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Patent Infringers Cannot Elect Patentee’s Remedy  

The Federal Court of Appeal dismissed Apotex’ appeal from a decision in which Apotex sought to elect the remedy that Bayer was entitled too after Apotex was found liable for patent infringement.

The Decision Below

Following a finding that Apotex infringed Bayer’s 426 Patent, Apotex argued that it should be entitled to elect Bayer’s remedy based on subsection 57(1) of the Patent Act and its prior success under the PM(NOC) Regulations in relation to the same patent (see our prior blog post here). The Federal Court had rejected Apotex’ argument and held that the Court had the power to award a successful patentee the ability to elect between damages and an accounting of profits but that this election was in the Court’s discretion. The Federal Court ordered that Bayer could elect between damages or an accounting of profits after due inquiry and reasonable discovery.

The Appeal Decision

On appeal, Apotex argued that the Federal Court misinterpreted subsection 57(1) of the Patent Act, arguing that the combined effect of subsections 55(1) and 57(1) is that a successful patentee is entitled to damages unless either party successfully requests that the Court exercise its discretion to award an accounting of profits:

Liability for patent infringement

55.(1) A person who infringes a patent is liable to the patentee and to all persons claiming under the patentee for all damage sustained by the patentee or by any such person, after the grant of the patent, by reason of the infringement.

Injunction may issue

57.(1) In any action for infringement of a patent, the court, or any judge thereof, may, on the application of the plaintiff or defendant, make such order as the court or judge see fit,

(a) restraining or enjoining the opposite party from further use, manufacture or sale of the subject-matter of the patent, and for his punishment in the event of disobedience of that order, or

(b) for and respecting inspection or account, and generally, respecting the proceeding in the action.

After reviewing the jurisprudence and legislative history in both Canada and the UK, the Court of Appeal affirmed that subsection 55(1) gives the patentee a right to damages that cannot be abrogated by the infringer or the Court, while subsection 57(1) gives the patentee, not the infringer, the right to elect an accounting of profits. This election, however, is subject to the Court’s discretion.

 The Court of Appeal clarified that the word “defendant” in subsection 57(1) means that a defendant, faced with a demand for an interlocutory injunction, may seek to have the demand dismissed upon an undertaking to keep an account:

[72] In my view, the inclusion of the word “defendant” in subsection 57(1) of the Act does not give the Court the power to grant an election to a defendant following a finding of infringement. Such a remedy is unknown to equity and, as a result, is not a remedy which, in my respectful view, is envisioned in subsection 57(1). However, as I indicated earlier, when faced with a demand for an interlocutory injunction, a defendant may seek, upon application to the Court, to have the demand dismissed upon an undertaking to keep an account.

A copy of the Court of Appeal’s Reasons for Judgment can be found here.