Canada: Generic Ordered To Pay $1.7 Million In Accounting Of Profits

Last Updated: April 24 2013
Article by Tushar Tangri

On March 12, 2013, the Federal Court released its decision in Apotex Inc. v. H. Lundbeck A/S, 2013 FC 192. The Court  dismissed Apotex's action to impeach Lundbeck's Canadian Patent No. 1,339,452 and declared the patent valid and infringed by Apotex. Among other things, the Court addressed the equitable remedy of accounting of profits in circumstances of patent infringement.  As decisions granting an accounting of an infringer's profits are rare, this article focuses on the Court's findings with respect to the accounting of profits remedy.

By way of background, Apotex brought an action seeking to impeach Lundbeck's Canadian Patent No. 1,339,452 (the "'452 Patent"). The '452 Patent claimed a compound known as "(+)-Citalopram" along with methods to make this compound.  (+)-Citalopram is used in the treatment of clinical depression and is branded in Canada as Cipralex®.  Apotex alleged that the '452 Patent was invalid based on the grounds of: inutility; insufficient disclosure; anticipation; and obviousness.  In response, Lundbeck alleged that the claims of the '452 Patent were valid and infringed by Apotex.

Apotex admitted that if the '452 Patent was found to be valid, in whole or in part, it had infringed.  After considering the expert evidence, Justice Harrington concluded that each of the claims of the '452 Patent were valid.  Therefore, the only issue that remained was what remedy Lundbeck ought to be granted for Apotex's patent infringement.  Lundbeck had sought an accounting of Apotex's profits rather than compensatory damages.  Lundbeck also sought punitive damages.  While Justice Harrington saw no reason to award punitive damages to Lundbeck on the facts of this case, he did exercise his discretion in awarding Lundbeck the equitable remedy of an accounting of profits.  In so doing, he distinguished this case from the earlier Supreme Court of Canada case of Monsanto Canada Inc. v. Schmeiser ("Monsanto").

The Monsanto case involved a claim of patent infringement by Monsanto Inc. against Mr. Percy Schmeiser, a farmer based in Saskatchewan, Canada.  The patent in issue in Monsanto related to genetically engineered genes and cells which, when inserted into plant seeds, increased their tolerance to herbicides containing glyphosate.  Testing had revealed that 95-98% of Mr. Schmeiser's 1,000 acres of canola crop contained the patented gene and cell at issue, despite Mr. Schmeiser never having purchased these seeds nor ever obtaining a license from Monsanto to plant them.   The Supreme Court found the subject matter of Monsanto's invention to be patentable, and held that Mr. Schmeiser had infringed the patent by saving and cultivating canola seeds containing the patented gene and cell. 

In terms of remedies in Monsanto, the Supreme Court held that Monsanto was precluded from seeking its damages in light of its election to seek an accounting of Mr. Schmeiser's profits.  Moreover, Monsanto was only entitled to those profits Mr. Schmeiser realized that were attributable to the patented gene and cell in issue.  In this regard, the Supreme Court held that Mr. Schmeiser's profits from the sale of the infringing canola crop would have been no different had he planted and harvested ordinary canola.  To put it another way, it was held that Mr. Schmeiser had realized no additional profits as a result of his unlicensed use of the invention, and, as such, Monsanto was not entitled to any monetary award for patent infringement. 

In contrast, the Federal Court's recent decision in this case dealt with Lundbeck's entitlement to Apotex's profits from foreign sales of (+)-Citalopram, which were the subject of Lundbeck's '452 Patent.  Justice Harrington held that Lundbeck was entitled to all of Apotex's profits realized from these sales.  In so doing, he distinguished the case before him from Monsanto.  Justice Harrington noted that, in Monsanto, it was held that Mr. Schmeiser realized no profits from the use of the patent at issue in that case since he would have realized the same profits without using the patented invention.  In contrast, Justice Harrington found that "[t]his case is quite different" because all of the profits realized by Apotex were a direct result of the infringement of the '452 Patent.  This can be explained by the fact that the only active ingredient in Apotex's product was  (+)-Citalopram, which was claimed in the '452 Patent.  As such, Apotex would not have realized any profits from its foreign sales but for its infringement of the '452 Patent.  Therefore, Apotex had to forfeit these profits to Lundbeck. 

In determining the monetary amount of the award to Lundbeck, Justice Harrington considered the revenues and reasonable expenses Apotex incurred as a result of its foreign sales of (+)-Citalopram.  Both Lundbeck and Apotex put forward expert evidence from chartered accountants to assist the Court in this regard; however, the Court affirmed that any analysis of the jurisprudence regarding such a remedy was for the Court to make and not accountants. 

While much of the information relating to the calculation of Apotex's revenues is confidential and has been redacted from the public version of the Apotex decision, Justice Harrington did provide guidance regarding allowable expenses that should be deductible in an accounting of profits calculation.  In this regard, the Court allowed expenses for packaging material and "direct labour, set/clean-up labour, direct overhead and direct quality assurance", but refused to allow expenses for Apotex's "indirect overhead, indirect quality assurance, fixed overhead, depreciation and rent" because they were "too remote to be referable to the manufacture of (+)-Citalopram".

Additionally, Justice Harrington allowed increased expenses for one of the Apotex entities manufacturing (+)-Citalopram, Apotex Pharmachem, because it was the first time this entity had manufactured the compound.  Justice Harrington held that "[t]he cost of the first item off the assembly line is always more expensive than if the set-up cost had been spread out over a much greater production". 

The Court awarded Lundbeck over $1.7 million on account of Apotex's profits.  The Court also granted an injunction prohibiting the Defendants from "making, selling, distributing, advertising, exposing for sale, offering for sale, stockpiling or possessing for the purposes of the foregoing or importing into Canada (+)-Citalopram prior to the expiration of patent 1,339,452 on 9 September 2014."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
8 Nov 2016, Seminar, Ottawa, Canada

The prospect of an internal investigation raises many thorny issues. This presentation will canvass some of the potential triggering events, and discuss how to structure an investigation, retain forensic assistance and manage the inevitable ethical issues that will arise.

22 Nov 2016, Seminar, Ottawa, Canada

From the boardroom to the shop floor, effective organizations recognize the value of having a diverse workplace. This presentation will explore effective strategies to promote diversity, defeat bias and encourage a broader community outlook.

7 Dec 2016, Seminar, Ottawa, Canada

Staying local but going global presents its challenges. Gowling WLG lawyers offer an international roundtable on doing business in the U.K., France, Germany, China and Russia. This three-hour session will videoconference in lawyers from around the world to discuss business and intellectual property hurdles.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.