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Availability of non-infringing product is relevant in determining profit recovery for infringing activities

non-infringing productIn a recent decision (Apotex Inc. v. ADIR, 2017 FCA 23), the Federal Court of Appeal determined that the Federal Court erred in law by rejecting the relevance at law of any available non-infringing product and failed to adequately consider the evidence adduced as to the ability and willingness of three suppliers to provide non-infringing product. According to the Court of Appeal:

  • To the extent the Federal Court rejected the relevance of non-infringing perindopril because the defendant sold perindopril, this conclusion was inconsistent with Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34 where the Roundup Ready Canola sold by the defendant Schmeiser consisted entirely of the patented genes and the differential profit approach was nonetheless applied.
  • While Apotex Inc. v. Merck & Co. Inc., 2015 FCA 171 considered a claim for compensatory damages for patent infringement, the comments had equal application to an accounting for profits. In any event, the policy reasons noted by the Federal Court could not trump the requirement that an infringer’s disgorged profit must be only the profit which is causally attributable to the invention.
  • The Federal Court’s rejection of arguments advanced in Wellcome Foundation Ltd v. Apotex Inc., (1998) 151 FTR 250 could not stand for the reason that it is contrary to the application of the differential profit approach applied by the Supreme Court in Schmeiser.

In light of the factually complex evidentiary record before the Federal Court and the need to assess the credibility of the evidence, this issue was remitted to the Federal Court.

This decisions follows an original finding, in 2008, that Canadian Patent No. 1,341,196 (the “196 Patent”), which claims the drug perindopril, was valid and infringed by the defendant, Apotex (2008 FC 825, aff’d 2009 FCA 222). This liability judgment permitted the patentee to elect to claim either an accounting of the defendants’ profits or all of the damages sustained as a result of the defendants’ activities which infringed the 196 Patent. The patentee elected to recover the profits earned by reason of the infringing activities. After a long trial, the Federal Court determined the amount of the defendant’s profits which were attributable to the infringing activity (2015 FC 721).

By: Kaitlin Soye and David Tait, McCarthy Tétrault LLP

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McCarthy Tétrault LLP

McCarthy Tétrault is a Canadian law firm that delivers integrated business law, litigation services, tax law, real property law, labour and employment law nationally and globally.McCarthy publishes a series of blogs to share information with companies to help them comply and manage their businesses. On the Inside Internal Controls blog we will share some of those blog posts sharing their expertise among others, in the areas of Competition/Anti-trust, Corporate and Commercial Law, Intellectual Property, Privacy, Environmental Law, Technology and Litigation. Read more here
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