Docket: T-1598-13
Citation:
2015 FC 1165
Ottawa, Ontario, October 15, 2015
PRESENT: The Honourable Madam Justice Gleason
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BETWEEN:
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ELI LILLY
CANADA INC.
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Applicant
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and
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APOTEX INC. AND
THE MINISTER OF
HEALTH
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Respondents
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and
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ICOS CORPORATION
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Respondent Patentee
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ORDER AND REASONS
[1]
In my Judgment of July 20, 2015 in this matter,
I granted the prohibition application of the applicant, Eli Lilly Canada Inc. [Lilly],
determined that costs would follow the event, remitted the issue of the quantification
of Lilly’s costs to the parties and retained jurisdiction to make a costs award
in the event that the parties were unable to agree on the quantum of costs.
They have been unable to so agree: Lilly claims $509,895.41 whereas the
respondent, Apotex Inc. [Apotex], asserts it should be liable for only
$213,179.99.
[2]
They join issue on the following points:
1.
Whether assessable costs should be calculated
with reference to the mid-point or upper end of Column IV of Tariff B to the Federal
Courts Rules, SOR/98-106 [the Rules];
2.
Whether assessable costs should be increased due
to Apotex having raised several issues that it did not pursue and that it dropped
only after Lilly filed its Memorandum or because it made several allegations that
Lilly alleges are akin to fraud and in respect of which Apotex called no
evidence;
3.
Whether Lilly is entitled to reimbursement for multiple
claims under items 1 and 24 of Tariff B and whether it may claim for
preparation of a Bill of Costs under item 27 of Tariff B;
4.
Whether the amounts claimed in respect of the
experts retained by Lilly are excessive and should be limited in some fashion;
5.
Whether Lilly is entitled to compensation for
photocopies;
6.
Whether Lilly is entitled to recover
disbursements for travel to Europe to meet with affiants;
7.
Whether the amounts claimed for airfare, hotels
and meals are reasonable;
8.
Whether Lilly is entitled to compensation for
translation costs incurred in connection with a meeting between counsel and a
French-speaking witness in preparation for her cross-examination;
9.
What amounts should be set off from the costs
otherwise payable by Apotex to compensate for a cross-examination that was
cancelled at the last minute due to the illness of Lilly’s counsel; and
10.
Whether post-judgment interest should be awarded
and, if so, when it should commence to run.
[3]
By virtue of Rule 400 of the Rules, the
factors the Court may consider in exercising its discretion in fashioning a
costs award include (among others): the importance and complexity of the
proceeding, the amount of work undertaken, any conduct of a party that tended
to unnecessarily lengthen the proceeding, whether any step in the proceeding
was improper, vexatious or unnecessary and whether expenses incurred in respect
of experts were justified in light of the issues in the case.
I.
Placement on the Tariff
[4]
The first of the two foregoing criteria are
relevant to the determination of whether the mid-point or upper end of Column
IV should be used to calculate Lilly’s assessable costs. Lilly argues that it
is entitled to the higher amount as the issues in this case were complex and
substantial work was undertaken, as is evidenced by the volume of materials
filed. It also notes that this application concerned Cialis, which it terms a “blockbuster” drug, and argues that by reason of the
drug involved, a higher costs award is appropriate because the outcome of the
case was of significant importance. Apotex counters by noting that Lilly agreed
on costs in the earlier case of Eli Lilly Canada v Mylan Pharmaceuticals
ULC, 2015 FC 17, 249 ACWS (3d) 191 [Mylan Tadalafil] at the
mid-point of Column IV of Tariff B to the Rules and asserts that as the
issues in this case were substantially similar to those decided in Mylan
Tadalafil this case is of lesser complexity as it was the second time Lilly
argued several of the issues (and retained the same experts in respect of
them). It therefore says the costs should be awarded only at the midpoint of Column
IV of Tariff B to the Rules.
[5]
I find merit in Apotex’s position on these
points and believe that there is no reason to depart from the mid-point of Column
IV of Tariff B for the calculation of assessable costs. This is where costs in
this type of application are often set (see, for example, Apotex Inc.
v Syntex Pharmaceuticals International Ltd., 2009 FC 494, 76 CPR (4th) 325
at para 88; Eli Lilly Canada Inc. v Apotex Inc., 2008 FC 142, 63 CPR
(4th) 406 at para 188; and Pfizer Canada Inc. v Pharmascience Inc., 2013
FC 120, 111 CPR (4th) 88 at para 218; Teva Canada Innovation and Teva Pharmaceutical
Industries Ltd. v Apotex Inc., 2014 FC 1070 at para 116, 252 ACWS (3d) 322
[Teva Canada]; Alcon Canada Inc. v Cobalt Pharmaceuticals, 2014
FC 525 at para 26, 240 ACWS (3d) 569)). Indeed, the fact that Lilly agreed to
the mid-point of Column IV in Mylan Tadalafil is evidence of this being
the appropriate level for costs. In addition, while I agree that the case was
of importance given the drug involved, this was the second time that Lilly
argued many of the same issues that arose in this case. Therefore, I see no
reason to increase costs beyond the mid-point of Column IV of Tariff B.
II.
Multiplier
[6]
I turn, next, to the issue of whether a
multiplier should be applied to the amounts provided under the mid-point of Column
IV of Tariff B by reason of two aspects of Apotex’s conduct that Lilly impugns.
[7]
Lilly first argues that it was improper for
Apotex to raise a number of issues in its Notice of Allegation but then decline
to address them in its evidence or Memorandum. Lilly says that by proceeding in
this fashion Apotex forced Lilly to go to the expense of preparing evidence on
the dropped issues. Lilly also claims that it needed to address the dropped
issues in its Memorandum, which required it to abbreviate its argument on the issues
that Apotex actually relied on in the context of these proceedings (which
Apotex was free to discuss at greater length in its own Memorandum). Lilly says
that Apotex’s conduct in this regard warrants increasing assessable fees by 25%.
[8]
The issues that Apotex raised, but did not
pursue were the following:
1.
The allegation that the 784 Patent (the patent
in suit in this case) was not entitled to claim priority from the previous
British patent filed in respect of Cialis;
2.
The allegation that the invention disclosed and
claimed in the 377 Patent (a related patent) was not entitled to claim priority
from the previous British patent filed in respect of the same invention;
3.
Allegations that the 784 Patent was invalid due
to lack of utility and lack of sound prediction;
4.
The denial that the compounds and formulations
mentioned in the 784 Patent were prepared, or prepared as described, in the
Patent;
5.
The denial that in vitro tests were
conducted as reported, that the results actually obtained were as set out in
the 784 Patent or that the description of how the tests were conducted would
allow a person skilled in the art to sufficiently reproduce or understand how
the tests were conducted or how to properly interpret the test results;
6.
The denial that the selectivity tests were
conducted using standard methodologies, as was stated in the 784 Patent, or
that such description would allow a person skilled in the art to sufficiently
reproduce or understand how these tests were conducted or how to properly
interpret the results;
7.
Allegations that Dr. Daugan was not the inventor
of the 784 Patent but, rather, that the invention was made by researchers at
Vanderbilt University or by Pfizer, in respect of which Apotex purported in its
NOA to rely on admissions it claims Lilly had made in previous litigation
involving Pfizer;
8.
The allegation that additional information was
not included in the 784 Patent that demonstrated the use of tadalafil was preferred
relative to the use of Compound B for the treatment of erectile dysfunction or,
alternatively, that the use of Compound B was to be avoided; and
9.
The allegation that the inventor was aware of
information in respect of the use of the claimed compounds, including tadalafil
and Compound B, for the treatment of erectile dysfunction that does not form
part of the specification as filed.
[9]
Lilly also alleges that several of these claims
are akin to claims of fraud, which it says merits a further increase of the
assessable costs by an additional 33%. It relies in this regard on the line of
cases where this Court has held that unsubstantiated claims made under section
53 of the Patent Act, RSC 1985, c P-4 are akin to fraud claims and merit
sanction through application of a 25% upward adjustment of a costs award,
citing Eli Lilly Canada Inc. v Apotex Inc., 2008 FC 142 at paras 59,
62-63, 192, 63 CPR (4th) 406; Eli Lilly Canada Inc. v Apotex Inc., 2009
FC 320 at para 69, 75 CPR (4th) 165; Bristol-Myers Squibb Canada Co. v
Apotex Inc., 2009 FC 137 at para 189, 74 CPR (4th) 85; Shire Biochem
Inc. v Canada (Health), 2008 FC 538 at para 111, 67 CPR (4th) 94; and Novo
Nordisk Canada Inc. v Cobalt Pharmaceuticals Inc., 2010 FC 746 at paras
374-377, 86 CPR (4th) 161.
[10]
Apotex contests these assertions and argues that
it dropped these issues only after it concluded that the non-pursued issues
were unmeritorious, which it determined only after it read and considered the
Judgment and Reasons in Mylan Tadalafil. In addition, as concerns the
allegations that Lilly impugns as being fraudulent, Apotex says that the claims
it made in this case are fundamentally different from allegations under section
53 of the Patent Act as it did not here allege that the misstatements
made in the Patent were made wilfully. Apotex submits that the essence of fraud
is that a false statement be made wilfully with an intent to mislead, as was
noted by the Supreme Court of Canada in Parna v G & S Properties Ltd.,
[1971] S.C.R. 306, [1970] SCJ No 81 (QL).
[11]
I agree with Apotex on the final point and find
there to be a meaningful difference between the allegations it made in this
case and those made in cases under section 53 of the Patent Act. A claim
under section 53 of the Patent Act involves the assertion that a
patentee made omissions or misstatements in a patent “wilfully
… for the purposes of misleading”. The claims made by Apotex in this
case do not rise to that level. Thus, this situation is distinguishable from
those in which this Court has increased costs due to baseless allegations under
section 53 of the Patent Act. I therefore do not believe that Lilly is
entitled to a multiplier on this basis.
[12]
I also find no basis for the award of a
multiplier due to the number of issues Apotex did not pursue in its Memorandum.
The most significant of these were the allegations of lack of utility and sound
prediction. I agree with Apotex that the weakness of these claims became most
apparent after Justice de Montigny dismissed similar claims in Mylan
Tadalafil in January of 2015, shortly before the memoranda were filed in
this case. I therefore do not believe that the dropping of a number of issues
should give rise to increased costs in this case. I find that this situation is
somewhat similar to that in Sanofi-Aventis Canada Inc. v Apotex Inc.,
2009 FC 1138, [2009] FCJ No 1626 (QL), aff’d 2012 FCA 265, relied on by Apotex,
where Justice Snider noted at para 10 that, absent a clear abuse of process, a
party should not be penalized for dropping arguments after hearing the
evidence.
[13]
I therefore decline to exercise my discretion to
award a multiplier in this case.
III.
Claims under items 1, 24 and 27 of the Tariff
[14]
Lilly has claimed under item 1 for each of the
materials it was required to prepare and under item 24 of the Tariff for travel
in respect of all the cross-examinations that were conducted. It also seeks
compensation under item 27 for preparing a Bill of Costs.
[15]
As Apotex notes, the weight of authority
supports the conclusion that an applicant can recover only once under item 1 of
Tariff B for preparation of all documents filed in connection with an
application (see, for example, Musée des beaux-arts du Canada v Front des
artistes canadiens, 2013 CAF 185 at para 6; Lundbeck Canada Inc. v Canada
(Health), 2014 FC 1049 at para 36 and cases cited therein). Thus, Lilly is
entitled to recover only once under item 1 of Tariff B.
[16]
As concerns claims under item 24, I believe
Lilly should be entitled to recover only once for travel for the cross-examination
of Drs. Daugan and Grondin, Mr. Desbiens and Ms. Bénard as only a single trip
was taken by counsel in respect of these cross-examinations. Travel for all
other cross-examinations, however, may be separately claimed.
[17]
Finally, I see no reason why Lilly should not
claim compensation under item 27 for preparation of a Bill of Costs, as this
work was undertaken and does not necessarily fall under item 26.
IV.
Disbursements
[18]
Apotex has contested that amounts claimed by
several of Lilly’s experts (which in some cases appear to exceed $1000.00 per
hour) and in reply Lilly has conceded that it would be appropriate to limit
expert fees at the amount charged by senior counsel for similar time involvement,
as has been done in other cases (see, for example, Teva Canada at para
116; ABB Technology AG v Hyundai Heavy Industries Co., Ltd., 2013 FC
1050 at para 10). I concur that this is appropriate and accordingly find that
expert fees should be capped at the amount charged by senior counsel for
similar time involvement.
[19]
Apotex next contests recovery for photocopies,
alleging that it is not clear that this amount was billed by Lilly because it
notes that Apotex’s lawyers do not charge for the first 1500 pages copied. I am
satisfied, based on the affidavits filed by Lilly, that its lawyers would bill
for all the copy costs that it seeks to recover and determine that the amount
of 25 cents per page copied for the materials filed is reasonable. I thus find
the amount claimed under this rubric to be allowable.
[20]
Likewise, I determine that the amounts claimed
by Lilly for hotels, airfare and meals are reasonable and therefore
recoverable. I agree with Lilly in this regard that there is no evidence that
the rooms in hotels were not single rooms and that airfare was economy class,
except for flights over 5 hours, which I find to be appropriate.
[21]
I also believe that Lilly is entitled to recover
disbursements for trips to Europe to meet with witnesses as this was necessary
for the preparation of the affidavits in this matter.
[22]
Finally, as concerns the cost of translation, I
believe this is also properly recoverable as it was necessary for Lilly to
retain a witness with knowledge of French law due to the allegations Apotex
made regarding chain of title. Thus, this amount is likewise recoverable.
V.
Set-Off
[23]
Lilly concurs that an amount should be set off
for the aborted cross-examination scheduled for January 16, 2014 but says that
the amount of the set-off should be limited to the disbursements incurred by
counsel for Apotex. I disagree. Apotex should be compensated not only for these
sums but also for the costs thrown away. I therefore believe that the amount of
the set-off should be equal to the disbursements incurred for the aborted
cross-examination ($8501.90) plus $1000.00, which I believe is a fair amount
for costs thrown away.
VI.
Post-Judgment Interest
[24]
Given the number of issues that were in play and
the divided success in respect of the costs award, I determine it appropriate
that post-judgment interest flow only from the date of this Order. In
accordance with section 3 of the Interest Act, RSC 1985, c I-15, it
shall be set at the rate of 5% per annum, not compounded.
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