Law Times

Page 14 March 27, 2017 • Law TiMes www.lawtimesnews.com CASELAW Federal Court of Appeal Intellectual Property COPYRIGHT Licences Board erred in ignoring expert evidence Copyright Board of Canada certified royalty rates to be col- lected by Canadian Copyright Licensing Agency for reproduc- tion of works in its repertoire by school institutions during two tariff periods. Board applied "volume times value" methodol- ogy, pursuant to which volume of compensable copying was multiplied by estimated value of each page of copied work for one of four genres included in agency's repertoire: books, pe- riodicals, newspapers and con- sumables. Agency brought ap- plication for judicial review. Ap- plication granted in part. Only reviewable error concerned coding errors on repertoire; this matter was to be remitted for reconsideration. Board erred in ignoring expert evidence pro- vided by agency to correct and clarify breadth of repertoire as described in volume study. In circumstances of this case, it was not unreasonable for board to infer that copying of one or two pages of book did not constitute reproduction of "substantial part of work" within meaning of s. 3 of Copyright Act. Board did not disregard burden of proof. Board's purpose was to come to its own "impression" of what was fair in best manner possible considering that both parties had agreed to use aggregate data to establish volume of copying during relevant period. Board did not breach its duty to act fairly. Board used methodology that was simply practical and mathematical way of ref lecting relative weight given by board to various factors used to form its "impression." Board's overall determination that large portion of exposures were fair was not unreasonable. Board followed previous cases where only quan- titative proportion of work was considered, and there was no er- ror in board's reasoning in this respect. Board did not err with respect to character of dealing, in fair dealing analysis. In explain- ing why looking at aggregate vol- ume of copies was not helpful to its assessment of whether copies were widely distributed, board reasonably applied Supreme Court of Canada's teachings in particular cases. Board did not err with respect to effect of deal- ing. In terms of realistic alterna- tives, this factor did not support finding of unfairness given that agency's evidence on this point was greatly limited in scope and detail. Agency did not establish board's assessment of amount of exposures that should be exclud- ed for compensability on basis of fair dealing pursuant to s. 29 of Act was unreasonable. Canadian Copyright Li- censing Agency v. British Co- lumbia (Ministry of Educa- tion) (2017), 2017 CarswellNat 163, 2017 FCA 16, M. Nadon J.A., Eleanor R. Dawson J.A., and Johanne Gauthier J.A. (F.C.A.). PATENTS Actions for infringement This was not proper case to apportion defendants' profits Plaintiff patent owner owned patent which claimed drug per- indopril. Federal Court held that patent was infringed by defen- dants through manufacture in Canada and sale of perindopril tablets. Plaintiffs elected to re- cover profits defendants earned by reason of their infringing activities. Federal Court deter- mined amount of defendants' profits which were attributable to infringing activity. This re- quired Federal Court to consider manufacture and sale of perin- dopril tablets in Canada as well as their sale abroad. With respect to export sales, Federal Court rejected argument that defen- dants' profits should be reduced by taking into account availabil- ity of non-infringing alterna- tives, and argument that their profits should be reduced on ba- sis that portion was attributable to non-infringing services they provided. Defendants appealed. Appeal allowed in part. Federal Court erred in law by rejecting relevance at law of any available non-infringing perindopril and failed to adequately consider evi- dence adduced as to ability and willingness of three suppliers to provide non-infringing perin- dopril. Issue would be remitted to Federal Court. While Federal Court committed extricable er- ror of law in its interpretation of contracts between defendants and certain affiliates, it did not err in its ultimate conclusion that this was not proper case to apportion defendants' profits. Apotex Inc. v. ADIR (2017), 2017 CarswellNat 217, 2017 FCA 23, Eleanor R. Dawson J.A., Boivin J.A., and Woods J.A. (F.C.A.); reversed (2015), 2015 CarswellNat 2838, 2015 CarswellNat 7793, 2015 FC 721, 2015 CF 721, Jocelyne Gagné J. (F.C.). Tax Court of Canada Tax INCOME TAX Tax credits Claim for scientific research and experimental development tax credit was disallowed Taxpayer was natural health product company, whose presi- dent was naturopathic doctor. Doctor formulated three new natural health products for tax- payer, evaluating condition to be treated, conducting systematic review of others' clinical stud- ies and literature, correspond- ing with other professionals and calculating ingredients by drawing on his expertise. Doc- tor did not run clinical trials due to expense and because they were not required for licensing of natural health products. Tax- payer claimed scientific research and experimental development (SR&ED) tax credit for activi- ties related to such formulation. Minister reassessed taxpayer under Income Tax Act, disal- lowing SR&ED credits. Taxpay- er appealed. Appeal dismissed. There was scientific uncertainty in three projects to develop these products mimicking ex- isting pharmaceuticals and, in two projects' reformulation to use existing pharmaceutical, in identifying supplemental natu- ral ingredients to lessen adverse side effects. Doctor hypothe- sized formulations but there was no testing performed to assess effectiveness or any other aspect of these products. Products were reformulated only in response to Health Canada either not ap- proving hypothesized formula or removing restriction on doc- tor's preferred ingredient. Ab- sence of any testing resulted in uncertainty as to whether any of formulations represented any form of advancement of scien- tific knowledge. Newly hypoth- esized formulation could not on its own be considered either knowledge or advancement of knowledge. Jurisprudence had clearly and consistently inter- preted definition of SR&ED as requiring some testing of hypotheses for there to be sys- tematic investigation or search carried out by means of experi- ment or analysis, although such testing did not necessarily have to be in form of clinical testing. Taxpayer's activities did not sat- isfy definition of SR&ED. Life Choice Ltd. v. R. (2017), 2017 CarswellNat 219, 2017 TCC 21, Patrick Boyle J. (T.C.C. [In- formal Procedure]). Ontario Civil Cases Bankruptcy and Insolvency COMPANIES' CREDITORS ARRANGEMENT ACT Arrangements Canadian debtors' plan of compromise and arrangement was sanctioned Global telecommunications company with corporate enti- ties in many jurisdictions (debt- ors) became insolvent. Canadi- an debtors were granted Com- panies' Creditors Arrangement Act protection. Dispute arose regarding $7.3 billion held in escrow after sale of debtors' as- sets (allocation dispute), which involved protracted litigation in Canada and U.S. with various parties from multiple jurisdic- tions. Parties executed settle- ment and support agreement (Agreement). Monitor brought motion to sanction Canadian debtors' plan of compromise and arrangement (Plan) and to release escrowed sale proceeds in accordance with Agreement. Motion granted. Plan sanc- tioned. Release of sale proceeds authorized in manner set out in Agreement. Plan was fair and reasonable. Plan received approval from 99.7 percent of creditors and called for payment to creditors on pari passu basis, which was bedrock of Canadian insolvency law. Objections to approval of Plan by long-term CASELAW Caselaw is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. These cases may be found online in WestlawNext Canada. To subscribe, please access carswell.com or call 1-800-387-5164. REACH ONE OF THE LARGEST LEGAL AND BUSINESS MARKETS IN CANADA! AVAILABLE ONLINE AND IN PRINT With more than 300,500 page views and 100,000 unique visitors monthly canadianlawlist.com captures your market. FOR MORE INFORMATION CONTACT Colleen Austin T: 416.649.9327 | E: colleen.austin@thomsonreuters.com www.canadianlawlist.com Get noticed by the lawyers, judges, corporate counsel, finance professionals and other blue chip cilents and prospects who find the contacts they need for Canadian legal expertise at canadianlawlist.com with an Enhanced listing. ENCHANCE YOUR LISTING TODAY! Untitled-6 1 2017-03-22 10:44 AM

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