Canada: Non-infringing alternative defence clarified

Managing IP is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Canada: Non-infringing alternative defence clarified

The Federal Court of Canada recently issued its public judgment and reasons concerning the financial compensation to be paid to AstraZeneca as a result of Apotex's infringement of the omeprazole formulation patent (AstraZeneca's Losec) in AstraZeneca Canada Inc v Apotex Inc, 2017 FC 726. During the liability phase of these proceedings, the Federal Court of Canada had found the omeprazole formulation patent valid and infringed by Apotex (AstraZeneca Canada Inc v Apotex Inc, 2015 FC 322).

In Canada, alternate remedies may be sought upon a finding of infringement. A successful plaintiff may be entitled to elect either their "damages" or an "accounting of profits" of the defendant. Here, AstraZeneca elected an accounting of Apotex's profits.

Many of the quantification issues relating to Apotex's profits had been settled between the parties before trial. The Court addressed the outstanding issues, including whether Apotex had an available non-infringing alternative (NIA).

Under Canadian law, a NIA defence is available to potentially reduce an innovator's claim to damages or to the recovery of the infringer's profits. In accounting of profits, it is incumbent on the defendant to prove costs, thus establishing the net profits from infringing sales. Similarly, the defendant must prove real net profits from infringing use by establishing on a balance of probabilities what costs would have been had the most likely NIA been used. The defendant has an onus to prove that a NIA was available and at what cost.

In the present case, Apotex failed to prove on a balance of probabilities that it could and would have sold a NIA at any time during infringement. Apotex's NIA defence was based on a number of formulations it designed for the purpose of the quantification trial (in-house NIAs), and in the alternative, product from third party foreign suppliers (third-party NIAs).

The Court held that an infringer's failure to produce a viable NIA formulation in the real world is not a threshold bar to the NIA defence, and a NIA need not be foreseeable to the infringer at the time of infringement. Rather, the question to be answered is: could the infringer have made the product had it attempted to do so at the relevant time and would the infringer have sold the product on some reasonable financial basis in substitution for the infringing product? Where there is brazen infringement, an inference may arise that no viable substitute was available.

In determining whether NIAs were available to Apotex and were true non-infringing substitutes, the Court assessed whether the in-house NIAs would be bioequivalent to Losec, had sufficient stability, and would have obtained regulatory approval. None of the asserted NIAs was shown to be approvable or commercially viable. Regarding the third-party NIAs, the Court found that these would only have been pursued after Apotex had tried and failed to produce and commercialise any in-house formulation.

Thus, while Apotex was unsuccessful in asserting a NIA defence, assessing the availability of a NIA remains an important consideration in patent infringement remedies in Canada.

Tamara O’Connell

Urszula A Wojtyra


Smart & Biggar/ Fetherstonhaugh55 Metcalfe Street Suite 900PO Box 2999 Station DOttawa ON  K1P 5Y6Tel: 613 232 2486Fax: 613 232 8440 ottawa@smart-biggar.cawww.smart-biggar.ca

more from across site and SHARED ros bottom lb

More from across our site

Natasha Ahmed said she was drawn to the firm’s commitment to artificial intelligence and tech transactions
As it celebrates its 50th anniversary this year, the firm discusses private equity interest in IP, why the UPC is a key priority, and being a ‘strategic adviser’ to clients
Thomas Rukin discusses IP due diligence, his joy at seeing colleagues succeed, and taking inspiration from Marcus Aurelius
The UK-India trade deal doesn’t mention legal services, showing India has again failed to agree on a move that could help foreign firms and local practitioners
Eva-Maria Strobel reveals some of the firm’s IP achievements and its approach to client relationships
Lateral hires at Thompson Hine and Pierson Ferdinand said they were inspired by fresh business opportunities and innovative strategies at their new firms
The launch of a new IP insurance product and INTA hiring a former USPTO commissioner were also among the top talking points this week
The firm explains how it secured a $170.6 million verdict against the government in a patent dispute surrounding airport technology, and why the case led to interest from other inventors
Developments of note included the court partially allowing a claim concerning confidentiality clubs and a decision involving technology used in football matches
The firm said adding capability in the French capital completes its coverage of all major patent litigation jurisdictions as it strives for UPC excellence
Gift this article