In Uponor AB v Heatlink Group Inc (2016 FC 320) the Federal Court of Canada awarded a permanent injunction after a finding that the asserted patent was valid and infringed, notwithstanding that the plaintiff did not practise the claimed invention. This case confirms that a patent owner’s primary leverage in many patent cases – namely, the possibility of a permanent injunction – remains available in Canada, even where the patentee may not practise the patented invention.

Background

Much has been written in the past few years regarding the entitlement of a non-practising entity (NPE) to the full scope of relief typically awarded to a successful patent owner in a patent infringement proceeding. In the United States, cases such as eBay v Mercexchange have made it difficult for NPEs which successfully assert a patent to obtain a permanent injunction. This and other trends in the US patent landscape have arguably resulted in a US system in which NPEs face significant hurdles before being able to reach a successful resolution of an infringement allegation.

In Canada, in light of its smaller market size, there has been less discussion on these issues. Some have argued that, like in the United States, an NPE should not be able to secure a permanent injunction in Canada against an accused infringer which was alleged to be practising the invention in Canada. In contrast, permanent injunctions continue to be a default remedy granted in patent proceedings brought by companies practising the patented invention in Canada. The last significant jurisprudence involving a company that was not practising the asserted patent was Unilever PLC v the Procter & Gamble Company ([1993] FCJ 1005, affirmed [1995] FCJ 1005), which involved dryer sheets sold by Procter & Gamble in Canada under the trademark BOUNCE. 

Earlier case law: request for injunction regarding BOUNCE

In Unilever, despite a finding that the asserted patent was valid and infringed, Justice Muldoon limited the plaintiff’s remedy to damages in the form of a reasonable royalty. In respect of the plaintiffs’ request for a permanent injunction, Muldoon stated at Paragraph 185:

"In the circumstances of this case the Court declines... to issue an injunction against P&G for effect throughout the balance of the patent’s term... The fact of the plaintiffs never having practised the patented invention in Canada, the hardship which an injunction would inflict on the infringing defendants and also, and especially, on their innocent employees in these hard economic times... and by contrast, the absence of a competing workforce engaged by Lever, are all factors inter alia in the exercise of the Court’s discretion. No permanent injunction is awarded."

Based on this case, some have argued that NPEs asserting their patent rights in Canada may be limited in terms of remedies to damages in the form of a reasonable royalty. Notwithstanding Unilever, Canadian law generally holds that permanent injunctions will be denied “only in very rare circumstances”. Because the Canadian market has not encountered as much patent assertion activity by NPEs as compared to the United States, there is little guidance coming from Canadian courts on this issue. However, in Uponor – a recent case decided by Justice Manson of the Federal Court – the court did grant a permanent injunction, although the plaintiff patentee did not practise the patented invention.

Injunction granted in Uponor

In Uponor the court came to a different result than in Unilever. The patent owner, Uponor AB, was a Swedish company that was part of a larger group of companies referred to in the decision as the 'Uponor Group'. As outlined in the decision, the Uponor Group engaged in developing, manufacturing and marketing cross-linked polyethylene pipes. However, the named plaintiff, Uponor AB, did not sell pipes produced according to the patented method in Canada. Although there were related North American Uponor Group companies selling pipe in Canada, that pipes was not made in accordance with the patented process, nor were any of the North American companies named as parties to the proceeding.

After finding that certain claims of the patent at issue were valid and infringed, Manson turned to the remedies. He considered the various forms of equitable relief that had been requested by the plaintiff. Although Manson declined to order an accounting of profits or delivery up, the requested injunction until patent expiry was granted:

"I do not find the Plaintiff is entitled to delivery up based on the facts of this case. I do find that the Pexcor and Heatlink Defendants (and any subsidiary and affiliated companies, franchisees, officers, directors, employees, agents, licensees, successors, assigns and any other over who they have control) are enjoined from manufacturing, using, offering for sale and/or selling to others for their use the apparatus for heating polymer material that infringes the ‘376 Patent and the PEX pipe made therefrom until expiry of the ‘376 Patent.

Manson also granted Uponor AB damages, to be determined in a subsequent reference.

It is interesting that Manson granted a permanent injunction while declining to award a common form of equitable relief – namely, an entitlement to elect an accounting of the infringer’s profits. While the reasons given in the judgment are not detailed on this point, the remedies awarded in this case suggest that the permanent injunction, which is the potential remedy that typically provides patent owners with the greatest leverage in an ongoing patent infringement suit, remains available to owners of Canadian patents, even if they are not actively practising the patented invention in Canada.

Comment

This case may be of interest to patent owners, including NPEs, which are considering enforcement in Canada, and defendants or potential defendants evaluating the adverse remedies that they may face in litigation. In addition to this decision granting a permanent injunction where the plaintiff did not practise the patented invention, patent owners should also be mindful of other aspects of the Canadian system that make Canada an advantageous venue for patent litigation, such as:

  • the lack of required notice to an infringer for damages to accrue;
  • more limited discovery procedures than in other jurisdictions (eg, the United States); and
  • post-grant patent review proceedings tending to favour patentees.

Selena Kim

This article first appeared in IAM. For further information please visit www.iam-media.com.