January 25, 2021
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After the end of the evidence-phase of a trial, the Federal Court re-opened the evidentiary record and admitted new expert evidence in Rovi Guides, Inc. v. Videotron Ltd., 2021 FC 19. This followed the release of the Federal Court of Appeal’s decision in Nova Chemicals Corporation v. Dow Chemicals Company, 2020 FCA 141 [“Nova Chemicals”], which impacted the approach to the accounting of profits remedy.
Background
The Plaintiff [“Rovi”] commenced an action against the Defendant [“Videotron”] in 2017 alleging infringement of certain claims of four of its patents, relating to interactive program guides. Videotron denied the infringement allegations and counterclaimed that the asserted claims were invalid for anticipation, obviousness and double patenting.
The experts of both parties agreed that, regarding remedy, the incremental costs approach was the appropriate way to calculate an accounting of profits. The parties filed written closing submissions following the close of Videotron’s case on June 17, 2020, but oral argument was not scheduled to be heard until January, 2021.
The Release of Nova Chemicals
On September 18, 2020, the Federal Court of Appeal released its reasons in Nova Chemicals, which arguably flipped the default approach to the accounting of profits remedy, substituting the previous incremental costs approach with the full costs approach.
Videotron subsequently brought a motion seeking to reopen the evidentiary portion of the patent infringement trial in order to allow the parties to adduce additional expert evidence relating to the accounting of profits remedy. Rovi took the position that Nova Chemicals did not fundamentally change the law regarding accounting of profits, but argued that, in the alternative, it be permitted to file an expert report in reply. Rovi also sought an order that the Court hear viva voce evidence from the parties’ experts and that the experts be subjected to cross-examination.
The trial judge ultimately granted Videotron’s motion and Rovi’s cross motion.
The Test to Reopen
Neither party could refer to any binding authority regarding the test to reopen the evidentiary record after it had been closed, but before oral arguments. Counsel did refer the Court to authorities involving similar requests, including 671122 Ontario Ltd v Sagaz Industries Canada Inc, [2001] 2 SCR 983 [“Sagaz”], which the Court found to be “useful”.
While the question before the Supreme Court of Canada in Sagaz was whether to reopen a trial to permit fresh evidence after reasons had been delivered by the trial judge and before entry of the judgment, the Federal Court accepted that the same two-part test, as set out below, should apply equally to requests to admit further evidence after parties have closed their respective cases:
The evidence, if presented, would change the result; and
The evidence could not have been obtained before trial by the exercise of reasonable diligence.
Applying the Test
The Court found that Videotron had satisfied both branches of the test and that expert opinion on corporate and financial data relating to fixed costs “would certainly assist this Court”.
The Court found that Nova Chemicals “unambiguously provides that the full costs approach should be the default one” and that, based on the prevailing understanding of the law amongst intellectual property lawyers prior to the release of the decision, Videotron could not have been expected to file evidence regarding the full costs approach.
The Court concluded that it was in the interests of justice to grant Videotron’s motion and admit expert evidence relating to the full costs approach in accordance with the Nova Chemicals decision.
Authors: Sam Galway and Emma Baumann