Federal Court Of Canada Invalidates Interactive TV Program Guide Technology Patents and Offers its Findings on Appropriate Remedy in Obiter

On June 23, 2022, the Federal Court of Canada (the Court) in Rovi Guides Inc. v. Videotron Ltd, 2022 FC 874, dismissed Rovi Guides Inc.’s (Rovi) infringement action against Videotron Ltd (Videotron) with respect to four patents relating to interactive television program guide (IPG) technology. The Court granted Videotron’s counterclaim, held that all of the asserted claims of Rovi’s four patents are invalid on various grounds and concluded in obiter that Rovi would not have been entitled to an accounting of profits if its patents were found to be valid and infringed.

Rovi supplies digital entertainment technology, including IPG technology, to consumers and owns hundreds of patents in Canada. Videotron is a Canadian telecommunications company that operates primarily in Quebec to provide cable television services. Rovi alleged that Videotron infringed its four patents, while Videotron argued that the asserted claims are invalid. The issues before the Court involved claim construction, infringement, validity of the asserted claims and remedies.

In a lengthy decision, the Court reviewed the development of IPG technology over the years, the state of the art and common general knowledge. Ultimately, the Court concluded that the asserted claims are invalid since they are anticipated or obvious having regard to the prior art and the common general knowledge of the skilled person.

Although Rovi’s action was dismissed, the Court addressed the issue of remedies for the sake of completeness. Specifically, the Court considered whether Rovi would have been entitled to an accounting of profits earned by Videotron or a reasonable royalty if Rovi’s patents were found to be valid and infringed.

The Court reviewed the following factors to decide whether to award the discretionary remedy to Rovi for an accounting of profits:

1. whether there has been undue delay in commencing or prosecuting the litigation;
2. the patentee’s conduct;
3. the infringer’s conduct;
4. whether the patentee practiced the invention of the patent in Canada; and
5. complexity of calculating an accounting of profits.

In denying Rovi’s request for an accounting of profits, the Court found that the second and fifth factor of its analysis weighted against Rovi. In its analysis of the second factor, the Court determined that Rovi’s business practices were questionable, in that the evidence established that Rovi used “hard-ball legal tactics to pressure third parties to license its patent portfolio” and did not disclose to Videotron the list of its patents that it thought were infringed during licence negotiations. With respect to the fifth factor, the Court was not satisfied that Rovi’s proposed methods to calculate profits would arrive at a reliable and appropriate amount reflecting Videotron’s profits.

The Court concluded that the appropriate remedy was a reasonable royalty. In the absence of evidence before the Court to establish the value of Rovi’s patents, the Court adopted Videotron’s proposed royalty in an amount of $150,000 per feature. Videotron showed that this amount was what it would have cost it to remove or design-around an infringing feature in its system if Rovi’s patents were found to be valid and infringed.

Summary By: Anna Troshchynsky