• About
  • Offices
  • Careers
  • News
  • Students
  • Alumni
  • Payments
  • EN | FR
Background Image
Bennett Jones Logo
  • People
  • Expertise
  • Knowledge
  • Search
  • FR Menu
  • Search Mobile
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
View all
Practices
Corporate Litigation Regulatory Tax View all
Industries
Energy Infrastructure Mining Private Equity & Investment Funds View all
Advisory
Crisis & Risk Management Public Policy
View Client Work
International Experience
Insights News Events Subscribe
Arbitration Angle Artificial Intelligence Insights Business Law Talks Podcast Class Actions: Looking Forward Class Action Quick Takes
Economic Outlook New Energy Economy Series Quarterly Fintech Insights Quarterly M&A Insights Sustainability & the CIO
People
Offices
About
Practices
Industries
Advisory Services
Client Work
Insights
News
Events
Careers
Law Students
Alumni
Payments
Search
Subscribe

Stay informed on the latest business and legal insights and events.

LinkedIn LinkedIn Twitter Twitter Vimeo Vimeo
 
Blog

Just Perfect: Compensatory Patent Damages in Apotex Inc v Merck & Co, Inc

July 29, 2015

The Federal Court of Appeal has decided that when computing compensatory damages for patent infringement, the availability of a non-infringing alternative is now a legally relevant consideration that can reduce the lost profits an infringer is liable to pay a patentee (Apotex Inc v Merck & Co, Inc). Considering non-infringing alternatives means taking into account the realistic effect of legitimate competition by a defendant marketing a non-infringing alternative. This achieves the "perfect compensation" the Patent Act requires. The non-infringing alternative is not, however, conceptual: the defendant must prove the existence of a true, economically viable alternative, and the fact that it could and would have sold that alternative in sufficient quantities to replace infringing sales.

Perfect Balance

The Federal Court of Appeal observed that the balance at the heart of the Patent Act demands "perfect compensation". The Patent Act  intends to compensate a patentee who has suffered loss as a result of patent infringement and "the concept of compensation rejects both under-compensation and over-compensation". The Act purports to balance the benefit to the public through disclosure of a new and useful invention against the benefit conferred on the inventor through the grant of a monopoly to encourage research and development. Perfect compensation achieves the balance by avoiding under-compensation which would discourage research by inventors, and over compensation which would discourage competition for fear of infringement.

Perfect Compensation

To determine compensation, the language of the Patent Act invokes a causation inquiry, as section 55(1) states: an infringer is liable "for all damages sustained by reason of the infringement". This causation inquiry is, in the words of the Supreme Court, best "answered by ordinary common sense". Common sense dictates that determining lost profits caused by patent infringement without regard to the availability of a non-infringing alternative yields imperfection. An award of lost profits without a realistic consideration of market share would sometimes overcompensate the patentee. This is because where a non-infringing alternative is available, but disregarded in a lost profits calculation, the patentee would be compensated for sales that would, in reality, have been sales of the alternative product.

In the result, "[p]erfect compensation requires consideration of: (i) what, if any, non-infringing product the defendant or any other competitors could and would have sold but for the infringement; and, (ii) the extent lawful competition would have reduced the patentee's sales."

Canada's approach to calculating compensatory patent damages is now closer to the United States approach, which the Federal Court of Appeal summarized as follows: "if a non-infringing alternative [to] which a defendant could and would have resorted, but for the infringement, is as good as the patented invention, and would have replaced all infringing sales, the infringement causes the patentee to suffer no damage."

Please note that this publication presents an overview of notable legal trends and related updates. It is intended for informational purposes and not as a replacement for detailed legal advice. If you need guidance tailored to your specific circumstances, please contact one of the authors to explore how we can help you navigate your legal needs.

For permission to republish this or any other publication, contact Amrita Kochhar at kochhara@bennettjones.com.

Download PDF

Author

  • Dominique T. Hussey Dominique T. Hussey, Chief Executive Officer

Related Links

  • Insights
  • Media
  • Subscribe

Recent Posts

Blog

Major Change in Alberta Occupational Health and Safety [...]

May 26, 2025
       

Blog

Q&A on Cybersecurity and Family Enterprises: How to [...]

May 23, 2025
       

Blog

British Columbia Grapples With Evidentiary Issues [...]

May 22, 2025
       

Blog

Screening By the Authorizing Judge: Québec Court of [...]

May 22, 2025
       

Blog

Court of Appeal Cuts Off Speculative Product Liability Claims

May 22, 2025
       
Bennett Jones Centennial Footer
Bennett Jones Centennial Footer
About
  • Leadership
  • Diversity
  • Community
  • Innovation
  • Security
Offices
  • Calgary
  • Edmonton
  • Montréal
  • Ottawa
  • Toronto
  • Vancouver
  • New York
Connect
  • Insights
  • News
  • Events
  • Careers
  • Students
  • Alumni
Subscribe

Stay informed on the latest business and legal insights and events.

LinkedIn LinkedIn Twitter Twitter Vimeo Vimeo
© Bennett Jones LLP 2025. All rights reserved.
  • Privacy Policy
  • Disclaimer
  • Terms of Use
Logo Bennett Jones