Remedies in the Federal Court by Arthur Renaud and Livia Aumand

1. Remedies in the
Federal Court
Arthur B. Renaud
Livia Aumand
November 22, 2012

2. Presenters
Arthur Renaud
Partner, Ottawa
613-786-0202
arthur.renaud@gowlings.com
Livia Aumand
Associate, Ottawa
613-786-0112
livia.aumand@gowlings.com
2

3. What we won’t be talking about:
• Section 8 damages in PM(NOC) matters
• Extraordinary remedies – Anton Piller Orders & Mareva
injunctions
• Remedies available in applications for judicial review (writ of
certiorari, mandamus)
• Interlocutory remedies such as appointing a receiver or
compelling witnesses to testify, inspection orders
3

4. Outline
1. Remedies providing immediate relief
• Pre-trial injunctions
• Motions to strike
2. Disposition short of trial
• Default judgment
• Summary judgment
• Summary trials
4

5. Outline
3. Equitable relief at/after trial
• Permanent injunctions
• Delivery up
• Accounting and payment of profits
• Stay of judgments
4. Legal remedies at/after trial
• Reasonable compensation (ss. 55(2))
• Damages
‐ Lost profits damages
‐ Reasonable royalties
‐ Punitive damages
‐ Recoverable costs
‐ Pre/Post judgment interest
5

6. 1) Remedies providing immediate relief
6

7. Pre-trial injunctions
Four-part test1:
1) Does the moving party have a prima facie or at least a fairly
arguable case?
2) Will the moving party probably suffer harm that is irreparable
if the injunction is not granted (not simply “may” or
“possibly” suffer harm)?
• “Irreparable” refers to the nature of the harm suffered rather
than its magnitude. It is harm which either cannot be quantified
in monetary terms or which cannot be cured, usually because
one party cannot collect damages from the other.
3) If the moving party satisfies the Court as to the
aforementioned points, where does the balance of
convenience lie, including the preservation of the status quo?
4) Is there a public interest involved that must be taken into
consideration?
7

8. Pre-trial injunctions
• Almost never granted in patent cases
• Last patent case in which a pre-trial injunction was granted was
Carbo Ceramics Inc. v. China Ceramic Proppant Ltd., 2004 FC
1046**
• Defendant had no apparent assets in Canada
• Defendant brought a motion to be self-represented on the basis
that it could not afford counsel (not helpful on the injunction
motion)
• Injunction granted
**The defendant did not seem to advance a non-infringement or
invalidity argument at the hearing
8

9. Pre-trial injunctions
• However, various Federal Court judges have hinted during CLE
conferences that they may be prepared to revisit the reluctance
to grant pre-trial injunctions in appropriate circumstances
9

10. Motions to Strike
• The power to strike out claims that have no reasonable
prospect of success is a valuable housekeeping measure
essential to effective and fair litigation. It unclutters the
proceedings, weeding out the hopeless claims and ensuring
that those that have some chance of success go on to trial2.
• Striking out claims that have no reasonable prospect of
success promotes litigation efficiency, reducing time and cost.
The litigants can focus on serious claims, without devoting
days and sometimes weeks of evidence and argument to claims
that are in any event hopeless3.
10

11. Motions to Strike
• Ought to be a defendant’s first consideration
• Two main bases:
• claim is beyond Court’s jurisdiction4
• absence of material facts to support cause of action5
• High threshold:
• Moving party must establish that it is “plain and obvious” that
claim is bereft of any possible chance of success6
11

12. 2) Disposition short of trial
12

13. Default Judgment
• Unlike some jurisdictions, absence of a defence in Federal Court
proceedings is tantamount to a denial of all pleaded facts and
remedies
• After deadline for delivery of a defence has passed, patentee must
file a motion for default judgment supported by evidence of rights
under a subsisting patent and infringement of those rights
• Patent presumed to be valid in the absence of any evidence to the
contrary
• In the absence of defendant’s participation, patentee can request a
reference to determine its lost profits (or the infringer’s profits) and
compel the defendant to participate in that process
13

14. Summary Judgment
Rule 215
(1) If on a motion for summary judgment the Court is satisfied that there
is no genuine issue for trial with respect to a claim or defence, the
Court shall grant summary judgment accordingly;
(2) If the Court is satisfied that the only genuine issue is:
(a) the amount to which the moving party is entitled, the Court may order a
trial of that issue or grant summary judgment with a reference under rule
153 to determine the amount; or
(b) a question of law, the Court may determine the question and grant
summary judgment accordingly.
(3) If the Court is satisfied that there is a genuine issue of fact or law for
trial with respect to a claim or a defence, the Court may
(a) nevertheless determine that issue by way of summary trial and make any
order necessary for the conduct of the summary trial; or
(b) dismiss the motion in whole or in part and order that the action, or the
issues in the action not disposed of by summary judgment, proceed to trial
or that the action be conducted as a specially managed proceeding.
14

15. Summary Judgment
• Under pre-2009 Rule amendments, Federal Court appeared reluctant to
grant summary judgment
• Initial reluctance to grant remedy appears to be softening:
1) Atomic Energy of Canada Limited v. Areva NP Canada Ltd. et al., 2009
FC 980
• Defendant’s motion to summarily dismiss the action allowed.
• Nature of parties’ businesses – sale of nuclear reactors – highly
sophisticated.
• “Hurried consumer” test inapplicable since there is no such thing as a
hurried consumer of nuclear products and services.
• Copyright claim summarily dismissed because of uncontradicted evidence
of independent creation.
15

16. Summary Judgment
2) Swamp Mats Inc. and Ronald Harrison et al., 2010 FCA 22
• One of the issues was whether the patentee had made an
enabling disclosure of the subject matter of his invention
more than one year before filing his patent application.
• Motions Judge had dismissed the defendant’s motion for
summary judgment.
• On a de novo review, the Court of Appeal reversed the
decision below, granted the summary judgment motion and
dismissed the action with costs. On the evidence before the
Court, the plaintiff’s action was so doubtful as not to deserve
consideration by a trier of fact at trial.
16

17. Summary Judgment
3) Aga Khan v. Nagib Tajdin et al., 2011 FC 14
• only issue was whether the plaintiff consented to the
defendants’ publication of the works.
• A defendant has the burden of proving that consent was
granted.
• Consent not proven. Summary judgment granted to plaintiff.
17

18. Summary Trial
Rule 216
(3) The Court may make any order required for the conduct of the
summary trial, including an order requiring a deponent or an expert who
has given a statement to attend for cross-examination before the Court.
(5) The Court shall dismiss the motion if
(a) the issues raised are not suitable for summary trial; or
(b) a summary trial would not assist in the efficient resolution of the
action.
(6) If the Court is satisfied that there is sufficient evidence for
adjudication, regardless of the amounts involved, the complexities of the
issues and the existence of conflicting evidence, the Court may grant
judgment either generally or on an issue, unless the Court is of the
opinion that it would be unjust to decide the issues on the motion.
18

19. Summary Trial
• The factors to be considered in determining whether a matter is
appropriate for summary trial include7:
• the amount involved;
• the complexity of the matter;
• its urgency;
• any prejudice likely to arise by reason of the delay until
conventional trial;
• the cost of taking the case forward to a conventional trial in
relation to the amount involved (i.e., the concept of proportionality)
19

20. Summary Trial
• the course of the proceedings;
• is the litigation extensive and will the summary trial take
considerable time;
• is credibility a crucial factor – have the deponents of the
conflicting affidavits been cross-examined;
• will the summary trial involve a substantial risk of wasting time
and effort, and producing unnecessary complexity;
• and does the application of the rule result in litigating in slices.
20

21. Summary Trial
In Wenzel (2010 FC 966):
• The summary trial procedure was found to be an inappropriate
forum to determine the validity of the patent.
• Patent trials are inherently complex; the patent required review
by expert witnesses.
• Given the fixed trial date, a summary trial would increase costs
and result in litigation in slices.
• The Court also noted the delay in bringing the motion,
particularly after the trial date had been fixed.
21

22. Summary trial
• The Federal Court has embraced the rule as “one to be used,
not avoided”:
1) Louis Vuitton Malletier S.A. et al. and Singga Enterprises
(Canada) Inc. et al., 2011 FC 776
• Knock-off Louis Vuitton and Burberry products
• 3 groups of Defendants:
• Singga Enterprises: Vancouver based, cross-Canada distributor
• Carnation (Guo): Vancouver based retail store/importer
• Altec Productions: Toronto based, cross-Canada distributor
• Brought summary trial motion after discovery and extensive
private investigations
22

23. Summary Trial
• Big record with numerous witnesses and competing evidence
[98] In this case, it is my view that summary trial judgment is
appropriate, having regard to all of the evidence and jurisprudence. The
British Columbia Supreme Court has itself granted judgment on
summary trial in cases of the manufacture, importation, distribution,
sale and offer for sale of counterfeit goods, even in cases with multiple
defendants, a complex fact pattern, numerous investigations and
affidavits, and relatively large damages awards, thereby confirming the
appropriateness of doing so.
• Over $2M awarded
23

24. Summary Trial
2) Teva Canada Limited v. Wyeth LLC, 2011 FC 1169; rev’d 2012
FCA 141
• Issues well defined
• Facts clearly set out in the evidence
• Evidence was not controversial
• No issue of credibility
• Although legal question was novel (whether the “doctrine of
election” applied), it could be resolved just as easily on motion
for summary trial as at trial
• Judgment on summary trial granted in favour of defendants
• Decision overturned by Federal Court of Appeal – judgment on
summary trial granted in favour of the plaintiff
24

25. 3) Equitable relief at/after trial
25

26. Permanent Injunctions
• Section 44 of the Federal Courts Act puts the onus squarely on
the party seeking the remedy to demonstrate the need for a
permanent injunction
• Only one or two patent decisions in Federal Court in which a
permanent injunction was denied:
• Named plaintiff was not the proper party/owner of the patent8
• Patent was not being worked in Canada by the patentee9
26

27. Permanent Injunctions
• Despite ebay10 decision from USSC, Federal Court routinely
grants permanent injunctions
• Circumstances that may convince Federal Court to withhold an
injunction:
• patent about to expire and result of injunction will cause
devastating hardship to defendant and its employees
• patentee does not practice the invention in Canada
• defendant not a direct competitor of patentee – no adverse affect
upon patentee’s ability to profit from the patent
• patentee has demonstrated a willingness to license the patented
invention
• infringing component makes up only a small part of infringer’s
product
27

28. Delivery Up
• Patentee able to request Federal Court to order that all
infringing products in infringer’s possession, custody or
control to be delivered up to patentee
• Jurisdiction for such an order resides in section 57 of the
Patent Act
• Court may make “such order as the judge sees fit”
• Order for delivery up routinely granted
• Disposition of infringing products between date of release of
Court’s reasons and date of issuance of formal judgment
amounts to contempt of Court11
28

29. Accounting of Profits
• Court has jurisdiction to grant under s. 57(1)(b) of the Patent Act
• Serves two equitable purposes12:
(1) a prophylactic purpose to deter wrong-doer and others who may
emulate his actions; and
(2) a restitutionary purpose to restore to wronged party profit which
properly belongs to him but which has been wrongly appropriated by
the wrong-doer.
• While an accounting of profits might serve to dissuade a defendant
from pursuing an improper course of conduct, punishment does not
play a role in its award.
• As an equitable remedy, its entire rationale is to redress wrongs, not to
administer punishment.
29

30. Accounting of Profits
• No “Entitlement” to Profits:
• Plaintiff entitled to pursue its legal claim in damages or elect, with leave of the
Court, to seek an accounting and payment of the infringer’s profits
• No presumption that plaintiff is entitled to an election – trial judge has
complete discretion.
• Success in action not enough – choice between two remedies not left entirely
to successful plaintiff.
• Plaintiff bears onus to establish “good reason” to warrant Court’s exercise of
discretion in favour of granting remedy13.
• Defendant may rely on “disentitling” factors – delay, plaintiff’s unclean hands,
plaintiff’s abandonment of market.
• If Court grants plaintiff’s election, and plaintiff pursues infringer’s profits, claim
to damages is abandoned – plaintiff cannot obtain both remedies
30

31. Accounting of Profits
• Evidentiary Burdens:
• Plaintiff need only prove amount of revenue made from acts of
infringement.
• Infringer must prove the costs incurred to generate this revenue.
• Any doubts as to computation of deductions from revenue to be
resolved in favour of Plaintiff.
• However, application of accounting principles are not to be done
in a purely mechanical fashion.
• It is open to the Trial Judge to adjust the quantum on a principled
basis.
31

32. Accounting of Profits
• Quantifying the Remedy:
• Three approaches have been advocated:
(1) Incremental (or differential cost accounting)
approach.
(2) Full costs absorption approach.
(3) Differential profits (or comparative) approach.
32

33. Accounting of Profits
1) Differential Cost Accounting Approach
• Profits derived from sale of infringing pulsating showerheads to
be quantified as follows14:
A. Revenue
minus plus
B.1 Variable expenses directly attributable
to infringing units;
plus
B.2 Any increase in fixed expenses
attributable to infringing units units.
equals C. Profits to be disgorged.
• No part or proportion of any expenditure which would have
been incurred had infringing acts not taken place is deductible.
33

34. Accounting of Profits
2) Full Costs Absorption Approach
• All common costs incurred by infringer, whether related to
manufacture/sale of infringing units, are proportionately
deducted from revenue.
• Approach has never found favour with Canadian Courts.
34

35. Accounting of Profits
3) Differential Profits Approach
• Profits allocated according to the benefit obtained by the
infringer derived from its infringement of the IP right
• Compare profit attributable to IP right infringed with profit that
would have been made had best available non-infringing option
been used.
• Approach routinely rejected until 200415:
“I believe one has to look at the profits the infringer made
through the infringing acts, not the profit he would have
made had he used a non-infringing option …”
35

36. Accounting of Profits
Monsanto v. Schmeiser16 (infringement)
• Patent covered modified gene/cell that imparted herbicide
resistance to plant – ROUNDUP READY®
• To benefit from this technology farmer had to spray herbicide
on GM plants.
• Benefits include ↑ yields; ↓input costs; agricultural and
environmental benefits.
• Patent claims to gene/cells themselves – utility not part of
claims.
• No finding that farmer had sprayed GM crop – hence no benefit.
• Farmer nonetheless found to have infringed by making use of
“stand by” benefit of technology.
36

37. Accounting of Profits
Monsanto v. Schmeiser (remedy)
• Monsanto sought and was granted right to elect between
its damages and the infringer’s profits – Monsanto elected
profits.
• Trial Judge applied Teledyne approach (differential costs
accounting).
• Trial Judge expressly rejected differential profits
approach.
• FCA affirmed Trial Judge’s exercise of discretion:
“If application of accounting principles in a
mechanical fashion results in a quantum that does not
reflect the economic profit from the infringement …
Trial Judge [may] adjust the quantum [if done] on a
principled basis. “
37

38. Accounting of Profits
Monsanto v. Schmeiser (remedy SCC)
• “Preferred approach” to calculating profits is the differential
profit approach.
• Only that portion of infringer’s profit which is causally
attributable to the invention needs to be disgorged.
• A comparison is to be made between defendant’s profit
attributable to invention and his profit had he used the next
best non-infringing option.
• As infringer did not benefit from the invention – no finding that
he sprayed crop with herbicide - no causal connection between
profits and invention.
• Profits arose solely from qualities of crop that could not be
attributed to invention.
• Profits award reduced to zero.
38

39. Accounting of Profits
Monsanto v. Schmeiser (aftermath)
• Differential profits approach now “preferred”.
• Were statements obiter since case was decided upon lack of
causation?
• Were statements re: remedy limited to the particular facts of
that case?*
* test case
* unsettled validity of subject matter of patent
* bona fide challenge to patent validity
39

40. Accounting of Profits
Monsanto v. Rivett17 (facts)
• No attack on patent validity by defendant.
• Defendant aware that SCC had upheld validity of patent.
• Defendant admitted that he had sprayed ROUNDUP READY
crop with herbicide to fully benefit from invention.
• Defendant admitted he made a deliberate decision to infringe
rather than pay license fee.
40

41. Accounting of Profits
Monsanto v. Rivett (remedy)
• License fee that infringer could have paid is not a measure of
the profits derived from infringement.
• Differential profits approach not limited to particular facts of
Schmeiser decision
• Fact that these infringers were deliberate infringers without any
bona fide challenge to patent validity not a distinguishing
factor.
• Differential profits approach applied.
41

42. Accounting of Profits
Quantification Formula after Schmeiser / Rivett18
• Must be a causal connection between profits made and
infringement – if none, profits = zero.
• Calculate gross profits of infringement (using Teledyne approach
tempered by further deductions on a principled basis) – “actual
profits”.
• Determine if there was a non-infringing option that infringer could
have used.
• If no non-infringing option, actual profits disgorged and
quantification exercise stops.
• If non-infringing option available, what gross profits of non-
infringement (“hypothetical profits”) would have been made?
• Profits to be disgorged is the difference between actual profits and
hypothetical profits.
42

43. Accounting of Profits
What Constitutes a Non-Infringing Option?
• Must be legally available.
• Must be shown to have been a useful alternative that would
have generated profits if used.
• Must have been physically available in the marketplace
although whether it was actually available to infringer at time to
decision to infringe is irrelevant.
• Non-infringing option not disqualified as such even if it does
not bestow all the benefits of the invention.
• Even though onus on infringer to demonstrate availability and
utility of non-infringing option, court may consider all sources
of evidence to arrive at profits differential.
43

44. Accounting of Profits
Are Former Approaches to Calculating Profits Gone?
• Did Schmeiser take the law on the remedy of the account of
profits in a new direction?
• Or, are the principles in Schmeiser/Rivett restricted to
biotechnology-based inventions?
• Either way, Schmeiser does not definitively close the door on
the use by a Trial Judge of other valuation methods better
suited to a different set of facts.
• Choice from among a number of legally acceptable tests is a
matter of Trial Judge’s judicial discretion to be afforded
deference.
• Clearly, the approach will be preferred when the IP right
represents only a part of the ultimate infringing
product/process.
44

45. Accounting of Profits
Comparison of Methods
Differential Cost Full Costs Differential Profit
Accounting Absorption Approach Approach
Approach
Revenue $1,000 $1,000 $1,000
Variable Costs (200) (200) (200)
Semi-Variable Costs (50) (50) (50)
Incremental Profit $750 750 750
Proportion of Fixed Costs (150) (150)
Absorption Profit $600 600
Profits net of hypothetical (100)
profits**
Differential Profit $500
Total Award $750 $600 $500
** that would have been earned by the use of a non-infringing alternative
45

46. Accounting of Profits
Practical Consequences:
• Hold off making election as long as possible.
• Each side ought to collect evidence of “unclean hands” by the
other side.
• Explore issue of availability of non-infringing alternatives in
documentary/oral discovery.
• If evidence demonstrates that non-infringing alternative was
available, assess how that will impact profits award.
• Lost profits damages or reasonable royalty available as of right.
46

47. Stay of Judgments
• Appeal to Federal Court of Appeal does not automatically
suspend operation/enforcement of terms of judgment
• Stays ordinarily difficult to obtain, however will likely be
granted by FCA if moving party can establish irreparable harm:
• Permanent reputational harm and irreparable “financial
consequences if permanent injunction required to be complied
with19
• Payment of financial remedies awarded at trial will threaten very
viability of infringer’s business and prevent its ability to pursue
appeal20
• Infringer would suffer permanent loss of market share and
downstream customers would also be affected21
47

48. Stay of Judgments
• Successful patentee can likely avoid any stay from being
granted if it undertakes to make the infringer whole should
infringer succeed on appeal22
• If granted, stays are usually granted on terms:
• Undertaking as to damages supported by a bond
• Prohibition on distribution of monies to shareholders
• Prohibition on unnecessary business expenditures
• Expedited hearing date
• Unsuccessful patentee likely unable to stay order declaring
patent invalid since purpose of a stay is to permit a party to
avoid having to do something that order requires it to do23
48

49. 4) Legal remedies available at/after trial
49

50. Reasonable Compensation
• Successful plaintiff entitled to “reasonable compensation” (ss.
55(2)) for defendant’s manufacture/sale of a device that would
have infringed patent claims provided the claims are materially
unchanged between laid open publication date and grant date
• Language used in ss. 55(2) speaks of “reasonable
compensation” rather than “damages sustained” language in
ss. 55(1) of the Patent Act
• Successful plaintiff not entitled to an award of lost profits
damages for the pre-grant laid open period24
• “Reasonable compensation” = reasonable royalty
50

51. Damages
Lost Profits Damages
• Both damages and profits calculations will need the occasional
application of the broad-axe
• Patentee’s damages equal the profits it would have earned “but
for” the presence of the infringing product in the marketplace
• Lost profits calculated on loss of sale of product even if
product comprised patented and non-patented components
• Exceptionally, Court will consider an apportionment and
reduction of patentee’s lost profits when infringer can
demonstrate that non-patented features or its new
improvements were responsible, in whole or in part, for the sale
51

52. Damages
• In a marketplace where purchasers had alternatives to the infringer’s
product, the court uses the market share approach – notwithstanding
the presence of acceptable, non-infringing substitutions in the
marketplace, the patentee would have captured a proportion of the
infringer’s share equivalent to its market share
• Lost profits award may include compensation for patentee’s price
suppression, loss of convoyed sales, loss of post-patent market share
due to pre-patent expiry infringement
• If infringer can prove that patentee would not have captured infringer’s
sales, no lost profits will be awarded for those sales, only a reasonable
royalty25
52

53. Damages
• Damages equal the delta between:
(a) the financial position that patentee would have been in “but
for” the infringement; and
(b) the actual financial position of the patentee caused by
infringement
• “But for” test leads to the “but for world” – hypothetically, what
would have happened in the marketplace if the infringer had not
infringed
53

54. Damages
• Damages are computed on the assumption that infringer would
not have entered the marketplace at all26
• Is the availability to the infringer of non-infringing alternatives
relevant to the assessment of patentee’s lost profits damages?
• Well-established authority suggests not27
• However, infringers continue to argue that defendant’s non-
infringing alternatives available to the infringer are also relevant
considerations in the “but for” world28
54

55. Reasonable royalty
• Where patentee does not exploit its intellectual property or
cannot prove it would have made the lost sale, the appropriate
remedy is a reasonable royalty
• Court will look at patentee’s past licensing behaviour and
historical license rates to determine reasonable royalty
• In the absence of such historical license rates, court will look at
comparable licenses within the industry
• In the further alternative, court will construct a hypothetical
negotiation where, in lieu of infringement, infringer and
patentee would have negotiated a royalty based upon the
infringer’s anticipated profits had it taken a license rather than
infringed29
55

56. Punitive Damages
• Intended to punish a party for malicious, oppressive, high-
handed, blameworthy conduct30 or marked departure from
ordinary standards of decent behaviour
• Federal Court has long been willing to find requisite
blameworthy conduct in cases involving counterfeiting
activities in trade-mark/copyright matters31
• Federal Court historically reluctant to award punitive damages
in patent cases32
56

57. Punitive Damages
“Deliberate appropriation of intellectual property does not,
without more, amount to high-handed, callous behaviour
that offends the Court’s sense of decency”
• Historical reluctance is apparently softening:
• Punitive damages awarded in case33 involving sophisticated
parties where infringement was deliberate and planned
misappropriation of the invention
57

58. Recoverable Costs
• Unlike U.S. proceedings, successful party does not have to
make out an exceptional case in order to obtain a costs award
in its favour
• General rule is that “costs follow the event” – to the victor go
the spoils
58

59. Recoverable Costs
• Two approaches to awards of costs
• First Approach
• The Court Tariffs
• 5 columns reflect degree of legal complexity and sometimes
court’s displeasure with a party’s conduct
• Default column is column III
• Successful party can expect to recover approximately 20 to 25%
of what it paid its lawyers
• No less than 85% of out of pocket expenses (e.g. expert witness
fees)
59

60. Recoverable Costs
• Second Approach34
• Partial v. substantial indemnity costs
• Deep-pocketed sophisticated litigants who spare no expense
• In complex, hard-fought litigation, court may be convinced to use
the partial or substantial indemnity approach in lieu of the tariffs
• Can expect upwards of 50% of actual fees spent if partial
indemnity approach applied
• 80% to 90% of actual fees if substantial indemnity approach
applied
• Greater incentive for pre-trial resolution
60

61. Apportionment of costs?
• Successful party did not win on all pleaded issues?
• Still entitled to its costs35
• May be deduction to reflect time spent on unsuccessful issues36
• Patentee loses infringement case but successfully defends
counterclaim alleging invalidity?
• Defendant gets its costs, perhaps with a deduction to reflect time
spent on unsuccessful counterclaim37
• Ultimately, it is a matter within the Court’s discretion
61

62. Solicitor and client costs
• Usually only granted in situations involving litigation
misconduct during or closely related to the hearing, amounting
to reprehensible, scandalous or outrageous behaviour
• Full indemnity
• Increasingly seeing this kind of award in cases of counterfeiting
cases and copyright infringement cases38
• Goal is to discourage such behaviour as a matter of public
interest
• Party enforcing the Court’s order usually entitled to solicitor-
and-client costs39
62

63. Pre-Judgment Interest
• Infringement limited to one province – laws relating to interest
in that province apply
• Otherwise, Court has discretion to fix whatever rate it considers
reasonable:
(a) On liquidated claim, from the date cause of action arose to date
of judgment
(b) On an unliquidated claim, from the date notice was given to date
of judgment
• Rate used may be an average bank rate40 or rate that patentee
would have been able to obtain in the market
63

64. Pre-Judgment Interest
• Simple, not compounded, on award of damages unless
compound interest proven to be an element of the damages
itself41
• Compound interest made by infringer on profits derived from
infringement is part of the infringer’s profits and may be
awarded42
• Delay and patentee’s conduct of action may negate or reduce
amount of interest
64

65. Post-Judgment Interest
• Infringement limited to one province – laws relating to interest
in that province apply
• Interest Act fixes rate of post-judgment interest at 5% - Court
has discretion to apply lower or higher rates
• In PMNOC proceedings, the Court fixed post-judgment interest
rate on an award of costs at 4.5% (compounded annually) which
approximated the current three year mortgage rate43
• Otherwise, Federal Court has discretion to fix a rate that it
considers reasonable in the circumstance, calculated from the
time of the giving of judgment
65

66. Footnote References
1 – RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311
(S.C.C.)
2 – R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42
3 – R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42
4 - Suncor Energy Inc. v. MMD Design and Consultancy Limited et al., 2007 CF
896; Bristol-Myers Squibb Company v. Apotex Inc., 2008 FC 1196;
Laboratoires Quinton International S.L. v. Biss, 2010 FC 358
5 – Bertelsen v. Automated Tank Manufacturing inc., 2011 FC 1219;
AstraZeneca Canada Inc. v. Novopharm Limited, 2009 FC 1209; Eli Lilly
Canada Inc. v. Nu-Pharm Inc., 2011 FC 255
6 – Inuit Tapirisat of Canada v. Canada, [1980] 2 S.C.R. 735; Hunt v. Carey
Canada Inc., [1990] 2 S.C.R. 959
7 - Wenzel Downhole Tools Ltd. v. National-Oilwell Canada Ltd., 2010 FC 966
8 –Globe-Union Inc. v. Varta Batteries Ltd., (1981), 57 C.P.R. (2d) 132
9 – Unilever PLC et al. v. Procter & Gamble Inc. et al. (1993), 47 CPR (3d) 479
10 – e-Bay Inc. v. MercExchange L.L.C. 126 S.Ct 1837 (May 15, 2006). In ebay,
USSC denied a permanent injunction to the patentee, accepting the
following four part test: irreparable harm; inadequate remedies at law;
balance of hardship between patentee and defendant; public interest
66

67. Footnote References
11 – BaxterTravenol Laboratories v. Cutter (Canada), [1983] 2 S.C.R. 388;
Merck & Co. Inc. v. Apotex Inc., 2003 FCA 234
12 – Strother v. 3464920 Canada Inc., [2007] 2 S.C.R. 177
13 – Merck & Co., Inc. et al v. Apotex Inc., 2006 FC 524; affirmed 2006 FCA
323, leave to appeal dismissed (SCC 31754); Janssen-Ortho Inc. et al v.
Novopharm Limited, 2006 FC 1234; affirmed 2007 FCA 217; leave to appeal
dismissed (SCC 322001). For an example in which the Court granted the
patentee’s election, see Valence Technology, Inc. v. Phostech Lithium Inc.,
2011 FC 174
14 - Teledyne Industries Inc. v. Lido Industrial Products (1982), 68 C.P.R. (2d)
204 (F.C.T.D.)
15 – Reading & Bates Construction Co. v. Baker Energy Resources Corp.,
[1995] 1 F.C. 483 (F.C.A.)
16 - Monsanto Canada Inc. v. Schmeiser, [2004] 1 S.C.R. 902
17 - Monsanto Canada Inc. v. Rivett, 2009 FC 317; var’d 2010 FCA 207.
18 - Monsanto, note 17 at ¶ 29 (FC).
19 – Nissan Canada Inc. v. BMW Canada Inc., 2007 FCA 119
20 – Halford et al v. Seed Hawk Inc. et al., 2006 FCA 167
67

68. Footnote References
21 – Phostech Lithium Inc. v. Valence Technology, Inc., 2011 FCA 107
22 – Novopharm Limited v. Janssen-Ortho Inc. et al., 2006 FCA 406; Apotex
Inc. v. Merck & Co. Inc. et al., 2006 FCA 198
23 – Apotex Inc. v. Sanofi-Aventis, T-933-09
24 – Jay-Lor International Inc. et al. v. Penta Farm Systems Ltd. et al., 2007 FC
358
25 – Allied Signal Inc. v. DuPont Canada Inc. et al. (1999), 78 C.P.R. (3d) 129
26 – Domco Industries Ltd. v. Armstrong Cork Canada Ltd. (1983), 76 CPR (2d)
70
27 – United Horse-Shoe & Nail Co. v. Stewart & Co (1888), 5 R.P.C. 260 (H.L.)
28 – Eli Lilly Canada, Inc. et al. v. Apotex Inc., T-1321-97 (cefaclor) – Reference
begins September 2, 2014
29 – Jay-Lor International Inc. et al. v. Penta Farm Systems Ltd. et al., 2007
FC 358
30 - Whiten v. Pilot Insurance, [2002] 1 SCR 595
68

69. Footnote References
31 - Adobe Systems Incorporated et al. v. Dale Thompson, 2012 FC
1219; Microsoft Corp. v. PC Village Co Ltd., 2009 FC 401
32 - Wi-Lan Technologies Corp. v. D-Link Systems Inc., 2006 FC 1484;
Dimplex North America Ltd. v. CFM Corporation, 2006 FC 586
33 - Eurocopter v. Bell Helicopter Textron Canada Ltee, 2012 FC 113
34 - Air Canada v. Toronto Port Authority, 2010 FC 1335; Phillip Morris
Products S.A. v. Marlboro Canda Ltd., 2011 FC 113; Harmony
Consulting Ltd. v. G.A. Foss Transport Ltd., 2011 FC 540
35 - Philip Morris Products S.A. v. Marlboro Canada Limited, 2011 FC
113
36 - Fournier Pharma Inc. v. Canada (Health), 2012 FC 1121; Apotex
Inc. v. Sanofi-Aventis, 2012 FC 318
37 - Raydan Manufacturing Ltd. v. Emmanuel Simard & Fils (1983)
Inc., 2006 FCA 293
69

70. Footnote References
38 - Microsoft Corporation v. 9038-3746 Quebec Inc., 2007 FC 659;
Aquasmart Technologies Inc. v. Klazen, 2011 FC 212; Louis Vuitton
Malletier S.A. et al. v. Singga Enterprises (Canada) Inc. et al., 2011
FC 776
39 - Riaz Lari v. Canadian Copyright Licensing Agency, 2007 FCA 127
40 – Allied Signal Inc. v. DuPont Canada Inc. (1999), 78 CPR (3d) 129
41 – Eli Lilly v. Apotex Inc. (2010), 80 CPR (4th); affirmed 90 CPR (4th)
327 (FCA)
42 – Beloit Canada Ltee v. Valmet Oy, (1995), 61 CPR (3d) 271 (FCA)
43 – AstraZeneca Canada Inc. v. Apotex Inc., 2011 FC 663
70

71. Thank You
Arthur B. Renaud Livia Aumand
613-786-0202 613-786-0112
arthur.renaud@gowlings.com livia.aumand@gowlings.com
Join us for our next webinar, November 27 at 12:00 pm ET
Methods of medical treatment claims:
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