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Recent Decisions Increase Canada’s Appeal as a Patent Filing Jurisdiction

July 11, 2017

In recent weeks Canadian courts have been busy issuing patent-related decisions and patent filers should take notice of some interesting developments which may enhance the appeal of Canada as a filing jurisdiction.

Two decisions which were released to the public in the last two weeks make it more difficult to invalidate a Canadian patent and also highlight the potential for very large awards for patent infringement due to the availability of an “account of profits” as a remedy for patent infringement.

In late June, the Supreme Court of Canada issued a decision in AstraZeneca Canada Inc. v. Apotex Inc. 2017 SCC 36 which abandoned the “promise doctrine,” which has been used in recent years to invalidate patents in Canada.  Under the promise doctrine, patents which promised more than they could provide were deemed invalid for lack of utility.  The Supreme Court of Canada found that the promise doctrine is excessively onerous and that it runs counter to the scheme of the Patent Act.  In rejecting the promise doctrine, the Supreme Court recognized that there is a potential for unfair consequences if the Patent Act were to be interpreted to require all uses disclosed in a patent specification to be met for a patent’s validity to be upheld.  For example, under the promise doctrine, a patent that describes an otherwise useful invention could be deprived of patent protection because not every promised use was sufficiently demonstrated or soundly predicted by the filing date.  The Supreme Court recognized that invalidating otherwise useful inventions under the promise doctrine would be unfair.

Most Canadian patent practitioners would likely agree that the abolishment of the promise doctrine is a welcome development that strengthens the presumption of validity for Canadian patents.  

Shortly after the Supreme Court’s decision, another pro-patentee decision was released by the Federal Court in Dow Chemical Company v. Nova Chemicals Corporation, 2017 FC 637  (“Dow”). In Dow, the Federal Court awarded approximately $645 million to Dow Chemical Company for NOVA Chemicals Corporation’s infringement of Dow’s patent.  This judgment is significant since it is the largest reported award for patent infringement by a Canadian court.  The size of this award is significantly greater than the top awards for patent infringement in many jurisdictions around the world and is large even compared to typical awards in the United States.  Indeed, despite the disparity in size between the Canada and United States markets, it appears that this award would rank among the top 20 awards for patent infringement in North America.

The large award in Dow resulted from an election by the patentee of an “accounting of profits.”  In Canada, a patentee that is successful in a patent infringement proceeding can elect either damages or an accounting of the infringer’s profits.  That is, the successful patentee can decide to either be made whole for the damage that they suffered due to the infringement, or they can instead elect to disgorge the infringer of all profits made from the infringement.  In an earlier decision this year, the Federal Court found that the accounting of profits could also capture “springboard profits” realized by an infringer after the expiry of the patent (See Dow Chemical Company v. Nova Chemicals Corporation, 2017 FC 350).  Springboard profits are profits realized after the expiry of a patent but that are attributable to the infringement.  That is, springboard profits recognize that the infringer has already captured a portion of the market when the patent expires due to their infringement.

In the United States, the option of an accounting of profits was dropped as a remedy for patent infringement of a utility patent in 1946.  However, the option remains for a U.S. design patent.  This provision was highlighted in the long-running dispute between Apple and Samsung where a federal jury awarded Apple $399 million for infringement of a design patent and many have already recognized the value of having the option to elect an accounting of profits.  In some circumstances, an accounting of an infringer’s profits can lead to an award which far exceeds the award that would be available if damages were the only remedy. 

For those not already filing in Canada, the availability of an accounting of profits for infringement of utility patents and the strengthened presumption of validity in Canada should make global patent filers seriously consider adding Canada to their list of filing jurisdictions.