Date: 20060523
Docket: T-2792-96
Citation: 2006 FC 631
Toronto, Ontario, May 23, 2006
PRESENT: The Honourable Mr. Justice Hughes
BETWEEN:
MERCK & CO., INC., MERCK FROSST CANADA & CO.,
MERCK FROSST CANADA LTD., SYNGENTA LIMITED,
ASTRAZENECA UK LIMITED AND ASTRAZENECA CANADA INC.
Plaintiffs
(Defendants by Counterclaim)
and
APOTEX INC.
Defendant
(Plaintiff by Counterclaim)
REASONS FOR ORDER and ORDER as to COSTS
[1] These Reasons are supplemental to those issued on April 26, 2006 and are directed to the issue of costs. That issue was left open pending further submissions from the parties which have now been received.
[2] Rule 400(1) of the Federal Courts Rules provides that the Court has full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid. Rule 400(3) provides a number of factors to be considered. Rule 400(4) provides for the award of a lump sum, something that no party is seriously suggesting here.
[3] In general a successful party is entitled to recover costs to be assessed on a Column III basis together with disbursements that are reasonable and necessary for the conduct of the proceeding. The Court may give specific directions as to specific matters and general directions to the taxing officer as to the criteria to be applied in assessing costs and disbursements. I propose to provide such directions in these Reasons.
[4] An overview of the litigation is appropriate. The action was commenced in 1996. Since that time there has been an enormous amount of discovery, a vast number of motions and appeals, several sessions with the Case Management Prothonotary and Judge and numerous amendments to the pleadings by all parties including amendments at the outset of trial.
[5] At one point it seemed that something in the order of forty expert witnesses might be expected to testify and at least twenty factual witnesses.
[6] As it turned out, at the beginning of trial Apotex amended its pleadings so as to remove substantial attacks on the validity of the patent in the area of utility and obviousness. Further, Apotex, after some equivocation, affirmed what it already had previously stated, that it had infringed certain of the claims of the patent at issue, subject to its attacks on validity of the patent and certain exemptions. By this time, however, expert statements had been prepared and countless days of discovery spent on these issues. I permitted Apotex to raise new defences relating to exemptions at the outset of trial, subject to further discovery which discovery went on while the trial was progressing. Apotex was successful on some of these defences, subject to a limitation period.
[7] As a result, at trial, thirteen factual witnesses appeared, many directed to exemption issues. Nine expert witnesses appeared. Large portions of the reports of these experts were not tendered in evidence since they related to validity attacks that Apotex had withdrawn. Very little discovery was read in by either party, I estimate no more than half a dozen pages and a few exhibits only.
[8] A pre-trial order had permitted the Plaintiffs to be divided into two groups, which I have called Merck and Astra, each represented by different counsel. During the trial there were between nine and eighteen counsel present and gowned, almost all on some occasion, got to speak. Ungowned lawyers were present as were paralegals (of whom Ms. Traer and Ms. Roth were of great assistance) and articling students. Observers representing the parties were present, at least one almost every day. Hundreds of exhibits were filed, many comprising several volumes of material. Much of this was unnecessary or redundant. No great care was taken as to reduce this volume of material filed.
[9] Much assistance was achieved through daily transcript which was placed in electronic form, Summation, together with PDF copies of the exhibits prepared by Ms. Traer of the Ogilvy firm representing Merck. This was of invaluable assistance in keeping matters organized and readily available through the simple use of a notebook computer.
General Matters
[10] A number of general matters will be addressed first.
Which Column of Fees is Applicable
[11] As may be expected, the Plaintiffs want much, Apotex wants Column III. An award of costs is save in unusual circumstances not applicable here, intended as a contribution towards, not a defrayal of actual fees and disbursements. Column III is the usual level at which costs are to be taxed. A patent case is not, for that reason alone, entitled to a higher level of costs.
[12] These proceedings can be compared, in terms of complexity to Monsanto v. Schmeiser, (2002) 19 C.P.R. (4th) 524 (FC) where Column III was deemed appropriate, and to Apotex Inc. v. Wellcome Foundation Ltd (1998), 84 C.P.R. (3d) 303 (FC) where the upper end of Column IV was deemed appropriate. In the present case I appreciate that almost every point of fact and law was contested and little in the way of compromise was achieved, save at the last moment. The case was really one of patent construction and estoppel with a few other issues arising from time to time. The chemistry was complex but, in the end, the case really wasn't about chemistry. Column IV at the upper end is the appropriate level.
Divided Success
[13] The Plaintiffs were largely successful, Apotex succeeded on a few of the exceptions to infringement however those issues were raised quite late in the proceedings. The Plaintiffs were awarded damages, but not profits, Apotex received a brief respite but otherwise was enjoined.
[14] Given that an award of costs is a rough remedy, the Plaintiffs are entitled to receive ninety percent (90%) of their pre-trial taxed costs and disbursements and eighty percent (80%) of their trial and post trial costs and disbursements. In so awarding I have already taken unto account any set off otherwise due to Apotex. I have also dealt separately with discovery conducted during trial.
Unnecessary Issues
[15] Apotex persisted, until trial, in keeping issues such as utility and obviousness alive. I appreciate that this caused the Plaintiffs to pursue discovery and retain experts to address issues that, essentially, were not before the Court. I appreciate that early in a proceeding issues may be pleaded and following discovery and reflection, may be dropped. This is the normal course.
[16] Here, however, discovery went on for years, many pre-trial conferences were held. The Plaintiffs were put to the expense of retaining experts to deal with issues that could have been dropped several months before expert reports were due. I will allow the Plaintiffs to recover the reasonable fees and disbursements paid to experts who were intended to be called at trial who dealt with issues still in the pleadings as of January 1, 2005. Only those fees of such experts not called at trial that were for services rendered after January 1, 2005 shall be recovered by the Plaintiff. The reasonable fees and disbursements of experts actually testifying at trial by the Plaintiffs, whenever incurred, shall be allowed.
Settlement Efforts
[17] I have evidence before me which indicated that, shortly before trial, Apotex made a substantial and serious offer to settle. Some time later the Plaintiffs responded with an offer that requested a multiple of the monetary offer made by Apotex and a variance of other terms.
[18] Since there has not yet been a determination of the quantum of a monetary award, it cannot be said that one offer or the other involved sufficient compromise or "beat" the actual award at trial, such as to trigger a double costs or no costs consideration.
[19] In the grand scheme of things whatever may be recovered by way of costs is insignificant having regard to the sums discussed by way of offer to settle.
[20] However offers to settle and serious consideration as to settlement should be encouraged. Therefore I will leave it open to the parties to apply to the Court, after final determination of the amount to be paid by Apotex to re-visit the award of costs. Of course if, on appeal, it becomes unnecessary to consider a monetary award, I expect the appellate Court will deal with costs. If not, the parties may apply to this Court for reconsideration of costs.
[21] Any possibility of reconsideration of costs, however, should not impede taxation of costs should any party wish to proceed with taxation. Payment of costs can be made and appropriate measures taken to effect later recovery.
Plaintiffs Collectively
[22] The normal rule of this Court is that all Plaintiffs, regardless of their number, are to be represented by the same solicitor or firm of solicitors. Here the Plaintiffs were, by an order of the Court, allowed to be divided into two groups, each separately represented. From time to time at trial statements were made that the two groups had different interests, however that was not the case as matters turned out. For purposes of this litigation their interests were the same. They clearly shared a common interest and, in terms of monetary award, asked to be dealt with collectively. Except as otherwise set out in these reasons, the Plaintiffs are entitled to only one set of costs.
Trial and Pre-Trial
[23] It is useful, in considering costs to consider the pre-trial matters separately from what went on at trial or the discovery happening while the trial was going on. I will consider pre-trial matters first.
Motions and Other Such Proceedings
[24] As earlier indicated, there were a vast number of motions, appeals and case management appearances in the file. To the extent that an Order or other disposition of any such matter specifically directed itself to costs, that specific direction will prevail. To the extent that such order or other disposition was silent as to costs, there is no order as to costs, thus no party gets costs. Where a successful party has been awarded costs and such costs have not been taxed, they are to be taxed and paid at the upper end of Column IV.
Discovery
[25] It is clear that almost all of the discovery save that which was undertaken during the course of the trial, was directed in one way or another, to issues upon which Merck/Astra were successful, infringement having finally been admitted by Apotex, validity attacks based on utility and obviousness withdrawn and the remaining attacks being unsuccessful. The Plaintiffs therefore shall recover the costs of conducting discovery and having discovery conducted upon them save as to discovery conducted during the course of trial. The same applies to discovery of documents including listing, preparation of affidavits of documents and inspection. The same also applies to preparation for discovery.
[26] As to disbursement in attending discovery out of the normal place of residence of those attending, I will allow the reasonable travel (economy) and hotel (e.g. no movies, no bar) expenses of up to two counsel and one paralegal together with those of the witness where paid by Merck/Astra. Reasonable transcript disbursements shall be paid by Apotex.
Discovery During Trial
[27] At the outset of trial Apotex was permitted to amend its pleadings so as to raise issues as to exemption from infringement on a variety of grounds. Discovery on these issues was ordered to take place where the trial was going on. Apotex was partially successful on these issues.
[28] Therefore as to the fees and disbursements related to these discoveries the Plaintiffs shall not have any recovery, and Apotex may recover one half of its taxed fees and reasonable disbursements, the amount of which shall be set-off against the amount otherwise to be paid to the Plaintiffs.
All Other Pre-Trial Matters
[29] All other matters set out in the Tariff of fees, Items 1 to 13 inclusive are allowed to the Plaintiffs at the upper end of Column IV. Any out of town attendances for any purpose other than discovery will be limited, in terms of disbursements to two counsel only and reasonable expenses as defined above.
Trial
[30] As previously stated there were many counsel present during trial as well as other lawyers, paralegals, articling students and observers. A pre-trial order permitted two sets of counsel for the Plaintiffs. This abundance of counsel and others assisting them, though undoubtedly useful to the relevant party from time to time, was a luxury that should not be borne by a losing party. Patent trials are costly enough without a court indulging the parties in such luxuries by the medium of an award of costs. I am, however, constrained by the pre-trial order allowing two sets of counsel to the Plaintiffs. Therefore I permit the costs of attendance at trial for two senior counsel plus one second counsel only. This is a collective award and not an award to each group of Plaintiffs. Travel for two gowned counsel attending at trial, at the same modest level as discovery, is allowed.
[31] At trial, I was greatly assisted in the provision of materials in electronic format. The cost of doing so together with the time spent in such preparation by Ms. Traer (not to exceed the costs awarded to junior counsel at trial) is to be awarded to the Plaintiffs.
Other Matters
[32] a) Client's Representatives and Others
During trial, discovery and preparation representatives of the client Plaintiffs were present. That is a choice of the client. The time and expenses of such persons is not to be included in any award of costs or disbursements. The same pertains to non-gowned lawyers, students, law clerks and others save as otherwise set out in these Reasons.
[33] b) Photocopies and Electronic Materials
All parties "over prepared" this case when it came to copies of trial exhibits and other such materials. I will allow expenses relating to copying the trial exhibits and other materials actually used in argument at trial and up to eight copies thereof. The same will pertain to exhibits marked during discovery.
[34] I have already dealt with electronic material used at trial.
[35] Any other paper or electronic copies must be demonstrated to have been necessary for use in these proceedings. Moderation as to the rates, including any "in house" services or discounts are to be considered carefully.
[36] c) Travel and Communication
Travel for the purposes of discovery and trial has been dealt with. Travel for purposes of meeting with experts who actually gave evidence at trial is allowed for up to two counsel, at the same modest level. Travel for purposes of meeting with witnesses who did not testify, taking place after January 1, 2005, for up to two counsel at the same modest level is also allowed.
[37] No travel to visit clients or for any other purpose save for attendance at court matters or other Court hearings, for up to two counsel, at the same modest level, is allowed.
[38] Other forms of communication such as e-mail, faxes, long distance phone and the like are not taxable.
[39] These Reasons are intended to address the principle issues as to costs raised, by the parties. The taxing officer has discretion to deal with other matters consistent with the principles that Column IV at the upper end prevails and only such disbursements at a reasonable level, as were actually incurred for purposes reasonable and necessary for the conduct of the action, are to be allowed.
ORDER
1. The Plaintiffs may tax their costs and disbursements, consistent with the directions set out in these Reasons;
2. Any party may return after final disposition of any appeal and after final disposition of the matters subject to the reference herein, for a further Order and directions as to costs.
"Roger T. Hughes"
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