Nova to pay large settlement to Dow in PE resin patent case

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Nova Chemicals Corp. will pay a major patent infringement settlement to Dow Chemical Co. after a recent Canadian court ruling in a case involving polyethylene resins.

Canada's Federal Court in 2014 had ruled that Nova's Surpass-brand PE resins violated patents that Dow had filed on similar resins sold under the Elite brand name. These types of PE are used in packaging applications such as heavy duty bags, pallet wrapping and food packaging. Canada's Federal Court of Appeals upheld that ruling in September 2016.

On April 20, Justice Simon Fothergill ruled that Dow would be able to include "springboard profits" that Nova made on the resins when determining a settlement amount in the case. In the case, "springboard profits" have been defined as profits made by Nova by entering the market before Dow's patent had expired.

Fothergill is allowing Dow to include a 20-month period after its patent expired when calculating damages. Nova's overall sales of materials that violated the Dow patent are estimated at $1 billion.

Fothergill also decided that Calgary, Alberta-based Nova will be entitled to deduct part of its fixed costs and capital depreciation expenses from the settlement amount, according to a news rlease from Smart & Biggar, the Canadian law firm that represented Midland, Mich.-based Dow in the case.

Steve Garland, an attorney with Smart & Biggar, told Canada's Financial Post newspaper that the result of the Dow-Nova case could be the largest-ever monetary award in a Canadian patent infringement case.

In an April 28 statement, Dow said it has seen "significant" advances on its case against Nova.

"First, the Canadian Supreme Court has rejected Nova’s last appellate option on liability. This is now a damages-only proceeding. In addition, Dow has won a significant victory at the damages phase before the Federal Court of Canada, and the parties are now calculating Nova’s profits for disgorgement to Dow," it said.

Given Nova’s public statements that its sales ... generated over $1 billion Canadian dollars in revenue, the award can be expected to be very substantial, with the final amount of the award to be announced by the trial court within the coming months."

A Nova spokesman said in an email the company was "disappointed in the Supreme Court of Canada’s dismissal of our application for review.

"We are studying Justice Fothergill’s published Direction, Judgement and Reasons and intend to file an appeal. We will not further comment on the pending litigation."