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Nova Chemicals Corporation and The Dow Chemical Company et al 2020 FCA 141

Nova Chemicals is a multinational corporation that develops and manufactures chemicals and plastic resins including Ethylene, Polyethylene and Chemical Co-Products, with annual sales of over $4.5 billion. Dow is a global chemical manufacturer with annual sales of over $39 billion.

In the Federal Court case (2017 FC 637) the Court ruled that Nova was liable for infringing Dow’s patent over Metallocene Linear Low-Density Polyethylene by manufacturing its product SURPASS and selling it in competition to Dow’s product ELITE. This is a widely used plastic in consumer products, among other things.

We were retained by Nova’s counsel to provide our opinion as to Nova’s profits from the infringement.

In what was a departure from standard practice at the time, we allocated a portion of fixed costs against the infringing revenues for reasons particular to the facts of the case. The opposing expert disagreed, adopting what was the standard approach at the time based on incremental costs.

The Federal Court of Appeal upheld our approach to deduct fixed costs and specified that, contrary to what had become a common practice in these types of cases, the general principle is that fixed costs are to be deducted from revenues.