Date: 20091106
Docket: T-1161-07
Citation: 2009 FC 1139
BETWEEN:
SANOFI-AVENTIS CANADA INC.,
SCHERING CORPORATION and
SANOFI-AVENTIS DEUTSCHLAND GmbH
Plaintiffs
and
NOVOPHARM LIMITED
Defendant
AND
BETWEEN:
NOVOPHARM LIMITED
Plaintiff by Counterclaim
and
SANOFI-AVENTIS CANADA INC.,
SCHERING CORPORATION and
SANOFI-AVENTIS DEUTSCHLAND GmbH
Defendants by Counterclaim
PUBLIC
REASONS FOR JUDGMENT ON COSTS
SNIDER, J.
[1]
These
reasons relate to the matter of costs arising from the patent infringement
action, for which Reasons for Judgment and Judgment were released to the
parties on June 29, 2009 (Sanofi-Aventis Canada Inc. v. Apotex Inc.,
2009 FC 676). The trial of this matter was held together with an
action commenced by the same Plaintiffs, in respect of the
same patent, against Apotex Inc. (Docket: T-161-07). At that time, the parties
were provided with an opportunity to make submissions on costs, if they could
not agree amongst themselves. They did not agree and submissions and reply
submissions on costs were served and filed. Having reviewed the submissions, I
now wish to provide my decision and reasons on the issue of costs in this
matter.
[2]
Although
the Reasons cited above dealt with both actions, separate judgments were issued
for each Docket. I observe that each of Novopharm Limited (Novopharm) and
Apotex Inc. (Apotex) have materially different interests on the issue of costs.
Accordingly, I have determined that a separate decision will issue for each
Docket.
[3]
Pursuant
to Rule 400(1) of the Federal Courts Rules, SOR/98-106, the Court has
"full discretionary power over the amount and allocation of costs".
Rule 400(3) describes, without limitation, factors that may be considered.
[4]
The
starting point is that a successful party is entitled to have its costs
assessed on the basis of Tariff B at the mid-point of Column III (as provided
for in Rule 407), together with disbursements that are reasonable and necessary
for the conduct of the proceedings. This would be the basis of assessment
unless the judge provides directions to the assessment officer or takes on the
responsibility of assessing the costs.
[5]
In
exercising my discretion, I have had regard to all of the written submissions,
the pertinent jurisprudence and the factors set out in Rule 400(3). A number of
matters warrant particular attention.
Lump Sum Award
[6]
In this
case, Novopharm seeks a lump sum award in the amount of $5.14 million.
Novopharm submits that this Court has held that, as a matter of policy, lump sum
orders should be favoured (Barzelex v. EBN Al Waleed (The), 1999 F.C.J.
No. 2002, 94 A.C.W.S. (3d) 434, at para. 11 (F.C.T.D.); Conorzio del
Prosciutto di Pharma v. Maple Leaf Meats Inc., 2002 FCA 417, [2003] 2 F.C.
451, at para. 12; Abbott Laboratories v. Pharmscience, 2007 FC 50, 154
A.C.W.S. (3d) 786, at paras. 9-10). There may well be cases where lump sums are
warranted. This is not one of them. I simply do not have sufficient information
on which to base a single lump sum award. Further, the practice of providing
guiding directions to the parties has certainly been followed in many recent
cases in the area of pharmaceutical litigation (see, for example, ADIR v.
Apotex, 2008 FC 1070, 70 C.P.R. (4th) 347 (referred to as ADIR Costs);
Merck & Co. v. Apotex Inc., 2006 FC 631, 53 C.P.R. (4th) 69, at
para. 3, varied on different matters 2006 FCA 324, 354 N.R. 355).
The Result of the Action
[7]
The
Plaintiffs (Sanofi-Aventis Canada Inc. and Sanofi-Aventis Deutschland GmbH,
referred to collectively as Sanofi, and Schering Corporation, referred to as
Schering) were unsuccessful in this action. This Court declared that certain
claims of Canadian Patent No. 1,341,206 ('206 Patent) were invalid.
Sanofi argues that success was divided and that I should reduce the award by
50% on the basis of the lack of success of Novopharm on some of the issues
dealt with by the Court. I do not agree.
[8]
The
general rule is that the successful party should have its costs. I recognize
that Novopharm was not successful in each and every argument it pursued. For
example, Novopharm did not persuade the Court of the merits of its arguments of
patent construction, and Example 20 or double patenting, all of which took up
considerable time during the trial. There is no doubt that pursuit of these
issues during the trial led to extra time and expense for all parties.
Nevertheless, I would not characterize success as divided. The Plaintiffs commenced
an action to validate its claims to the drug ramipril and to enjoin Novopharm
from making and selling ramipril; they lost. In my view, success ought not to
be measured in terms of how many issues were argued and won or lost. Rather,
success ought to be assessed on the basis of the overall finding of the Court.
Absent an abuse of process, “a successful plaintiff should not be penalised
simply because not all the points he has taken have found favour with the
court” (Sunrise Co. Ltd. v. The "Lake Winnipeg” (1988), 96 N.R. 310,
28 F.T.R. 78 (F.C.A.) at para. 29, rev’d on a different point, [1991] 1
S.C.R.); Canada v. IPSCO, 2004 FC 1083, 259 F.T.R. 204, at para. 36).
[9]
The
decision of this Court in ADIR Costs is an example of where success was
truly divided. While the Plaintiffs succeeded in having their patent upheld and
obtaining an injunction against the Defendants (see Servier v. Apotex,
2008 FC 825, 332 F.T.R 193 aff’d by Apotex v. ADIR, 2009 FCA 222, 75
C.P.R. (4th) 443), they failed to obtain standing for two of the
originally-named Plaintiffs. They were also unsuccessful in obtaining a finding
of inducement. These two failures went directly to the remedies sought by the
Plaintiffs. This, in my view, was “divided success”. In the decision on costs,
I reduced the overall award by 10% to account for the divided success.
[10]
It is not
reasonable to penalize parties for bringing arguments that are ultimately
abandoned after hearing the evidence, or that do not find favour with the
Court. Obviously, there may be cases where an argument pursued is so specious
as to constitute an abuse of process. That was definitely not the case in this
trial with respect to the issues raised that responded directly to the claim of
patent infringement. The award of costs will not be reduced in respect of the
issues that were advanced at the trial, regardless of whether Novopharm succeeded
or not.
[11]
There
were, however, allegations of conspiracy in Novopharm’s counterclaim. Although
the claim was abandoned prior to trial, it required extensive work. In my view,
a reduction of 10% in the overall award would be a reasonable accounting for
the inclusion of this issue in the pleadings.
Scale of Costs
[12]
If the
Court does not accept that a lump sum should be awarded, Novopharm submits that
its costs should be assessed at the high end of Column V of Tariff B. Sanofi
asserts that the high end of Column III is appropriate; Schering argues simply
for Column II of Tariff B.
[13]
In my
view, the upper end of Column IV is appropriate, and not simply because this
award “splits the difference”. A review of recent jurisprudence on the issue of
awards in intellectual property trials indicates that this scale recognizes the
significance and complexity of the various issues in such a trial (see, for
example, Johnson & Johnson Inc. v. Boston Scientific Ltd., 2008 FC
817, [2008] F.C.J. No. 1022, at para. 15; Adir Costs, above, at para.
9-11; Kirkbi AG v. Ritvik Holdings Inc., 2002 FCT 1109, [2002] F.C.J.
No. 1474, at para. 10). This trial, in my view, reflects the same level of
significance and complexity. Indeed, in light of the number of Federal Court
decisions where the Court concluded, in cases of similar complexity, that the
high end of Column IV was appropriate, I question why the parties argued this
point. I will award costs based on the upper end of Column IV.
Recovery of Counsel Fees and
Disbursements
[14]
Novopharm
requests that it be allowed to recover for more than one counsel with respect
to aspects of preparation for and attendance at pre-trial motions and at the
trial, requests that it be allowed to recover for more than one counsel. I am
prepared to allow Novopharm to recover its costs in relation to two first
counsel and one second counsel (where used) for preparation for and attendance
at trial and for preparation and filing of and attendance for written argument.
[15]
In respect
of pre-trial matters, Novopharm should be allowed to recover fees and
reasonable disbursements (including travel, accommodation and related expenses)
for all pre-trial procedures (Items 1 to 12, 16 to 22 and 24 of Tariff B). This
would include attendance at the testing in relation to Example 20 of the '206 Patent. However, except in
the limited circumstances set out in the following, the request for recovery for
more than one first and one second counsel is refused.
[16]
For
further guidance, the award would be allowed to include the costs for one first
and one second counsel (where in attendance) in respect of:
·
preparation
of pleadings; preparation of motion materials and attendance at motion hearings
(other than those where costs were specifically directed or awarded to the
Plaintiffs);
·
documentary
and oral discovery (including reasonable time spent traveling to attend
discovery out of the normal place of residence of those attending);
·
preparation
of expert affidavits for those experts who appeared at trial; preparation of
witnesses who appeared at trial; and
·
preparation
and attendance at pre-trial conferences.
Experts
[17]
Novopharm seeks
recovery of all fees and expenses for all experts, regardless of whether they
appeared at trial. There is no question that fees for experts who appeared at
trial should be recovered. In the Reasons, I observed that there was some
duplication of expert testimony. Upon further review and reflection, I am
satisfied that all of the experts provided assistance to the Court. However, I
am not prepared to allow an award of costs for experts who did not appear at
trial.
[18]
I am also
prepared to allow costs for experts assisting counsel in reviewing and
understanding other experts’ reports, preparing for cross-examination of
opposing experts and, where applicable, assisting in preparation for
discoveries. Costs for attending at trial are recoverable only where the expert
was attending to hear the testimony of an opposing party’s expert, whose report
and testimony responded to or addressed issues considered in his or her own
expert report.
Costs for non-lawyers
[19]
Novopharm seeks
recovery of costs for services of students-at-law and clerks. Related to this, Novopharm
also seeks recovery of the costs of Summation technology and of computerized
research services. In my view, all of these expenses were part of the normal
overhead costs of litigation. I am not prepared to award costs for any of these
expenses.
Offer to Settle
[20]
Under Rule
400 (1)(e), a factor that the Court may consider is a written offer to settle.
In addition, pursuant to Rule 420, there are serious cost consequences where a
written offer to settle is made and judgment is made in favour of the party who
makes the offer to settle. Not all settlement offers will meet the stringent
requirements of Rule 420. Nevertheless, a written offer to settle that does not
meet the requirements of Rule 420 may still be factored into an award of costs under
Rule 400 (Dimplex North America Ltd. v. CFM Corp., 2006 FC 1403, 55
C.P.R. (4th) 202 at para. 20).
[21]
Novopharm
submits that it made a number of serious written settlement offers to Sanofi
beginning on January 19, 2008. Novopharm asks the Court to apply Rule 420, or,
in the alternative, that it be entitled to double costs from January 19, 2008.
[22]
Sanofi
argues that Novopharm has not provided sufficient evidence to support a Rule
420 finding and, in any event, the settlement offers would not meet the
criteria of Rule 420. I agree. However, I am also sympathetic to Novopharm’s
situation. It appears that, even if these offers were not formal or substantive
enough to satisfy Rule 420, there is no doubt that they were made in a good
faith effort to end the litigation. Further, while Sanofi now explains why the
offers could not have been accepted, I see no evidence that Sanofi ever tried
to make responding offers. In November 2008, Novopharm went so far as to draw
up draft terms of settlement, to which there appears to have been no response.
Even on the little evidence before me, I am satisfied that Novopharm made very
serious efforts to settle the litigation both prior to and during the trial.
Sanofi’s attitude throughout, and its defensive, after-the-fact justification
for its failure to properly consider the offers are simply not helpful. In the
circumstances, while recognizing that the offers do not satisfy Rule 420, I am
convinced that the settlement offers by Novopharm should result in an increase
in the overall award of 50%.
Remedies Phase of the Trial
[23]
As I noted
in the Reasons for Judgment, over half of the days of the trial were taken up
with evidence and argument for the remedies phase. Due to the result on the validity
of the patent in question, there was no need for the Court to make any
determination on the remedies or damages issues. Sanofi and Schering submit
that each party should bear its own costs for this phase. Apotex argues that it
should be allowed to recover such costs.
[24]
The
problem with all of the submissions on this matter is that they take an
after-the-fact perspective to the question. The reality is, pursuant to an
order of the case management prothonotary, the trial was not bifurcated.
Attaching blame, at this stage, is difficult.
[25]
At the
pre-trial stage, Sanofi, supported by Schering, brought a motion to bifurcate
the proceeding. Novopharm did not consent to the motion. It is almost certain
that, if the Defendants had consented, the motion for bifurcation would have
succeeded. To what extent, if any, should Novopharm be “punished” not agreeing
to a bifurcation order?
[26]
In my
view, there should be some – but not substantial – discount of the costs of
this phase. It was only after considerable pre-trial work had been carried out
that the true extent of the issues for the remedies phase became apparent. As
the reality became clear, the Plaintiffs could have brought a further motion or
a motion for reconsideration. That did not happen. Further, Sanofi contributed
to the length of this phase of the trial by not making an election between
damages and profits until the commencement of the presentation of oral
arguments. Finally, I believe that the pre‑trial discovery and expert
reports were, more likely than not, helpful to the parties for settlement
discussions.
[27]
Weighing
all of this, I am of the view that a reduction in the overall award of costs
(rather than trying to separate out specific fees and costs) in the order of
10% would be a fair and just recognition that Novopharm bears some
responsibility for the second phase of the trial.
Summary
[28]
Having
considered all of the submissions of the parties and the factors of Rule 400, I
determine that costs of the action in favour of Novopharm and against Sanofi
and Schering should be awarded in accordance with the above findings and
directions. As noted above, I would decrease the cost award by 10% to deal with
the remedies phase of the trial and a further 10% in respect of certain issues
not pursued at trial. On the other hand, I believe that an increase of 50% in
the award is justified in response to the settlement offers made by Novopharm.
Thus, overall, the costs, once calculated in accordance with these reasons,
should be increased by 30%.
[29]
I expect
that the parties will now be able to calculate and agree on a quantum for the
award. I will remain seized of this matter. I would be prepared to make a
further order awarding a lump sum, if Novopharm wishes to prepare an order for
my consideration calculating the amounts of the
costs to which it is entitled. Specific questions or further
disagreements may be brought to me. However, only in exceptional circumstances
will any award of costs be made for further steps in finalizing the quantum of
the award.
POSTSCRIPT
[1]
These Reasons for Judgment on Costs are
un-redacted from confidential Reasons for Judgment which were issued on November
6, 2009 pursuant to a Protective Order dated December 5, 2007.
[2]
The Court canvassed counsel for the
parties whether they had concerns if the reasons were issued to the public
without redactions. On November 10, 2009, November 12, 2009 and November
13, 2009, the parties advised that there are no portions of the confidential
Reasons for Judgment that should be redacted.
“Judith
A. Snider”
Ottawa,
Ontario
November
6, 2009
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