Date: 20060905
Docket: A-447-05
Citation: 2006
FCA 293
CORAM: RICHARD C.J.
LÉTOURNEAU J.A.
PELLETIER J.A.
BETWEEN:
RAYDAN
MANUFACTURING LTD.
Appellant
and
EMMANUEL SIMARD
& FILS (1983) INC.
Respondent
Heard at Ottawa, Ontario, on September 5, 2006.
Judgment
delivered from the Bench at Ottawa, Ontario,
on September 5, 2006.
REASONS FOR JUDGMENT OF THE COURT BY: RICHARD
C.J.
Date: 20060905
Docket: A-447-05
Citation: 2006 FCA 293
CORAM: RICHARD
C.J.
LÉTOURNEAU J.A.
PELLETIER J.A.
BETWEEN:
RAYDAN MANUFACTURING LTD.
Appellant
and
EMMANUEL SIMARD & FILS (1983) INC.
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Ottawa, Ontario, on September
5, 2006)
RICHARD C.J.
[1]
This is an appeal from an order
of Justice Simon Noël of the Federal
Court dated July 12, 2005, (2005 FC 973), in which he refused to allow costs to
the appellant (defendant) after having dismissed the respondent’s claim for patent infringement and granted, in part,
the appellant’s counterclaim for patent
invalidity. The main issue in this appeal was whether the trial judge properly
exercised his discretion under rule 400(1) of the Federal Courts Rules,
when he refused to award costs to the appellant on the ground that it was a
case of “mixed results”.
[2] In our opinion, the outcome of this appeal is
governed by the decisions of this Court in Gorse v. Upwardor Corp.
(1992), 140 N.R. 295 (F.C.A.), and, more recently, in Illinois Tool Works
Inc. v. Cobra Anchors Co., (2003) 312 N.R. 184 (F.C.A.), 2003 FCA 358,
where it was held that a trial judge’s
discretion in the allocation of costs must be exercised judicially with regard
to the principles and factors enumerated at rule 400(3) of the Federal
Courts Rules. These decisions further held that a defendant in a patent
infringement case need not be successful in both its defence of
non-infringement and invalidity in order to be entitled to its costs. If
successful in defending the main action of patent infringement, such a
defendant is entitled to costs.
[3] In the instant case, the respondent sued the
appellant for patent infringement. The appellant raised a two-part defence:
first that its products did not infringe the respondent’s patent and, second, that the respondent’s patent was in any event invalid under section 59
of the Patent Act. The appellant also brought a counterclaim against
the respondent under section 60 of the Patent Act, repeating each of the
alleged defences. The trial judge, having found that the appellant’s product does not infringe the patent, dismissed
the action and granted the counterclaim, but only to the extent that the
respondent had admitted invalidity in relation to one specific claim of the
patent. The trial judge then refused to allow costs on the ground that “mixed results”
were arrived at. He explained his refusal at paragraph 83:
For the reasons mentioned above, I
will dismiss the action and grant the counterclaim only in part because of the
admission made in relation to claim 9. More specifically, claim 7 is valid for
the construction given to such claim as detailed in the above reasons. Also,
claim 9, was admitted, is invalidated. No costs will be allowed because of
the mixed results arrived at which indicate that each party has received an
outcome justified by the conclusion (see Saint John Shipbuilding and Dry
Dock Co. v. Kingsland Maritime Corp. (1981), 126 D.L.R. (3d) 332 at para.
26 (F.C.A.); see also R.B. v. Children’s Aid
Society of Metropolitan Toronto, [1995] 1 S.C.R. 315 at paras. 155-156) [emphasis added].
[4] In our opinion, the trial judge did not properly
exercise his discretion under rule 400(1) in refusing costs to the appellant.
Rule 400(3) enumerates many factors that would justify the exercise of judicial
discretion to deny costs to a successful party, but we see nothing in the trial
judge’s reasons or in the facts that
would warrant such a result.
[5] The fact that the counterclaim was granted only in
part was no reason in itself to deny costs to the appellant. The entire
proceeding was conducted as a single action and the counterclaim was an
integral part of the defence to the main action. There is no indication that
the attack on validity was vexatious, improper or otherwise inappropriate. The
trial judge did not take into consideration the end result of the proceedings,
as required by rule 400(3), when he concluded that “mixed results”
were arrived at.
[6] The respondent submitted that this Court should draw
a distinction between invalidity raised as a defence under section 59 of the Patent
Act and invalidity raised as a counterclaim under section 60 of the Patent
Act. The respondent’s argument is
that invalidity raised under section 60 has a larger impact in that it results
in a declaration in rem available to anyone.
[7] From the point of view of costs, that distinction
does not reflect the reality of a patent trial. Once invalidity is raised,
whether as a defence or by way of counterclaim, the trial judge is bound to
deal with it. The issues are the same in either case, the only difference being
the consequences for the plaintiff. Those consequences do not justify denying a
successful defendant its costs.
[8] For these reasons, the appeal will be allowed with
costs. The decision of the trial judge dated July 12, 2005 relating to costs
will be set aside, and rendering the decision he should have made, the action
will be dismissed with costs. The matter of costs will be remitted to the trial
judge for a determination as to quantum of costs in accordance with the Federal
Courts Rules. An opportunity shall be given to the parties to present factors
relevant to quantum, including offers to settle.
“J.
Richard”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-447-05
APPEAL FROM AN ORDER OF
THE HONOURABLE JUSTICE NOKL DATED JULY 12,
2005 IN FILE T-574-99
STYLE OF CAUSE: RAYDAN MANUFACTURING LTD.
v.
EMMANUEL SIMARD & FILS (1983) INC.
PLACE OF HEARING: Ottawa
DATE OF HEARING: September 5, 2006
REASONS FOR JUDGMENT
OF THE COURT BY: Richard C.J.
L ourneau J.A.
Pelletier J.A.
DELIVERED FROM THE
BENCH BY: Richard C.J.
APPEARANCES:
Bennett Jones LLP, Calgary, Alberta
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L er Robic Richard, Montreal, Quebec
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