IP monitor - Federal Court of Canada grants interim injunction in patent case

Interim and interlocutory injunctions are exceptional remedies, particularly in patent infringement cases. On May 7, 2019, in Arysta Lifescience North America et al v. Agracity Crop et al, 2019 FC 530, Justice Pentney decided, on the particular facts of the case, that this rare form of relief was justified.

The plaintiff, Arysta, owned patents relating to a selective herbicide marketed as EVEREST. The defendant, AgraCity, obtained regulatory approval for a generic version of the herbicide. After sending unsuccessful demand letters to the defendant, Arysta sued for patent infringement and applied for an interim injunction.

The decision

In granting the interim injunction, the court applied the well-known, three-part test most recently affirmed by the Supreme Court of Canada in R v. Canadian Broadcasting Corp, 2018 SCC 5. That test requires a court to consider (1) whether the applicant has demonstrated that there is a serious issue to be tried; (2) whether the applicant has shown it will suffer irreparable harm if the injunction is refused; and (3) which party will suffer greater harm from the granting or refusing of the injunction.

As is often the case with interim injunction decisions, this case turned on the second element – whether the applicant could present clear and non-speculative evidence that it would suffer irreparable harm that could not be compensated by a monetary award. Traditionally, interim injunctions have rarely been awarded in patent cases because patent rights are economic in nature: there is usually no reason why the damages caused by infringement cannot be measured or calculated in a reasonably accurate way.

To overcome this high burden, Arysta argued that there was a substantial risk that AgraCity would be unable to pay a damages award following trial, and thus Arysta would suffer irreparable harm. To support its position, Arysta put forth the affidavit of a private investigator who searched publically available information on AgraCity’s financial circumstances. The investigator noted several potential problems with AgraCity’s financial strength, including a pending claim for $2.7 million against AgraCity currently before the Saskatchewan Court of Queen’s Bench.

In addition, the court noted the urgency of the situation, and found that Arysta had acted quickly upon learning that AgraCity had launched its competing generic product. It was also notable that the launch coincided with the 2019 growing season and with Arysta’s plans to introduce a new generation product to the market. The court also commented on the presumptive validity of Arysta’s patents and noted that AgraCity failed to adduce any expert evidence to support its allegations that the patents were not valid.

Ultimately, the decision hinged on AgraCity’s failure to file sufficient evidence that it would be capable of paying damages following trial. The court rejected AgraCity’s evidence from one of its principals, which made unsupported claims regarding the company’s gross revenues and the value of its assets. Justice Pentney pointed out deficiencies in the affidavit, including a lack of evidence with respect to AgraCity’s current bank balance, its net profits and whether any of its assets are subject to liens. As a result of these findings, the court determined that the balance of convenience favoured Arysta and awarded the interim injunction.

Takeaway

The Federal Court has always been reluctant to grant interim injunctions in patent disputes, but Justice Pentney’s decision underscores that relief is available in cases of urgency where the evidence shows it is unlikely that the patentee can be made whole following trial. It is a welcome reminder that Canadian courts will grant interim injunctions.

The authors wish to thank articling student William Chalmers for his help in preparing this IP monitor.