Reasonable Royalty Awarded for Pre-Grant Patent Infringement in Frac Shack Inc v AFD Petroleum Ltd

On January 26, 2017, in Frac Shack Inc v AFD Petroleum Ltd, 2017 FC 104, the Federal Court awarded an accounting of profits and a reasonable royalty of 29% of the infringer’s profits for pre-issuance patent infringement.  This case is noteworthy because the plaintiff published their patent application early and obtained an award for pre-issuance compensation.

The trial concerned the validity and infringement of Canadian Patent 2,693,567, entitled “Fuel Delivery System and Method”.  In finding a set of the claims valid and infringed, the Federal Court considered arguments of a non-infringing alternative and found that a manual alternative method did not apply because the invention provided a significant improvement in safety and risk over the alternative.  Compensation for the pre-issuance period was awarded as the infringed claims were allowed with only superficial changes during prosecution from the time of publication.  The parties agreed that a reasonable royalty was appropriate for pre-issuance infringement.  The plaintiff was also granted injunctive relief and an accounting of profits for post-grant infringement by the defendant.