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

Nigel Stoate, head of Taylor Wessing's award-winning UK patents team, tells us about his team’s UPC successes and why collaboration is king
Camilla Balleny, who spent a decade at Carpmaels & Ransford, will become the firm’s first head of patent litigation, Managing IP can reveal
Leaders at the newly merged firm Jones Maxwell Smith & Davis reveal their plan to take on bigger firms while attracting more clients and talent
Charles Achkar, who will bring a team of two with him, said he was excited about joining ‘one of the few strong IP boutiques’
Andy Lee, head of IP at Brandsmiths and winner of the Soft IP Practitioner of the Year award, tells us why 2024 was a seminal year and why clients value brave advice
The deal to acquire MIP's parent company is expected to complete by the end of May 2025
Jinwon Chun discusses the need for vigilance, his love for iced coffee, and preparing for INTA
Karl Barnfather’s new patent practice will focus on protecting and enforcing tech innovations in the electronics, AI, and software industries
Partner Ranjini Acharya explains how her Federal Circuit debut resulted in her convincing the court to rule that machine learning technology was not patent-eligible
Paul Hastings and Smart & Biggar also won multiple awards, while Baker McKenzie picked up a significant prize
Gift this article