If you are a patent owner, you are entitled to damages if
someone infringes your patent. The measure of damages is
compensatory damages, lost profits or a "reasonable
royalty". Is it fair for the infringer to say that the damages
should be reduced because the infringer could have made
the same sales using an available alternative that did not infringe
Marck sued its rival Apotex for patent infringement for sales of
the drug lovastatin. The trial judge awarded Merck a total damages
award of $119 million. In the decision in Apotex Inc. v. Merck &
Co., Inc. 2015 FCA 171, the court considered
Apotex's argument about "non-infringing
alternatives". In a nutshell, Apotex was saying, okay, we
infringed when we sold lovastatin using the patent process,
but we could have made the same sales of
lovastatin using another process that did not infringe.
Therefore, the measure of damages should be lower, since the loss
of profits could still have been suffered by the patent holder
without any patent infringement.
The court describes it this way: "The principal issue
raised on this appeal is whether, when calculating damages for
patent infringement, it is relevant to consider the availability of
non-infringing alternative products available to the infringer. For
the reasons that follow I have concluded that, as a matter of law,
the availability of a non-infringing alternative is a
relevant consideration. The issue arises in the following
context: Apotex has been found liable for patent infringement. On
the issue of remedy, Apotex submits that the damages it is liable
for should be reduced because it had available a non-infringing
product that it could and would have used." (Emphasis added)
In other words, the patent holder's sales could have been
reduced simply by legitimate competition as opposed to
infringement. In the end, the court agreed that non-infringing
alternatives should be considered, but disagreed that there was any
non-infringing alternative available in this case.
The damages award (one of the largest damage awards in Canada)
remained in place and Apotex's appeal was dismissed. This kicks
open the door to arguments about using "non-infringing
alternatives" to reduce damages in future patent infringement
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.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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