Accounting and Injunction Granted: No News is News

Valence Technology, Inc. v Phostech Lithium Inc. 2011 FC 174, Gauthier J

I noted in a recent post that Snider J, in her lovastatin decision 2010 FC 1265, departed from the common practice of allowing a successful patentee an election between an accounting and damages. What was noteworthy about Snider J’s decision was not simply that the patentee was confined to damages, but that Snider J expressed a presumption against allowing an election, on the basis that “[i]t is necessary for a party seeking an equitable remedy, such as profits, to show some basis for the exercise of equity” [617].

This may be contrasted with Gauthier J’s decision in Valence Technology. The defendants had argued that an accounting should be denied because of undue delay and bad faith. Gauthier J dismissed both of these arguments on the facts, and allowed Valence to elect [234]-[238]. What is significant, is that while Gauthier J expressly recognized the discretionary nature of an accounting, she did not place any special burden on a plaintiff seeking an election. While her reasons on this point were brief, the tenor is clearly that the plaintiff will be allowed an election unless there is some particular reason to refuse it. This contrasts with the view expressed by Snider J that an accounting will only be permitted if there is some particular reason to allow it. In this respect, Gauthier J’s decision reaffirms the orthodox practice.

Gauthier J also granted injunctive relief [239]-[240]. This is the invariable practice and would hardly be worth mentioning, save for the question of whether the US Supreme Court decision in eBay Inc v MercExchange, LLC, 547 U.S. 388 (2006) will make its impact felt in Canada. In Valence Technology, the defendant had asked the Court to give it a grace period of approximately two years before giving effect to the injunction, in order to give it time to finish a new factory that was designed to use a non-infringing process. The defendant in this case is relatively sympathetic, in that it was clear on the facts that it had developed the infringing process independently. Of course, independent creation is not a substantive defence, but given that injunctive relief is equitable, in principle independent creation might be a relevant consideration. On the other hand, the patentee in this case, who had developed and was practising the invention itself, is also much more sympathetic than the plaintiff in MercExchange. It is interesting, but not surprising, that we will have to wait for a stronger set of facts before the possibility of refusing final injunctive relief to a successful patentee becomes a real issue.