Date: 20071109
Docket: A-194-07
Citation: 2007 FCA 361
Present: NADON
J.A.
SHARLOW
J.A.
RYER J.A.
BETWEEN:
RATIOPHARM INC.
Appellant
and
WYETH, WYETH CANADA and THE MINISTER OF HEALTH
Respondents
REASONS FOR ORDER
NADON J.A.
[1]
Before us
is a motion by the appellant, ratiopharm inc. (“ratiopharm”), made pursuant to
Rule 397(1)(b) of the Federal Courts Rules, for reconsideration
of our Judgment dated August 1, 2007, which reads as follows
This appeal
is allowed. The Order of March 29, 2007 is set aside and the motion of
Ratiopharm Inc. to dismiss the prohibition application is granted. The
cross-appeal is allowed only in relation to the portion of the order that
orders the de-listing of the 778 patent. As between Ratiopharm Inc. and Wyeth
and Wyeth Canada, the costs
of the appeal and the cross-appeal will be borne by Wyeth. No costs are awarded
to or against the Minister of Health.
[2]
By its
motion, ratiopharm also seeks an order providing directions to the Assessment
Officer with respect to costs, pursuant to Rule 403 of the Federal Courts
Rules.
1. Reconsideration
[3]
Our
Judgment was the end result of a prohibition application commenced by the
respondents, Wyeth and Wyeth Canada (“Wyeth”) following the
receipt of a Notice of Allegation (“NOA”) from ratiopharm which alleged that
Canadian patent 2,199,778 (the “778 patent”) was invalid and that its generic
venlafaxine hydrochloride capsules would not infringe the patent.
[4]
Ratiopharm’s
NOA was required by the Patented Medicines (Notice of Compliance)
Regulations (the “Regulations”) in that the 778 patent had been listed by
Wyeth on the Patent Register, maintained pursuant to the Regulations, in
respect of Wyeth’s EFFOXOR XR capsules, which comprise the medicine venlafaxine
hydrochloride, on the basis of six supplementary New Drug Submissions which
resulted in the issuance of Notices of Compliance (“NOCs”) dated March 14,
2003, April 25, 2003, June 13, 2003, September 13, 2004, December 10, 2004 and
September 1, 2005.
[5]
By its
prohibition application, Wyeth sought to prevent the Minister of Health (the
“Minister”) from issuing a NOC to ratiopharm in respect of its generic
venlafaxine hydrochloride capsules.
[6]
After the
filing of the parties’ evidence and following cross-examinations on the
respective expert affidavits, ratiopharm brought a motion, pursuant to
subsection 6(5)(a) of the Regulations, to dismiss Wyeth’s prohibition
application on the ground that the 778 patent was not eligible for inclusion in
the Patent Register in respect of EFFEXOR XR capsules against the NOCs that
issued in response to the submissions upon which the patent listing was based.
In bringing its motion, ratiopharm sought costs with regard to the dismissal of
the prohibition application on a solicitor and client basis.
[7]
By
Judgment dated March 29, 2007, the Federal Court allowed ratiopharm’s motion in
part. More particularly, the Motion Judge dismissed the motion in respect of
the EFFEXOR XR capsules NOCs issued April 25, 2003 and September 13, 2004, and
granted the motion in respect of the EFFEXOR XR capsules NOCs issued March 14,
2003, June 13, 2003, December 10, 2004 and September 1, 2005. The Judge made no
order as to costs.
[8]
The
Federal Court Judgment was appealed by ratiopharm on April 10, 2007 and Wyeth,
in turn, filed a cross-appeal. At paragraph 2 of its Notice of Appeal,
ratiopharm sought an order dismissing the prohibition application in its
entirety with costs in this Court and in the Federal Court. Ratiopharm was
successful on its appeal and the cross-appeal was allowed in respect of that
part of the Federal Court’s decision which ordered the de-listing of the 778
patent. As a result, the prohibition application was dismissed with costs to
ratiopharm on the appeal and on the cross-appeal.
[9]
Ratiopharm
says that our Judgment fails to address its request for costs on the dismissal
of the prohibition application. Relying on Rule 397(1)(b), ratiopharm
argues that our Judgment should be reconsidered on the ground that “a matter
that should have been dealt with was overlooked or accidentally omitted”, in
that the Judgment clearly addresses the issue of costs in regard to the appeal
and the cross-appeal, but fails to do so with respect to costs on the
prohibition application.
[10]
In the
circumstances, I have no difficulty concluding that our failure to deal with
the issue of costs on the prohibition application is clearly an oversight on
our part. As I can see no reason why ratiopharm should not get its costs on the
prohibition application, I would accordingly amend our Judgment of August 1,
2007 to read as follows:
This appeal
is allowed. The Order of March 29, 2007 is set aside and the motion of
Ratiopharm Inc. to dismiss the prohibition application is granted. The
cross-appeal is allowed only in relation to the portion of the Order that
orders the de-listing of the 778 patent. As between Ratiopharm Inc. and Wyeth
and Wyeth Canada, the costs
of the prohibition application, the appeal and cross-appeal will be borne by
Wyeth. No costs are awarded to or against the Minister of Health.
2. Directions to the
Assessment Officer
[11]
The second
part of ratiopharm’s motion seeks an order providing directions to the
Assessment Officer with respect to costs, in the following terms:
(a) ratiopharm
shall be entitled to its costs under Tariff B of the Federal Court[s] Rules
at the high-end of Column IV;
(b) ratiopharm
shall be entitled to its costs for one senior counsel and one junior counsel on
the motion to dismiss the prohibition application, on the appeal and on the
cross-appeal; and
(c) ratiopharm
shall be entitled to the travel expenses of Kane Denike, ratiopharm’s Director,
Patent, Legal and Regulatory Affairs, where Mr. Denike attended at
cross-examinations in the prohibition application to provide technical
scientific evidence to counsel.
[12]
I begin my
discussion of this issue by referring to this Court’s decision in Consorzio
Del Prosciutto Di Parma v. Maple Leaf Meats, [2003] 2 F.C. 451. In that
case, the respondent sought increased costs pursuant to Rule 403. In disposing
of the motion, Rothstein J.A. (as he then was), writing for the majority,
enunciated the principles applicable to a motion for increased costs. At
paragraphs 6 to 11 of his Reasons, he stated:
6]
I am satisfied in the circumstances of this case, that the respondent should be
awarded increased costs. This is an intellectual property matter involving
sophisticated clients. Where, as here, numerous issues are raised on
appeal and the issues involve complex facts and expert evidence, the amount of
work required of respondents' counsel justifies increased costs. To the
argument that the complexity of this case was no greater than that of most
intellectual property cases that come before this Court, I would say that such
cases frequently present complex facts and give rise to difficult issues.
[7]
The increased costs to be awarded are party-party costs. They do not indemnify
the successful party for its solicitor-client costs and they are not intended
to punish the unsuccessful party for inappropriate conduct.
[8]
An award of party-party costs is not an exercise in exact science.
It is only an estimate of the amount the Court considers appropriate as a
contribution towards the successful party's solicitor-client costs (or, in
unusual circumstances, the unsuccessful party's solicitor-client costs). Under
rule 407, where the parties do not seek increased costs, costs will be assessed
in accordance with Column III of the table to Tariff B. Even where
increased costs are sought, the Court, in its discretion, may find that costs
according to Column III provide appropriate party-party compensation.
[9]
However, the objective is to award an appropriate contribution towards
solicitor-client costs, not rigid adherence to Column III of the table
to Tariff B which is, itself, arbitrary. Rule 400(1) makes it clear that the first
principle in the adjudication of costs is that the Court has "full
discretionary power" as to the amount of costs. In exercising its
discretion, the Court may fix the costs by reference to Tariff B or may depart
from it. Column III of Tariff B is a default provision. It is only when the
Court does not make a specific order otherwise that costs will be assessed in
accordance with Column III of Tariff B.
[10]
The Court, therefore, does have discretion to depart from the Tariff,
especially where it considers an award of costs according to the Tariff to be
unsatisfactory. Further, the amount of solicitor-client costs, while not
determinative of an appropriate party-party contribution, may be taken into
account when the Court considers it appropriate to do so. Discretion should be
prudently exercised. However, it must be borne in mind that the award of costs
is a matter of judgment as to what is appropriate and not an accounting
exercise.
[11]
I think this approach is consistent in today's context with the observations of
Nadon J. (as he then was) in Hamilton Marine and Engineering Ltd. v. CSC
Group Inc. (1995), 99 F.T.R. 285 at paragraph 22:
I indicated
to counsel during the hearing that there was no doubt that, in most cases, the
fees provided in Tariff B were not sufficient to fully compensate a successful
party. I also indicated to counsel during the hearing that, in my view, the
Tariff necessarily had to remain the rule and that an increase of tariff fee
was the exception. By that I mean that the discretion given to the Court to
increase the tariff amounts pursuant to rule 344(1) and (6) of the Federal
Court Rules was not to be exercised lightly. Put another way, the fact that the
successful party's legal costs were far superior to the amounts to which that
party was entitled under the Tariff, was not in itself a factor for allowing an
increase in those fees.
[Emphasis
added]
[13]
As Wyeth
points out, correctly in my view, ratiopharm does not provide any evidence, nor
indeed any arguments, to support its claim for costs at the high end of Column
IV of the table to Tariff B.
[14]
After
referring to a number of Federal Court decisions which awarded increased costs,
ratiopharm makes the following submission at paragraph 29 of its Written Representations:
In view of
the foregoing, given the number of witnesses, the complexity of the case and
the stage at which the proceedings had reached before the Prohibition
Application was dismissed, ratiopharm respectfully submits that this Court
should provide directions to the assessment officer in respect of costs for the
Prohibition Application in accordance with Rule 403 of the Federal Court[s]
Rules …
[15]
In support
of its position, ratiopharm says that Wyeth filed the affidavits of 13 experts
and that it filed five expert affidavits. It also says that all of the experts
were cross-examined on their affidavits, which resulted in a 22-volume
Application Record filed by Wyeth on May 2, 2007 for a hearing scheduled to
proceed for five days on September 10, 2007. However, nothing is said in
ratiopharm’s submissions as to the complexity of the case and, more
particularly, why a departure from the general rule is warranted in the present
matter.
[16]
In
opposing ratiopharm’s request for increased costs, Wyeth says, inter alia,
that ratiopharm could and should have presented its motion under subsection
6(5)(a) of the Regulations in a more timely manner and that, as a
result, the length of the proceedings results directly from its failure to do
so. Wyeth says that, in these circumstances, ratiopharm should not be entitled
to costs on the prohibition application.
[17]
In the
alternative, Wyeth says that if costs are to be awarded to ratiopharm, they
should be assessed in accordance with Column III of the table to Tariff B. Wyeth
further submits that, in any event, there is no evidence to support
ratiopharm’s claim for costs at the high end of Column IV. With respect to the
fact that the proceedings were voluminous and extensive, Wyeth says that volume
of work alone is not a sufficient ground to depart from Column III.
[18]
I have
carefully considered both parties’ submissions and the material filed in
support thereof and I have not been persuaded that there is any basis to depart
from what Rule 407 provides, i.e. that costs shall be assessed in accordance
with Column III of the table to Tariff B. More particularly, I am of the view
that neither the importance and complexity of the issues nor the amount of work
are such so as to warrant an order of increased costs.
[19]
In the
end, I am not convinced that, in all of the circumstances, an award of costs
according to Column III is unsatisfactory.
[20]
Consequently,
I am not prepared to provide the directions which ratiopharm requests us to
give to the Assessment Officer.
[21]
In the
circumstances, I would make no order as to costs in the motion.
“M.
Nadon”
“I
agree.
K.
Sharlow J.A.”
“I
agree.
C. Michael Ryer J.A.”
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