013 FC 750, 236 A.C.W.S. (3d) 714 at paras. 403–410; Marlboro FC at paras. 22–45, aff’d Marlboro FCA at paras. 3, 23; Merck FCA at para. 129;
. the infringement complained of occurred when the patent in suit had been declared invalid at first instance (but then later found valid on appeal): Beloit FC 1993, affirmed on this point in Beloit FCA 1997;
. the calculation of profits was unduly complex as opposed to the assessment of damages, especially where the infringing items were only a very small portion of the product sold by the defendant, making it difficult to arrive at a reliable figure for profits earned via infringement: Eurocopter v. Bell Helicopter Textron Canada Limitée, 2012 FC 113, 100 C.P.R. (4th) 87 at paras. 406–416, aff’d 2013 FCA 219, 120 C.P.R. (4th) 394; Marlboro FCA at paras. 11–14;
. the plaintiff was a non-exclusive licensee: Domco Industries Ltd. v. Armstrong Cork Canada Ltd. et al. (1980), 1980 CanLII 4176 (FC), [1980] 2 F.C. 801, 47 C.P.R. (2d) 1 (F.C.T.D.) at 9-10, aff’d 1980 CanLII 4137 (FCA), [1981] 2 F.C. 510, (1980) 54 C.P.R. (2d) 155 (F.C.A.), aff’d 1982 CanLII 185 (SCC), [1982] 1 S.C.R. 907, 66 C.P.R. (2d) 46 (this point not in issue on the appeals); and
. the plaintiff did not practice the invention in Canada: Nova Chemicals at para. 7; Frac Shack Inc. v. AFD Petroleum Ltd., 2017 FC 104, at para. 283, rev’d on other grounds 2018 FCA 140, 157 C.P.R. (4th) 195; Human Care Canada Inc. v. Evolution Technologies Inc., 2018 FC 1302 at para. 437, rev’d on other grounds 2019 FCA 209, 167 C.P.R. (4th) 285, leave to appeal to SCC refused, 38846 (9 April 2020). [109] However, on the final point, this Court recently held in Seedlings Life Science Ventures, LLC v. Pfizer Canada ULC, 2021 FCA 154, 339 A.C.W.S. (3d) 69 [Seedlings] that the mere fact that a patentee licences or intends to licence the patent should not disentitle the plaintiff to an accounting of profits. Writing for the Court, Justice Locke stated at paragraphs 77-79:In the present case, the Federal Court concluded that, even if infringement had been found, an accounting of profits would have been inappropriate. One reason cited by the Federal Court for this conclusion was that Seedlings does not practise the invention, and never had any intention to do so. Instead, it intended to license its invention to another entity. At paragraph 252 of the Reasons, the Federal Court cited several decisions over many decades in support of the statement that “if the patentee made its profits by selling licenses, it should not be entitled to compensation beyond a reasonable royalty.” In response to the concern that denying it the right to elect would ignore the deterrent purpose of an accounting of profits, the Federal Court noted the absence of jurisprudence in which such an argument overcame the fact that the patentee did not practise the invention.
With regard to the cases cited at paragraph 252 of the Reasons, I note that three of them concern damages, not accounting for profits, and are therefore not helpful in the present context: Colonial Fastener Co. Ltd. v. Lightning Fastener Co. Ltd. (1936), 1936 CanLII 26 (SCC), [1937] S.C.R. 36, at page 45, [1937] 1 D.L.R. 21; Alliedsignal Inc. v. du Pont Canada Inc. (1998), 1998 CanLII 7464 (FC), 142 F.T.R. 241, 78 C.P.R. (3d) 1 (F.C.T.D.), at paragraphs 21–22, affd (1999), 1999 CanLII 7409 (FCA), 235 N.R. 185, 86 C.P.R. (3d) 324 (F.C.A.); and JAY-LOR International Inc. v. Penta Farm Systems Ltd., 2007 FC 358, 313 F.T.R. 1, [2007] 4 F.C.R. D-5, at paragraph 119. The other cases focus on the fact that the patentee was not practising the invention, and not necessarily on whether it made profits from licensing. In my view, none of the cited decisions provides firm support for the broad principle that a patentee that makes (or intended to make) profits by selling licences to its patent should not be entitled to elect an accounting of profits.
I am particularly concerned about the potential effect of such a broadly defined principle on inventors who recognize that their specialty lies in inventing, and that production and marketing of their inventions are better left to different specialists. Such inventors will seek to license third parties to take their inventions to market as a matter of business efficiency. The broadly defined principle would force such inventors to choose between business efficiency and retaining a potential remedy for infringement of their patent rights. The value of a patent would therefore be reduced for specialist inventors. I see no reason to force such a choice. In my view, business efficiency should be encouraged. [110] Thus, the fact that the patentee has licenced or intends to licence its patents in Canada, as opposed to itself practicing the invention, is to be afforded no weight in the determination of whether to award an accounting. This is to be contrasted with situations where the plaintiff has made no attempt and has no plans to commercialize the invention. The latter sort of circumstance may well weigh against the award of an accounting of profits.
[111] It must be noted that the above-listed situations, where an accounting has been denied, are not a complete list of situations where the remedy may be denied. It remains open to a court to deny an accounting in other, new situations where it would be inequitable to make the award: Marlboro FCA at paras. 8, 18; Merck FCA at para. 133.
[112] Even though a plaintiff ought not be denied an accounting of profits in the absence of compelling reasons, this Court has noted that certain circumstances favour the award of an accounting of profits. The decided cases confirm that these may include circumstances where:. the defendant knowingly infringed the patent: Laboratoires Servier, Adir, Oril Industries, Servier Canada Inc. v. Apotex Inc., 2008 FC 825, 67 C.P.R. (4th) 241 at para. 509, aff’d 2009 FCA 222, 75 C.P.R. (4th) 443, leave to appeal to SCC refused, 33357 (25 March 2010); Apotex Inc. v. ADIR, 2020 FCA 60, 172 C.P.R. (4th) 1 at para. 120, leave to appeal to SCC refused, 39172 (24 September 2020), citing Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34, [2004] 1 S.C.R. 902 at para. 95 [ADIR]; Rivett v. Monsanto Canada Inc., 2010 FCA 207, 325 D.L.R. (4th) 107 at para. 32; and
. the defendant was aware that the plaintiff was likely to enforce the patent: Eli Lilly at para. 655. [113] Where a defendant alleges that it should not be liable for damages or be required to disgorge all or part of its profits because it could have adopted a non-infringing alternative, it is incumbent on the defendant to establish that the claimed alternative is a true substitute that could and would have been adopted: see Nova Chemicals at para. 114, citing Merck & Co. Inc. v. Apotex Inc., 2015 FCA 171, 387 D.L.R. (4th) 552 at para. 73 [Lovastatin]. In addition, as this Court stated in Apotex Inc. v. Eli Lilly and Company, 2018 FCA 217, 161 C.P.R. (4th) 411 [Apotex 2018], consideration of whether the non‑infringing alternative is a true substitute is particularly important in non‑pharmaceutical patent infringement cases: this "“very important question... usually turns on whether the product at issue would be considered a true substitute by the consumer”": see para. 54; see also ADIR at paras. 96–100. . Mud Engineering Inc. v. Secure Energy Services Inc.
In Mud Engineering Inc. v. Secure Energy Services Inc. (Fed CA, 2024) the Federal Court of Appeal emphases the unique 'in personam' result when the court refuses to issue a sought declaration on poor evidence [see para 42]:[17] The appellants also submit that the Federal Court’s decision in the main appeal has created an absurd result: neither the appellants nor the respondents obtained a declaration that they own the patents and so, as a result, no one owns them. They raise the spectre that we now have patents that cannot be defended.
[18] The result is not absurd. Courts do not declare that someone owns property unless they are satisfied they have the factual and legal bases to make that declaration. Here, after weighing the evidence before it, the Federal Court found that both sets of parties fell short of the mark. The Federal Court was entitled to so find, given the state of the evidence before it.
[19] Further, the Federal Court’s decision in the main appeal does not leave the parties without a remedy for an infringement of the patents in appropriate circumstances. The decision binds these two parties as against each other but does not bind them against third parties. Absent an abuse of process (see, e.g., Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77), either remains free to contest an infringement of the patents by third parties and to succeed if, among other things, their ownership of the patents is contested and they are able to offer sufficient evidence proving ownership.
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[25] And sometimes no remedy should be given at all. An appellate court will send the matter back for redetermination only if, among other things, there is some possibility that the error might have changed the outcome. Sending a case back to a first-instance court for redetermination, when the outcome would have remained the same despite the error, makes no sense. . Nova Chemicals Corp. v. Dow Chemical Co.
In Nova Chemicals Corp. v. Dow Chemical Co. (SCC, 2022) the Supreme Court of Canada generally considered patent infringment remedies:A. Remedies in Patent Law
[7] Below I define three patent law remedies and explain how they relate to each other. The three statutory remedies I define are (1) reasonable compensation, (2) damages, and (3) an accounting of profits.
Reasonable Compensation
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Reasonable compensation can be granted for any loss caused by the infringer’s use of the invention between the patent’s publication and the grant of the patent.
This remedy is authorized by s. 55(2) of the Patent Act, R.S.C. 1985, c. P-4.
This remedy typically entitles a patentee to a “reasonable royalty” (S. J. Perry and T. A. Currier, Canadian Patent Law (4th ed. 2021), at §§17.93-17.94).
A reasonable royalty is “that which the infringer would have had to pay if, instead of infringing the Patent, [the infringer] had come to be licensed under the Patent” (AlliedSignal Inc. v. Du Pont Canada Inc. (1998), 1998 CanLII 7464 (FC), 78 C.P.R. (3d) 129 (F.C. (T.D.)), at para. 199, quoting Unilever PLC v. Procter & Gamble Inc. (1993), 47 C.P.R. (3d) 479 (F.C. (T.D.)), at p. 571 (text in brackets in original)). “The test is what rate would result from negotiations between a willing licensor and a willing licensee” (para. 199).
Damages
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Damages compensate the patentee for all pecuniary losses causally attributable to infringement after the grant of the patent.
This remedy is authorized by s. 55(1) of the Patent Act.
Damages can include lost profits on sales or due to depression of prices, and lost income from licensing opportunities, among others (Perry and Currier, at §17.9).
Accounting of Profits
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An accounting of profits requires that the infringer disgorge all profits causally attributable to infringement of the invention after the grant of the patent.
This remedy is authorized by s. 57(1)(b) of the Patent Act.
This remedy is an alternative to an award of damages (Apotex Inc. v. ADIR, 2020 FCA 60, 172 C.P.R. (4th) 1, at para. 35). It is an equitable, discretionary remedy (AlliedSignal Inc. v. Du Pont Canada Inc. (1995), 61 C.P.R. (3d) 417 (F.C.A.), at pp. 444-46). Judges may consider practical consequences, including expediency, misbehaviour by litigants, and whether the patentee practices the invention itself when exercising this discretion (K. Andrews and J. de Beer, “Accounting of Profits to Remedy Biotechnology Patent Infringement” (2009), 47 Osgoode Hall L.J. 619, at p. 641; Bayer Inc. v. Cobalt Pharmaceuticals Co., 2016 FC 1192, 142 C.P.R. (4th) 374, at paras. 6 and 10; Seedlings Life Science Ventures, LLC v. Pfizer Canada ULC, 2021 FCA 154, at paras. 76 and 79-81 (CanLII)). At para 42-67 to court considers the purpose of an 'accounting of profits' and 'non-infringing options'.
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