Last updated on October 12, 2020
In July of 2017, the Federal Court of Canada granted the largest damages award in Canadian history for patent infringement on the basis of an accounting of profits in Dow Chemical Company v Nova Chemical Corporation, 2017 FC 637,
On September 15, 2020, the Federal Court of Appeal of Canada upheld that award and provided guidance on the the principles that underlie an accounting of profits as a remedy for patent infringement (2020 FCA 141)
As noted in Deeth Williams Wall’s newsletter article on the FCA ruling:
The Court stated that an accounting of profits disgorges the benefit obtained by the infringement – no more and no less. Therefore, an accounting of profits must strip the infringer of all the benefits of the infringement but it is not intended to be punitive. The Court held that when calculated according to proper principles, the size of the award is irrelevant. More specifically, the Court concluded that the following principles must be applied:
Only actual profits are awarded: The Court is only concerned with actual revenues and costs and hypothetical “but for” costs and theories are irrelevant to the analysis.
Only profits resulting from the infringement are awarded: The disgorgement of profits must be linked, and limited, to the profits caused by the infringement separate from other profits. This is particularly relevant when the patented invention covers one component of a larger whole. What is relevant is the value added by the invention itself, which can in appropriate circumstances be determined by comparison with a non-infringement product or process as a baseline.