Tuesday, January 19, 2021

Nova v Dow Flipped the Approach to Accounting of Profits

Rovi Guides, Inc v Videotron Ltd 2021 FC 19 Lafrenière J

In this decision Lafrenière J granted Videotron’s motion to reopen the evidentiary portion of the patent infringement trial to allow additional expert evidence relating to the accounting of profits remedy, given that the FCA in Nova v Dow 2020 FCA 141 “effectively flipped the default approach to accounting of profits” [14]. (Oral argument is scheduled commencing January 20, 2021 [13].) As Lafrenière J noted [26], this is consistent with a similar motion granted in the Bauer Hockey 2020 FC 1123 trademark case, where Grammond J remarked that “I am satisfied that, given the understanding of the law prevailing among intellectual property lawyers prior to Nova v Dow, CCM could not have been expected to file evidence regarding total costs earlier” [7].

In this case, Rovi, opposing the motion, argued that

[21] the Federal Court of Appeal’s decision in Nova Chemicals is either consistent with Schmeiser [2004 SCC 34], which would mean that there has been no fundamental change in the law, or that Nova Chemicals is inconsistent with Schmeiser, and therefore wrongly decided and should not be followed.

Lafrenière J noted that Nova Chemicals is “viewed by some as departing from established law both in statements of principle and in the result,” quoting from my post Nova v Dow: A Radical Departure from Established Law, which argued that Nova is inconsistent with Schmeiser.

Lafrenière J remarked that whatever the merits of those views, he was bound to follow the FCA decision in Nova, given that it “unambiguously provides that the full costs approach should be the default one” [23]. That is surely right. While I remain of the view that the principles expressed in Schmeiser are inconsistent with the decision in Nova, the FCA is evidently of a different opinion, and the SCC did not address the issue of fixed costs specifically. There would be an interesting issue of precedent if the SCC had specifically addressed fixed costs and the FCA had declined to follow it on that point, but on how to understand the implications of the principles set out in Schmeiser, the FC must of course follow the FCA.

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