Date:
20090624
Docket: T-307-04
Citation: 2009 FC 665
BETWEEN:
BIOVAIL PHARMACEUTICALS CANADA
GLAXOSMITHKLINE INC. and
THE WELLCOME FOUNDATION LIMITED
Applicants
and
THE MINISTER OF NATIONAL
HEALTH AND WELFARE
and NOVOPHARM
LIMITED
Respondents
ASSESSMENT OF
COSTS - REASONS
Charles E. Stinson
Assessment Officer
[1]
A
copy of these reasons is filed today in Federal Court file T-503-03 (Glaxosmithkline
Inc. and The Wellcome Foundation Limited v. The Minister of Health and Novopharm
Limited) (the T-503-03 Matter) and applies there accordingly. The
Court ordered (October 14, 2004) that this matter (the T-307-04 Matter) be
heard together with the T-503-03 Matter. The subject medicine bupropion
hydrochloride was marketed under the trade-mark WELLBUTRIN® SR to treat
depression (100 mg and 150 mg sustained-release tablets relative to the
T-307-04 Matter and the T-503-03 Matter respectively.
[2]
The
Applicants in each matter brought applications pursuant to the Patented
Medicines (Notice of Compliance) Regulations, SOR/93-133 for an order prohibiting
the Minister of Health from issuing a Notice of Compliance (NOC) for the
generic form of bupropion hydrochloride to the Respondent, Novopharm Limited
(Novopharm), until after the expiration of the patents in suit. The key
issue centred on sustained release of medicine. The Court issued an Order in
each matter dismissing it with costs. Paragraph 64 of the Court’s reasons dated
January 6, 2005 (the Decision) noted that it “was agreed that material filed in
either action would apply to both, and the result would be the same.” Paragraph 65
noted that Novopharm “did not seek any special order to costs” and “shall only
be entitled to a single hearing fee.”
[3]
Before
me, counsel for Novopharm noted, conceded by opposing counsel, that through
inadvertence in the T-307-04 Matter the name Biovail Pharmaceuticals Inc. appeared
incorrectly on some documents. The parties agreed that my decision should
reflect the company’s name as it appeared in the instituting document, i.e.
Biovail Pharmaceuticals Canada.
[4]
After
a general assertion by the Applicants of opposition to any costs for the
T-307-04 Matter on the basis that its Notice of Allegation (NOA) duplicated
that for the T-503-03 Matter, the parties agreed that these matters had
not been consolidated, that separate records had been filed, that separate
judgments had issued, that they had agreed that there would be only one set of
cross-examinations to apply to both matters, and that the respective evidence differed
somewhat. The Applicants noted that the second NOA did not constitute
abuse of process and emphasized that they had no control over Novopharm’s
decision to institute two separate proceedings.
[5]
The
total hearing time for the two-day judicial review was 14.5 hours which
Novopharm claimed in each matter under counsel fee item 14(a) (attendance) for
a total of 29 hours. In response to my preliminary observation that I likely
could not allow that because it would violate a basic principle of costs as an
indemnity, i.e. that they are not a windfall or a source of profit, counsel for
Novopharm argued that the Applicants chose to bring two separate proceedings.
The Applicants argued that, having been served with an NOA for each dosage,
they were bound in law to institute two proceedings, but they did agree to
consolidate the hearings and to one set of cross-examinations. The Applicants
noted that having lost a motion (the striking motion) preventing them from
putting nine US patents to Dr. Joseph Schwartz (order dated March 10, 2004
in the T-503-03 Matter), they advanced those documents in the T-307-04 Matter
and, apart from that, the evidence in the record was common to both matters.
[6]
For
the T-503-03 Matter, the parties agreed that in exchange for Novopharm withdrawing
its claim for second counsel fees under fee items 14(b) and 27, the
Applicants would concede photocopies ($1,052.50), binding ($300) and computer
research ($1,421.19). The Applicants conceded process server fees ($480),
transcript and court reporter fees ($3,727.75), Canadian expert fees ($6,700
and $1,278.90 for Dr. Robert Miller) and travel expenses ($1,098.34 and
$1,255.50) leaving US expert fees (CAN$104,361.95) in issue. Novopharm split
travel expenses between the two matters meaning that the amount of $1,098.34
appeared in each bill of costs: the Applicants conceded only the costs of lead
counsel. Novopharm removed its claim in the T-307-04 Matter for second counsel
fees and the Applicants conceded photocopies ($716.25), binding ($200), computer
searches ($286.17) and process servers ($300).
I. Counsel Fees
A. Novopharm’s Position
[7]
Novopharm
argued generally that these matters were complex, as NOC matters usually are,
and noted that although it did not claim elevated costs, as are sometimes allowed
in these matters, it does seek maximum Column III counsel fees. The costs
sought ($155,113.39 for the T-503-03 Matter and $33,920.57 for the T-307-04 Matter)
are reasonable in these circumstances of importance for its market share
interests, i.e. being denied access to millions of dollars during the unfolding
of this litigation and even more revenue if it had lost.
[8]
Novopharm
argued that the Applicants’ position concerning the necessity to commence the
T-307-04 Matter is irrelevant because they could simply have accepted the facts
in the second NOA. The Applicants’ reliance on Pfizer Canada Inc. v. Canada (Minister of
Health),
[2008] F.C.J. No. 3 (F.C.) [Pfizer] is irrelevant because the
circumstances there were very different, i.e. the NOA of the first generic
company was rejected and resulted in the rejection of a second NOA by the
second generic company because it was estopped from advancing the same
formulation argument already rejected for the first generic company. Novopharm
conceded that the additional evidence in the T-307-04 Matter may not have
been considerable, but there was enough of it for differences in the work
required for each matter, i.e. paras. 60 and 61 of the affidavit of Paul Maes
(for the Applicants) sworn March 29, 2004 adding six US patents addressing
simulated gastric buffer not in the T-503-03 Matter. Novopharm argued that its
expert, Dr. Joseph Schwartz, therefore had to respond in paragraph 79 of his
affidavit sworn April 29, 2004 in the T-307-04 Matter. Novopharm conceded that
said paragraph was the only difference between his affidavits sworn in the
respective matters, but asserted that both Dr. Schwartz and its other expert,
Dr. Metin Çelik, had to read and analyze these additional US patents.
[9]
In
the T-505-03 Matter, the Applicants and Novopharm respectively brought a motion
for document production and a motion for confidentiality heard at the same
time. The production motion sought considerable materials and required
cross-examination of several affiants. Page 6 of the resultant order
(dated June 5, 2003) indicated the Applicants sought “a wide range of
materials” and that the Court was not satisfied certain of the information was
relevant or important. The confidentiality motion involved cross-examination of
Novopharm’s affiant and was of great importance to its interests.
[10]
Subsequently,
Novopharm brought the striking motion in the T-503-03 Matter and the Court in
allowing it and awarding costs in the cause noted that the Applicants had not
taken the proper steps to introduce evidence into the record. Novopharm
requested that the maximum 4 units ($120 per unit) under fee item 4 be
added to its bill of costs in the T-307-04 Matter for its preparation of the
uncontested motion leading to the confidentiality order dated May 5, 2004 and
awarding costs in the cause.
[11]
Novopharm
referred to my decision in Biovail Corp. v. Canada (Minister of
National Health and Welfare) (2007), 61 C.P.R. (4th) 33,
[2007] F.C.J. No. 1018 (A.O.), aff’d [2008] F.C.J. No. 342 (F.C.) [Biovail]
which also addressed bupropion hydrochloride tablets and which addressed Dr.
Çelik’s evidence on behalf of the Respondent, Sandoz Canada Inc. (Sandoz). The
Applicants’ position in Biovail was that as Dr. Çelik had to address the
same pieces of prior art common to all three matters and as he had to first
address them in these two matters, his costs for the third matter, i.e. Biovail,
should have been lower. In Biovail, Dr. Çelik claimed $127,937.12 and
was allowed $104,000. The bill of costs there was allowed at $152,906.24 in
total. Therefore, as Novopharm’s hearing here preceded the one in Biovail,
Novopharm’s claimed costs here, i.e. about $190,000 in total for the two matters
including $94,083.50 for Dr. Çelik, are reasonable by comparison to those in Biovail.
Dr. Çelik’s task here was more difficult because he did not have the benefit,
as he did in Biovail, of the reasoning of the Decision here. Novopharm
adopted here the position of Sandoz in paragraph 19 of Biovail, i.e.
that success by the Applicants would have shut it out of the lucrative Canadian
market for several years.
[12]
Novopharm
noted that paragraph 14 of Eli Lilly Canada Inc. v. Novopharm Ltd., [2006]
F.C.J. No. 1002 (F.C.) found that NOC matters tend to be more complex than most
applications for judicial review mainly because of “the technical nature of the
evidence and the need for expert evidence.” The requisite materials here
numbered thousands of pages. The prior art and construction of the patents were
the core of these cases. Novopharm noted that the Court in Apotex Inc. v.
Syntex Pharmaceuticals International Ltd., [1999] F.C.J. No. 1465
(F.C.T.D.) awarded elevated costs for an NOC matter considered more complex
(para. 9) than the average patent case.
[13]
Novopharm
argued that just because the Court did not have to rule on the validity of the patents
does not mean that these matters were not complex and that the experts did not
need to address each piece of prior art. Paragraphs 29 to 31 inclusive of the
Decision set parameters for consideration of the infringement issues which were
complex as indicated by the comment in paragraph 31 that although” the
Novopharm tablet does not infringe Biovail’s claims as textually written, the
question is whether the “pith and marrow” of the claims are violated.” Novopharm
argued further to paragraph 18 of Mon-Oil Ltd. v. Canada, [1993]
F.C.J. No. 1447 (T.O.) that supervising counsel has a professional
responsibility to the client to prepare for potential and relevant issues
regardless of whether they were ultimately determinative.
[14]
Novopharm
argued relative to fee items 8 (preparation for cross-examination of affiant)
and 9 (attendance on cross-examination) that the cross-examinations by the
Applicants of Novopharm’s experts were as important for its interests as
Novopharm’s cross-examinations of the Applicants’ experts because they were
Novopharm’s only witnesses. Novopharm argued that it can claim a fee item 13
(preparation for the judicial review) for each matter because as argued above
there were differences between the two matters, i.e. the simulated gastric
buffer issues, and the Court made a separate award of costs for each.
B. The Applicants’ Position
[15]
The
Applicants argued generally that they were bound by legislation to institute
the T-307-04 Matter and that their conduct was not a factor in
Novopharm’s decision to not issue a single NOA. However, the evidence is that
the respective NOA’s were virtually identical, the only differences being the
strengths of the Novopharm products and the signatures on these two documents.
A failure to institute the T-307-04 Matter, in effect conceding the allegations
of the associated NOA, meant that there would have been an adverse inference of
validity of allegations drawn with regard to the first NOA (the T-503-03 Matter).
Novopharm, and not the Applicants, should therefore bear the associated
consequences of costs by complete disallowance of the bill of costs for the
T-307-04 Matter.
[16]
The
Applicants argued that as access to market share is common to all NOC matters,
it is of minimal importance for an assessment of costs, if at all.
[17]
The
Applicants disagreed with Novopharm’s position on the volume of the record by
noting for example that the 183 pages attributable to Dr. Schwartz’s
report are comprised mostly of attachments and his curriculum vitae
with only 30 pages (the body of his affidavit) of any substance, but not
necessarily of any complexity. A fifty-page curriculum vitae can simply
document abilities without indicating complexity. Dr. Schwartz may have looked
at the 92 pieces of prior art, but his reference to only about 30 of them
indicates an absence of complexity. Similar comments apply to Dr. Çelik. Gina
Mitchell did not analyze anything in her affidavit (5 volumes of 1,581 pages)
instead simply attaching the prior art documents. As well, her affidavit was
identical in both matters.
[18]
The
Applicants conceded that Novopharm had to lead argument on obviousness although
that issue was not ultimately determinative. However, the Decision’s
determinative findings on infringement of two patents only were not as lengthy
or complex as other NOC decisions. A third patent had been invoked, but
paragraph 5 of the Decision noted the acknowledgement by the Applicants that
Novopharm’s proposed product would not infringe it and paragraph 65 directed
that there be no costs associated with it. Only a few paragraphs of the 66
paragraphs comprising the Decision addressed construction of the patent claims
and non-infringement. Only one claim of 21 claims in the first patent was
in issue, the balance essentially being dependent on or common to that claim.
The parties did not address the claims separately at the hearing and the Court
did not so construe them. The 15 claims of the second patent were essentially
crystallized into one issue, i.e. was an osmotic process claimed and if so
did Novopharm use it so as to infringe the patent. The Applicants noted Wellcome
Foundation Ltd. v. Apotex Inc. (1992), 40 C.P.R. (3d) 376 at 380 (F.C.T.D.)
which stated that while “patent cases by their nature may be somewhat complex,
general tariffs are set and there is no provision that patent cases should be
accorded a treatment different from other types of cases.”
[19]
Relative
to Novopharm’s claim of maximum Column III costs throughout, the Applicants
noted paragraph 65 of the Decision which said that “Novopharm did not seek any
special order” on costs and argued that it therefore should be restricted
to the mid-level Column III costs defined in paragraph 69 of Pfizer.
Paragraph 64 of the Decision indicated that “the material filed in either
action would apply to both, and the result should be the same.” There was no
differentiation at the hearing between the two matters. Therefore, Novopharm
should be limited to single fee items 13 (preparation) and 14 (attendance)
for what was a single hearing. It cannot assess 29 hours for a hearing of 14.5
hours duration.
II. Assessment
[20]
I
concluded in paragraph 7 of Starlight v. Canada, [2001] F.C.J. No. 1376
(A.O.) that the same point in the ranges throughout the Tariff need not be used
as each item for the services of counsel is discrete and must be considered in
its own circumstances. As well, broad distinctions may be required between an
upper versus lower allowance from available ranges. The Applicants had objected
to a fee item 1 claim for the NOA in each bill of costs. I permitted Novopharm
to change that to a fee 2 claim (available range = 4 – 7 units) for its Record
in each matter. With much respect and with regard to Pfizer, Rule 407
directing that costs be assessed per Column III unless the Court orders
otherwise does not set its mid-level as the default value.
[21]
I
read the Notices of Allegation and the application materials. I agree with the
Applicants that these matters were not as complex as Novopharm suggests. I
allow fee item 2 at 6 and 3 units for the T-503-03 Matter and the T-307-04
Matter respectively. Further to my findings in Abbott Laboratories v. Canada (Minister of
Health)
(2008), 66 C.P.R. (4th) 301, [2008] F.C.J. No. 870 (A.O.) [Abbott]
(under appeal), I disallow the fee item 27 claims in the bills of costs for the
role of supervising counsel in the preparation of expert reports as this work
is subsumed in other fee items.
[22]
I
agree with Novopharm’s position concerning the production motion and allow the
maximum 7 units claimed for preparation under fee item 5 (available range = 3 –
7 units). I agree in part with the Applicants’ position on the
confidentiality motion in the T-503-03 Matter and therefore allow their
suggested 5 units for fee item 5. However, I allow the 3 units per hour as
claimed for attendance under fee item 6 (available range = 1 – 3 units per
hour) as I think that value more fairly captures the appropriate indemnity for
the three hours associated with these two motions. I allow 5 units as suggested
by the Applicants for fee item 5 for preparation of the striking motion. I
allow 2 units per hour as claimed under fee item 6 for attendance at its
hearing. In the absence of notice of a claim for fee item 4 for the
confidentiality motion in the T-307-04 Matter, I allow only the minimum 2
units.
[23]
As
in NOC matters such as Abbott, Fournier Pharma Inc. v. Canada
(Minister of Health), [2008] F.C.J. No. 1151 (A.O.) [Fournier], Aventis
Pharma Inc. v. Apotex Inc., [2008] F.C.J. No. 1238 (A.O.) and Aventis
Pharma Inc. v. Apotex Inc., [2009] F.C.J. No. 56 (A.O.) [Aventis], I
read the NOA, the respective memoranda of fact and law and expert reports of
the parties, and the associated cross-examinations of affiants to gauge the
effort demanded of counsel and the appropriate amount of disbursements. Under
the subheading Cross Examinations on Motion for Production in the
T-503-03 Matter, Novopharm claimed maximum costs under fee item 8 (preparation
for cross-examination) and 9 (attendance) (available ranges = 2 –5 units
and 0 – 3 units per hour respectively) for the Applicants’ affiant, Dina Khairo.
Consistent with their position on mid-level Column III allowances, the
Applicants suggested 3.5 units and 1.5 units per hour respectively for these
and other fee item 8 and 9 claims. The Court has in the past directed mid-level
or mid-range costs which the parties and the assessment officer, in for example
Aventis and Mercury Launch & Tug Ltd. v. Texada Quarrying Ltd.,
[2009] F.C.J. No. 390 (A.O.) [Mercury Launch], have construed as
permitting fractions of units. Here, there was no such direction. I allow 3 units
and 1 unit per hour for Dina Khairo’s cross-examination. I allow 4 units
and 2 units per hour respectively for fee items 8 and 9 for the Applicants’
affiant Dr. Xiao Yu Wu. Pages 24 to 56 of the transcript of the
cross-examination of the Applicants’ affiant Dr. Kathryn Uhrich disclose
counsel’s difficulties with the witness apparently rephrasing or
misunderstanding questions, answering questions not asked and asserting
irrelevant comments, although the Applicants might view this differently. I
allow the maximum 5 units and 3 units per hour claimed respectively for fee
items 8 and 9. I allow 4 units and 2 units per hour respectively for fee
items 8 and 9 for Novopharm’s affiant Bill Mayo. I allow 3 units and 2 units
per hour respectively for fee items 8 and 9 for the cross-examination of
Novopharm’s affiant Dr. Robert Miller relating to the confidentiality motion.
[24]
Novopharm
claimed maximum units under fee items 8 and 9 for cross-examinations of
affiants relating to the application hearing itself. Again, my examination of
the record impels me to allow the maximum for Dr. Uhrich’s
cross-examination. I allow 3 units and 1 unit per hour respectively for fee
items 8 and 9 for the Applicants’ affiant Paul Maes. I allow 4 units and 2
units per hour respectively for fee items 8 and 9 for Dr. Çelik. Page 77 of the
transcript of the cross-examination of Novopharm’s affiant Dr. Schwartz
discloses the Applicants’ counsel asking opposing counsel whether he intended
to testify as an expert after the latter clarified the deponent’s answer. I am
not convinced that the maximum is warranted for preparation. I allow 4 units
for fee item 8, but the maximum 3 units per hour claimed for fee item 9.
[25]
The
Court issued separate judgments and more significantly for these assessments of
costs separate awards of costs. I speculated at the hearing that if I was
to reject the Applicants’ position on fee item 13(a) (available range = 2
– 5 units) and (b) (available range = 2 – 3 units per day) (preparation for
hearing on the first and subsequent days respectively), i.e. disallowing
completely costs for the T-307-04 Matter, I might make a higher allowance for
the T-503-03 Matter and something close to the minimum for the T-307-04 Matter.
I allow the maximum values as sought for fee items 13(a) and 13(b) in the
T-503-03 Matter. In the T-304-07 Matter, I allow the minimum value for 2 units
for fee item 13(a), but the maximum value of 3 units for fee item 13(b).
[26]
The
provision in paragraph 65 of the Decision for a single hearing fee presumably
flowed from the reality of a single and common hearing encompassing both
matters. Costs are an indemnity and not a windfall or source of profit.
Novopharm cannot claim twice for the same occurrence. There was nothing in the
record to indicate a potential problem (such as liability of separate
legal entities to pay costs) with assigning 7.25 hours to each matter as opposed
to assessing the full 14.5 hours in one or the other matters. I allow fee item
14(a) at the maximum 3 units per hour for 7.25 hours in each matter.
[27]
Fee
item 15 (written argument where requested or permitted by the Court) falls
under the subheading E. Trial or Hearing. Such written argument usually
occurs shortly after a hearing, but on occasion has been requested shortly
before a hearing. It is not the memorandum of fact and law included in the
respondent’s materials under fee item 2. As the Court did not request such
written argument, I disallow the fee item 15 claim in each matter.
[28]
Further
to my comments in paragraph 3 of Abbott, I disallow the fee item 24
claims (travel time of counsel) as there must be a visible direction by
the Court to the assessment officer specifically authorizing fees for the time
of counsel in transit. Such a direction is not however necessary to assess essential
and associated travel disbursements, which might include those for second
counsel. I allow the travel disbursements of $1,098.34 and $1,255.50
outstanding in the T-307-04 Matter.
[29]
Although
Novopharm does not achieve on these assessments all that it sought, the work by
its counsel was professional and of solid assistance to me. I allow fee item 26
(assessment of costs) (available range = 2 – 6 units) at 5 and 4 units
respectively for the T-503-03 Matter and the T-307-04 Matter. In so
doing, I am aware that one might characterize the hearing before me of these two
matters as a single hearing, but I note that fee item 26 encompasses the discrete
and requisite preparation work for each matter additional to the appearance
before me.
III. Disbursements
[30]
As
a preliminary, the Applicants conceded the $22,210.84 claimed in the T-503-03
Matter for Dr. Schwartz and argued that Dr. Çelik’s claim should be reduced
from $82,151.11 to that amount. As above, the Applicants argued that the
absence of necessity for the 2nd NOA means that the $16,647.67 ($11,
932.39 and $4,715.28 for Dr. Çelik and Dr. Schwartz respectively) in the
T-307-04 Matter should be disallowed as they should not have to pay for what
was essentially the same affidavit used in the T-503-03 Matter. Alternatively,
Dr. Çelik’s claim should be reduced to that of Dr. Schwartz. Novopharm argued
that Dr. Schwartz addressed the additional evidence, i.e. nine US Patents
and simulated gastric buffer, in the T-307-04 Matter.
A. Novopharm’s Position
[31]
Novopharm
noted that although Dr. Schwartz and Dr. Çelik may have been asked to address
the same documents, Dr. Çelik’s mandate was to create a primer to educate the
Court and counsel. His work differed from that of Dr. Schwartz in his analysis
of the state of prior art at the relevant date. Paragraph 8 of the affidavit of
Andrew Skodyn (one of supervising counsel) sworn January 30, 2008 in the
T-307-04 Matter asserted that as “the Applicants’ Rule 306 evidence in this
case was quite similar to the evidence they filed in T-503-03, not as much work
was required on the part of Drs. Çelik and Schwartz, however they did have to
review their previous evidence, the material from Novopharm’s 100 mg submission
and the new aspects of the Applicants’ evidence and make changes and additions
to their previous affidavits where necessary.” Dr. Çelik’s claim for this work
is much less than in the T-503-03 Matter. Novopharm argued further to paragraph
29 of Biovail that experts may provide technical assistance beyond their
own reports and oral evidence as long as it does not stray into areas for which
supervising counsel bear sole responsibility, and further to paragraph 21 of Bayer
AG v. Apotex Inc., [2002] F.C.J. No. 1693 (A.O.) that such work can include
evaluation of the impact of opposing experts.
[32]
Novopharm
noted that the costs for both experts were allowed in Biovail. It is
prudent to prepare at least two experts in these matters of significant market
share in case one expert becomes problematic, i.e. incapacity. The Court did
not prefer one expert over the other and instead indicated in paragraph 40 of
the Decision that its conclusions were reached “with the aid of the experts,
particularly Dr. Schwartz.” This could only include Dr. Çelik as the
Applicants’ experts did not assist Novopharm’s case. The Decision qualified
both men as experts, acknowledged differences in their respective
expertise, i.e. solid dose technology for Dr. Schwartz and development and
formulation for Dr. Çelik. Biovail found that the absence of a reference
to an expert by name does not mean that expert was not relevant. Dr.
Çelik’s evidence provided context for that of Dr. Schwartz. The Court in Kirkbi
AG v. Ritvik Holdings Inc., [2002] F.C.J. No. 1474 (F.C. ) found that
the costs of securing one’s most relevant, credible and competent expert
evidence are recoverable particularly in circumstances of significant amounts
at stake for both sides. Paragraph 50 of Aerlinte Eireann Teorenta v. Canada, [1993]
F.C.J. No. 1462 (T.O.) [Aerlinte] found that the principle that experts’
fees should be in proportion to those of counsel “does not have general
application: the relationship between counsel fees and the expenses allowed for
expert witnesses will depend on the circumstances of each case.”
[33]
Novopharm
argued that two experts were justified because Dr. Schwartz addressed the
history of the development of sustained release formulation. Dr. Çelik
addressed this briefly, but his focus was a primer for the Court on the
different methodologies of sustained release. The core of this case, i.e. oral
dosage forms and sustained release, fell directly within Dr. Çelik’s expertise.
[34]
Novopharm
discounted the Applicants’ position on benchmarking by arguing that there was little
difference between their hourly rates (US$375 versus US$300) and there were
differences in writing styles and roles. Although Dr. Çelik’s charge was not
extravagant or outrageous by comparison, Dr. Schwartz’s charge just happened to
be a good deal for which Novopharm should not be penalized. The
differences in their respective billing practices underscore this. That is, Dr. Çelik
makes his living as a consultant and documents his time more precisely than Dr.
Schwartz who is a full-time professor and runs a pharmacy institute. Dr.
Schwartz tracks his time in broad chunks, i.e. only telephone conferences and
document review shown for a three-month period, as opposed to a lawyer tracking
time in much greater detail, i.e. every six minutes.
[35]
Novopharm
argued that the issues in Biovail were different and Dr. Çelik’s hours
and work there are irrelevant here. The needs there of counsel for
technical assistance may have been different. It cannot be inferred simply on
the basis of comparison to Dr. Schwartz that Dr. Çelik’s account here has been
inflated relative to his account in Biovail. Dr. Schwartz’s style of
docketing meant he overlooked charging for writing his affidavit. There was
considerable work not necessarily reflected in the materials and
cross-examinations. Supervising counsel used Dr. Çelik in a technical advisory
role via teleconferences, a role not apparent from Dr. Schwartz’s material.
Novopharm argued that a charge of some 36 hours for advisory work by Dr. Çelik
in the context of 92 pieces of prior art is not excessive even if Dr.
Schwartz did not bill anything for such work. Similar comments apply to the 36.85
hours for review by Dr. Çelik of documents for his expert affidavit versus the
rough billing by Dr. Schwartz of 1.5 days, the 40.42 hours billed for
preparation of his affidavit versus the apparent absence of hours billed by Dr.
Schwartz (counsel for the Applicants interjected to note there was not any
evidence that Dr. Schwartz did such work much less overlooked billing for it)
and the 18.74 hours billed for revision of his affidavit versus the 2.5 days
billed by Dr. Schwartz.
[36]
Novopharm
noted my comment in paragraph 30 of Biovail that Dr. Çelik’s work here
should have simplified his work there and that the losing side should not have
to bear the costs of an adverse expert educating himself. Dr. Çelik’s
charge here compares favourably to the $104,000 allowed for him in Biovail
because his work here occurred first and billings here for review of textbooks
are not of concern. Novopharm argued alternatively that his necessary
disbursements for things such as travel be considered if rough justice is used
to set an amount for him.
B. The Applicants’ Position
[37]
The
Applicants noted generally that Novopharm refused their request for a copy of
the latter’s instructions to its experts. The Applicants argued that in fact
Dr. Schwartz’s work was more of a primer for the Court, i.e. paragraphs 25
to 30 (in either affidavit) on the scientific background of sustained and
controlled release formulations. He then commented extensively on the prior art
and referred to several documents not addressed by Dr. Çelik. When he did refer
to a document also addressed by Dr. Çelik, i.e. a 1984 article on hydrogel
matrices by D.A. Alderman in para. 37, it is as if he had read and
digested it as opposed to paragraph 89 of Dr. Çelik’s affidavit (in the
T-307-04 Matter) in which he simply refers to this article as one of several of
a group covered by the comment that many “publications were readily available.”
Dr. Schwartz’s work as a primer was much broader in scope, i.e. meticulous
examination of each document, its teachings, its relevance and how it would
assist the Court, than Dr. Çelik’s work and therefore was much more helpful to
the Court. Dr. Çelik’s evidence was of little assistance to the Court because
it did not address the prior art at the relevant date.
[38]
In
response to my speculation that Dr. Çelik’s writing skills might not have been
as good as those of Dr. Schwartz, the Applicants’ counsel noted that
although his style might have been to make a statement and let his reader look
up the references, that is not nearly as much assistance to the Court as Dr.
Schwartz’s careful analysis of each piece of prior art and his teachings. The Applicants’
counsel agreed with my observation that if I did not accept her position on Dr.
Çelik’s necessity, I should predicate any allowance on the basis that it should
not be four times that for Dr. Schwartz.
[39]
The
Applicants noted that the Decision, other than in its introductory paragraphs
qualifying the experts, does not refer to Dr. Çelik by name, but does
refer several times to Dr. Schwartz. The Court preferred the reasoned
teachings of Dr. Schwartz over Dr. Çelik’s laundry lists. The Applicants’
counsel characterized the likely thought process of the Court as follows: Dr. Schwartz
cites these textbooks and tells me exactly where it is taught versus Dr. Çelik
who says it is in these textbooks, but I am not going to tell you where. The
Applicants noted the reference in paragraph 73 of Aerlinte to excessive
costs of an aborted study and argued that as Dr. Çelik’s evidence was less
substantive than that of Dr. Schwartz, it had no real effect on the outcome.
[40]
The
Applicants estimated Dr. Schwartz’s hourly rate at US$300 for comparison
purposes to Dr. Çelik’s hourly rate of US$375. The Applicants
compared their work under four general headings to underscore their position on
the excessiveness of Dr. Çelik’s charges. In the T-503-03 Matter, these were
telephone conferences and document review (12 hours/$3,600 for Dr. Schwartz
versus 44.68 hours/$16,755 for Dr. Çelik); preparation and finalization of
affidavit (20 hours/$6,000 for Dr. Schwartz versus 85 hours/$31,875 for
Dr. Çelik); preparation for cross-examination (12 hours/$3600 for Dr. Schwartz
versus 15.92 hours/$5,970 for Dr. Çelik) and cross-examination (4 hours/$2,400
for Dr. Schwartz versus 16 hours/$6,000 for Dr. Çelik). In the T-307-04 Matter,
these were compressed into a single heading (12 hours/$3,600 for Dr. Schwartz
versus 23.5 hours/$8,812.50 for Dr. Çelik). The totals were 60 hours and 185.1
hours respectively for Dr. Schwartz and Dr. Çelik. As it appears that
their respective mandates were similar, it was excessive for Dr. Çelik to take
triple the amount of Dr. Schwartz’s time. If Dr. Schwartz’s 60 hours are
multiplied by Dr. Çelik’s US$375 per hour, the resultant US$22,500 approximates
the CAN$22,510.84 conceded for Dr. Schwartz. However, as Novopharm does
not concede anything for the T-307-04 Matter, the 60 hours should be
reduced to 48 hours for this calculation. The Applicants noted that the
practice of Novopharm’s solicitor of record to pass directly to its client for
payment invoices exceeding a certain amount makes it difficult to determine the
currency exchange rate used.
[41]
The
Applicants argued further to paragraphs 27, 30 and 32 of Biovail and
paragraph 82 of Halford v. Seed Hawk Inc., [2006] F.C.J. No. 629
(A.O.) [Halford] that charges such as here (about 5 hours) by Dr. Çelik
to read textbooks to educate himself in his purported area of expertise are not
assessable in areas which he appeared to be less qualified than Dr. Schwartz
and that the paucity of evidence precludes gauging reasonableness or whether
his work improperly strayed into the realm of supervising counsel. The
Applicants put Dr. Çelik’s invoices from Biovail in the record and noted
that he repeated there all of his work done first here and charged even more.
He spent even more time there (about 59 hours) reading textbooks and the
prior art despite his prior experience in these two matters. The Applicants
noted my observation that an expert might need some time to become familiar
with a given pharmaceutical given so many in the market, but argued that Dr. Çelik’s
cross-examination (pages 2-12, 48, 78, 81, 117 and 144-45) indicated that he
had no experience with bupropion hydrochloride or with sustained release
products relevant for this litigation. The Applicants argued further to Canadian
National Railway Co. v. Industrial Estates Ltd., [1987] F.C.J. No. 665
(T.O.) that they should not have to pay for an expert reviewing and revising
(54.16 hours of 185.1 hours) his report several times.
IV. Assessment
[42]
The
Applicants raised Pfizer and Janssen-Ortho Inc. v. Novopharm Ltd.,
[2006] F.C.J. No. 1684 (F.C.) further to their position on benchmarking. I
have not generally outlined the able and respective submissions before me on
benchmarking, i.e. pegging the costs of an expert to those of senior counsel or
to those of more inexpensive experts, because I felt that my findings in Abbott
sufficiently canvassed that factor. That included my reservations concerning
the application of Allied Signal Inc. v. Dupont Canada Inc. (1988), 81
C.P.R. (3d) 129 (T.O.) [Allied Signal]. In paragraph 28 of Fournier
above, I expressed further concerns about benchmarking and indicated that the
focus of assessment of an expert’s account should be on the circumstances of
what he did. In paragraph 45 of Aventis, I also expressed concerns about
benchmarking. I commented in paragraph 90 of Abbott that “benchmarking
as an approach can be useful, but it should not necessarily be paramount or
mandatory.”
[43]
I
agree with Novopharm that it had to prepare for potential issues not ultimately
determinative. In paragraphs 23 to 57 inclusive of Halford, I found that
an award of costs is not distributive.
[44]
Novopharm’s
position included an assertion that adverse expert evidence would not result in
favourable judgments. With respect, and I concede that this refers to answers
in cross-examination, I think paragraph 17 of Mercury Launch above is
an example of adverse opinion evidence assisting in a favourable judgment.
[45]
I
reiterate what I said to counsel at the hearing. I cannot purport to sit in
appeal of my findings in Biovail on Dr. Çelik by somehow compensating
here in favour of the Applicants. The assessment of Dr. Çelik’s account
should be predicated primarily on what he did and not on what someone else did.
As sometimes happens, that results in reductions which do not however indicate
a problem with the competence of supervising counsel.
[46]
My
findings in Halford, Biovail and Abbott above set out my
views on threshold of proof for categories of costs and approach to their
assessment. Paragraphs 68 to 72 inclusive of Abbott above summarize the
subjective elements and the notion of rough justice in assessments of costs.
Paragraph 38 of Mercury Launch above outlines my view that an assessment
of costs should reflect the reality of the demands of litigation.
[47]
The
able submissions and materials advanced succinctly before me by opposing
counsel leave clear pictures in the record of their respective perspectives and
analyses for assessment of the experts’ accounts, to which there is
little if any analysis to add. I compared Dr. Çelik’s respective affidavits for
these matters to note differences. I did the same for Dr. Schwartz.
[48]
I
then compared the respective affidavits of Dr. Çelik and Dr. Schwartz in each
matter. The imprint of supervising counsel is present in several common
subheadings. It is also present in their respective mandates (the balance
of this paragraph and the ensuing paragraphs 49 to 51 address their respective
affidavits in the T-503-03 Matter). For example, their respective paragraphs 17
and 18 under the common subheading II. Materials Reviewed are
essentially the same except for the difference, i.e. 20 and 35 years
respectively for Dr. Çelik and Dr. Schwartz, in experience in their common
field of “pharmacy, pharmaceutical development and pharmaceutical formulation.”
This imprint continues in common paragraphs 19 under the subheading III.
Scope of Retainer and Summary of Opinion which gave each the general
mandate to provide an opinion “as to who the person skilled in the art” would
be for the subject patents. Paragraphs 20 to 23 by Dr. Çelik and 20 and 21
by Dr. Schwartz respectively were their independent summaries of their work,
but reaching similar conclusions. Paragraphs 24 by Dr. Çelik and 22 by Dr.
Schwartz, although phrased somewhat differently in each, both asserted a
mandate from supervising counsel to provide an opinion “as to the validity of
the arguments raised by Novopharm in the NOA” in respect of the subject
patents. The ensuing paragraphs under this subheading were their independent
but similar conclusions further to that mandate.
[49]
Although
phrased somewhat differently, each included a subheading addressing deliberate
variation of drug-release rate profiles in the prior art. Their conclusions
were similar, but their writing styles were different. Dr. Schwartz (paras. 59
– 67) referred by name to specific publications including his own and indicated
that there many more supporting his analysis. Dr. Çelik’s analysis (paras 63 –
65) appeared less extensive simply if measured by the number of paragraphs.
However, he chose to simply open each paragraph with the expert opinion
that persons skilled in the art knew of release rate processes followed
by, in my view, an analysis comparable in worth to that of Dr. Schwartz on
issues before the Court.
[50]
Both
included a subheading IV. Background Information in which they commented
on the history and development of sustained and controlled release
formulations (paras. 28 – 57 for Dr. Çelik and 25 – 46 for Dr. Schwartz). Their
respective work was independent of one another, but relevant for the issues.
[51]
The
Decision (paras. 49 – 62) analysed Canadian Patent 1,321,754 (the ‘754 Patent)
with reference to expert evidence on both sides. Dr. Schwartz (paras. 47 – 87)
analysed the ‘754 Patent with several references by name to individual
pieces of the prior art. Dr. Çelik (paras. 58 – 81) reached similar
conclusions, but did not refer by name to individual pieces of prior art.
Instead, he initiated areas of analysis as he tended to do throughout with a
general expert assertion as in paragraph 59 that persons skilled in the art at
the time were aware of processes and relevant publications. He included in his
discussion in paragraphs 63 – 65 of sustained release process the general
assertion that persons skilled in the art knew prior to August 17, 1984 of
means to modify sustained release compositions and of associated manufacturing
techniques. While I concede the Applicants’ point that Dr. Schwartz’s approach
made the use of his report easier for the Court in matching the prior art to an
area of analysis, I think that Dr. Çelik’s work was focused and relevant. As
well, the Court would have been aware that both experts were working with the
same pieces of prior art and that the Applicants could have used their experts
or Dr. Çelik’s own cross-examinations to expose serious deficiencies in the
latter’s work, neither of which apparently occurred in my reading of the
record. In paragraph 31 of Biovail, I commented that “judges have varied
writing styles and do not always set out discrete and explicit statements of
their exact use, or not, of experts” as part of my reservations concerning
the application of the three-part test for experts in Allied Signal. Paragraph
69 of Abbott noted concerns by trial judges about how much detail of the
evidence and argument to include in reasons.
[52]
Aventis
addressed
experts not mentioned by name in a decision and with disparate billing practices.
I compared the respective instituting documents for these matters. As part of my
analysis of the circumstances within which these experts prepared their opinions,
I compared the Memorandum of Fact and Law in the T-503-03 Matter to the Memorandum
of Fact and Law in the T-307-04 Matter.
[53]
Paragraphs
52 and 53 respectively of Novopharm’s Memorandum of Fact and Law in the T-503-03
Matter asserted in strong terms that Dr. Schwartz and Dr. Çelik were not only
persons “skilled in the art today,” but also “skilled in the art at the
relevant dates” of the subject patents. Paragraphs 54 to 56 then argued that the
admissions by the Applicants’ expert, i.e. she addressed the ‘754 Patent
as a chemist, disqualified her as a relevant expert as she was not skilled in
the art. Dr. Çelik asserted on pages 78 and 117 of his cross-examination that
he was not a chemist. Paragraphs 41 to 47 of the Applicants’ Memorandum of Fact
and Law in the T-503-03 Matter asserted strongly that neither Dr. Schwartz nor
Dr. Çelik were skilled in the art. The Decision qualified all three as experts.
[54]
Dr.
Çelik’s cross-examination (December 2, 2003) was confined to his affidavit and
did not probe his role, if any, as a technical consultant directly to
supervising counsel in the latter’s formulation of the pharmaceutical component
of the litigation strategy. Novopharm’s materials characterized four hours in
Dr. Çelik’s 09/01/03 invoice as hints for the cross-examination (November 24,
2003) of Dr. Uhrich. I think the reference was likely to the 10/04/03 invoice
charging four hours for cross-examination hints from her affidavit. This
latter invoice charged 15 minutes to review Novopharm’s supporting
affidavits. His 12/17/03 invoice billed one hour for preparation for Dr.
Uhrich’s cross-examination; 3.25 hours for preparation and attendance on a
November 14 teleconference without identifying its purpose and 11.67 hours in
the period November 10 – 30, 2003 for preparation “for the disposition” without
specifying which disposition. This latter billing likely referred to Dr.
Çelik’s cross-examination. In general, Dr. Çelik’s invoices do not clearly establish
a significant role as a technical consultant directly to supervising counsel.
[55]
This
leaves me with the impression as for Dr. Schwartz that his charges addressed
preparation of his evidence, including some necessary consultation with
supervising counsel, attendance at cross-examination and disbursements. In
paragraphs 126 and 127 of Abbott, I commented on differences in working
styles of experts. In paragraph 59 of Aventis, I referred to the billing
practice of one expert as a “crude estimate” and noted that he likely had
overlooked several hours of work. I agree with Novopharm that Dr. Schwartz’s
charge for his work represents a bargain. However, I am assessing what Dr.
Çelik did, not what Dr. Schwartz did. I am not gauging the actual solicitor-client
charge by senior counsel to the client as a cap on Dr. Çelik’s allowable fee.
[56]
Dr.
Çelik billed, i.e. 5-minute increments, more tightly than Dr. Schwartz, i.e.
day or half day. The respective estimates of 27.67 hours and 31.92 hours by
Novopharm and the Applicants for preparation by Dr. Çelik for cross-examination
and the cross-examination itself are fairly close. The Applicants’
separate allocation, which Novopharm did not do, for the T-307-04 Matter made comparisons
in other areas rougher. Novopharm allocated 36.07 hours for advisory work by
Dr. Çelik versus none for Dr. Schwartz followed by 36.85 hours for his
review of the prior art versus 1.5 days for Dr. Schwartz. The Applicants
allocated 44.68 hours (the T-503-03 Matter) for Dr. Çelik’s telephone conferences
(which could be characterized as advisory work) and document review. Novopharm
allocated time (14.17 hours) from invoice 692 for Dr. Çelik’s preparation of
his affidavit. In contrast, the Applicants allocated all of the time (32.09
hours) in invoice 692 to his telephone conferences and document review.
[57]
In
Abbott, I addressed experts with similar mandates and did not restrict
recovery to a single expert as I think it prudent, as the Respondent,
Apotex Inc., put it in paragraph 22 of Biovail “to have some overlap in
expert testimony in case a given expert experiences difficulties in
cross-examination and another expert must bolster the evidence.” I find that
$68,500 is a fair assessed result for Dr. Çelik’s work in the T-503-03 Matter
leaving $90,710.84 assessed in total for US experts in that matter, down from
the claimed $104,361.95.
[58]
I
think that the broad discretion of Rule 400(1) would have permitted the Court
to refuse a separate award of costs for the T-307-04 Matter in the
circumstances of a second NOA. That did not occur. However, I am not
convinced on the record that Dr. Çelik’s work warranted the full $11,932.39
claimed for him in the T-307-04 Matter and I therefore assess his account
there at $4,715.28, being the amount allowed for Dr. Schwartz. This leaves the US experts in
the T-307-04 Matter assessed in total at $9,430.56, down from the claimed total
of $16,647.67.
[59]
Novopharm’s
bill of costs in the T-503-03 Matter, presented at $155,113.39, is assessed and
allowed at $128,870.76. Novopharm’s bill of costs in the T-307-04 Matter,
presented at $33,920.57, is assessed and allowed at $17,990.27.
“Charles
E. Stinson”
Vancouver,
BC
June 24,
2009
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