Infringers’ “Intentions, Motivations and Preferences” Dispenses with Non-Infringing Alternative

In ADIR v. Apotex Inc., the Federal Court applied the now-familiar ‘could have and would have’ test to determine whether the patent-infringing defendants had a non-infringing alternative (“NIA”) defence.[1] Ultimately, the Court rejected the defendants’ alleged NIA, not because the defendants could not have adopted the NIA. Indeed, the Court held that the defendants could have adopted the NIA. Rather, the Court rejected the NIA because the defendants would not have pursued it.

In 2008, the defendants were held liable for infringing the plaintiffs’ patent by selling infringing perindopril tablets manufactured in Canada to its UK and Australian affiliates for sale abroad.[2] The successful plaintiffs elected an accounting of the defendants’ profits. To reduce the award, the defendants alleged that they could have competed legitimately with the plaintiffs by sourcing perindopril tablets from other suppliers in Mexico and India, and selling those tablets to their UK and Australian affiliates.

At trial, in 2015, the Federal Court held that the alleged NIA was irrelevant and assessed the defendants’ profits without taking into account the defendants’ alleged NIA.[3] The Federal Court of Appeal allowed the defendants’ appeal, holding that the Federal Court should have considered the alleged NIA, and remitted the issue to the trial judge for redetermination.[4]

On remand, the Federal Court held that the defendants’ could have deployed their alleged NIA, but that their proposed timeline for doing so was “utopic” – the NIA could first have been deployed one year following the date of first infringement.[5]

Nonetheless, the Court rejected the NIA. The Court held that the applicable jurisprudence, including Apotex v. Merck,[6] Airbus Helicopters v. Bell Helicopter,[7] and AstraZeneca Canada v. Apotex,[8] “requires that the intentions, motivations and preferences of an infringing party be considered.”[9] Applying the law to the case at hand, the Court held that – despite the fact that the NIA was economically viable – the defendants would not have sourced perindopril tablets from the Mexican and Indian suppliers, preferring instead to manufacture in Canada.[10] As a result, the Court held as a fact that, in a world where the defendants did not infringe, they would have abstained from the market altogether during the life of the patent.[11] In the result, the Court rejected the NIA and reaffirmed its 2015 judgment.[12]

 

[1] 2018 FC 346.

[2] 2008 FC 825, aff’d 2009 FCA 222, leave to appeal ref’d 2010 CanLII 14709 (Sup. Ct. Can.).

[3] 2015 FC 721.

[4] 2017 FCA 23.

[5] 2018 FC 346 at paras. 54, 62.

[6] 2015 FCA 171 at paras 90-93: ““Brazen” infringement in the real world makes it very difficult to prove that the defendant would have deployed the non-infringing alternative in the “but for” world.”

[7] 2017 FC 170 at para. 295: “[i]t would simply be too easy to allow infringers of a valid patent, to retroactively rewrite history to escape their liability to pay damages by bringing out scenarios that were never considered or unrealistic on the eve of first infringement.”

[8] 2017 FC 726 at para. 21: “The “could have and would have” evidentiary concerns are also magnified when the proposed hypothetical NIA(s) were never, at any time, submitted to the relevant regulator for assessment and approval”, and para. 31: “where an infringer brazenly infringes a valid patent, or substantially courts the risk of doing so, an inference may arise that no viable substitute was available. If it were otherwise the rational choice would always be to employ the NIA and not the infringing product.”

[9] 2018 FC 346 at para. 78.

[10] 2018 FC 346 at paras. 85-89.

[11] 2018 FC 346 at para. 91.

[12] 2018 FC 346 at para. 92.

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