Date: 20080903
Docket: T-2459-03
Citation: 2008 FC 988
BETWEEN:
AVENTIS PHARMA INC. and
AVENTIS PHARMA DEUTSCHLAND GmbH
Applicants
and
APOTEX INC. and
THE MINISTER OF HEALTH
Respondents
ASSESSMENT OF COSTS – REASONS
Charles
E. Stinson
Assessment Officer
[1]
The
Respondent, Apotex Inc. (Apotex), served a Notice of Allegation (NOA) alleging
that the claims of Canadian Patent No. 1,246,457 (the ‘457 Patent) were invalid
due to anticipation, obviousness and double patenting. The Applicants brought
this application for judicial review for a declaration that the NOA was
deficient and alternatively for an order prohibiting the Minister of Health
from issuing of a Notice of Compliance (NOC) permitting Apotex to market
rampiril oral capsules of various dosages (rampiril) until after the expiration
of the ‘457 Patent (addressing cardiac insufficiency). The Court dismissed this
judicial review with costs to Apotex (the Decision).
[2]
The
framing of these reasons and my consideration of the issues are consistent with
my approach in para. 3 of Abbott Laboratories v. Canada (Minister of
Health),
[2008] F.C.J. No. 870 (A.O.) [Abbott]. Apotex’s bill of costs claims
mid-range values for counsel fee items. I have not summarized the respective
evidence and submissions of the parties concerning counsel fee items 2 (claimed
six times for the Respondent’s record and for each of five affidavits); 15
(Compendium); 25 (services after judgment); 26 (appearance on assessment of
costs) and 27 (preparation of bill of costs) as I rely on my findings in Abbott
for their disposition. I allow a single fee item 2 for preparation of the
record; fee item 27 (such other services as the assessment officer may allow)
instead of fee item 15 (written argument where requested by the Court); fee
item 25 and fee item 26 as the global indemnity for assessment of costs, but
nothing under fee item 27 for work associated with this assessment of costs.
Similarly, I rely on my findings in Abbott to disallow the various
claims for second counsel in the absence of a visible direction of the Court,
except where the record confirms the absence of an objection on the part of the
Applicants, i.e. fee item 14(b)(attendance at hearing). I have not summarized
the respective positions of the parties on distributive nature relative to an
award of costs and on sufficiency of evidence as Abbott sufficiently
canvassed those issues.
I. Apotex’s Position
[3]
Apotex
noted the affidavit of Andrew R. Brodkin, one of the counsel with direct
carriage of this matter, sworn October 10, 2007 asserting the complexity of
this matter and its importance for access to the rampiril market with annual
sales of many tens of millions dollars. Apotex incurred costs relative to the
three grounds advanced to challenge the ‘457 Patent regardless of the fact that
the Court’s finding of invalidity was based on obviousness. The record confirms
the amount and complexity of work required, i.e. five affidavits from each side
and extensive cross-examination of each concerning highly technical points,
Applicants’ Record consisting of 11 volumes comprising 3,132 pages, three-day
hearing and a 53-page decision. There was nothing in those 53 pages to indicate
that the hearing judge viewed this matter as of average complexity.
[4]
Apotex
discounted the Applicants’ position, i.e. that Apotex’s failure to diligently
pursue its appeal of the earlier decision in Federal Court file T-1851-03 (the
T-1851-03 decision) rejecting allegations of non-infringement and refusing to
issue the NOC until after the expiration of the ‘457 Patent undermined its
assertions of the importance of access to the rampiril market, by arguing that
litigation strategy in another proceeding is irrelevant for the assessment of
costs here and the success here on the broader issue of invalidity precluded the
necessity to pursue the appeal of the T-1851-03 decision. It is disingenuous of
the Applicants to argue against Apotex’s assertion of the significance of the
rampiril market given their position in para. 42 of Sanofi-Aventis Canada Inc. v. Canada (Minister of
Health),
[2006] F.C.J. No. 1958 (F.C.) that the impact of Apotex’s generic rampiril
product would be devastating and result in millions of dollars of lost sales in
the first few weeks.
[5]
One
of Apotex’s experts, Dr. John Parker, was cross-examined on his affidavit on
November 19, 2004 and January 27, 2005. Apotex claimed a fee item 8
(preparation) for each day because, although Apotex’s counsel could not speak
to his own witness while his cross-examination remained open, real work was
necessary to put counsel on January 27 in the position he was in when the
cross-examination adjourned on November 19. Apotex advanced a similar argument
for fee item 8 claimed separately for each of January 28 and April 22, 2005,
the dates of the cross-examination of Dr. Morris Karmazyn on his affidavit
sworn on behalf of the Applicants. The Applicants’ opinion of the amount
of work required for preparation is irrelevant.
[6]
Apotex
disagreed with the Applicants’ position that all breaks during various
cross-examinations of affiants should result in reduction of the fee item 9
(attendance on cross-examination of affidavit) claim from 43 to 33.3 hours
because it ignores the work that continued throughout those breaks. Apotex
discounted the Applicants’ position concerning fee item 13(b) (preparation per
hearing day after the first hearing day) by arguing that preparation for the
final day should be based on a full day regardless of the fact that the hearing
ended somewhat earlier on the final day.
[7]
Apotex
argued that the Applicants’ proposed reduction of Dr. Parker’s charge
($32,564.18) to $25,000 is unwarranted because his attendance on
cross-examination spanned two days and his work extended beyond actual
attendance time. The circumstances here are very different from those in Biovail
Corp. v. Canada (Minister of National Health and Welfare), 61 C.P.R. (4th)
33, [2007] F.C.J. No. 1018 (A.O.) [Biovail], aff’d [2008] F.C.J. No. 342
(F.C.) where 23 hours for preparation were claimed relative to a
cross-examination lasting less than three hours.
[8]
Apotex
discounted the Applicants’ characterization of Dr. Haralambos Gavras as a
Cadillac type witness by arguing that his charge ($55,717.22) was much less
than the charge and assessed amount of the expert in Biovail. As well,
that he had to travel between Boston and Toronto (for his
cross-examination) accounts for some of the difference between his charge and
that of Dr. Parker. The absence of a taxi charge from the Toronto airport
indicates that he did not charge for everything. There is no evidence of undue
benefit by reason of pocketing a second ticket. There was nothing in the decision
to warrant discounting of his charge because his evidence allegedly duplicated
that of Dr. Parker, the latter charging some $23,000 less, or for any other
reason.
[9]
Apotex
argued that Applicants’ proposed reduction of the charge ($6,825) of Dr. Robert
McClelland by $595 on the basis that his claim of 2.7 hours for preparation and
attendance is excessive given actual duration of one hour is unwarranted because
it ignores the reality of the pace of cross-examination, i.e. his professional
time was still engaged during breaks. Apotex conceded a possible inconsistency
between the one hour claimed under item 9 for attendance by counsel and the 2.7
hours claimed by Dr. McClelland, but argued that actual time in session might
have been one hour and that 2.7 hours accounted for the breaks.
[10]
Apotex
argued that the charge ($6,791.44) for consulting by Associates In Cardiology
to review documents and meet with counsel is allowable. For example, Merck
& Co. v. Canada (Minister of Health), [2007]
F.C.J. No. 428 (A.O.) [Merck assessment] allowed a large amount for a
consultant who did not prepare an expert affidavit. On appeal, the Court in Merck
& Co. v. Apotex Inc., [2007] F.C.J. No. 1337 (F.C.) [Merck
appeal] reduced that amount, but still allowed much more than the charge here.
If there is some doubt about this item, it could be reduced somewhat further to
Carlile v. M.N.R. (1997), 97 D.T.C. 5284 (T.O.) instead of entirely
disallowing it.
[11]
Apotex
noted that the rate of $0.25 per page for photocopies was not in issue. Apotex
discounted the Applicants’ position on the charge ($16,753.50) for photocopies
by arguing that it ignores the size of the record, the size of Apotex’s legal
team and its need for working copies of documents, the need for drafts of
documents and copies of the prior art, exchanges among experts, correspondence
and the Compendium. An assessment of costs should not proceed on hindsight: Apotex
Inc. v. Egis Pharmaceuticals, 4 O.R. (3d) 321 at 331 (Ont. Ct. Gen. Div.).
[12]
Apotex
argued that time constraints and international locations of witnesses made the
charge ($520.99) for couriers necessary. The charge ($819.44) for
meetings/parking/cab/mileage resulted from necessary meetings with witnesses,
deliveries outside the scope of couriers, late nights working and refreshments
during extended cross-examinations and their preparation, but not from fees to
book meeting rooms. These disbursement categories were allowed by Merck
assessment at much higher amounts and affirmed by Merck appeal.
[13]
Apotex
had to have had the prior art before institution to list in its NOA. Merck
assessment affirmed by Merck appeal allowed such a charge. There have
been several proceedings addressing rampiril in which the prior art as here was
a key element. The charge ($3,557.04) here was not about simply photocopying,
but rather access to third party databases.
II. The Applicants’ Position
[14]
The
Applicants argued further to Abbott Laboratories v. Canada (Minister of
Health),
59 C.P.R. (4th) 1 at para. 56 (F.C.A.), that NOC proceedings
are summary in nature, are not as extensive as actions for determination of
patent validity or infringement and are limited in scope to the administrative
purpose of whether an NOC should issue and are therefore less complex than
actions. The Court viewed this matter as of average complexity given it did not
award increased costs. The length of a decision does not necessarily indicate
complexity. The Applicants argued that their evidence confirming several other
patents to be addressed by Apotex before access to the rampiril market
corrected the erroneous assertion that the ‘457 Patent was the sole obstacle to
market access. Apotex’s failure to pursue the appeal of the T-1851-03 decision
resulted in said decision being extant until expiry of the ‘457 Patent. That
undercuts its assertion of the importance of this matter for its interests.
[15]
The
Applicants argued that Apotex cannot claim multiple times under fee item 8 for
a single affiant even if it was prudent to prepare separately for each day of
cross-examination because the tariff permits only a single recovery. If extra
work was necessary, and there is no evidence here of that, some movement
to the upper part of the available range of values might be a remedy.
However, once Apotex’s expert (Dr. Parker) began his cross-examination,
Apotex’s counsel was precluded from speaking with him. Presumably, counsel was
fully prepared before the first day of Dr. Karmazyn’s cross-examination.
[16]
The
Applicants argued that the various fee item 9 claims should be reduced because
breaks of various durations are not indemnifiable. This fee item addresses
actual time in session and not breaks. Fee item 13(b) should be reduced from
two to 1.5 days for its calculation.
[17]
The
Applicants do not seek a distributive assessment of costs, but they argued
that, for example, the allowance for Dr. Gavras should reflect the reality that
Apotex succeeded on only one of three grounds advanced and that Dr. Parker
charged considerably less. The test is: what was reasonable in the
circumstances? For example, the amount of the bill of costs as presented in Merck
appeal was about $800,000 and one expert was allowed some $100,000 (reduced on
appeal). This should not create a pervasive benchmark of $100,000 for experts
so that a claim of some $55,000 as here for Dr. Gavras is deemed reasonable by
comparison, without any regard for reasonableness of the actual work or
relevance for the outcome. Another factor should be the observation by the
hearing judge, who was best situated to discern the relative worth of experts
and who based the Decision on Dr. Parker’s evidence, in para. 120 of the Decision
that the evidence of Dr. Gavras was essentially the same as that of Dr. Parker.
The former’s account should be reduced accordingly.
[18]
The
Applicants noted that the affidavit of Dr. Gavras was 20 pages and 70
paragraphs and that his cross-examination lasted six hours. He charged 61
hours at US$600 per hour for preparation and attendance. The August 31, 2005
invoice indicated that he charged for every hour from the moment he left Boston for Toronto
(cross-examination) to the moment he returned to Boston, including
sleeping time. This inclusion of significant charges for travel status and
sleep demonstrates the unreasonableness of his account for which the Applicants
should not be responsible. The evidence is that he purchased two sets of
tickets (itinerary change). The airline refused a refund for one set, but he
was able to retain it for future use. Its cost (US$516.82) should be
disallowed. As well, his account is disproportionately high in that his rate
was over twice that of Dr. Parker, yet the decision did not indicate that Dr.
Parker was any less qualified. Further to Biovail at para. 33 and Laboratoires
Servier v. Apotex Inc., [2007] F.C.J. No. 465 at para. 17 (F.C.), the
Applicants should not have to pay for a Cadillac expert. His account should be
reduced to about $25,000 as below for Dr. Parker.
[19]
The
Applicants noted that Dr. Parker’s affidavit was 35 pages and 106 paragraphs
and his cross-examination lasted eight hours. His invoices charged 102 hours at
CAN$300 per hour. The five hours one way charged for each leg of two trips
between Kingston and Toronto should be reduced
to three hours for each leg. In particular, he used a train for the second
trip. Further to Biovail, his claim of 14 hours for his
cross-examination should be reduced to the actual duration of eight hours given
the Applicants conceded preparation time. His claim ($32,564.18) is excessive
and should be reduced to $25,000 inclusive of disbursements.
[20]
The
Applicants generally conceded Dr. McClelland’s charge ($6,825) but argued that
since Apotex claimed only one hour under item 9 (attendance by counsel at
cross-examination), Dr. McClelland’s claim of 2.7 hours for his attendance
should be reduced to one hour by removing $595 (1.7 hours x CAN$350 per hour). GST
claimed for Dr. McClelland and Dr. Gavras should be disallowed as they are not
from Canada.
[21]
The
Applicants argued further to Halford v. Seed Hawk Inc., [2006] F.C.J.
No. 629 at para. 158 (A.O.) [Halford] and Records on Wheels Ltd. v.
Astral Communications Inc., 2000 Carswell Ont. 1290 at para. 6 (Ont.
S.C.J.) that, although Apotex was free to engage multiple law firms, any
resultant extra expenses as here for photocopies ($16,753.50) should be
disallowed (as in Abbott, the firm of Ivor M. Hughes, not formally of
record, performed certain solicitor work). Four of the eleven volumes of the
Application Record consisted of prior art documents listed in the NOA, meaning
that Apotex had acquired them before any certainty that this litigation would
ensue. The Applicants prepared the Application Record. The evidence here
is insufficient relative to the findings in Williams v. M.N.R., [2001]
F.C.J. No. 249 at para. 20 (A.O.) and Mitchell v. M.N.R., [2003] F.C.J.
No. 1530 at para. 13 (A.O.) addressing costs prior to institution. Therefore,
costs for prior art documents should not be allowed and should be a factor in
reducing photocopy charges. The evidence generally on photocopies is
insufficient as to breakdown and manner of calculation of their cost thereby
precluding analyses of reasonableness. The Applicants conceded some
photocopying costs were assessable, but the claim here is grossly excessive and
should be reduced to about $9,000 further to the formula approved in Merck
appeal.
[22]
The
Applicants asserted that they were not even aware of the use of a consultant
until served with the bill of costs. Dr. Beanlands did not file an affidavit
and the evidence does not explain his work. Merck assessment allowed a
consultant’s charge, but it is unclear whether it was unopposed. The charge in Merck
assessment was clearly, unlike here, for someone directly assisting an expert
on the record and was sharply reduced by Merck appeal. The evidence is
scanty for the remaining disbursements with particular regard to relevance and
reasonableness for couriers ($520.99) and meetings/parking/cab/mileage
($819.44).
III. Assessment
[23]
I
held in Métis National Council of Women v. Canada (A.G.), [2007] F.C.J.
No. 1259 at paras. 30-31 (A.O.) [Métis] that a second fee item 8 may be
claimed for the same affiant. There, I did allow a second fee item 8 for
one affiant further to circumstances and an order in the record relative to
problems on the first day. I refused a second fee item 8 for another affiant. A
single fee item 8 may adequately address a cross-examination with an
adjournment of more than a few days. As in Métis, I examined the affidavit
and transcript of cross-examination. I refuse a second fee item 8 for Dr.
Parker. As well, I am not convinced that Apotex should have a second fee item 8
for Dr. Morris Karmazyn, but further to Starlight v. Canada, [2001]
F.C.J. No. 1376 at para. 7 (A.O.) concerning variances of allowances, I allow a
single fee item 8 for him at the maximum value in the range.
[24]
As
I think that the duration issues for fee item 9 can be considered differently
than duration issues as, for example, in Abbott at para. 102 for fee
item 14(a) (attendance at hearing), I reduced the fee item 9 claims as
suggested by the Applicants. The record indicates that the Court sat from 9:30
a.m. to 12:20 p.m. on the third day of the hearing. I allow fee item 13(b) as
presented as I think that its mid-range value is appropriate in the
circumstances.
[25]
My
findings in Halford, Biovail and Abbott (under appeal)
shape my approach to the disbursements in issue here. Paragraphs 68-71 inclusive
of Abbott summarize the subjective elements of assessments of costs. Dr.
Parker submitted two statements: one in July 2004 for 41 hours (analysis of
materials and preparation of affidavit) and another in May 2005 for 61 hours
(analysis, preparation, transit time, cross-examination, follow-up work and
disbursements). The roundtrip distance for the first day of
cross-examination was 600 kilometres. The trip duration for the train for the
second day was two hours each way plus time to and from the train station.
He claimed five hours each way for both days. Traffic can extend the time
from the outskirts of Toronto to downtown. An extra
additional hour of his time was $300. I will base the allowance for his time in
transit on a duration of four hours each way meaning a reduction of four hours
total. Dr. Parker likely could not have done other paid work during the
breaks (lunch or recess) in his cross-examination. He met counsel in Toronto the day
before the first day and charged eight hours for preparation. He charged eight
hours for the first day. I allow five hours for the first day as I do not think
that last minute preparation required more than one hour. For the second day,
he claimed four hours for preparation and six hours for attendance. He was
barred at that point from speaking to Apotex’s counsel. I think four hours (the
fee item 9 allowance) for the second day attendance is sufficient. The result
is removal of nine hours at $300 per hour leaving his account assessed at $29,864.18.
[26]
I
think that the account of Dr. Gavras is an example of one likely not subjected
to close scrutiny by counsel as a filter for reasonableness and clarity. His
invoice charged US$238.84 for a “first set of tickets” for a roundtrip on
January 31 and February 2, 2005. It charged US$516.82 for a “second set of
tickets” for a roundtrip between Boston and Toronto on February
1 and 3, 2005. The date sequence of the travel agent’s two invoices was
consistent with this description as first and second sets of tickets.
However, other evidence in the record was not. His invoice charged for dinners
on January 31 and February 1, 2005 in Toronto; a calculation worksheet referred
to departure on January 31 and return on February 2, a ticket stub listed the
January 31-February 2 routing and the hotel statement fit with the January
31-February 2 itinerary all indicating that the actual itinerary might have
been associated with the first set of tickets. His letter dated February 22,
2005 to counsel referred to “the second set of tickets I had issued because of
rearranging the meeting one day later” and stated that he kept it for use
within the next year because the airline had refused reimbursement. This is
confusing and does not warrant indemnification by the Applicants.
[27]
That
this expert’s account passed through for payment unchallenged for a charge for
sleeping time induces me to speculate that other parts of his account may be
suspect. Some professionals consider time in transit as lost earnings time if
not included in their accounts. There is no evidence that his rate of US$600
per hour, which is considerably more than that of Dr. Parker, was negotiated
with regard to relative rates in his area of expertise. His credentials were
impressive. I reduce that portion of his account (52 hours) which included a
charge for two nights’ sleep during the cross-examination trip by 29 hours
leaving four hours transit each way, nine hours consultation with counsel and
six hours deposition at US$600 per hour x 1.2825 (exchange rate in the
evidence). I reduced his account by another CAN$2,100 to account for problematic
disbursements and other possible inconsistencies leaving it allowed at $31,301.72.
[28]
On
the day of his cross-examination, Dr. McClelland charged for 9:00 a.m. to 11:45
a.m. His cross-examination lasted from 10:00 a.m. to 10:56 a.m. He likely
conferred with counsel before (preparation) and after (instructions for
follow-up). I allow his account as presented at $6,825.
[29]
The
use here by Apotex of associate counsel (the law firm of Ivor M. Hughes)
mirrors the circumstances of Abbott and I apply my findings there at para.
65 in reducing the claim here for photocopies ($16,753.50) to $12,500. I reduce
couriers ($520.99) to $400. Further to my approach in Abbott at para. 110,
I reduce meetings/parking/cab/mileage ($819.44) to $425.
[30]
My
usual concern with items of costs such as consulting ($6,791.44) in NOC matters
is whether their purpose, in the absence of evidence such as here, is so
obscure as to preclude an inference of purpose and relevance similar to that for
other items more obvious as to purpose, i.e. transcripts ($3,664). It is common
practice for supervising counsel pursuing intellectual property litigation to
obtain technical advice not ultimately used as part of an expert report. Given
that it may not as here be subject to scrutiny until appearing in a bill of
costs, extra effort may be required to establish relevance. As above, I am not
sure of the extent to which this item was subjected before payment to a filter
for reasonableness and I therefore reduce it to $3,100. I am satisfied that the
other disbursements are reasonable and allow them as presented.
That includes prior art ($3,557.04) as its relevance was indisputable
regardless of when its charge was incurred.
[31]
As
in Abbott, GST was claimed for certain non-Canadian items of costs (Dr.
Gavras, taxis, etc.) not subject to GST. As in Abbott, I endorsed a GST
exclusion calculation on the bill of costs as assessed to adjust for this.
Although the Applicants led evidence that Dr. McClelland had moved away from Canada, the record
is unclear whether his charges were incurred after that happened and I
have therefore assumed that they were subject to GST. I have not, as I did in Abbott,
made additional adjustments for transportation (air and ground) inside and
outside Canada as I felt
that other disbursement considerations would effect such adjustments. Apotex’s
bill of costs, presented at $171,403.96, is assessed and allowed at $118,139.74.
“Charles
E. Stinson”
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