Apotex Inc. and Novopharm Ltd. v. Wellcome Foundation Ltd., (1998) 159 F.T.R. 233 (TD)

• Judge: Wetston, J.
• Court: Federal Court (Canada)
• Case Date: November 13, 1998
• Jurisdiction: Canada (Federal)
• Citations: (1998), 159 F.T.R. 233 (TD)

Apotex v. Wellcome Fdn. (1998), 159 F.T.R. 233 (TD)

MLB headnote and full text

Temp. Cite: [1998] F.T.R. TBEd. DE.057

Apotex Inc. and Novopharm Ltd. (plaintiffs) v. The Wellcome Foundation Limited (defendant)

(T-3197-90)

The Wellcome Foundation Limited and Glaxo Wellcome Inc. (plaintiffs) v. Novopharm Ltd. (defendant)

(T-2983-93)

The Wellcome Foundation Limited and Glaxo Wellcome Inc. (plaintiffs) v. Interpharm Inc. and Apotex Inc. and Allen Barry Shechtman (defendants)

(T-2624-91)

Indexed As: Apotex Inc. and Novopharm Ltd. v. Wellcome Foundation Ltd.

Federal Court of Canada

Trial Division

Wetston, J.

November 13, 1998.

Summary:

The Wellcome Foundation Ltd. owned a patent for a drug used to treat AIDS, known under the tradenames zidovudine or retrovir and commonly known as AZT. Apotex Inc. and Novopharm Ltd. commenced an action (T-3197-90) to have the patent declared invalid. Wellcome Foundation Ltd. and its licensee Glaxo Wellcome Inc. subsequently commenced an action against Apotex Inc. et al. for infringement of the patent (T-2624-91). Wellcome and Glaxo also commenced an infringement action against Novopharm Ltd. (T- 2983-93).

The Federal Court of Canada, Trial Div­ision, in a decision reported 145 F.T.R. 161, held that the patent was valid, but certain of the claims were invalid. The court deter­mined that Apotex and Novopharm had infringed the patent and were liable for damages. Welcome sought an order for directions to the assessment officer under the Federal Court Rules, rules 400-404 and 420, regarding scale of costs, allowance for mul­tiple counsel and special costs, doubling of costs resulting form offers to settle, dis­burse­ments and other miscellaneous costs.

The Federal Court of Canada, Trial Div­ision, determined costs accordingly.

Editor's note: for related proceedings see 147 F.T.R. 211; 228 N.R. 355; 232 N.R. 40.

Practice - Topic 6923

Costs - General principles - Power to award or fix costs - The Federal Court of Canada, Trial Division, stated that certain general principles were applicable to the exercise of discretion regarding costs - "Tariff B is formulated so as to reflect the philosophy that party and party costs should bear a reasonable relationship to the actual costs of litigation, while preserving the discretion of the court and the assess­ment officer as that discretion is permitted under the Rules" - See paragraph 5.

Practice - Topic 6923

Costs - General principles - Power to award or fix costs - The Federal Court of Canada, Trial Division, noted that an important principle underlying costs is that an award of costs represents a compromise between compensating a successful party and not unduly burdening an unsuccessful party - See paragraph 7.

Practice - Topic 6931

Costs - General principles - Discretion of court - [See first Practice - Topic 6923 ].

Practice - Topic 7061

Costs - Party and party costs - Counsel fees - Increased or decreased fee (incl. premium) - Welcome was successful in complex patent proceedings - Wellcome sought an order for directions to the assessment officer under Federal Court Rules 400-404 and 420, regarding, inter alia, allowance for multiple counsel - The Federal Court of Canada, Trial Division, reviewed Wellcome's claim and deter­mined accordingly what Wellcome's coun­sel fees should be - See paragraphs 41 to 43.

Practice - Topic 7061

Costs - Party and party costs - Counsel fees - Increased or decreased fee (incl. premium) - Welcome sought an order for directions to the assessment officer under Federal Court Rules 400-404 and 420, regarding, inter alia, scale of costs - Par­ticularly, Wellcome sought an award equal to two-thirds of the reasonable counsel fees incurred in relation to the proceedings - The Federal Court of Canada, Trial Divi­sion, declined to award costs on this basis stating that it was an unwarranted exten­sion of solicitor-client costs - See para­graph 14.

Practice - Topic 7062

Costs - Party and party costs - Counsel fees - Entitlement - [See first Practice - Topic 7061 ].

Practice - Topic 7085

Costs - Party and party costs - Witness fees and costs of preparation for trial or appeal - Expert witness fees - Wellcome was successful in complex patent litigation - Wellcome sought costs for all experts' fees and disbursements, including fees which went beyond charges for time that the experts spent testifying in court - But for one expert that the court felt was un­necessary, the Federal Court of Canada, Trial Division, granted costs for experts' fees and disbursements which arose as a result of the experts' time spent in: prepar­ing their affidavits; reviewing the patent, reviewing the other experts' affidavits and attendance in court - The court further granted costs for experts' travel, but only with respect to their attendance in court - The court denied costs for experts' time spent meeting with counsel, for fees and disbursements for experts not called at trial - See para­graphs 62 to 64.

Practice - Topic 7102

Costs - Party and party costs - Special orders - Costs payable on solicitor and client basis - [See Practice - Topic 7452 ].

Practice - Topic 7109

Costs - Party and party costs - Special orders - Discretion to exceed scale of costs - Wellcome sought directions to the assess­ment officer with respect to the scale of costs - The Federal Court of Canada, Trial Division, held that the scale of costs should be increased to the upper end of Column IV of tariff B - The court con­cluded that such an increase was warranted by four main factors: "the volume of work involved, the importance and complexity of the legal issues, the nature of the work involved and the fact that party and party costs should bear a reasonable relationship to the actual costs of the litigation" - See para­graphs 1 to 38.

Practice - Topic 7110

Costs - Party and party costs - Special orders - Increase in scale of costs - [See Practice - Topic 7109 ].

Practice - Topic 7110

Costs - Party and party costs - Special orders - Increase in scale of costs - Wel­come sought an order for directions under Federal Court Rules 400-404 and 420 regarding, inter alia, costs of services rendered or disbursements incurred over the amounts specified in Tariff B - The Federal Court of Canada, Trial Division, considered the volume of work and allowed the application in part by ordering increases over the Tariff for the conduct of the trial, appeal and cross-appeal and allowing certain disbursements - The re­maining items were ordered to be taxed without any special directions.

Practice - Topic 7111

Costs - Party and party costs - Special orders - Increase in scale of costs - Ap­plication for - [See Practice - Topic 7109 ].

Practice - Topic 7111.2

Costs - Party and party costs - Special orders - Increase in scale of costs - Effect of settlement offers - [See Practice - Topic 7246 ].

Practice - Topic 7115

Costs - Party and party costs - Special orders - Increase in scale of costs - Dif­ficulty and complexity of proceedings - [See Practice - Topic 7109 ].

Practice - Topic 7137

Costs - Party and party costs - Disburse­ments - Travelling expenses - Counsel - Wellcome was successful in complex legal proceedings - Welcome sought an order for directions to the assessment officer under Federal Court Rules 400-404 and 420, regarding, inter alia, travelling expenses for its counsel - The Federal Court of Canada, Trial Division, deter­mined accordingly what counsels' travelling expenses should be - See para­graphs 59 to 61.

Practice - Topic 7246

Costs - Party and party costs - Offers to settle - Whether judgment equal to or more favourable than offer - Wellcome was successful in complex legal proceed­ings - Welcome sought an order for direc­tions to the assessment officer under Fed­eral Court Rules 400-404 and 420, regar­ding, inter alia, two offers to settle it made prior to trial which were less than the award that it received - Particularly, Wel­lcome requested that the court award double costs due to these offers, pursuant to rule 420 - The Federal Court of Canada, Trial Division, agreed and granted the requested double costs - See para­graphs 44 to 58.

Practice - Topic 7248

Costs - Party and party costs - Offers to settle - Costs to successful plaintiff - [See Practice - Topic 7246 ].

Practice - Topic 7452

Costs - Solicitor and client costs - Entitlement to solicitor and client costs - Neglect or misconduct - Wellcome sought directions to the assessment officer with respect to the scale of costs - Particularly, Wellcome sought solicitor and client costs on the ground that speculative and unfounded allegations of fraud were made by A & N against Wellcome - The Feder­al Court of Canada, Trial Division, rejected this argument - An award of costs on a solicitor-client scale was generally based on misconduct - Welcome's allega­tions did not support an award of solici­tor-client costs either on an allegation of fraud or on the basis of inappropriate conduct - See paragraph 13.

Practice - Topic 7470

Costs - Solicitor and client costs - En­title­ment to solicitor and client costs - Unproved allegation of fraud - [See Prac­tice - Topic 7452 ].

Cases Noticed:

Apotex Inc. and Novopharm Ltd. v. Well­come Foundation Ltd. (1998), 145 F.T.R. 161; 79 C.P.R.(3d) 193 (T.D.), refd to. [para. 2].

Sanmammas Compania Maritima S.A. et al. v. Ship Netuno et al. (1995), 102 F.T.R. 181 (T.D.), refd to. [para. 5].

Wellcome Foundation Ltd. v. Apotex Inc. (1992), 52 F.T.R. 241; 40 C.P.R.(3d) 376; 31 A.C.W.S.(3d) 1157 (T.D.), refd to. [para. 6].

Apotex Inc. v. Egis Pharmaceutical (1990), 32 C.P.R.(3d) 552 (Ont. Gen. Div.), refd to. [para. 11].

Estok et al. v. Tamassy (1975), 10 O.R.(2d) 308 (C.A.), refd to. [para. 12].

Aladdin Industries Inc. v. Canadian Ther­mos Products Ltd. (1973), 12 C.P.R.(2d) 24 (F.C.T.D.), refd to. [para. 33].

Wellcome Foundation Ltd. v. Apotex Inc. (1992), 52 F.T.R. 249; 40 C.P.R.(3d) 361 (T.D.), refd to. [para. 33].

Valmet-Dominion Inc. v. Beloit Corp. (1990), 40 F.T.R. 122 (T.D.), refd to. [para. 33].

Rothmans, Benson & Hedges Inc. et al. v. Imperial Tobacco Ltd. (1993), 66 F.T.R. 148; 50 C.P.R.(3d) 59 (T.D.), refd to. [para. 33].

Scharf (Jim) Holdings Ltd. v. Sullivan (1996), 65 C.P.R.(3d) 290 (F.C.T.D.), refd to. [para. 34].

Thakore v. Canada (No. 2), [1989] 3 F.C. 50; 23 F.T.R. 212 (T.D.), refd to. [para. 34].

Bloom (Albert) Ltd. et al. v. Bentinck (Township) et al. (1996), 1 O.T.C. 1; 29 O.R.(3d) 681 (Gen. Div.), refd to. [para. 34].

TRW Inc. v. Walbar of Canada Inc. (1992), 146 N.R. 57; 43 C.P.R.(3d) 449 (F.C.A.), refd to. [para. 34].

Diversified Products Corp. and Brown Fitzpatrick Lloyd Patent Ltd. v. Tye-Sil Corp. (1988), 22 F.T.R. 241 (T.D.), refd to. [para. 35].

Sunrise Co. v. Ship Lake Winnipeg (1988), 96 N.R. 310 (F.C.A.), refd to. [para. 36].

Allied Signal Inc. v. DuPont Canada Inc. and Complax Corp., [1998] F.C.J. No. 551 (T.D.), refd to. [para. 36].

Ray Plastics Ltd. v. Dustbane Products Ltd. (1990), 47 C.P.C.(2d) 280 (Ont. H.C.), refd to. [para. 47].

Spencer v. Soanes (1994), 30 C.P.C.(3d) 305 (B.C.S.C.), refd to. [para. 51].

Aladdin Industries Inc. v. Canadian Ther­mos Products Ltd. (1973), 12 C.P.R.(2d) 24 (F.C.T.D.), refd to. [para. 59].

Amfac Foods Inc. v. Irving Pulp and Paper Ltd., [1985] F.C.J. No. 1150 (T.D.), refd to. [para. 62].

Riello Canada Inc. v. Lambert (1987), 15 C.P.R.(3d) 257 (F.C.T.D.), refd to. [para. 62].

Oleskiw v. Regina (City) (1985), 139 Sask.R. 103 (Q.B.), refd to. [para. 63].

Abate v. Borges (1992), 12 C.P.C.(3d) 391 (Ont. Gen. Div.), refd to. [para. 63].

TNT Canada Inc. v. T.N.T. Motor Lines Ltd. (1990), 31 C.P.R.(3d) 165 (F.C.T.D.), refd to. [para. 66].

Counsel:

Peter Stanford and Brian Daley, for the Wellcome Foundation and Glaxo Well­come Inc.;

H.B. Radomski, Richard Naiberg and Anik Morrow, for Apotex Inc., Interpharm Inc. and Allen Barry Shechtman.

Solicitors of Record:

Ogilvy Renault, Toronto, Ontario, for the Wellcome Foundation and Glaxo Well­come Inc.;

Goodman Phillips & Vineberg, Toronto, Ontario, for Apotex Inc., Interpharm Inc. and Allen Barry Schechtman;

Hitchman & Springings, Toronto, Ontario, for Novopharm Ltd.

This motion was heard in Toronto, Ontario, on September 10 and 11, 1999, before Wetston, J., of the Federal Court of Canada, Trial Division, who delivered the following judgment on November 13, 1998, in Ottawa, Ontario.