Complex Proceedings ≠ Complex Accounting: When to Deny the Accounting of Profits Remedy

Angelcare Canada Inc. v Munchkin Inc., 2023 FC 1111 deals with the Plaintiffs’ entitlement to remedies arising from a successful patent infringement action relating to diaper pail cassettes (2022 FC 507).  In the prior decision, Justice Roy of the Federal Court found the Defendants’ cassettes and assemblies of cassettes and diaper pails had infringed the Plaintiffs’ patents. One of the issues before the Court was whether the Plaintiffs are entitled to elect between an accounting of Munchkin’s profit and Angelcare’s damages.

The Defendants argued that the Plaintiffs should not be allowed the right to elect because:

  1. The patent action had been complex and protracted;
  2. The type of discovery involved in accounting for profits should not be allowed;
  3. The Plaintiffs did not disclose until the end of trial all of the facts as to title to infringements and damages; and
  4. An accounting of profits produces unreliable results.

The Court noted that the election is a discretionary decision which should not be exercised in an arbitrary fashion. Some of the considerations include expediency, misbehaviour by litigants, whether the patentee practices the invention itself, the complexity of an accounting of profits and the infringer’s conduct.

The Court did not find that complexities associated with the number of patents and claims at issue in the infringement was relevant, because there was no evidence that these complexities would cause difficulty in an accounting of profits. In making this point, the Court noted that in this case “[t]here is no demonstration concerning the alleged complexity and difficulties of the accounting of profits”.

The Court also disagreed that the alleged misconduct of the Plaintiff, which stemmed “largely from the fact that numerous claims in 6 patents” were asserted, disentitled them from the right to elect.  The Court commented that it was not prepared to accept “that asserting rights to a patent, especially where there is a measure of success following litigation leads as such to a finding of misconduct by the patentee”.  The Court also noted that it is seldom that “protracted litigation is the responsibility of one party”.

The Court also noted that it was not useful “to establish whether the infringements were blatant or not” since the Defendants claimed that they “sought to avoid infringement”.  The Court also commented that the purpose of accounting of profits, namely “restoring the improperly received profits to their rightful owners”, would be adequately served in the circumstances of this action.

The Court did not deny the Plaintiffs its right to elect an accounting of the Defendants’ profits.

A copy of the decision is available here.

Our blog posts on the other topics covered by this decision can be found here (entitlement to injunctive relief), here (entitlement to punitive damages), and here (plaintiffs’ enti