Dow Chemical Company v. Nova Chemicals Corporation

Dow Chemical Company v. Nova Chemicals Corporation

The court held the disputed SURPASS grades and off-grades are included in the quantum reference; applied a hypothetical-license framework and adopted Dow's expert quantification for diversion and profitability to set a reasonable royalty of 8.8% for Dec 9, 2004–Aug 21, 2006; allowed an accounting of profits including a springboard period Apr 20, 2014–Dec 31, 2015 using established ramp-up percentages; permitted deduction of Nova's actual ethylene costs (full cost/absorption for ethylene) and a proportional share of PE2 fixed/capital costs; set pre-judgment interest for s.55(2) damages at 5% simple and interest on accounting at 5% compounded; ordered conversion to CAD at judgment date.

Citation
2017 FC 350
Parties
Plaintiffs/defendants by Counterclaim: The Dow Chemical Company; Dow Global Technologies Inc.; Dow Chemical Canada ULC; Defendant/plaintiff by Counterclaim: Nova Chemicals Corporation
Court
Federal Court
Jurisdiction
Canada
Judgment Date
19 April 2017
Procedural Posture
Patent Infringement Reference for Damages and Accounting of Profits / Reference on Quantum and Accounting Following Liability Phase
Outcome
Reference decisions in favor of Dow on inclusion of disputed grades and on quantum principles: reasonable royalty fixed, accounting framework and deductions defined, interest and currency conversion rules set.
Legal Topics
Accounting of Profits, Reasonable Royalty, Res Judicata, Abuse of Process, Limitation and Prescription, Pre Judgment Interest, Currency Conversion, Springboard Damages, Deductible Costs, Expert Evidence
Source Language
English
Patent Law Intellectual Property Equity Commercial Law Accounting of Profits Reasonable Royalty Res Judicata Abuse of Process +6 more

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Parties

The Dow Chemical Company; Dow Global Technologies Inc.; Dow Chemical Canada ULC

Plaintiffs/defendants by Counterclaim

Nova Chemicals Corporation

Defendant/plaintiff by Counterclaim

Procedural Posture

Patent Infringement Reference for Damages and Accounting of Profits / Reference on Quantum and Accounting Following Liability Phase

Legal Issues

  1. 1 Whether disputed SURPASS grades and off-grades are included in damages and profits calculations
  2. 2 Appropriate reasonable royalty under s.55(2) of the Patent Act
  3. 3 Appropriate accounting of profits under s.55(1) of the Patent Act including springboard profits

Ratio Decidendi

The court held the disputed SURPASS grades and off-grades are included in the quantum reference; applied a hypothetical-license framework and adopted Dow's expert quantification for diversion and profitability to set a reasonable royalty of 8.8% for Dec 9, 2004–Aug 21, 2006; allowed an accounting of profits including a springboard period Apr 20, 2014–Dec 31, 2015 using established ramp-up percentages; permitted deduction of Nova's actual ethylene costs (full cost/absorption for ethylene) and a proportional share of PE2 fixed/capital costs; set pre-judgment interest for s.55(2) damages at 5% simple and interest on accounting at 5% compounded; ordered conversion to CAD at judgment date.

Court Disposition

Reference decisions in favor of Dow on inclusion of disputed grades and on quantum principles: reasonable royalty fixed, accounting framework and deductions defined, interest and currency conversion rules set.

Orders

  • Include disputed grades and all off-grades identified in Dow v Nova in damages and profits calculations
  • Reasonable royalty rate of 8.8% for period December 9, 2004 to August 21, 2006