[2017] 3 F.C.R. D-3
Patents
Appeal from Federal Court (F.C.) decision (2015 FC 721) determining amount of appellants’ (Apotex Inc. and Apotex Pharmachem Inc.) profits attributable to its infringing activity — Respondent ADIR owner of Canadian Patent No. 1341196 (ꞌ196 patent) which claims drug perindopril sold under trademark COVERSYL — Respondent Servier Canada Inc. corporate affiliate of ADIR, exploiting ꞌ196 patent in Canada (ADIR, Servier collectively referred to as respondents herein) — Appellants selling generic version of perindopril in tablet form — F.C. holding in 2008 that ꞌ196 patent valid, infringed by appellants — Liability judgment affirmed on appeal — Respondents electing to recover profits appellants earned by reason of their infringing activities — F.C. requiring appellants to completely disgorge its Canadian profits — Rejecting appellants’ arguments profits should be reduced (1) by taking into account availability of non-infringing alternatives, (2) on basis that portion thereof attributable to non-infringing services it provided — Appellants asserting F.C. failed to: reduce profits by taking into account availability of non-infringing alternatives; apportion or segregate profit appellants earned on sale of infringing perindopril from profit it earned from provision of indemnity, related legal services appellants provided to foreign affiliates — Main issues whether F.C. erring by rejecting relevance at law of non-infringing perindopril for export sales; in refusing to apportion revenue appellants received under transfer price agreements for sale of perindopril to foreign affiliates — F.C. erring in law by rejecting appellants argument that its profits should be calculated taking into account availability of non-infringing perindopril for export sales, by failing to apply differential profit approach — Supreme Court in Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34, [2004] 1 S.C.R. 902 explaining that comparison having to be made between profit attributable to invention, profit using best non-infringing option — Differential profit approach “preferred means” of calculating an accounting of profits but not only means — However, need to ensure patentee only receive that portion of infringer’s profit that is causally attributable to invention — Here, value of invention can only be quantified if non-infringing alternatives considered — Value of patent lying in ability of patentee to exclude competitors, competition — F.C. conclusion rejecting relevance of non-infringing perindopril because appellants sold perindopril inconsistent with Schmeiser — Policy reasons cannot trump requirement that infringer’s disgorged profit must only be profit causally attributable to invention — F.C. not erring in refusing to apportion revenue appellants received under transfer price agreements for sale of perindopril to foreign affiliates — F.C.’s interpretation of transfer pricing agreements based on extricable error of law — This said, in applying required interpretive principles, appellants failing to establish that transfer pricing agreements apportion revenue — Profit resulting from sale of perindopril entirely causally attributable to invention — Follows that no apportionment warranted — F.C. committing extricable legal error when interpreting transfer price agreements — Appellants not demonstrating that revenues received pursuant to transfer price agreements with foreign affiliates intended to be apportioned between revenue received for drug, revenue received for indemnity, defence costs it agreed to bear — Appeal allowed in part.
Apotex Inc. v. ADIR (A-315-15, 2017 FCA 23, Dawson J.A., judgment dated February 2, 2017, 34 pp.)