Beloit Canada Ltd. v. Valmet Oy
T-1003-76
Rouleau J.
12/5/94
40 pp.
Reference for accounting of profits-Court of Appeal finding plaintiffs' patent with respect to "press section" of paper making machines valid, infringed by sale by defendant of four paper machines including infringing press section-Holding plaintiffs entitled to damages or accounting of profits, as they may elect-Plaintiffs electing accounting of profits-On appeal from order dealing with certain areas of discovery, Court of Appeal indicating plaintiff entitled to profits resulting from defendant's infringement-Whether plaintiffs entitled to accounting of all profits realized by defendant on sale of four paper making machines or only those profits derived from sale of infringing press sections-Plaintiffs alleging their property, Tri-nip technology, driving force behind infringing sales-Since machines sold as unit, not possible to apportion profit relating only to infringing press section, plaintiffs maintaining entitled to all of profits earned by Valmet Oy on sale of entire machines-Accounting of profits having origins in courts of equity-Discretionary remedy which may be awarded should circumstances so warrant-Few patent cases in this Court in which remedy granted-In Consolboard Inc. v. MacMillan Bloedel (Saskatchewan) Ltd. (1978), 39 C.P.R. (2d) 191 (F.C.T.D.) where remedy refused, Court stating successful plaintiff not entitled, as matter of course or of right, to elect method of determining monetary compensation-As numerous factors mitigating against award of account of profits, question of whether remedy should be allowed matter within equitable discretion of Court, properly decided by Trial Judge aware of all circumstances of litigation-Should not be allowed simply by reason of plaintiff's election-As stated in J.M. Voith GmbH v. Beloit Corp., [1993] 2 F.C. 515 (T.D.), issue not whether accounting of profits available, but whether appropriate remedy-Not remedy commonly chosen by patentee against infringer as involving expensive, time-consuming procedure rarely rewarded by end result-In Siddell v. Vickers (1892), 9 R.P.C. 152 (C.A.), Lindley L.J. stating as litigation enormous, expense great, time consumed out of all proportion to advantage ultimately attained, people tired and disgusted with accounting-In present case, Court of Appeal's judgment awarding "damages or accounting of profits as the plaintiffs may elect", and defendant's failure to contest plaintiffs' election, leaving no alternative but to proceed with accounting-While both damages and accounting of profits intended to provide compensation to wronged plaintiff, substantially different fundamental principles underlying two remedies-Where damages sought, onus on plaintiff to establish loss suffered, amount thereof-In accounting of profits, onus on defendant to establish amount of profit realized by its wrongdoing-While accounting of profits might serve to dissuade defendant from perusing improper course of conduct, punishment not playing role in award-As equitable remedy entire rationale to redress wrongs, not to administer punishment-In Ruff v. Swan (1921), 20 O.W.N. 158 (H.C.), Court noting object of inquiry to compensate plaintiff, not to punish defendants-Punitive damages proper remedy if plaintiffs intending "Valmet should be punished" as stated by Beloit's Senior Vice President-Based on evidence, doubtful such claim would have succeeded-Despite significant difference underlying two remedies, same principles applying with respect to question of apportionment-Apportionment becoming issue when defendant alleging only certain of its activities infringing plaintiff's rights and damages or profits should be confined to those activities alone-Onus on defendant to prove apportionment should be made and extent-Individual circumstances may render apportionment of profits only equitable solution-Test to determine whether should be apportionment based on saleability, as whole, of product containing patented invention-Question for Court whether market demand for defendant's product arising because of infringed patent or whether arising by virtue of product's additional features-Inquiry directed to "value of patented part to the machine as a whole"-Determination factual-Onus on defendant to adduce sufficient evidence to satisfy Court consumer demand for its product arising by virtue of features other than plaintiffs' infringed patent-Based on evidence none of profit realized by defendant on sale of four paper machines derived as result of wrongful infringement of plaintiffs' patent-Numerous reasons why defendant successful in bid for sale of those machines (superior design, better construction, higher quality materials, better service on warranties, prompt delivery), but none related to infringing press section-While plaintiffs must be compensated for defendant's infringement, inequitable to award all profits realized by defendants on sale of four machines-Entitled only to those profits realized from sale of press sections infringing patent-Plaintiffs awarded profits derived by defendant from press sections, change orders four press sections, erection and start-up costs for press sections; interest derived by defendant from positive working capital up to time of payment in full of each contract; simple interest at 5% per annum on outstanding amounts awarded.