UNB Law

Professor Norman Siebrasse was extensively cited and quoted by the Federal Court of Appeal in an important decision setting out the proper approach to the remedy of an accounting of profits in Nova Chemicals Corporation v Dow Chemicals Company 2020 FCA 141. Nova v Dow is a patent infringement case involving the production and sale of plastic wrap. Nova was infringing upon Dow’s patent. The original decision saw Dow awarded almost $645,000,000, a record award in Canadian patent law. This award was affirmed on appeal.

The court references Professor Siebrasse’s 2004 article, A Remedial Benefit-Based Approach to the Innocent User Problem in the Patenting of Higher Life Forms, as well as his subsequent co-authored article, Accounting of Profits in Intellectual Property Cases in Canada, which examine the accounting of profits in patent infringement cases.

According to Siebrasse, the differential profit approach determines damages through an examination of profits made had there not been any infringement.

“You look at how much profit the infringer actually made, how much they would have made had they not infringed, and the difference between these amounts is the profit due to the invention—the amount paid to the patentee.”

Here are some passages in which the Court of Appeal discussed Professor Siebrasse’s approach:

[51] Professor Norman Siebrasse, a leading, incisive member of Canada’s intellectual property academy, calls this the “differential profits approach” or “value-based apportionment”:

[…] awarding profits according to the value added by the patented invention and opposed to the proportionate cost or physical size, is consonant with fundamental nature of patents as intellectual property. What is valuable is the intellectual contribution that is embodied in an invention, not the physical contribution. It may be that even though the patented aspect is only a small part of the wares that are sold, either by physical proportion or by cost, the entire value of the ware is due to the patent.

(Siebrasse 2004 at 92.)

[66] Indeed, the seminal Siebrasse (2004) article, above, advocating for value-based apportionment, cited at paragraph 51, above, briefly succumbs to this temptation. In that article, Professor Siebrasse justifies non-infringing alternatives as a “specialized statement” of the “but for” principle of causation (at 91, emphasis added):

The argument in favour of the differential-profits approach is that it is simply the application of “but for” causation to an accounting of profits. …

It says that the defendant’s profit caused by the infringement is the difference between the profit that the defendant in fact made and the profit that the defendant would have made but for the infringement, on the supposition that but for the infringement the defendant would have used the next best non-infringing alternative.

Read Professor Siebrasse’s thoughts on the FCA decision.