Nova to pay large settlement to Dow in polymer patent suit

In what could be the largest patent infringement damage award in Canadian history, Nova Chemicals Corporation has been ordered to pay a major settlement to The Dow Chemical Company after a recent Canadian court ruling in a case involving polyethylene resins.

In late April, a federal judge issued a written decision that details how much Dow can claim from an estimated $1 billion in revenue Nova collected while infringing on Dow’s Canadian patent 2,160,705, which sets out a method to make the thin plastic packaging used in end products such as garbage bags and food wrappings.

Dow actually won its infringement case in federal court in 2014, when Nova was found liable for infringement of a patent owned by Dow by Nova’s manufacture and sale of its Surpass film-grade polymers. Litigation continued on how the parties should calculate the damages, however, and a damages trial was heard in Toronto last December and January. Justice Simon Fothergill issued the public version of his 78-page written decision on April 19.

Justice Fothergill ordered Calgary-based Nova to disgorge profits it made during the infringement. The companies must now use the judge’s methodology to figure out how much those profits should be. “The parties’ accountants will calculate the sums owed by Nova to Dow based on the conclusions reached by the Court in this stage of the reference,” Justice Fothergill wrote.

Steve Garland, an attorney with Smart & Biggar, which represented Dow, told Canada’s Financial Post newspaper that the result of case between Dow and Nova could be the largest monetary settlement ever awarded in a Canadian patent infringement case. “I’ve been litigating IP cases and patent cases for 25 years,” Garland told the Post. “This, without a doubt, has been the most complex and interesting case that I’ve been involved in and our team here has been involved in.”

In an April 28 statement, Dow said it has seen “significant” advances on its case against Nova. “First, the Canadian Supreme Court has rejected Nova’s last appellate option on liability. This is now a damages-only proceeding,” Dow said. “In addition, Dow has won a significant victory at the damages phase before the Federal Court of Canada, and the parties are now calculating Nova’s profits for disgorgement to Dow.”

Justice Fothergill’s decision is also unique in that it takes into account so-called “springboard” profits, defined as the infringer’s excess profits during a post-expiry ramp-up period – in this case, profits made by Nova by entering the market before Dow’s patent had expired. “I think it’s the first time in Canadian patent history where a springboard award on an accounting of profits has been awarded,” Garland told the Post.