Wednesday, February 13, 2019

Airbus v Bell Punitive Damages Award Upheld

Airbus Helicopters S.A.S. v. Bell Helicopter Textron Canada Limited 2019 FCA 29 de Montigny JA: Pelletier, Boivin JJA aff’g 2017 FC 170 Martineau J
            2,207,787 / helicopter landing gear

In Eurocopter v. Bell Helicopter Textron Canada Limitée 2012 FC 113 aff’d 2013 FCA 219 Martineau J held that one of the claims of the 787 patent, owned by Eurocopter (now the helicopter division of Airbus), to be valid and infringed. The patent covers sleigh type skid landing gear for helicopters [8]. In the subsequent Airbus Damages decision, Martineau J awarded $500,000 in compensatory damages (see here and here) and $1,000,000 in punitive damages, plus pre-judgment and post-judgment interest. (I wrote far to much on the punitive damages aspect of the trial decision, trying to analyze the relevant principles. I won’t repeat that here, but for those who are interested the posts are here, here, and here.) Airbus appealed, arguing that the award of punitive damages should have been higher, alleging a variety of errors [29]. Bell cross-appealed on the basis that the award of punitive damages was too high [71]. A few general principles arise from the FCA decision.

The standard of review is deferential

The Court noted that:

[30] It is now well established that appellate intervention with respect to an award of punitive damages will only be warranted where the trial court made an error of law or a “wholly erroneous assessment” of the quantum of damages (Richard v. Time Inc., 2012 SCC 8, [2012] 1 S.C.R. 265 at para. 190 (Time)). In Cinar Corporation v. Robinson, 2013 SCC 73, [2013] 3 S.C.R. 1168 (Cinar), the Supreme Court summarized the applicable standard of review in the following way:
In [Time], this Court held that an appellate court may only interfere with a trial judge’s assessment of punitive damages (1) if there is an error of law; or (2) if the amount is not rationally connected to the purposes for which the damages are awarded, namely prevention, deterrence (both specific and general), and denunciation …
                                    Cinar at para. 134.

Airbus argued that Martineau J had not attached sufficient importance to various factors, such as the blameworthiness of the respondent’s conduct, and the financial means of the defendant [39]. However, Martineau J “correctly identified the factors going to the proportionality of a permissible quantum of punitive damages, and properly applied them to the facts of this case” [50]. So long as that is done, the FCA will not be inclined to reweigh the relevant factors itself [39], [45]-[52], [57].

Prior awards may be used as guideposts

Airbus argued that “the judge’s determination of the quantum of punitive damages was based on his erroneous belief in the existence of a $2,000,000 ceiling” on punitive damages awards [34]. The FCA concluded that Martineau J had not in fact felt himself limited by any such ceiling [36], [38]. Rather, “he saw this scale simply as a helpful indication of the range of punitive damages previously awarded” [36]. Moreover (emphasis added):

[37] In my view, there is nothing untoward or inappropriate in using a range of previous awards, as guideposts, in assessing the quantum of punitive damages. Even the Supreme Court, in Whiten, took such a range into account, when it concluded that the award was “certainly at the upper end of a sustainable award on these facts but not beyond it” (at para. 4). It is, in fact, a very common practice, and a sound one for that matter, to consider previous awards in assessing the quantum of punitive damages in a particular case.

Lubrizol is of limited precedential value

In Lubrizol 58 CPR(3d) 167 (FCTD) rev’d 67 CPR(3d) 1 (FCA) the FC had initially awarded $15,000,000 in punitive damages. This was overturned on appeal because the quantum of the compensatory damages had not been considered in the analysis [40] and they had not yet even been assessed. As the FCA stated in Lubrizol, “the Court cannot decide whether exemplary damages are required until after it decides whether the general damages were insufficient for punishment and deterrent purposes.” Airbus argued that nonetheless the FCA in Lubrizol had “implicitly agreed” that $15,000,000 was appropriate [41]. The FCA in this case rejected that reading of Lubrizol [41], and went on to state that

[43] Lubrizol was decided almost 25 years ago and does not seem to have been given much precedential value. I have been unable to find any other case where such a large award of punitive damages has been made, and counsel has not drawn our attention to any such case. [On review of other awards] Lubrizol would therefore appear to be the outlier in terms of the significance of the award in punitive damages, and the judge was certainly entitled to distinguish that decision from the present case.

Post infringement mitigating conduct should be considered

Bell had originally used the infringing gear, known as the “Legacy” gear, but after an infringement action was brought in Canada and other jurisdictions (including the US and France), had switched to non-infringing Production gear [10]. Martineau J had taken this into account as a mitigating factor in assessing punitive damages. Airbus argued that doing so was an error of law. It argued, based on the discussion of “potential harm” in Whiten 2002 SCC 18 [117], that “the seriousness of the prejudice must be assessed at the time of the wrongful behaviour, whether or not actual prejudice ensued” [60]. This FCA rejected this, pointing out that it was clear from the SCC discussion in Whiten that “what the Court really wanted to prevent was for bare luck to be considered as a mitigating factor” [61].

Further, the FCA held that “it was open to the judge to regard the steps taken by the respondent after the infringement as a mitigating factor” [62], and indeed,“[n]ot taking into account the conduct of the respondent after being notified of the violation would be antithetical to [the holistic and balancing approach endorsed in Whiten]” [63, my emphasis]: and see [64].

Sanctions for the same infringement in other jurisdictions may be taken into account

Airbus argued that Martineau J had erred in law in considering other penalties, in particular the likelihood of damages for infringement in parallel US and French proceedings [65],[66]. (And see [FC 435], [FC 440]. The FCA held that this may be taken into account, at least so long as the proceedings related to the same infringement [66] and are actually likely to result in a sanction [67]. (Though in any event, on the facts Martineau J appears to have considered this factor to be neutral [69].)

Finally, Bell cross-appealed on the basis that the award of $1,000,000 was more than the minimum necessary to meet the purposes of punitive damages [71]. The FCA rejected this argument, holding that on the facts, it was open to Martineau J to conclude that substantial punitive damages were warranted [75].

Monday, February 11, 2019

Patent Listing Timing Turns on Date Submission is “Administratively Complete”

Eli Lilly Canada Inc. v. Canada (Attorney General) 2019 FC 5 Lafrenière J
            2,812,704 / pegbovigrastim / IMRESTOR

The PM(NOC) Regulations allow patents to be listed against a drug. The basic rule is that only patents which pre-date the NOC application are eligible for listing, on the rationale that subsequent inventions should not extend the duration of the linkage [12]. The Regulations implement this timing requirement with two provisions. Subsection 4(5) states that the patent list must be submitted at the time of filing the NDS, so that only patents that have already been granted can be listed under this provision. But is not necessary that the patent has already been granted, so long as it has been applied for. Subsection 4(6) provides that a patent is eligible for listing if it has a Canadian filing date prior to “the date of filing of the [new drug] submission.” The question in this case is what is the date of filing of the NDS: is it the date at which the NDS is “administratively complete” or the date at which is it substantively or technically complete? Short answer: the former.

On June 21, 2011, Elanco submitted a Drug Submission Application form and some related forms, which got the ball rolling on the application process [20]. This material was received on June 24, 2011 and determined to be “administratively complete” as of that date. It was common ground that the submission was not substantively complete, in the sense that the efficacy data, animal safety data, etc required by subsection C.08.002(2) was not provided [20]. Elanco had been permitted to engage in a rolling submission process [19], and the bulk of the substantive information was provided over the year from March 2012 to March 2013. The Canadian patent filing date was September 22, 2011 [22], between these two dates. Thus, if it is enough that the NOC application is administratively complete, then the ‘704 patent was not eligible for listing as the patent filing date was after the NDS filing date. But if the NOC application has to be substantively complete, the timing requirement would be met, and ‘704 would be eligible for listing.

Health Canada’s position is that the date of filing is when the NDS is administratively complete. Accordingly, it refused to list the ‘704 patent. Elanco appealed. Lafrenière J, applying a deferential standard of review [50], upheld Health Canada’s position. (To be eligible for listing under s 4(6), it is also necessary that the patent be submitted for listing within 30 days of issuance. That requirement was met, and was not at issue [31].)

A key point is that “[n]either the Patent Act, the NOC Regulations or the FD Regulations define the term “date of filing” of a submission, nor do they establish rules for determining that date” [58]. Elanco relied on C.08.002(2) of the FD Regulations, which specify “A new drug submission shall contain sufficient information and material to enable the Minister to assess the safety and effectiveness of the new drug, including...” Elanco argued that “shall” was a mandatory provision. However, as Lafrenière J noted, “Subsection C.08.002(2) simply speaks to the contents of a NDS and not to when a NDS may be considered filed. All the provision does is to set out the information that a first person is required to provide in order for a submission to be processed” [59]. If it were mandatory in terms of timing, then the practice of allowing rolling submissions would not be permitted [60].

In the absence of governing statutory provisions defining the date of filing, it was open to the Minister to allocate a filing date for submissions [63]. Moreover, the rationale for using the date the filing is sound, because it promotes certainty [66]. Adopting a requirement of substantive completeness would introduce considerable uncertainty, both in light of rolling submissions and supplementary submissions.

Thursday, February 7, 2019

Crystalline Form Not Obvious to Try

Apotex Inc v Pfizer Canada Inc 2019 FCA 16 Boivin JA: Webb, de Montigny JJA aff’g 2017 FC 774 Brown J
Teva Canada Ltd v Pfizer Canada Inc 2019 FCA 15 Boivin JA: Webb, de Montigny JJA aff’g 2017 FC 777 Brown J
2,436,668 / desvenlafaxine (ODV) / PRISTIQ / NOC

In ODV the FCA has affirmed Brown J’s finding that Claims 8 and 9 of the ‘668 patent, to Form I ODV succinate (a particular crystal form of a particular salt of the compound ODV), were not obvious. The decision turns on the obvious-to-try analysis: see here for a review of the facts. The FCA decision does not apply new law, but it is another helpful discussion of the obvious-to-try analysis applied to the particular facts. It is useful to contrast this case, in which the crystalline form was found not to be obvious on an obvious-to-try analysis, with Dasatinib 2017 FCA 190 aff’g 2017 FC 296, holding the claims at issue to be obvious-to-try: see here for a discussion. These are companion cases, and the reasons are largely the same. This discussion will refer primarily to the Apotex decisions, simply because it is the one I happened to read first.

As the FCA discussed in Atazanavir 2017 FCA 76 (see here), as well as in Ciba v SNF 2017 FCA 225 (see here), the role of the inventive concept in an obviousness analysis has been problematic. In this case, it was uncontested that the inventive concept of the relevant claims is Form I ODV succinate. Apotex’s main argument was that “the Federal Court Judge erred when he made reference to the properties of ODV succinate – and specifically Form I – in his reasons as they are not part of the inventive concept” [37]. This is an important point. An obvious to try analysis is likely to be appropriate “where advances are often won by experimentation” (Sanofi [68]). In such a case, the detailed properties of the invention normally cannot be predicted in advance. If the detailed properties are part of the inventive concept, then the claimed invention would never be obvious, even though it was obvious to try and succeeded without the need for inventive ingenuity, as, for example, in Dasatinib. The FCA acknowledged this concern:

[38] I am mindful that our Court cautioned in Atazanavir to not implicitly adopt a definition of the inventive concept that focuses on properties if the properties are not part of the inventive concept (Atazanavir at para. 74).

In the Teva appeal, the Court noted that there was no dispute between the parties that the inventive concept does not include properties [32]. (This is not to say that the properties can never be part of the inventive concept, as the Court indicated in [38].)

Apotex’s complaint did have some basis in Brown J's reasons; in places, he did discuss the properties of ODV in a way that could be taken to imply that it would have been necessary to be able to predict its properties from the prior art: see eg the passages quoted at [38]. However, when read as a whole:

the Federal Court Judge did not find non-obviousness on the basis that the properties were not predictable in the manner seemingly suggested by Apotex. Indeed, although the Federal Court Judge discusses properties in various parts of his reasons, his conclusion that Form I ODV succinate is not obvious does not rest solely on the unpredictability of the properties of a salt form. Rather, the Federal Court Judge relied on evidence that demonstrated that a skilled person could not have known or predicted that the Form I ODV succinate – i.e., the crystal form itself – could be made or even existed:

So, Brown J found that “the number of experiments required to move from the acceptable pharmaceutical salts to the Form I ODV succinate was extremely large, as Dr. Myerson deposes at para 102 of his affidavit, and in the nature of a research program, not routine experimentation” [FC 230] quoted at [38]. Sp, on the facts, actually making the crystal form required inventive ingenuity, quite aside from whether the properties are part of the inventive concept, or could have been predicted.

The FCA also affirmed that the jurisprudence “does not establish any “hard and fast rules” on obviousness when it comes to evaluating whether or not a salt screen or any other form of experimentation is obvious or not” [42]. Whether salt forms, polymorphs or crystalline forms are obvious will turn on the facts of the case.

Friday, February 1, 2019

No new cases

No new substantive patent cases were released for the week of 28 January.

Wednesday, January 30, 2019

No new cases

No new substantive patent cases were released last week.

Note that I generally only blog on substantive patent cases. To keep abreast of all new decisions, including procedural decisions and copyright and trade-mark cases, I recommend subscribing to the Daily Intellectual Property News service from Alan Macek's IPPractice.

Thursday, January 17, 2019

Ownership Can Be Raised as a Defence but Not as a Counterclaim

Farmobile, LLC v Farmers Edge Inc 2018 FC 1269 Mactavish J aff’g 2018 FC 915 Ring J
            2,888,742 / Farming data collection

Farmobile, the patentee in this action, sued Farmers Edge (FE) for infringement of the 742 patent. FE asserted, by way of both defence and counterclaim, that it was the rightful owner of the patent [915-3]. The defence and counterclaim were both based on the same facts [14], [914-38], to the effect that the right in the invention had been assigned to it [8]-[12], [914-4]. Farmobile sought to strike the allegations related to ownership from both the Statement of the Defence and the Statement of Counterclaim, which were considered separately. Ring J granted the motion to strike the counterclaim, but allowed the same allegations to stand as a defence (see here). Mactavish J has now affirmed.

In affirming that the allegation of ownership may stand as a defence, Mactavish J established what appears to be a novel point, albeit a minor one, namely that ownership of the patent by the defendant is indeed a defence to a claim of patent infringement which may be asserted in Federal Court, like non-infringement, invalidity and use pursuant to a licence [31]. This was in the face of Farmobile’s argument that the Federal Court lacked jurisdiction to entertain ownership in any context; it asserted that “while ownership is indeed a defence to a claim for patent infringement, it is not one that can be asserted in this Court” (Mactavish J’s emphasis). As Mactavish J pointed out, it is well-established that a licence to use is a valid defence, notwithstanding that assessing the merits of such a defence involves a matter of contractual interpretation, and “A licence is, after all, merely one form of contract” [32]. This holding seems clearly correct, but it is nonetheless a relief.

At the same time, Mactavish J affirmed that the Court does not have jurisdiction to consider exactly the same issue, based on exactly the same facts, by way of counterclaim. Mactavish J held that the contracts relating to ownership may be used a shield, but not as a sword [26], [35], [50]. The rationale is that in the defence, the essence of the litigation is patent infringement, while in the counterclaim, the essence of the litigation is patent ownership. This distinction does have support in the cases, in particular Innotech (1997) 74 CPR (3d) 275 (FCA), relied on by Mactavish J [34],[43]-[50]. And it is also reasonable to say the that the Federal Court can determine ownership when raised as a defence to an infringement action, even if it does not have jurisdiction to do so when ownership is raised independently.

However, the shield / sword distinction does not address, or affect, the more fundamental issue as to whether the Federal Court has jurisdiction to consider patent ownership when raised indepednently. If the Federal Court does not have such jurisdiction, then the sword / shield distinction makes sense; but if it does have such jurisdiction, then it doesn’t. Mactavish J’s reasoning is sound if one accepts that the Federal Court does not have jurisdiction to determine patent ownership on its own, but nothing in her decision addresses that fundamental point, one way or the other.

In previous posts, here and here, I have argued that the Federal Court does indeed have such jurisdiction, in light of s 20(2) of the Federal Court Act which gives the Federal Court “concurrent jurisdiction in all cases. . . in which a remedy is sought under the authority of an Act of Parliament or at law or in equity respecting any patent of invention.” In Kellogg [1941] SCR 242 the SCC interpreted the predecessor provision of the Exchequer Court Act as follows:

It will be noticed that subsection (c) deals with the "remedy" which is sought. And it enacts that the Exchequer Court shall have jurisdiction between subject and subject in all cases where a "remedy is sought" "respecting any patent of invention" "under the authority of any Act of the Parliament of Canada or at Common Law or in Equity." The remedy sought by the appellant, as a result of paragraph 8 of its statement of claim, is evidently a remedy in Equity respecting a patent of invention. The appellant claims that remedy as a consequence of the facts alleged in its paragraph 8 [that the appellant was owner by assignment]. It claims the remedy as owner deriving its title from the same alleged inventor of whom the respondent claims to be the assignee, through other assignors. In such a case, the invention or the right to the patent for the invention is primarily the subject-matter of the appellant's claim, and the remedy sought for is clearly "respecting any patent of invention." And this is covered by subsection (c) of section 22 of the Exchequer Court Act, as it stands at present.

Mactavish J interpreted Kellogg as holding that the Federal Court “may resolve contractual issues raised in an action that is in ‘pith and substance’ within the Court’s jurisdiction” [20]. I’m not sure that is exactly right: what the above passage says is that a party has jurisdiction when seeking a remedy respecting any patent of invention; which, of course, is what s 20(2) of the Act says on its face.In any event, whatever the broader principle, it seems to be to say quite explicitly that the Court does have jurisdiction in the circumstances at hand.

The argument endorsed above was made in the alternative (though that does not detract from its authority, as it was "obviously intended for guidance" and so should be accepted as authoritative: R v Henry 2005 SCC 76 [57]). Mactavish J implicitly distinguished Kellogg by saying that in that case the “primary issue” was a matter of patent law, not that alternative argument, citing pages 249-250. The exact “matter of patent law” at issue in Kellogg at 249 was as follows

the appellant is entitled to the benefit of the invention because John L. Kellogg, Jr. [the putative inventor], at the time when he is alleged to have made it, was in the employ of the appellant and then carrying out work which he was instructed to do on the plaintiff's behalf, and that, by virtue of his contract of employment and the circumstances under which the invention was made, he became and is a trustee of the invention for the company; if it be true further that, by reason of his being such a trustee, he was unable to transfer any right, title, or interest in the invention to any other party, and that the plaintiff is now the owner of any invention so made by John L. Kellogg, Jr., this would be one of the reasons why the appellant should be declared entitled, as against the respondent, to the issue of a patent including the claims in conflict as applied for by it.

That is, the "matter of patent law" is the question of who is the true owner of the patent in light of the contract of employment. This is exactly the question at issue in Farmobile: see the allegations [915-4], reproduced in my post on Ring J’s decision. The argument which I have previously discussed, based on what is now s 20(2), was an argument in the alternative. The primary basis for the decision in Kellogg, which Mactavish J acknowledged was a matter of patent law, is that ownership of a patent by virtue of contractual assignment and related circumstances, is essentially a matter of patent law and so the Federal Court has jurisdiction by virtue of that fact. This is entirely apart from any authority to award a remedy under s 20(2), or vary the Register under s 20(1). This aspect of Kellogg strikes as even more fundamental and directly on point. I cannot see how it is distinguishable from the facts at hand.

I remain perplexed by the Federal Court’s unwillingness to accept jurisdiction in these situations. When SCC precedent is unsound, I can understand that the Federal Court would resist its application by looking for tenuous distinctions. Indeed, that is in part how the common law “works itself pure.” But to my mind Kellogg makes perfect sense. The Federal Court consistently recognizes that it is “inconvenient” to require a party to commence a second proceeding in a provincial superior court in such circumstances [52]; the Court does not seem to be resisting jurisdiction out of concern that it would create some practical problem, which might not be apparent to an academic such as myself. It is of course true that inconvenience in itself is not a basis to assert jurisdiction where it does not exist [52], but conversely, creating inconvenience is not a basis to refuse jurisdiction where it does exist.

More broadly, a court faced with the question of who is the present owner of the patent must address who was the inventor, in order to determine who had the right to make a valid assignment in the first place, and that is surely a matter of patent law; as well as the question of how is the first owner, which is usually said to be a matter of patent law (see Comstock 38 CPR(3e) 29, 51-54; s 49); as well as the matter of priorities under s 51. Ultimately the remedy is amendment of the Register, which is established pursuant to s 12, and which the Federal Court, but not the provincial superior courts, has the authority to order amended, pursuant to s 52. Thus, patent law and the Patent Act is implicated at every stage of an patent ownership dispute. Consequently, while contacts of assignment are also implicated, the matter of ownership of a patent seems to me to be essentially a matter of patent law, and that is what Kellogg says on its face.

Friday, January 11, 2019

Legal Fees Not a Deductible Expense in an Accounting

Human Care Canada Inc v Evolution Technologies Inc 2018 FC 1302 supplementary reasons 2018 FC 1304 Elliott J
            2,492,392

In Human Care v Evolution Tech, Human Care brought an action against Evolution for infringement of its 392 patent related to “rollators” – a “walker” with wheels, primarily used to assist the elderly with mobility issues. Evolution counterclaimed that the 392 patent was invalid. The case turned on the facts. One legal point of passing interest, the deductibility of legal costs as an expense in an accounting of profits, was raised.

Infringement, as usual, turned on claim construction, and Elliott J generally preferred the evidence of Human Care’s expert. For example, Elliott J agreed with counsel for Human Care that the key expert for Evolution “has looked at the claims, picked at random words, define[d] them outside of the claims, and then reinserted them into the claims” [189]. Validity attacks based on anticipation [382], obviousness [405], [410], and overbreadth [420], likewise failed on the facts.

Turning to damages, the parties agreed that the quantum for reasonable compensation for ‘infringement’ after publication but prior to grant, should be based on royalties actually charged by Human Care during that period, and the number of units was also agreed [41], so there was “nothing to discuss” on this issue [432].

Elliott J held Human Care was entitled to elect an accounting rather than damages, essentially on the basis that there was no reason, such as undue delay, for denying the election [436]. This is consistent with the general practice of presumptively allowing the patentee to elect an accounting unless there is some equitable reason to refuse it. (There are one or two cases where the Court has held that the burden was on the successful patentee to establish an entitlement to an infringement, but these are the exception.)

It appears that Human Care’s rollator design swept the market, so that there was no non-infringing alternative; if Evolution had not sold infringing rollators, it would have had to leave the market, and might well have gone out of business [455]. Elliott J noted that “Where there is no non-infringing alternative, the infringer must turn over all profits made from the infringing act, less legitimate expenses incurred” [462].

One unusual point is that Evolution sought a deduction for legal fees as a business expense. Elliott J noted that:

[477] This Court has been generally hesitant to accept deductions for legal fees. For instance, in Teledyne [(1982), 68 CPR(2d) 204), Mr. Justice Addy at [pages] 214-216 did not allow the defendant to deduct legal expenses because it was concluded that such an approach would allow the infringing party to retain part of its unjust enrichment.

The point was apparently a novel one in Teledyne, as the only cases cited related to deductibility for income tax purposes of legal expenses incurred for the purpose of doing business, and as such, “are not remotely applicable” (215). To say Addy J was "hesitant" to accept such a deduction, is an understatement. He said (my emphasis):

That question must be answered most emphatically in the negative, regardless of the fact that the expenditure might well be considered from a general accounting standpoint as being a variable expense incurred in the course of selling the infringing product. Allowing this deduction would amount to the Court rewarding the wrongdoer and contravening its own finding. Such a decision would, in my mind, be likely to bring the administration of justice into disrepute and, in addition, contribute to the unjust enrichment of the wrongdoer. It is impossible for me to conceive how a court of equity would even seriously consider these expenses as a legitimate deduction and indeed the Defendant was unable to point to any case where the question was even raised.

I admit the concept does seem outrageous, but outrage is always an uncertain basis for a legal holding, and to my mind Addy J’s next point was more persuasive:

Furthermore, the Court in this action awarded-costs to the Plaintiff on a party-and-party basis. A deduction of the Defendant's costs on a solicitor-and-silent basis would in effect constitute a direct contradiction of its previous order. Costs in an action have always been considered separately from the ether claims of the parties to that action, as the considerations governing allowance or disallowance of costs, the amounts granted and the scales on which they are to be calculated are quite different from those which govern the Court's findings on substantive issues. It is for this same reason that a successful plaintiff, who elects to as for an assessment of damages, is not entitled to add his legal expenses in prosecuting the action as part of the damages incurred.

That strikes me as entirely persuasive. Costs awards are dealt with separately, with distinct considerations, related to eg the incentive to litigate, and the need to sanction the conduct of the case, and so on. To allow deduction of the legal fees as an expense on the accounting would undermine the rationale for the costs award.

(Note that Addy J remarked that “[a] similar claim was also disallowed in the Dubiner v. Cheerio Toys case [[1966] Ex.C.R. 801, 837-38]” but I note that in Dubiner the legal costs were disallowed primarily “on the simple ground that the defendant failed to prove these accounts,” and it is therefore not strong authority for refusing the deduction as a matter of principle.)

In the case at hand, Elliott J, after citing Teledyne, nonetheless allowed a deduction for legal costs to a certain extent, as being the amount the defendant “spent prior to the litigation in this and a parallel dispute” [478]. This seems to suggest that the principle enunciated by Addy J is applicable only in respect of litigation expenses incurred after the statement of claim is actually filed. I’m not sure that is a principled distinction, but the issue discussed so briefly that I won't explore it further..

Overall, a number of the expense deductions were disallowed in whole or in part for lack of adequate proof. The result was a “rough justice” award of just over $12 million.

Elliott J also granted a permanent injunction on established view that ““[t]he Court should refuse to grant a permanent injunction where there is a finding of infringement, only in very rare circumstances” [485], quoting Valence v Phostech 2011 FC 174 [240]. Compound interest (“profits-on-profits”) was refused on the basis that Human Care “did not provide thorough submissions on why profits-on-profits is merited in this case” [487]. The supplementary reasons clarified the terms of the injunction and order for delivery up, as well as the details of the damages and interest assessment.