Nova seeks to cut Dow’s $517m award in Canada
Nova Chemicals has asked Canada’s top court to revisit a historic patent damages award of CAD$645 million ($517 million) won by Dow Chemical at the country’s federal court of appeal.
The company, based in the United Arab Emirates, delivered its argument at Canada’s Supreme Court on Wednesday, April 20.
Back in 2020, the Federal Court of Appeal upheld the Federal Court's earlier judgment awarding Dow Chemical the largest monetary award by a Canadian Court in history for patent infringement.
But Nova this week contended that CAD$300 million should be removed from the award because it is punitive and detracts from the patent law’s objective of restoring lost profits to patent holders.
“The goal of the remedy is not to punish defendants—it is to put the defendant back in the position it would have been in had it not infringed,” the company argued.
The dispute began in 2014 when Dow Chemical successfully defended the validity of its patent covering metallocene linear low-density polyethylene against Nova Chemicals.
In 2020, the Federal Court ruled that Dow Chemical was entitled to an award of $644 million for Nova Chemicals' infringement of its patent.
According to the court, this sum represented a reasonable royalty for the infringement during the pre-grant publication period of the patent, an accounting of profits for the post-grant period, and an accounting of "springboard profits" for a period of 20 months following the expiry of the patent.
By this action, the appeals court revised a law regarding the remedy of an accounting of profits.
In particular, the Court of Appeal stated that the aim of an accounting of profits is not to compensate for injury but to remove the benefits the wrongdoer has made as a result of the infringement. By doing this, any economic incentive to infringe is removed, it said.
Commenting on the latest development, Michael Crichton, partner at Gowling WLG, said: “The award is indeed historic in Canada, the largest Court-ordered monetary remedy in Canadian history for patent infringement. Should the Supreme Court agree with Dow’s arguments, it will mean the remedy of an accounting of an infringer’s profits will be strengthened.”
In particular, he explained, it will mean that an infringer will have a more difficult time demonstrating that a patentee’s claim to the infringer’s profits should be reduced or apportioned based on comparisons to non-infringing behaviours that the infringer could have engaged in.
“If Dow is successful on this appeal, we can expect patentees to feel more bullish about electing to recover an infringer’s profits as opposed to the patentee’s damages. This is because it will be more challenging for infringers to be able to successfully demonstrate some reduction or apportionment of their infringing profits should be applied.
But he added that if Nova is successful, patentees are likely to be more hesitant to elect to recover an infringer’s profits, as the likelihood that the recoverable profits will be reduced somewhat or eliminated entirely will be greater.
“The Supreme Court did not give any explicit indications as to whether it favoured one party’s arguments over the other party, so it is difficult to say how likely it is as to whether Dow or Nova will be the successful party.
“One could try to read the tea leaves from the questions posed by some of the judges during the hearing. Some of those questions seemed to suggest at least some sympathy for Dow’s arguments. Does this bode well for Dow? Maybe, but it is impossible to say for sure either way,” he concluded.
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