$644-million Award For Patent Infringement Upheld On Appeal; Accounting Of Profits Remedy Removes "Economic Incentive To Infringe"

Published date10 October 2020
Subject MatterIntellectual Property, Litigation, Mediation & Arbitration, Patent, Trials & Appeals & Compensation
Law FirmGowling WLG
AuthorMr Michael Crichton

In 2020 FCA 141, the Federal Court of Appeal has upheld the Federal Court's earlier judgment awarding Dow Chemical $644 million, the largest monetary award by a Canadian Court in history for patent infringement. In doing so, the Court of Appeal reviewed the law regarding the remedy of an accounting of profits, and made a number of findings that are notable for those engaged in patent disputes in Canada.

Case Background

In 2014, Dow Chemical successfully asserted its patent related to metallocene linear low-density polyethylene as against Nova Chemicals.1 This decision was upheld on appeal in 2016.2

As is common in Canadian patent litigation, the discovery and trial phases for liability and compensation issues were bifurcated in this case. Following discovery and trial on compensation issues and as we previously reported here and here, the Federal Court determined that Dow Chemical was entitled to an award of $644 million for Nova Chemicals' infringement of its patent. This compensation comprised a reasonable royalty for infringement during the pre-grant publication period of the patent, an accounting of profits for the post-grant period, and an accounting of "springboard profits" for a period of 20 months following expiry of the patent.

The current decision (2020 FCA 141) addresses Nova Chemicals' appeal and Dow Chemical's cross-appeal of the lower Court decision awarding $644 million to Dow Chemical.

Background on available remedies for patent infringement in Canada

A successful patentee in an infringement action in Canada may elect to recover either (a) its damages, or (b) the infringer's profits. Election of an accounting of an infringer's profits is subject to equitable considerations, such as the requirement that the plaintiff come to the Court with clean hands.

In addition, a patentee may recover reasonable compensation (i.e., a reasonable royalty) for all laid open (pre-grant but post-publication) period acts of infringement.

In any case, liability for damages, an accounting of profits and reasonable compensation, as the case may be, begin to accrue automatically following publication of the application and patent at issue. There is no requirement for a patentee to give actual or constructive notice.

The Court of Appeal's Decision

At the outset of its decision, the Court of Appeal made a number of comments regarding the accounting of profits remedy, and the remedy's overall role in patent law. In particular, the Court of Appeal stated that the aim of an accounting of profits is not to compensate for injury but to remove the benefits the wrongdoer has made as a result of the infringement. By doing this, any economic incentive to infringe is removed. The Court of Appeal contrasted this purpose of the accounting of profits remedy with the purpose of the damages remedy, which it held was to restore those whose patents have been infringed to the position...

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