Accounting of profits reaffirmed as available remedy for patent infringement

In Rovi Guides, Inc. v. Videotron Ltee, 2024 FCA 125, the Federal Court of Appeal (“FCA”) provided some important comments on the issue of available remedies for patent infringement in Canadian law. Importantly, the FCA stated that, upon successfully establishing liability for patent infringement, the patentee is entitled to seek an accounting of the defendant’s profits, unless there are sufficient reasons to deny the remedy.

Although the FCA held that the patents at issue were invalid, affirming the ultimate decision of the trial judge on appeal, the Court issued these important reasons to clarify and reverse a finding made in the decision on appeal, on the discretionary nature of accounting of profits.

In the decision of the trial judge on appeal, the Federal Court had found (in obiter, given that he found the patents invalid) that, even if the defendant Videotron was liable for infringement, the patentee Rovi would not have been entitled to claim the remedy of accounting of profits due to the court’s findings that Rovi had delayed the prosecution of its patents and in commencing the infringement action. The trial court would have limited remedies to a reasonable royalty based on the idea that Rovi was creating a “patent holdup”.

The FCA confirmed that the remedy of accounting of profits is equitable in nature and discretionary, but noted that this was explicitly provided for as an “accounting” under s. 57(1)(b) of the Patent Act. Plaintiffs are permitted to seek either damages (e.g. their own lost profits) or an accounting of the infringer’s profits. More importantly, the FCA emphasized that a trial judge may not “arbitrarily deny the remedy”.

As a result of the FCA’s decision, it should be presumed that a successful plaintiff in a patent infringement lawsuit is entitled to request an accounting of profits, unless there is a “compelling reason” to deny the remedy. The Court reviewed some such reasons to deny the remedies, including:

• delay in the pursuit of the action once the plaintiff became aware of the infringement
• the plaintiff had “unclean hands” in respect of conduct directly relating to the claim or action
• the infringement complained of occurred when the patent had been declared invalid at first instance,
• the calculation of profits was unduly complex compared to the assessment of damages,
• the plaintiff was a non-exclusive licensee, and
• the plaintiff did not practice the invention in Canada

However, as an important point for non-practicing patentees, the Court stated that the fact that a patentee has licensed or intends to license its patents instead of practicing the invention itself, “is to be afforded no weight in the determination of whether to award an accounting”.