Date: 20061106
Docket: T-2175-04
Citation: 2006 FC 1333
Toronto,
Ontario, November 6,
2006
PRESENT: The Honourable Mr. Justice Hughes
BETWEEN:
JANSSEN-ORTHO INC. and
DAIICHI PHARMACEUTICAL CO., LTD.
Plaintiffs
and
NOVOPHARM
LIMITED
Defendant
REASONS FOR JUDGMENT AND JUDGMENT
AS TO COSTS
[1]
These
Reasons and Judgment deal with the issue of costs which was left open, pending
further submissions from Counsel for the parties, in the Judgment dated October
17, 2006. Those submissions have now been received.
[2]
The
trial of this action took place in the period from early September to early
October 2006, with a few days interruption in the middle. From start to finish
the proceedings took approximately two years from start to Judgment, a
remarkable achievement in the context of a complex patent action. The
co-operation between counsel for the parties is undoubtedly substantially
responsible for this efficient use of time.
[3]
It
now comes to the matter of costs. In arriving at a disposition on this issue,
I am guided by the following legal principles:
1.
A
successful party is usually entitled to receive costs, the scale of such costs
are not intended to be punitive or extravagant, but is intended to be a
compromise between compensating the successful party and not unduly burdening
an unsuccessful party. (AB Hassle v. Genpharm Inc., (2004), 34 C.P.R.
(4th) 18 (F.C.) [A.B. Hassle]).
2.
Patent
cases are not to be treated any differently than other types of cases in this
Court. (AB Hassle, supra).
3.
Where a
patentee and licensee are each plaintiffs, they are entitled to separate
representation and to be compensated in costs accordingly. This concept is not
strictly limited to a situation where separate representation has been ordered,
but such limitation may be taken with account. (Apotex Inc. v. Merck &
Co. Inc., 2006 FCA 324 [Apotex]).
4.
Pre-trial
Orders are not to be dealt with in dealing with costs after trial unless the
pre-trial Order expressly says so. (Apotex, supra).
5.
The
successful party’s lack of success on certain issues may be considered (Merck
& Co. Inc. v. Apotex Inc., 2006 FC 631, aff’d 2006 FCA
324 [Merck]).
[4]
Certain
other principles will arise when considering specific issues.
[5]
As
to general factual matters and the circumstances of this case, I have been particularly
mindful of the following:
1.
There was
substantial co-operation between Counsel as noted above and in my earlier
Reasons for Judgment.
2.
The only
substantial issue of factual contention was the Gerster 1982 poster. In my
opinion, Plaintiffs’ counsel should not have pursued the objections that they raised
to having Dr. Gerster testify. His testimony should have been admitted without
all the fuss that Plaintiffs’ raised. As it turned out the testimony was brief
and truthful and could readily be dealt with by the parties.
3.
The only
issue remaining at trial was that of validity of Claim 4. The Defendant had,
by trial, admitted infringement and restricted its issues as to validity. The
determination as to validity was by no means a certainty for the Plaintiffs,
and while they were successful as to that issue, the attacks made on validity
were substantial and meaningful. The Defendant has already prevailed on that
point in earlier NOC proceedings.
4.
The
Plaintiffs or related parties had already been through many of the same issues
at trial and appeal in the United States Courts. The review of documents and
evidence and preparation of translated material, to a considerable extent,
would have had to be done for those proceedings well prior to similar preparation
for the proceedings in Canada.
5.
The
Plaintiff, Daiichi, had one senior counsel and one junior counsel gowned; the
Plaintiff, Janssen-Ortho, had one senior and two junior counsel gowned. The
Defendant had one senior and three junior counsel gowned. In addition, there
were other Canadian and foreign lawyers present for much of the trial as well
as paralegals and other assistants.
6.
For the
witness Hayakawa, there was provided an official Japanese/English interpreter
and a “check” interpreter provided by the Plaintiffs.
7.
The
Plaintiffs requested, at their expense, “real time” court reporting.
[6]
Other
factual matters will arise as particular circumstances are discussed.
[7]
Turning,
then, to the particular matters:
1. Award of Costs
[8]
The
Defendant argues that each party should bear its own costs. I do not find that
this is proper. The Plaintiffs were successful and are entitled to an award of
costs. That award is to be governed by these Reasons however.
2. Lump Sum or Taxation
[9]
The
Plaintiffs claim to have spent several millions of dollars each in pursuing
this action, including well over a million in disbursements. They ask for a
lump sum award for counsel’s fees and full compensation for disbursements.
[10]
I
find that it is not appropriate to award a lump sum. The case was extensive
and simply to award an arbitrary figure without much more by way of evidence
and explanation would be inappropriate. It would be preferable to have an
assessment officer review the relevant matters in detail and come to a reasoned
decision within the context of the principles set out in these Reasons.
3. Scale
[11]
The
case was a typical, hard fought patent case. An award at the upper end of Column
IV is appropriate and consistent with awards made in Merck, supra and Monsanto
Canada Inc. v. Schmeiser, (2001) 12 C.P.R. (4th) 204, aff’d (2003)
22 C.P.R. (4th) 455 (F.C.A.).
[12]
Thus,
the costs are to be taxed at the upper end of Column IV by an assessment
officer.
4. Specific Directions
to Taxing Officer
1. Pre-Trial Proceedings
and Orders
[13]
Any
pre-trial Order that directs that costs be left to the Trial Judge, if any, are
to be treated as if an award was made to the Plaintiffs on the upper end of Column
III (Merck, supra 15). Otherwise, the disposition of costs made on all
pre-trial Orders are unaffected. Any pre-trial Order that is silent as to
costs means that no costs have been awarded to any party. (101359 Ontario
Inc. v. Bedesee Imports Ltd., (8 November 1999), T-705-99 (Fed. Ct.)).
2. Travel and Out of
Town Living Expenses
[14]
Any
travel and out of town living expense that are allowed to be recovered are to
be at a modest level. Travel shall be allowed at economy class rates.
Accommodation shall be allowed at moderate but comfortable single room rates.
No alcohol, movies or entertainment expenses may be recovered.
[15]
For
travel out of North America, two extra days of accommodation expenses beyond
that for the days actually spent working are allowed. Within North
America,
no extra days are allowed.
3. Photocopying and Electronic
Copies
[16]
Photocopying
is allowed, where indicated in these Reasons, at the lesser of the actual
charge or $0.25 per page. I am mindful that law firms may have set up in-house
copy centres, possibly as separate entities. In this regard, the comments of
this Court in Diversified Products Corp. v. Tye-Sil Corp, [1990] F.C.J.
No. 1056 (QL) are appropriate in stating that the sum of $0.25 per page is not
simply an amount that can be charged without more. When an in-house service is
used, the assessment officer must be advised as to the actual costs. The Court
said:
With respect, I cannot agree
with the reasoning of the Taxing Officer. The item of photocopies is an
allowable disbursement only if it is essential to the conduct of the action.
Therefore, this is intended to reimburse a party for the actual out-of-pocket
cost of the photocopy. The $0.25 charge by the office of Plaintiffs’ counsel
is an arbitrary charge and does not reflect the actual cost of the photocopy.
A law office is not in the business of making a profit on its photocopy
equipment. It must charge the actual cost and the party claiming such
disbursements has the burden to satisfy the Taxing Officer as to the actual
cost of the essential photocopies.
[17]
Electronic
copies are allowed at the lesser of normal rates charged by commercial services
or the actual expenses.
[18]
Nothing
is allowed for copies of legal authorities provided at trial as this was
excessive as commented upon at trial. Up to eight copies of other documents,
if made, and actually provided at trial or on discovery are allowed.
4. Interpreters
[19]
The
fees charged by the official Japanese/English Interpreter at trial and one such
interpreter attending on discovery are allowable.
[20]
Nothing
is allowed for the “check” interpreter at trial or any other interpreter
services or disbursements used in connection with this action.
5. “Real Time”
Reporters
[21]
The
expenses for “real time” reporting services at trial, on discovery or elsewhere
are not allowable. The basic fees charged to Plaintiffs for reporting services
at trial and on discovery are allowable.
6. Trips
[22]
One
trip for no more than two counsel, to Japan is allowed. Trips by
witnesses for discovery appearance and for trial appearance are allowed.
[23]
No
other trips by any other persons are allowed save for witnesses at discovery
and those appearing at trial as further named in these Reasons.
7. Other Counsel,
Clients, Non-Appearing Experts and Others
[24]
No
costs or expenses are to be allowed for persons other than Counsel expressly
referred to in these Reasons and witnesses expressly referred to in these
Reasons.
[25]
The
attendance of a client or its representatives has traditionally been an expense
borne by the client. Similarly, if client chooses to have Canadian or foreign
lawyers also assist, that is an expense that it should bear alone. The same
applies to experts who did not appear as witnesses, but assisted in other
capacities, that is the choice of the party, but not an expense to be borne by
others. The same applies in respect of paralegals, clerks, students and any
other persons engaged by the Plaintiffs in respect of this action unless
otherwise expressly referred to in these Reasons.
8. Interest
[26]
Costs
bear interest from the date of the Reasons and Judgment (CCH Canadian v. Law
Society (2004), 37 C.P.R. (4th) 323). The rate of interest is
five percent (5%) not compounded, as established by the Interest Act,
R.S. 1985, c. I-15, s.4; 2001, c.4 s.91. If the Defendant wishes to minimize
its exposure in this regard, it should promptly move to have costs assessed.
5. Discovery of
Witnesses and Document Discovery
1. Documents
[27]
The
Plaintiffs advise that masses of documents were produced and provided in both
paper and electronic form. Many of these documents were translated from
Japanese to English.
[28]
The
Defendant says that most of the documents were simply those already produced in
the United
States
proceedings and little discrimination was exercised in simply turning them over
for this Canadian proceedings. Similarly, translations had already been made
for the United
States
proceedings.
[29]
The
Plaintiffs may only recover for work done and expenses incurred for the
Canadian proceedings and not for work or expenses already incurred for the
prior United
States
proceedings.
[30]
The
assessment officer is to be guided by the above statement, the onus shall be on
the Plaintiffs to demonstrate that work and expenses were incurred expressly for
these Canadian proceedings.
2. Discovery of
Witnesses
[31]
Travel
of witnesses for attendance on discovery, which I am advised all took place in Toronto, is
allowable on the basis previously set out.
[32]
The
Plaintiffs are entitled to the attendance of one senior and one junior counsel
at such discovery. In addition to the days actually spent on discovery, the
Plaintiffs are entitled to one day preparation time for each day spent on
discovery.
[33]
No
fees or disbursements are allowed in respect of the re-attendance of any
witnesses Ordered by the Court.
6. Pre-Trial Issues
1. Pleadings
[34]
The
Plaintiffs are entitled to costs allowed by the Tariff for pleadings, but not
for the amended Reply and Defence to Counterclaim, which by Order dated
September 16, 2005, were to be paid by the Plaintiffs to the Defendant. These
costs are to be set off against other costs allowed on assessment.
2. Notices to Admit
[35]
One
set of costs only are allowed to the Plaintiffs
3. Pre-Trial Conference
[36]
There
was none. No costs are allowed.
7. Trial
1. Counsel
[37]
The
Plaintiffs, collectively, had two senior and four junior counsel gowned. The
Defendant had one senior and three junior counsel gowned.
[38]
I
allow the Plaintiffs collectively, to recover the fees for the two senior and
two junior counsel.
2. Gerster
[39]
I
have previously referred to the unnecessary objections raised by the Plaintiffs
to the evidence of Dr. Gerster. I estimate that one trial day was consumed by
such objections. The Defendant, one senior and one junior counsel, is awarded
fees from one trial day to be set off against costs otherwise assessed in
favour of the Plaintiffs.
[40]
In
addition, the travel expenses and any fees charged by Dr. Gerster are allowed
to the Defendant and are similarly set off.
3. Plaintiffs Factual
Witnesses
[41]
The
travel and accommodation expenses of Dr. Hayakawa, Dr. Kahn and Mr. Enstrom are
allowed on the basis earlier set out, to the extent actually incurred.
[42]
One
day for one senior counsel for preparation of each of these witnesses is
allowed.
4. Expert Witnesses
[43]
I
am concerned with what has been increasingly observed as mounting and often extravagant
fees charged by expert witnesses. While a party is free to engage a person for
expert services and pay whatever fee is negotiated, that fee should not become simply
allowable on an assessment. Therefore, such fees should, for assessment purposes,
be capped for days spent by the witness in attendance in Court, whether
testifying or not, at the lesser of fees actually charged or those charged for
daily services to the same client for senior counsel attending at trial. For
preparation time the cap will be one half such senior counsel fee.
[44]
Only
the fees and expenses of the following expert witnesses called by Plaintiffs at
trial will be allowed:
Dr. Wentland
Dr. Klibanov (except no fees or
disbursements are allowable for his evidence in Reply to Gerster)
Dr. Hooper
Dr. Zhanel
Dr. Rodricks
Dr. Myerson
Dr. Bartlett (expert no fees or
disbursements are allowable for his evidence in reply to Gerster)
Dr. Partridge
[45]
In
addition, the fees and disbursements on the same scale as previously discussed
for the witness Ms. Langley, are allowed.
[46]
The
fees and disbursements not mentioned above shall not be allowed. Such evidence
was not sufficiently relevant to the issues in this action.
5. Preparation of
Memoranda
[47]
Plaintiffs
are entitled to the fees of two senior and two junior counsel for three days
for preparation of memoranda of argument used at trial including submission as
to costs.
8. Services after Trial
and Taxation of Costs
1. Services After Trial
[48]
No
special or additional matters beyond the Tariff are allowable.
2. Taxation of Costs
[49]
Costs
shall be assessed, in accordance with the Reasons, by an assessment officer.
That officer shall take into account reasonable fees and disbursements incurred
for preparation and attendance in respect of such assessment. It is expected
however, that the Plaintiffs could prepare a draft bill of costs in line with
these Reasons and the Defendant may make a reasonable offer as to costs. This,
if it occurs, should be taken into account.
9. General
[50]
The
assessment officer is to proceed to assess fees and disbursements as set out
in the Tariff, at the upper end of Column IV, consistent with the instructions
and guidelines as set out in these Reasons. Unless otherwise allowed in these
Reasons, no fee or disbursement(s) beyond that set out in the applicable Tariff
is to be allowed. Disbursements allowable, but not otherwise discussed in
these Reasons, are to be proven and allowed only to the extent that they were
reasonably incurred for the purposes of this action and are at a level no
greater than those charged in arms length commercial transactions.
JUDGMENT
FOR THE REASONS SET OUT
ABOVE,
THIS COURT ORDERS THAT:
1.
The
Plaintiffs are entitled to costs at the upper end of Column IV of the Tariff
and to reasonable disbursements as set out in these Reasons;
2.
The
Defendant is entitled to fees and disbursements with respect to Dr. Gerster and
with respect to Plaintiffs’ amended pleadings as set out in these Reasons;
such costs are to be set off against those allowed to the Plaintiffs;
3.
An
assessment officer of this Court shall assess such costs in a manner as
directed by these Reasons; and
4.
Costs
bear interest at the rate of five percent (5%) per annum, not compounded, from
the date of issue of this Judgment.
“Roger T. Hughes”
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