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Federal Court
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Cour fédérale
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Date: 20090710
Docket: T-1515-05
Citation : 2009 FC 717
BETWEEN:
MONSANTO CANADA INC. and
MONSANTO COMPANY
Plaintiffs
and
CHARLES
RIVETT
Defendant
REASONS FOR ORDER
ZINN J.
[1]
In my
Reasons for Judgment of March 26, 2009, I indicated that the matter of costs
was reserved pending receipt of submissions from the parties. These submissions
have now been received and reviewed.
[2]
The
plaintiffs’ action for patent infringement was commenced in September of 2005.
Justice Simon Noël issued a consent Judgment on January 11, 2007, holding that
Mr. Rivett had infringed various claims of Canadian Letters Patent 1,313,830
(“the ‘830 Patent”) by growing, harvesting and selling crops which he knew to
contain genes and cells as claimed in the ‘830 Patent. Mr. Rivett was also
permanently enjoined from further infringing activities and required to deliver
up any infringing seed and plants in his possession to Monsanto Canada Inc. The
case proceeded to trial only on the issues of remedy, costs, and interest. The
plaintiffs elected an accounting of profits rather than damages. My Reasons of
March 26, 2009 established that Mr. Rivett must disgorge profits to the
plaintiffs in the amount of $40,137.94, with prejudgment and post-judgment
interest on the whole.
[3]
There is
no dispute between the parties that the plaintiffs are entitled to costs in
accordance with the usual rule that costs follow the event, and both parties
appear to be in favour of a lump sum award. Rule 400(4) of the Federal
Courts Rules contemplates lump sum costs awards and I agree that such an
award is appropriate to the circumstances of this case, particularly where the
defendant takes no issue with the plaintiffs’ claimed disbursements and has
focused on overall quantum rather than challenging specific items of the fee
component of the plaintiffs’ draft bill of costs.
[4]
The
plaintiffs submit that the fee component of the cost award should be fixed at
the high end of Column IV of Tariff B, that is to say, at a higher scale than
the default rate set out at Rule 407, which refers to Column III of Tariff B,
and their draft bill of costs is calculated on the basis of Column IV values at
the high end of the range. The plaintiffs argue that a lump sum award
reflective of the higher scale is justified in light of the defendant’s
intentional infringement of their patent. They also point to the defendant’s
public statements to the effect that his infringement liability should not go
beyond the cost of a licensing fee, and the waste of time occasioned by the
defendant’s failed attempt to introduce expert evidence without complying with
the Rules. They point the Court to the costs award in Dimplex North America
Ltd. v. CFM Corp., 2006 FC 1403,
where costs on a higher tariff were awarded on account of
the intentional nature of the defendant’s infringement notwithstanding that
punitive damages had been denied to the plaintiff in the main action.
[5]
The fee
component of the plaintiffs’ draft bill of costs is $26,712.00 with an additional
disbursements component of $4,997.55 and GST.
[6]
This is
substantially higher than the lump sum amount of $3,000.00 and disbursements,
plus GST on the whole, proposed by the defendant in his submissions on costs.
The defendant proposes this figure in light of a number of favourable factors
he maintains should be reflected in the costs award, including his admission of
infringement at the earliest opportunity; his cooperation with the plaintiffs;
and his offers to settle of 2004 and 2007. He also asks that the Court
consider that the infringement was a “one-off event” and that he was “substantially
successful with respect to profit assessment.”
[7]
It is
clear from the defendant’s costs submissions and the plaintiffs’ reply
submissions on costs that the parties do not agree on a number of issues,
including whether or not the defendant’s public statements encouraged others to
infringe Monsanto patents, and whether or not the plaintiffs’ primary claim at
trial was for a “damage assessment” in the range of $200 per acre of infringing
crop.
[8]
For
present purposes, it is not necessary for the Court to come to any conclusion
on these disputes except to note that the defendant’s description of what was
at issue at trial, and his claim to have been “substantially successful,”
should not stand uncorrected. The plaintiffs were the successful party. It
should be clear from the Court’s Reasons of March 26, 2009, that whatever
“success” may have come the defendant’s way was inherent in the accounting
remedy elected by the plaintiffs.
[9]
Beyond
this, and for reasons that will be explained below, there is no need to comment
on the parties’ disagreements. As will be explained, the Court does not
consider that any of the offers that have been brought to its attention, by
either party, should have any bearing on costs. As to the defendant’s alleged
encouragement of others to infringe, in the Court’s view, the most that could
be held against the defendant is that he encouraged a conception of the law of
damages which, however wrongheaded, is not so preposterous that it hasn’t been
pleaded in earnest by distinguished members of the patent bar, in this Court.
Analysis
[10]
As it was
noted by the Federal Court of Appeal in Thibodeau v. Air Canada, 2007
FCA 115, the objectives of costs awards are to effect partial compensation, to
promote settlement, and to deter abusive behaviour. The Court of Appeal
further remarked that “Tariff B is a compromise between
awarding full compensation to the successful party and imposing a crushing
burden on the unsuccessful party,” and that “Column III concerns cases of
average or usual complexity.”
[11]
Rule
400(3) lists a number of factors the Court may take into account in exercising
its discretion over the amount and allocation of costs. These include inter
alia the result of the proceeding; the amounts claimed and the amounts
recovered; the importance and complexity of the issues; the apportionment of
liability; the existence of written settlement offers; the failure of any party
to make admissions it should have; whether steps were taken which were
improper, vexatious, or unnecessary; and any other matter the Court “considers
relevant.”
[12]
The
plaintiffs made a series of settlement offers. In October 2004, prior to
instituting proceedings, they offered to settle their claim for a cash payment
of $50,000 and an undertaking on the part of Mr. Rivett to purchase Monsanto
herbicides for the following three years. In December 2004, they made a
revised settlement offer on the basis of a $40,000 cash payment over four
years, and an undertaking to buy Monsanto herbicides exclusively for three
years. In March of 2007, the plaintiffs offered to settle either on the basis
of a consent judgment for $30,000, coupled with a denial of access to present
or future Monsanto technologies, or a consent judgment of $60,000, coupled with
an undertaking to purchase $60,000 more of Monsanto products over the course of
five years. Either option would also have required Mr. Rivett to publish a
statement in the Ontario Farmer newsletter admitting infringement and
acknowledging the payment of damages in an amount greater than the licence fee.
Finally, in November of 2007, the plaintiffs offered to settle on the basis of
judgment for $94,700.00 plus interest and costs, the latter to be waived if the
principle was paid. The final offer was open at the commencement of trial.
[13]
The
defendant Mr. Rivett also offered to settle. In December of 2004, he proposed a
settlement on the basis of a $20,000 cash payment over time, and an undertaking
to purchase Monsanto products exclusively for five years. In March of 2007, he
offered to settle on the basis of a $19,000 cash payment, and costs. This
offer remained open at the commencement of trial.
[14]
Although
the existence of settlement offers is specifically set out at Rule 400(3) of
the Federal Courts Rules as a factor that the Court may consider for the
purpose of assessing costs, and while the promotion of settlement is one of the
recognized objectives of costs awards, the Court is not of the view that any of
the settlement offers extended by the parties in this case should have any
bearing on costs. The defendant’s offers were for less than half the amount he
was ultimately required to disgorge. The plaintiffs’ offers, including its best
offer of December 2004, all included conditions that are not amenable to simple
monetary quantification and which in some cases would have severely restricted
Mr. Rivett’s commercial autonomy.
[15]
As for the
alleged waste of time occasioned by the defendant’s failure to comply with the Federal
Courts Rules on expert evidence, such that the plaintiffs were required to
prepare for a cross-examination which did not happen, irregularities of this
sort, however regrettable, are not unusual or exceptional. In this case, the
issue did not require much of the Court’s time, and whatever time counsel for
the plaintiffs actually spent in anticipation of a cross-examination is
presumably reflected in the draft bill of costs submitted to the Court under
item 13, “Counsel Fee.” Further, the irregularity was more than compensated by
the defendant’s conduct in general, for
instance, forthrightness in testimony, cooperation with
opposing counsel, and the making of admissions which speeded the proceedings
and narrowed the issues.
[16]
Finally,
with regard to the plaintiffs’ submission that that the Court should follow the
decision in Dimplex, above, and order costs on a higher scale
than usual on account of the defendant’s intentional infringement, there is no
general principle that deliberate patent infringement should be sanctioned
through higher costs awards. Moreover, Dimplex is distinguishable on
its facts; the defendant in that case was a sophisticated commercial
entity which was unable to come up with a competitive alternative and therefore
chose to copy a proven success in which the plaintiff had rights. Here, the
parties are not commercial competitors. Further, in Dimplex the
decision to award costs at the high end of Column V was made on account of all
of the circumstances, including the large amount of work the plaintiff was
required to undertake to assert its rights and the existence of settlement
proposals that would have resulted in substantial savings to the defendants.
Neither of those circumstances is present here.
[17]
Bearing in
mind that that this was not an unusually complex case, and in light of my view
of the various other factors pleaded by the parties, I do not feel that this is
a case where a departure from the default column of the tariff would be
justified, despite the plaintiffs’ arguments. Accordingly, I will fix costs on
the basis of the plaintiffs’ draft bill of costs, with the fee component
reduced by roughly 50% to bring the values into line with the mid-range of
Column III amounts.
[18]
In the
result, costs will be fixed at $13,000 for fees, and $4,997.55 for
disbursements, for a total of $17,997.55 plus GST. A consequential order will
issue in the formal Judgment on the main action.
“Russel W. Zinn”
Ottawa,
Ontario
July 10, 2009
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