Executive Summary: Key Legal and Evidentiary Issues

• DeepRoot's patent infringement claim against GreenBlue's "RootSpace" product was upheld at trial and affirmed on appeal, with the remedy issue remitted for redetermination.

• The Federal Court of Appeal required GreenBlue to demonstrate a causal link between its claimed overhead deductions and the infringing Canadian sales before such deductions could be allowed.

• GreenBlue's financial records combined North American expenses (including U.S. operations) without sufficient detail to isolate costs attributable solely to Canadian infringing sales.

• Overhead deductions for 2017–2018 were denied because the evidence conflated Canadian and American expenses, making it impossible to establish the required causal connection.

• Financial data for 2019–2020 was even less reliable, as GreenBlue provided only lump-sum totals that included concededly inappropriate expenses such as legal fees and amortization.

• An accounting of profits in the amount of $593,362.21, plus pre-judgment interest and costs, was awarded to DeepRoot, with a credit for the $136,000 royalty previously paid.

Background and facts of the dispute

DeepRoot Green Infrastructure, LLC and DeepRoot Canada Corp. (collectively, DeepRoot) hold certain patents that were at issue in this litigation. GreenBlue Urban North America Inc. (GreenBlue) manufactures and sells a product called "RootSpace," which DeepRoot alleged infringed its patents. The dispute originated in the Federal Court of Canada under Docket T-954-18, and the matter has produced multiple decisions over several years — a trial decision in 2021 (2021 FC 501), a Federal Court of Appeal decision in 2023 (2023 FCA 184), and this supplementary judgment issued on March 31, 2026, by Madam Justice McDonald.

The trial decision and the initial remedy

At the original trial, the Court found that GreenBlue's RootSpace product infringed various claims in DeepRoot's patents. DeepRoot sought an accounting of GreenBlue's profits as a remedy, or alternatively a royalty payment if GreenBlue's total profits between 2017 and 2020 were less than $145,000. The parties agreed on the gross sales revenue generated by GreenBlue from the sale of infringing products. After allowing deductions for GreenBlue's cost of goods (COGs) and overhead expenses, the Court found that GreenBlue's profits were less than $145,000. Relying on the expert report of Mr. Blacker, the Court awarded DeepRoot a royalty of 7% on a per unit basis of $0.94, amounting to $136,000.00. GreenBlue has since paid DeepRoot this sum.

The appeal and the remitted issue

DeepRoot cross-appealed the allowance of overhead deductions, arguing that the Trial Decision did not consider whether there was sufficient causation between GreenBlue's claimed deductions and infringing sales. The Federal Court of Appeal, in its 2023 decision (2023 FCA 184), dismissed the appeal on patent infringement but on cross-appeal remitted to the trial court the issue of the appropriateness of an accounting of profits. The FCA held that proof of causation is required and that GreenBlue must establish some link between the claimed portion of the overhead expenses and the infringing sales. Notably, on appeal GreenBlue conceded that the costs it incurred in defence of the patent infringement action ought not to have been included in the calculations, and it also admitted that amounts claimed for amortization and consulting fees likewise bore no causal connection to the infringing sales and should be removed from the calculations.

Legal principles governing the accounting of profits

The Court outlined that an accounting of profits is a discretionary equitable remedy where a defendant must pay the profits generated from its infringement to the plaintiff. Its purpose is not to punish the defendant but to ensure that the gain earned by the infringer as a result of the infringement is reversed, no more, no less. When conducting an accounting, the plaintiff must prove the revenue generated by the defendant from infringing sales, and the defendant then bears the burden of establishing valid deductions through evidence and proving a causal link between the proposed deductions and infringing sales. Causation is to be approached with a "common sense view," and any doubts as to the computation of costs or profits are to be resolved in favour of the plaintiff.

GreenBlue's evidence on overhead expenses

GreenBlue provided financial records showing total annual overhead expenses for 2017–2020, along with a categorical breakdown for 2017 and 2018 that included items such as advertising and promotion, automotive, interest and bank charges, office and general, rent, repairs and maintenance, subcontract, subscriptions, permits and licenses, supplies, telecommunication, travel, utilities, and wages and benefits. GreenBlue allocated a "RootSpace Overhead Allocation" for each year based on infringing RootSpace sales as a percentage of total sales, with a "conservative" allocation of 40% for advertising and promotion, automotive, and travel, based on the testimony of Mr. Jeremy Bailey, GreenBlue's General Manager, who testified at trial that roughly 80–85% of advertising and promotion was devoted to RootSpace. Based upon this, GreenBlue submitted their net profit was $2,625.66.

The Court's findings on evidentiary deficiencies

The Court found GreenBlue's evidence problematic for several reasons. First, GreenBlue's financial information combined expenses relating to both Canadian and American sales. GreenBlue's General Manager, Mr. Bailey, confirmed on cross-examination that the financial statements concerned activities in North America and that expense categories such as advertising and promotion, travel, and subcontracting pertained to both Canada and the United States. GreenBlue also maintained United States offices in Knoxville, Tennessee and Los Angeles, California in addition to its principal place of business in Woodstock, Ontario, yet the financial records did not indicate how much of their expenses for categories such as rent, utilities, office and general, and wages and benefits related solely to the Canadian office. Since the infringed patent was a Canadian patent and the "infringing sales" were Canadian sales, the Court required a causal connection specifically to Canadian operations — a connection GreenBlue failed to establish. The Court found it could not disentangle relevant Canadian expenses from irrelevant U.S. expenses, drawing a parallel to the precedent in Monsanto Canada Inc v Janssens, where the Court denied deductions because the defendant provided over-generalized information that conflated expenses that could not be disentangled on the evidence before the Court.

The 2019 and 2020 financial data

The financial information for 2019 and 2020 was even more problematic. For those years, GreenBlue only provided total overhead amounts with no categorical breakdown of expenses and conceded that the total overhead expenses included inappropriate expenses, such as legal fees and amortization. GreenBlue proposed that the Court estimate the inappropriate expenses by extrapolating the trend between 2017 and 2018 to 2019 and 2020, but the Court refused, noting that GreenBlue had not provided any evidence justifying their proposed estimations and had elected not to provide more detailed financial evidence, or expert accounting evidence, on its expenses. The Court distinguished GreenBlue's cited cases, observing that those precedents used estimates provided by accounting expert witnesses in accordance with accounting principles and practices — not extrapolations offered by counsel.

The ruling and outcome

Having found that GreenBlue failed to demonstrate a sufficient causal connection between its claimed overhead deductions and its infringing Canadian sales for any of the years in question, the Court denied all overhead deductions for 2017 through 2020. With the deductions for the COGS upheld in the Appeal Decision and no overhead deductions permitted, the Court determined that GreenBlue made a profit of $593,362.61 from infringing RootSpace sales in Canada. Madam Justice McDonald awarded DeepRoot an accounting of profits in the amount of $593,362.21, plus pre-judgment interest compounded annually using the average prime lending rate plus 1%, calculated from May 23, 2018 — the date DeepRoot served their Statement of Claim on GreenBlue — to the date of the Judgment. The $136,000.00 royalty previously paid by GreenBlue, plus interest at the same rate since the date of payment, is to be credited towards the new total award. The Court also awarded DeepRoot its costs on the remitted issue, to be calculated in accordance with the mid-range of Column 2 of Tariff B. The successful party in this supplementary judgment is DeepRoot, which received a significantly larger award than the original $136,000.00 royalty.