American Home Products Corp. v. I.C.N. Canada Ltd., (1988) 84 N.R. 69 (FCA)

• Judge: Heald, Urie and Stone, JJ.
• Court: Federal Court of Appeal (Canada)
• Case Date: March 01, 1988
• Jurisdiction: Canada (Federal)
• Citations: (1988), 84 N.R. 69 (FCA)

Am. Home Products Corp. v. ICN Can. (1988), 84 N.R. 69 (FCA)

MLB headnote and full text

American Home Products Corporation (appellant) v. I.C.N. Canada Limited (respondent) and Attorney General of Canada (intervenor)

(No. A-709-86)

Indexed As: American Home Products Corp. v. I.C.N. Canada Ltd.

Federal Court of Appeal

Heald, Urie and Stone, JJ.

March 1, 1988.

Summary:

The Commissioner of Patents granted I.C.N. Canada Ltd.'s application for a compulsory licence respecting patents held by American Home Products and fixed a royalty of 1%. American Home appealed.

The Federal Court of Appeal in a judgment reported 61 N.R. 141; 5 C.P.R.(3d) 1, dismissed the appeal from the granting of the licence, but referred the issue of the royalty back to the Commissioner for reconsideration on the ground that the Commissioner had insufficient evidence to determine the issue. The Commissioner, upon receiving written submissions from the parties, but without an oral hearing, again fixed the royalty at 1% of the net selling price. American Home appealed.

The Federal Court of Appeal allowed the appeal and remitted the royalty issue once more to the Commissioner. The court held that the Commissioner erred in principle in again ruling on the royalty without sufficient evidence.

Patents of Invention - Topic 5744

Compulsory licences - Royalties - Fixing of - General - The Federal Court of Appeal held that the use by the Commissioner of Patents of a rule of thumb of 4% as a royalty for a compulsory licence is proper, if due consideration is given to facts which might alter it - The court set aside a 4% royalty, where there were insufficient material facts in evidence for the Commissioner to determine if 4% was appropriate - See paragraphs 33 to 36.

Patents of Invention - Topic 5744

Compulsory licences - Royalties - Fixing of - General - Division of royalty - An applicant for a licence sought to justify a lower royalty on the ground that it would have to acquire additional licences - The Commissioner fixed a 4% royalty to be divided equally among four patentees - The Federal Court of Appeal set aside the royalty, where there was insufficient evidence to decide upon - The court stated that an applicant for a licence must satisfy the Commissioner that there is a reasonable possibility that additional licences are required to justify a reduction in the royalty otherwise payable - See paragraphs 37 to 39.

Patents of Invention - Topic 5745

Compulsory licences - Royalties - Fixing of - Evidence - The Commissioner of Patent's fixing of a royalty of 1% was remitted for reconsideration on the ground that he had insufficient evidence on which to make his decision - Neither party on the remittal improved the evidentiary position of the Commissioner, who again set a 1% royalty - The Federal Court of Appeal reversed and remitted the royalty issue again on the ground that the Commissioner erred in principle in deciding without sufficient evidence - The court stated that it was incumbent up on both parties, not just the applicant for licence, to provide the Commissioner with the requisite evidence to discharge his function - Here neither did and the Commissioner erred in proceeding without it.

Patents of Invention - Topic 5746

Compulsory licences - Royalties - Fixing of - Procedure - The Federal Court of Appeal held that the Commissioner of Patents may determine the procedure to fix a royalty and his decision not to hold an oral hearing was unassailable - See paragraphs 19 to 22.

Patents of Invention - Topic 5747

Compulsory licences - Royalties - Judicial review - The Federal Court of Appeal held that the decision of the Commissioner of Patents on the amount of a royalty could be reviewed only for error of principle or for manifest error on the facts - The court set aside a royalty set by the Commissioner, where he had insufficient evidence on which to decide, thereby committing an error of principle.

Cases Noticed:

Parke, Davis & Co. v. Fine Chemicals of Canada Limited, [1959] S.C.R. 219, appld. [para. 5].

Hoffmann-La Roche Limited v. Delmar Chemical Limited, [1965] S.C.R. 575, appld. [para. 21].

Hoffmann-La Roche Limited v. Bell-Craig Pharmaceuticals Division of L.D. Craig Limited, [1966] S.C.R. 313, appld. [para. 23].

Frank W. Horner Ltd. v. Hoffmann-La Roche Limited, 61 C.P.R. 243, appld. [para. 24].

Charles Pfizer Co. Inc. v. Novopharm Ltd., 65 C.P.R. 132, appld. [paras. 27, 34].

Beecham Group Ltd. v. Frank W. Horner Ltd. (1974), 13 C.P.R.(2d) 5, appld. [para. 37].

Statutes Noticed:

Patent Act, R.S.C. 1970, c. P-4, sect. 41(4) [para. 4].

Patent Rules, sect. 118(1)(c)(x) [para. 16]; sect. 119 [para. 17].

Authors and Works Noticed:

Martindale, Extra Pharmacopoeia (28th Ed.) [para. 18].

Counsel:

Immanuel Goldsmith, Q.C., and Conor D.M. McCourt, for the appellant;

Joseph I. Etigson, for the respondent.

Solicitors of Record:

Immanuel Goldsmith, Q.C., Toronto, Ontario, for the appellant;

Hughes, Etigson, Concord, Ontario, for the respondent.

This case was heard on February 9, 1988, at Toronto, Ontario, before Heald, Urie and Stone, JJ., of the Federal Court of Appeal.

On March 1, 1988, the Federal Court of Appeal delivered the following judgment.