Canada’s Federal Court of Appeal Says Infringers Cannot Dictate the Remedy

When a patent is infringed in Canada, a successful plaintiff can elect damages, or an accounting of the profits the defendant made by infringing. Unless there is an equitable reason to refuse an accounting of profits, the choice belongs to the plaintiff.[1]

In Apotex Inc. v. Bayer Inc., 2018 FCA 32, the Federal Court of Appeal ruled in no uncertain terms that the infringer does not get to dictate the remedy. The infringer, Apotex, raised a novel argument that it could impose an accounting of profits on Bayer. In the Court below, Justice Fothergill rejected Apotex’s argument, holding that it would “turn the doctrines of equity and parliamentary sovereignty on their heads”.[2]

The Federal Court of Appeal affirmed. Writing for a unanimous panel (with Justices Stratas and Woods), Justice Nadon held that subsection 55(1) gave the successful plaintiff a right to damages.[3] The issue was whether that right was displaced by the defendant’s alleged right to elect an accounting of profits under subsection 57(1). Justice Nadon called Apotex’s argument “an astounding proposition” and rejected it.[4]

Core to Apotex’s argument was the use of the word “defendant” in subsection 57(1) of the Patent Act. Under that jurisdiction-granting provision, “on the application of the plaintiff or defendant”, the court may “make such order as [it]…sees fit…for and respecting…account”.[5] Based on this, Apotex argued that, as the defendant, it could impose an accounting of profits on the successful plaintiff, thereby precluding a damages award under subsection 55(1).

In the course of his reasons, Justice Nadon examined the legislative history behind section 57 and the cases considering its predecessor provisions. Key to Justice Nadon’s reasoning, section 57 traces its origins to the U.K. Patent Law Amendment Act, 1852, which fused the then-distinct remedial jurisdictions of the courts of law (where damages were the available remedy) and the courts of equity (where injunctions and orders to ‘account’ were available).[6]

Originally, in the courts of equity, there were two kinds of orders to account. The first kind was an order for the infringer to account for and disgorge its ill-gotten profits.[7] This was the kind of order Apotex sought to impose on the successful plaintiff.

The second kind of account was an interlocutory order for the defendant to maintain a ledger of its alleged infringements. This second kind of account was typically offered as an undertaking by the defendant, either on the defendant’s motion to dissolve an interlocutory injunction, or to resist the plaintiff’s interlocutory injunction motion.[8] As Justice Nadon noted, this second type of account was carried into Canadian law with the passing of An Act respecting Patents of Invention in 1869.[9] Since the Canadian enactment in 1869 had merely adopted U.K. law existing at that time, this was the type of ‘account’ the defendant could seek under subsection 57(1).

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[1] At paras. 58-61, citing Beloit Canada Ltd. v. Valmet-Dominion Inc., [1997] 3 F.C. 497.

[2] Bayer Inc. v. Cobalt Pharmaceuticals Company, 2016 FC 1192

[3] At para. 69.

[4] At paras. 33, 72.

[5] Patent Act, R.S.C. 1985, c. P-4, s. 57(1)(b) (emphasis added).

[6] At paras. 41-43, citing Patent Law Amendment Act, 1852 (U.K.) 15 & 16 Vict. c. 83.

[7] At paras. 46-50.

[8] A defendant’s undertaking to keep an account of its alleged infringements would mean that any harm caused by the infringement was quantifiable and, therefore, reparable. Conversely, irreparable harm is necessary to impose an injunction: RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 at 341.

[9] At para. 44, citing An Act respecting Patents of Invention, 1869 (32 & 33 Vic.), c. 11, s. 24. This kind of order has been imposed in many Canadian authorities: at para. 51.

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