snIP/ITs Insights on Canadian Technology and Intellectual Property Law

Canadian Patent Damages – Mitigation and Person Claiming Under the Patentee

Posted in Intellectual Property, Litigation, Patents
Kaitlin SoyeJames S.S. HoltomDavid Tait

Not long after its decision in Apotex Inc. v. Bayer Inc (2018 FCA 32 – see our blog), the Federal Court of Appeal released another important decision on the subject of remedies for patent infringement (full decision here: Teva Canada Limited v. Janssen Inc., 2018 FCA 33).

The Court of Appeal confirmed that whether a plaintiff has reasonably mitigated its loss in a patent case is a question of fact. The burden lies with the defendant to establish the plaintiff failed to take reasonable steps that were available to mitigate. Further, the Court of Appeal reiterated that a person claiming under the patentee in patent infringement actions is to be broadly defined.
In 2006, the Federal Court found that Daiichi’s patent protecting its antibiotic, LEVAQUIN®, was valid and infringed by Teva.[1] This ruling was made despite the same court previously finding Teva’s obviousness allegation was justified in litigation under Canada’s PM(NOC) Regulations. That previous decision cleared the path for Teva, who obtained marketing access and launched its infringing product at risk. Teva was sued for patent infringement and its same obviousness attack failed to persuade the court after a full trial, as opposed to the summary hearing under the PM(NOC) Regulations.

In a second damages phase, the Federal Court ordered Teva to pay over $18 million in damages[2] and $1 million in costs[3].

In dismissing Teva’s appeal, Justice Dawson (writing for the unanimous panel) made a number of holdings, including:

  • Mitigating Damages: What must be done to reasonably mitigate is a question of fact. The burden rests with the defendant to show both that the plaintiff failed to make reasonable efforts, and that mitigation was possible.[4] The plaintiff will generally receive the benefit of any doubt.[5] Furthermore, there is no single standard of objectively reasonable behaviour when it comes to mitigation.[6]
  • Person Claiming Under the Patentee: One need not be a patentee to sue for patent infringement in Canada. Persons claiming under the patentee may also sue alleged infringers pursuant to subsection 55(1) of the Patent Act.[7] A “person claiming under the patentee” is interpreted broadly.[8] Such a person is one who enjoys rights under a patent. In this case, the paperwork demonstrated that the sales transactions include Janssen Puerto Rico, who manufactures the tables and sells to Janssen U.S., who then sells to Janssen Canada. Accordingly, when the infringing sales of Teva’s tablets supplanted the sales of Janssen Canada’s tablets, Janssen US suffered a compensable loss. Janssen US’s rights could be traced back to the patent, and the US entity was not required to demonstrate that it held title in Canada to the tables it sold to Janssen Canada.[9]
  • Costs Award: Costs awards are “quintessentially discretionary”.[10] Teva did not assert that the $1 million lump sum was in itself excessive, but that it was excessive compared to what an assessment officer would have awarded. The FCA maintained the cost award and stated, as previously held,[11] that an amount awarded as a lump sum would not necessarily correspond with an amount assessed by an assessment office.

[1] 2006 FC 1234, aff’d 2007 FCA 217, leave ref’d [2007] S.C.C.A. No. 442.

[2] 2016 FC 593.

[3] 2016 FC 727.

[4] Teva Canada Limited v. Jannsen Inc., 2018 FCA 33, paras. 55-56.

[5] Teva Canada Limited v. Jannsen Inc., 2018 FCA 33, para. 57

[6] Teva Canada Limited v. Jannsen Inc., 2018 FCA 33, para. 58.

[7] Teva Canada Limited v. Jannsen Inc., 2018 FCA 33, para. 127.

[8] Teva Canada Limited v. Jannsen Inc., 2018 FCA 33, para. 119.

[9] Teva Canada Limited v. Jannsen Inc., 2018 FCA 33, paras. 122-128.

[10] Teva Canada Limited v. Jannsen Inc., 2018 FCA 33, paras.154-155, citing Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6 at para. 247.

[11] Apotex Inc. v. Merck & Co., 2005 FCA 23.