Recent Canadian Decision on Infringer's Profits

The case is Nova Chemicals Corp. v. Dow Chemicals Co., 2020 FCA 141.  Norman Siebrasse will be publishing a detailed analysis of the case in the near future on Sufficient Description, so I will mention it here just to note the court's conclusion regarding awards of infringer's profits.  In brief, while the court recognizes that the defendant's ability to avoid infringement by using a non-infringing alternative reduces the plaintiff's ability to recover lost profits (see para. 45), and that the defendant's own profit attributable to the infringement (the "isolate[d] . . . value of the patent") should be only the profit it earned above what the court calls the "non-infringing baseline" (para. 73), it views the latter as somehow precluding consideration of what the defendant's profit would have been in the counterfactual world in which the defendant didn't infringe (see, e.g., paras. 65, 75, 76).  With all due respect, however, this conclusion makes no economic (or legal) sense, because the additional profit or cost saving the infringer derives from using the patented invention over what it would have earned by using the next-best alternative is the objective value of the invention to the infringer.  To calculate that objective value, you have to construct the hypothetical or counterfactual world in which the defendant didn't infringe, and figure out what the defendant's profit would have been in that counterfactual world.  Moreover, while this may seem like an abstract concept, there is nothing odd about considering counterfactuals in this way:  we do it every time we seek to restore the state of the world to what it would have been, but for the wrongful act.  In the present context, we can either restore the victim to the position it would have occupied (lost profits), or the defendant to the position it would have occupied (infringer's profits), but either way we have to construct the hypothetical, counterfactual, but-for world.  Unfortunately, this opinion appears to confuse these long-recognized principles. 

Update:  Professor Siebrasse's post, titled Nova v Dow: A Radical Departure from Established Law, is now available here.  It's a long post, but well worth your time.