$644 Million Patent Infringement Judgment Is Largest In Canadian History

In its decision in The Dow Chemical Company v. Nova Chemicals Corporation, 2017 FC 637, the Federal Court of Canada has awarded the successful plaintiff (Dow Chemical) over $644,000,000, plus interest, as compensation for Nova Chemicals' patent infringement.

This award is, by a substantial margin, the largest monetary award for patent infringement ever granted in a Federal Court judgment. The award was based on a combination of a reasonable royalty for 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 time following expiry of the patent.

Case Background and Court's Decision

The liability phase of this patent infringement action was decided in 2014. The Federal Court concluded that Dow Chemical's patent was valid and infringed. This decision was upheld by the Federal Court of Appeal.1

Earlier in 2017, as we previously reported here, the Federal Court issued a decision in relation to the compensation phase of this action [the "First Compensation Decision"].2

The First Compensation Decision confirmed that Dow Chemical would be entitled to compensation in the form of a reasonable royalty (of 8.8%) for 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. An accounting (disgorgement) of an infringer's profits is permitted under the Canadian Patent Act as an alternative to (but not in addition to) damages for the post-grant period of infringement.

In addition, the First Compensation Decision set out a number of parameters and findings concerning the calculation of Nova Chemicals' costs. These parameters and findings were to be used by the parties to calculate and agree upon a final quantum of profits to be accounted for. In this regard, the First Compensation Decision provided that Nova Chemicals would be allowed to deduct its costs on a full costs basis, as opposed to a more traditional incremental costs basis. The Court was of the view that an incremental approach would be punitive, as Nova Chemicals would have used its capital infrastructure for other purposes during the infringement period.

Following the First Compensation Decision, the parties' respective experts came to different conclusions regarding the allocation of two fixed costs at issue, and the appropriate timing for currency...