2,382,426 / ethinylestradiol & drospirenone / YAZ YASMIN
In Bayer Inc v Apotex Inc 2016 FC 1013 Fothergill J held that Apotex had infringed Bayer’s ‘426 patent: see here and here. Subsequently, Apotex argued that it, not Bayer, should be entitled to make the election between damages and an accounting of profits, and that Bayer should be confined to the (presumably lesser) remedy of an accounting. In 2016 FC 1192 Fothergill J rejected this argument: see here. (On the facts, he also held that Bayer was entitled to elect between damages and an accounting after discovery and inquiry.)
Apotex appealed the decision on remedy, reiterating the argument that, subject to the court’s discretion, the defendant can elect the remedy to which the respondents are entitled. The FCA has dismissed the appeal, affirming that the entitlement to elect (subject to the court’s discretion), rests with the patentee, not the infringer. The result is not very surprising, but the decision is noteworthy for providing an authoritative summary of the law relating to the right to an election, including a compelling historical analysis.
Section 55(1) of the Act provides that an infringer is liable to the patentee “for all damage sustained . . . by reason of the infringement.” On its face, this implies that the patentee is entitled to a damages, and so, by implication, cannot be denied that remedy on election of an accounting by the infringer. To counter this, Apotex appealed to s 57(1)(b), which provides that the court “on the application of the plaintiff or defendant,” may make an order “for and respecting inspection or account” (my emphasis). Apotex argued that 57(1) entitles the defendant to request an account, and this is not overridden by s 55(1), as there is no hierarchy between the provisions of the Act.
Nadon JA had a powerful answer to this proposition: yes, s 57(1)(b) does indeed entitle the defendant to make an application for an account — an interlocutory account [40], [66]. Nadon JA quoted the editorial comment to Vidi v. Smith (1854), 118 E.R. 1404 (QB), which noted that there were two classes of account, namely the accounting of profits ordered after a final decision, and interlocutory accounts which “are ordered by the consent of the defendant, and indeed on his application, as a condition for dissolving an interim injunction” [47, FCA emphasis]. That is, the defendant might apply to have an account ordered against itself in order to avoid being subject to an interlocutory injunction. Nadon J’s historical analysis showed that what is now 57(1) derived from early UK legislation which reflected this practice, while at the same time enabling the common law courts to grant equitable remedies, including a final account. He observed further that Canadian cases have also allowed the defendant to provide an interlocutory account in place of an injunction [51].
With that puzzle resolved, and having reviewed Benoit v Valmet-Dominion [1997] 3 FC 497 (FCA), the Court affirmed a number of propositions:
• An accounting was an equitable remedy historically available to a successful patentee,
and the intention of what is now 57(1), and the UK legislation on which it is based, “was
limited to providing to the common law courts the power to make certain orders that had
previously only been available in the courts of equity” [62-64].
• 57(1) enables a defendant to request an interlocutory account for the purpose of
dispensing with an interlocutory injunction [66].
• The election of a final accounting of profits “necessarily belongs to a patentee, subject
to the Court’s discretion” [67].
• If the Court refuses an accounting “the patentee shall be entitled to its damages” [67].
• The Court “cannot oblige the patentee to accept as a remedy an accounting of profits if
it is not willing to do so” [67].
This means that a successful patentee always has a right to damages unless waived by election, and that right cannot be abrogated by the infringing party or the Court [69], [71].
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