The Federal Court ruled on the availability of equitable remedies, namely an an accounting for profits and injunctive relief under s. 57(1) of the Patent Act in Rovi Guides, Inc v BCE Inc, 2022 FC 1388.
Rovi brought infringement actions against Bell and TELUS for its patents that relate to “interactive television program guide” and “internet protocol television” [IPTV] technology. For all patents asserted, there was a 9-17.5-year delay between filing and issuance where Rovi waited to request examination. Rovi sought a declaration that it is entitled to elect for an accounting of profits and to injunctive relief. Justice Lafrenière found the asserted claims of Rovi Guide’s patents were invalid and dismissed Rovi’s infringement actions against the Defendants (anticipation and obviousness discussed here and overbreadth discussed here), but nevertheless discussed the availability of the remedies Rovi sought.
Accounting for Profits
Justice Lafrenière explained that despite common practice that allows a plaintiff to elect between damages and an accounting for profits, “this practice, however, does not establish a right to an election.” He then enumerated a non-exhaustive list of factors that typically guide a Court’s discretion in determining whether to award an accounting for profits:
- The complexity and the practical difficulties of an accounting for profits
- The conduct of the patentee
- The good faith of the defendant, and
- Whether the patentee does not compete with the Defendants
Justice Lafrenière explained the first factor focuses on the proportionality of the accounting remedy. He found IPTV is a complex product, and the asserted patented features are a small part of the software which is a small part of the overall product of the Defendants’ services. He found isolating the impact of the individual features at issue would be extremely challenging and accepted the Defendant’s expert’s opinion that the complicated analysis would produce an unreliable number that would mislead the Court. Further, because of Rovi’s delay in issuing its patents, Rovi’s remedy would be limited to reasonable compensation during the periods where the patents were not actually issued, meaning if Rovi was entitled to an accounting of profits, it would be necessary to perform two analyses: profits post-Patent issue, and reasonable compensation pre-Patent issue.
On the second factor, Justice Lafrenière found Rovi’s delay in prosecuting the Patents, while not contrary to the Patent Act and Rules, weighed strongly against granting equitable relief. Rovi’s attempt to “game the system” by delaying when the Defendants could attempt to invalidate the Patents exemplified the “patent holdup” problem, where a patent owner takes advantage of the potential infringer’s reduced flexibility after they have launched a product and opportunistically tries to extract a larger unreasonable licensing fee, especially using the threat of an injunction.
On the third factor, Justice Lafrenière found the Defendants behaved responsibly by ensuring they had a license from Rovi when they launched their IPTV products. Further there was no evidence of willful infringement by the Defendants that would call for deterrent measures.
Finally, on the fourth factor, Justice Lafrenière held that “entitlement of a non-practicing entity to an accounting of profits ought to properly be considered through the lens of its conduct, rather than on how the patentee chooses to take its invention to market as a matter of business efficiency.”
After weighing the factors, Justice Lafrenière was not inclined to grant Rovi an accounting of profits, and held they were not prejudiced as Rovi could still seek damages, presumably a reasonable royalty.
Justice Lafrenière explained an injunction does not necessarily follow from a finding of infringement but falls to a judge’s discretion. The factors considered in deciding whether to grant an injunction include delay, lack of clean hands, unconscionability, and triviality. He also considered it appropriate to adopt the US Supreme Court case eBay Inc v Merc-Exchange, LLC, 547 US 388 (2006) where it was held legal damages would be sufficient to compensate for an infringement when an injunction may not serve the public interest, because the patented invention is a small component of the product the companies seek to produce, and the threat of an injunction is employed simply for undue leverage in negotiations.
Justice Lafrenière held that Rovi was not entitled to either an accounting of profits or an injunction.
The full decision can be found here.