Docket: T-1095-13
Citation:
2015 FC 1123
Ottawa, Ontario, September 28, 2015
PRESENT: The Honourable Mr. Justice O'Reilly
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BETWEEN:
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NOVARTIS
PHARMACEUTICALS
CANADA INC.
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Applicant
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and
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TEVA CANADA
LIMITED AND
MINISTER OF
HEALTH
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Respondents
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And
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NOVARTIS AG
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Respondent / Patentee
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ORDER AND REASONS
[1]
Novartis seeks a lump sum payment to compensate
it for costs incurred in prosecuting a successful application for an order of
prohibition under the Patented Medicines (Notice of Compliance) Regulations.
I found that Novartis was entitled to the order requested on the grounds that
Teva’s allegations of invalidity were unjustified in respect of the compounds
claimed in the patent. On the other hand, I found that Teva’s allegations in
respect of the patent’s use claims were justified.
[2]
Novartis seeks an order granting it costs on a
partial indemnity basis, 60 percent of actual costs or, in the alternative, a
lump sum calculated on the basis of the upper end of Column IV of the Federal
Court’s Tariff B. Novartis argues that the scope and complexity of the
proceedings before me were the product of Teva’s overly broad Notice of
Allegation [NOA]. Further, Novartis says that Teva is, in effect, the “aggressor” in these proceedings, as the party that
served the NOA, even though Novartis was the applicant for a prohibition order.
In addition, according to Novartis, Teva prolonged the proceedings by filing
two lengthy expert affidavits, cross-examining all of Novartis’s witnesses,
abandoning some of its allegations at the hearing, making allegations extending
beyond the NOA, and making unfounded allegations of fraud, all in a losing
cause.
[3]
Novartis claims that its full costs amount to
$1,193,110.95, which includes $950,468.40 in fees, and $242,642.55 in disbursements
(including witness fees for four experts and three fact witnesses). If fees
were calculated at the upper end of Column IV, Novartis would be entitled to
fees of $112,592.00, which would include fees for two counsel (one senior, one
junior) at pre-hearing procedures and two counsel (both senior) at the hearing
itself.
[4]
Teva submits that Novartis’s request for partial
indemnity is both unprecedented and unsubstantiated. It maintains that the
proceedings were not exceptionally complicated, its NOA was not excessively
broad, and there are no special circumstances justifying an elevated cost
award. In particular, while it alleged that a statement in the patent was
incorrect, it did not accuse Novartis of fraud. Moreover, Teva points out that
Novartis has included ineligible amounts under the Tariff, and has doubled-counted
some items. Further, it disputes various items included in Novartis’s list of
disbursements such as the payment of $600 per hour for a fact witness, and over
30 hours for an expert’s “homework”.
[5]
Teva also notes that I accepted at least part of
its argument on invalidity of the patent. There is no need, therefore, to
impose a high cost award as a deterrent. Further, it suggests that it should
not be labelled an “aggressor” simply for
engaging the Regulations by serving Novartis with an NOA. Teva contends that
Novartis should be awarded a lump sum of $31,670.00.
[6]
In reply, Novartis concedes that it made errors
in calculating fees under the Tariff; the correct figure, it says, should be
$102,512.00.
[7]
I see no basis for Novartis’s claim for costs on
a partial indemnity basis. Novartis relies on Air Canada v Toronto Port
Authority et al, 2010 FC 1335, but I note that that case was characterized
by Justice Roger Hughes as high stakes litigation in which none of the parties
spared legal resources in trying to succeed. Further, the losing party, Air Canada, truly the aggressor in the proceedings, knew that the Court did not have
jurisdiction and had made false and irrelevant allegations against the other
parties. I see no comparison with the present case which, in my view, was a
fairly routine application under the Regulations.
[8]
Still, this type of proceeding is inherently
complex as compared to other proceedings in Federal Court, and is typically
contested by sophisticated, wealthy litigants. I am satisfied, therefore, that
costs should be calculated at the upper end of Column IV, as requested by
Novartis (that is, $102,512.00).
[9]
However, I would reduce Novartis’s disbursements
by limiting recovery for photocopies to $10,000.00 (as compared to $16,914.33),
by reducing expert fees to Dr Richardson to $50,000.00 (instead of $66,740.87),
and by reducing the amount claimed for Dr Lattman to $10,000.00 (instead of
$13,259.78), resulting in total disbursements of $215,727.57.
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