Markwell Clarizio LLP

Angelcare v Munchkin: Entitlement to Infringement Remedies

Co-written with Dino Clarizio

The Federal Court of Canada (per Roy J.) decided four issues of entitlement to remedies in an action where he had previously held that the defendants’ products sold in Canada infringed valid claims. The issues were 1) entitlement to injunctive relief; 2) entitlement to an accounting of profits; 3) entitlement to punitive damages; and 4) which Plaintiffs are entitled to a pecuniary remedy (damages or accounting of profits).

1) Injunctive Relief
Roy J. held that the natural consequence flowing from a finding of infringement is to grant a permanent injunction to restrain any future infringement by the defendants until expiry of the patent(s), especially where there is some uncertainty whether the defendants’ infringing products may find their way back into the Canadian marketplace.

2) Accounting of Profits
Section 55 of the Patent Act grants successful plaintiffs, as a matter of law, the right to claim the damages they suffered as a result of the defendants’ infringement. In addition, subsection 57(1) of the Act allows plaintiffs the possibility of seeking an accounting of profits of the defendants’ profits rather than claiming the damages they suffered. There are many reasons why plaintiffs may want to recover the defendants’ profits rather than damages. However, an accounting of profits is an equitable remedy, and the right to elect between damages and profits is provided at the discretion of the Court. Roy J. held that successful plaintiffs are generally entitled to elect an accounting of profits in the absence of any compelling reasons against it. There are a number of factors that the Court considers when exercising this discretion. One such factor is the complexity of proceedings, however, this factor alone does not preclude an accounting of profits. Rather, complexity must be weighed against other factors, including the amounts at stake and the complexity of the alternative quantification (damages).

3) Punitive Damages
According to Roy J., there is no doubt that punitive damages are available in patent cases. However, he recognized that findings of willful and knowing infringement alone are insufficient to support a claim to punitive damages. More is needed, such as litigation misconduct or “willful blindness or intentional and planned misappropriation of the claimed invention”. In this case, the plaintiffs did not prove entitlement to punitive damages.

4) Who Can Claim Damages
Section 55 of the Patent Act provides that the patentee and “all persons claiming under the patentee” can claim damages sustained as a result of patent infringement. Roy J. thoroughly reviewed the case law defining who is a “person claiming under the patentee”, and accepted the following summary of the applicable test:

  • the person must be one who, as a user, an assignee, a licensee or lessee has a title or a right that can be traced back to the patentee;
  • it does not matter whether a licensee is exclusive or non-exclusive;
  • the licence must be proved but it need not exist in writing; and
  • the claim must be one in respect of a use in Canada and not elsewhere in the corporate chain.

In the Angelcare case, Roy J. held that each of the three named plaintiffs were either a patentee or a “person claiming under the patentee” at some point in the relevant infringement period, based on implied licenses in a commercial relationship evidenced by oral witness testimony, copies of invoices, and “confirmatory patent licenses”. He found that the “business relationships between the Plaintiffs led to their joint effort towards a shared goal. That included practicing the patents owned by two of them.