A judge of the Federal Court recently granted an interim injunction in a case involving patent infringement. This is very unusual.
An interim injunction is in place before the grant of an interlocutory injunction, which extends until trial. To obtain an interim injunction, in addition to satisfying the requirements for obtaining an interlocutory injunction the plaintiff must show urgency.
Interlocutory injunctions are typically not granted in cases involving patent infringement. This is because the damages for infringement in this context is the usual remedy and the damages can typically be accurately measured or calculated.
The Facts
The two patents owned by the plaintiff expire in the fall of this year and were no longer worked or used by the plaintiff. The products in issue where herbicides. The plaintiff initially developed a version of its herbicide based on the patents. However, the plaintiff’s herbicide had since been developed in a way that no longer followed the patents. The current product formulation was a new and improved formulation, although it still contained similar original ingredients.
The new and improved product was the flagship product of the plaintiff. The sale of this product was linked by loyalty programs to the sale of other products sold by the plaintiff. The annual sales of the product were in the tens of millions of dollars each year. In addition, the product was seasonal and applied by farmers to crops at an early stage of the growing season.
The defendant had advertised that it would shortly introduce a product containing the same active ingredients as the plaintiff’s product. In addition, the defendant substantially reduced the introductory price of its product as compared to the plaintiff’s product.
The plaintiff demanded that the defendant not launch its product until after the patents expired. The defendant responded that the plaintiff’s patents were invalid and that the formulation of its product did not infringe. The defendant’s position brought into play sales of the plaintiff’s herbicide for at least one year because of the seasonal nature of the product.
The Interim Injunction
The plaintiff instituted an action and sought an interim and an interlocutory injunction pending trial. To obtain an interlocutory injunction three matters must be considered:
First, a preliminary investigation of the merits of the case is made to decide whether the plaintiff has demonstrated a “serious question to be tried” in the sense that the application is neither frivolous nor vexatious.
Second, the plaintiff must convince the court it will suffer irreparable harm if an injunction is refused.
Third, an assessment of the balance of convenience is made to identify the party which would suffer greater harm from the granting or refusal of the interlocutory injunction, pending the trial.
Irreparable harm means harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. That one party is impecunious does not automatically determine this issue but can be relevant. The onus is on the plaintiff to provide clear, convincing and non-speculative evidence that irreparable harm will be caused by the infringement.
On the issue of urgency, the judge accepted that the plaintiff had satisfied its onus given the impending start of the growing season.
The plaintiff filed detailed evidence in dealing with the alleged grounds of invalidity, evidence from a private investigator concerning the financial circumstances of the defendant and an expert’s report on the economic impact of the launch of a competitive product in the marketplace together with potential financial losses to the plaintiff.
The judge found that the plaintiff’s claim for infringement was not frivolous or vexatious. On the issue of the defendant’s inability to pay the judge was satisfied, there were serious reasons to doubt whether the defendant could pay a damage award. On balance, the judge was satisfied that the plaintiff established through clear and non-speculative evidence – the defendant could not pay a damage award which satisfied the test of showing irreparable harm.
Regarding the balance of convenience, a key question was whether the effect of the injunction would preserve the status quo by preventing the commencement of a new activity, rather than stopping a business that had been carried on for some time. After it had been put on notice of the plaintiff claim and the patents on which it relied, the defendant proceeded without taking any steps to clear the way. As a result, the balance of convenience weighed in favour of the plaintiff and an interim injunction was granted pending the disposition of the motion seeking an interlocutory junction or other determination of the action.
Comment
The facts of this case are unusual, and it is not reasonable to expect an increase in the number of interim injunctions granted by the court. The decision is consistent with the courts’ ability to grant relief as required by the facts before it. However, the costs of obtaining this type of relief are high and not without exposure as the plaintiff must provide an undertaking to the court to pay the damages suffered by the defendant as a result of the granting of the injunction if they are not successful at trial.
John McKeown
Goldman Sloan Nash & Haber LLP
480 University Avenue, Suite 1600
Toronto, Ontario M5G 1V2
Direct Line: (416) 597-3371
Fax: (416) 597-3370
Email: mckeown@gsnh.com
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.