Challenge to patentee’s right to elect between damages and accounting of profits rejected

Which party has the right to choose the patentee’s remedy after a successful action for patent infringement? In Canada, it has long been the case that a successful patentee may elect between the statutory remedy of damages and, subject to the court’s discretion, the equitable remedy of an accounting of profits. Apotex challenged this status quo in Bayer v Cobalt by asking that damages be denied (2016 FC 1192). While Apotex and Cobalt both infringed, Cobalt relied on Apotex’s submissions for the issue.

Bayer’s 426 patent covered its YAZ and YASMIN products. Due to earlier litigation under the Patented Medicines (Notice of Compliance) Regulations in which allegations of non-infringement were upheld, Cobalt had entered the YASMIN market and Apotex was on the market with generic versions of both products (Bayer v Cobalt, 2013 FC 1061, aff’d 2015 FCA 116; Bayer v Apotex, 2014 FC 436). However, in a subsequent action for infringement, Justice Fothergill found that the 426 patent was valid and was infringed by both Apotex and Cobalt. Fothergill invited the parties to provide submissions as to Bayer’s opportunity to elect between damages and an accounting of profits.

A successful patentee can claim its damages as of right under the Patent Act. Section 55(1) provides that: "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."

The patentee also has the option of asking the court instead for the equitable remedy of an accounting of the infringer’s profits, pursuant to Section 57(1). An accounting may or may not be granted for various reasons, such as the conduct of the parties (decision at paragraph 10).

Here, infringer Apotex asked the court to grant it the right to choose between damages and an accounting, and asked that damages be denied. Apotex argued that it gained regulatory approval through adhering to the regulations (via the finding that Apotex’s allegations of non-infringement were justified), and thus that it should not be exposed to a claim for Bayer’s damages.

The court rejected this argument. It held that the right for a successful patentee to claim damages is statutorily enshrined in Section 55(1), and that the court’s equitable jurisdiction cannot be invoked to prevent a successful patentee from invoking this statutory right. It stated that allowing such an argument would “turn the doctrines of equity and parliamentary sovereignty on their heads”. The existing jurisprudence of leaving the election to the patentee and allowing the infringer to challenge only the availability of the equitable remedy of an accounting of profits was affirmed.