Aram Systems Ltd. v. NovAtel Inc. et al., (2010) 476 A.R. 188 (QB)

• Judge: A.D. Macleod, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: March 01, 2010
• Citations: (2010), 476 A.R. 188 (QB);2010 ABQB 152

Aram Systems Ltd. v. NovAtel Inc. (2010), 476 A.R. 188 (QB)

MLB headnote and full text

Temp. Cite: [2010] A.R. TBEd. MR.059

Aram Systems Ltd. (plaintiff) v. Novatel Inc. and Patrick C. Fenton (defendants) and Aram Systems Ltd., Norman David Heidebrecht and Donald G. Chamberlain (defendants by counterclaim)

(0601 08106; 2010 ABQB 152)

Indexed As: Aram Systems Ltd. v. NovAtel Inc. et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

A.D. Macleod, J.

March 1, 2010.

Summary:

NovAtel Inc. was issued a U.S patent with respect to a system which used a global positioning system in the acquisition of seismic data for both timing and positioning purposes. Aram Systems Ltd. claimed that NovAtel wrongfully derived the patent from Aram's former engineering manager, who had communicated his idea to NovAtel and its chief technology officer (Fenton). Aram further claimed that NovAtel and Fenton breached a non-disclosure agreement (NDA) entered into by the parties as well as their common law duty of confidentiality. NovAtel counterclaimed in respect of the patent ownership issue and it also alleged a breach of the NDA by Aram.

The Alberta Court of Queen's Bench, in a decision reported at (2008), 449 A.R. 288, dismissed Aram's claims. As the court determined that NovAtel had suffered no damages, no judgment issued with respect to the counterclaim. Aram appealed.

The Alberta Court of Appeal, in a decision reported at (2009), 457 A.R. 341; 457 W.A.C. 341, dismissed the appeal. The Supreme Court of Canada, in a motion reported at 404 N.R.  398, denied leave to appeal. There had been a number of interlocutory decisions prior to the trial. An application was brought with respect to costs up to and including judgment from the Court of Queen's Bench.

The Alberta Court of Queen's Bench determined the costs issues accordingly.

Practice - Topic 4957

Admissions - Notice to admit - Costs - Aram Systems Ltd.'s action against NovAtel Inc. and Fenton was dismissed - NovAtel sought recovery of costs for responding to Notices to Admit prepared by Aram - The Alberta Court of Queen's Bench stated that "Notices to Admit are covered by item 4 and often result in reduction of trial time or a better definition of the issues. If they are used properly, they are an appropriate item for recovery of costs by the successful party. Aram says that only the serving party should receive costs for serving a Notice to Admit facts. I do not read item 4 that way. The Notices to Admit in this case were rather involved and required NovAtel to respond carefully. I would therefore award NovAtel one item for the Notices to Admit facts" - There were also Notices relating to the evidence of four witnesses - The court allowed one other item under item 4 relating to the four witnesses - See paragraphs 26 to 29.

Practice - Topic 7020

Costs - Party and party costs - Entitlement to party and party costs - Successful party - General principles - [See Practice - Topic 7030 ].

Practice - Topic 7021

Costs - Party and party costs - Entitlement to party and party costs - Successful party - Exceptions - Conduct - [See Practice - Topic 7364 ].

Practice - Topic 7030

Costs - Party and party costs - Entitlement to party and party costs - Where success or fault divided - Aram Systems Ltd.'s action against NovAtel Inc. and Fenton was dismissed - The issue of limitations occupied much of the litigation and NovAtel was only partially successful on that issue - At issue was how that should affect the award of costs - The Alberta Court of Queen's Bench stated that "A party is expected to raise all of the arguments and issues which a reasonable party in its position would raise. In my view, this was done. Limitations issues were raised because they were reasonable defences and much time was spent arguing them because they were not easy issues. Aram was successful on one limitations issue and NovAtel was successful on the other. The issues were legitimate. Aram has received its costs for the interlocutory application where it was successful. On the overall litigation, NovAtel was successful and, where the costs relate to issues reasonably raised, NovAtel shall receive its costs. This includes the costs of litigating the limitations issues" - See paragraph 11.

Practice - Topic 7085

Costs - Party and party costs - Witness fees and costs of preparation for trial or appeal - Expert witness fees - Aram Systems Ltd.'s action against NovAtel Inc. and Fenton was dismissed - NovAtel retained U.S. patent counsel who assisted and sat in on much of the trial - At issue was how that disbursement should be treated - The Alberta Court of Queen's Bench stated that "On the one hand, a successful litigant who reasonably retains an expert appears to be entitled to some recovery under Rule 600. On the other hand, if that expert is retained to do counsel's job, that is not recoverable. Moreover, disbursements ought not to be allowed to distort the overall scheme of balancing the right of a successful party to costs and the interests of access to justice ... Taking everything into account and recognizing that lead counsel for NovAtel could not reasonably have been expected to conduct this litigation with respect to U.S. patent law without some assistance from U.S. patent attorneys, I have determined, again somewhat arbitrarily, that NovAtel should be able to recover twenty-five per cent of the $169,000 U.S. paid by NovAtel to U.S. patent counsel. Therefore, I allow the sum of $42,250 U.S." - See paragraphs 14 to 18.

Practice - Topic 7085

Costs - Party and party costs - Witness fees and costs of preparation for trial or appeal - Expert witness fees - Aram Systems Ltd.'s action against NovAtel Inc. and Fenton was dismissed - The expert fee of one of the U.S. legal experts (Quinlan) exceeded $150,000 U.S. and Aram objected to paying all of that amount because it related in part to issues outside of the litigation - The Alberta Court of Queen's Bench stated that "Aram complains that much of [Quinlan's] services were utilized in early motions by NovAtel to seek summary judgment, to stay this action and to oppose Aram's successful motion to strike paragraphs of the Statement of Defence. The interplay between this litigation and the U.S. patent process was complicated and was properly the subject of expert assistance up and until this court's judgment that all issues would be decided in the litigation. But given that I have awarded Aram costs of the interlocutory applications, it would rather defeat the purpose to award NovAtel its expert fees for those applications. Also, there were aspects of the expert report filed by Mr. Quinlan which related to issues that had been previously decided by this court. Taking everything into account, I set the recoverable fees attributable to Mr. Quinlan rather arbitrarily at the sum of $100,000 U.S." - See paragraphs 12 to 13.

Practice - Topic 7115

Costs - Party and party costs - Special orders - Increase in scale of costs - Difficulty and complexity of proceedings - Aram Systems Ltd.'s action against NovAtel Inc. and Fenton was dismissed - NovAtel sought enhanced costs for pleadings, trial preparation, discovery and written argument - It emphasized the complexity of the litigation, the large element of foreign law and the allegations against NovAtel and Fenton that they had misappropriated Aram's intellectual property - The Alberta Court of Queen's Bench noted the complexity of the case and the high stakes involved - The court stated that "While I was critical of certain pre-litigation conduct attributable to Aram, I see this primarily as litigation which was extremely hard-fought given the stakes ... Aram concluded that it had the basis of an allegation of patent derivation and/or breach of confidence. Management made a commercial gamble and they lost. Accordingly, while I do not believe that the award of costs should be punitive in nature, enhanced costs are clearly justified here" - The court increased the tariff items for pleadings, document discovery, trial preparation and written argument - See paragraphs 32 to 41.

Practice - Topic 7138

Costs - Party and party costs - Disbursements - Computer research - A successful plaintiff claimed a disbursement for computerized legal research - The Alberta Court of Queen's Bench stated that "the view of computerized legal research as a mere alternative is no longer consonant with the reality of current legal practice. Such research is now expected of counsel ... Indeed, it might be argued that a lawyer who chooses to forgo computerized legal research is negligent in doing so ... The practice of law has evolved to the point where computerized legal research is no longer a matter of choice ... I would point out that the disbursement claimed in these cases is for access to the legal databases and is based upon the time spent doing research for the particular client on the particular matter. There is no suggestion that the disbursement is meant to reimburse the law firm for the cost of computers as capital assets. In my view, disbursements for electronic legal research are similar to disbursements for photocopying; it is the copies, not the copiers, that are being paid for. Nevertheless, I am bound by the weight of authority and must therefore refuse to allow the disbursement" - See paragraphs 19 to 25.

Practice - Topic 7141

Costs - Party and party costs - Disbursements - Cost of expert advice - [See both Practice - Topic 7085 ].

Practice - Topic 7364

Costs - Costs of interlocutory proceedings - Costs of motions or applications - Aram Systems Ltd.'s action against NovAtel Inc. and Fenton was dismissed - At issue was how Aram's success in a number of interlocutory applications should be treated in awarding costs - NovAtel argued that an award of costs constituted equitable relief and Aram ought to be denied that relief because of its conduct - Novatel noted that the court had decided that Aram's pre-litigation conduct would have otherwise dis-entitled it to any remedy for breach of confidence - The Alberta Court of Queen's Bench stated that "unless there is a good reason to deny those costs, Aram should receive the costs of the above-noted applications. ... before dis-entitling a party to costs because of pre-litigation behaviour, the court ought to proceed carefully. ... I am not satisfied that I should dis-entitle Aram from receiving its costs for the interlocutory proceedings in which it was successful. Aram is entitled to its costs for the pre-trial motions where it was successful and these will be deducted from NovAtel's ultimate award" - See paragraphs 6 to 10.

Cases Noticed:

Walsh v. Mobil Oil Canada et al. (2008), 440 A.R. 199; 438 W.A.C. 199; 2008 ABCA 268, refd to. [para. 10].

Sidorsky et al. v. CFCN Communications Ltd. et al. (1998), 216 A.R. 151; 175 W.A.C. 151; 1998 ABCA 127, refd to. [para. 15].

Murphy Oil Co. et al. v. Predator Corp. et al. (2005), 379 A.R. 388; 2005 ABQB 134, refd to. [para. 16].

Strandquist et al. v. Coneco Equipment et al., [2000] A.R. Uned. 86; 2000 ABCA 138, refd to. [para. 19].

Sidorsky et al. v. CFCN Communications Ltd. et al. (1995), 167 A.R. 181; 27 Alta. L.R.(3d) 296 (Q.B.), refd to. [para. 20].

Milsom v. Corporate Computers Inc. et al., [2003] A.R. Uned. 424; [2003] 9 W.W.R. 269; 2003 ABQB 609, refd to. [para. 21].

Philip v. Whitecourt General Hospital et al. (2005), 381 A.R. 234; 2005 ABQB 174, refd to. [para. 22].

Marathon Canada Ltd. v. Enron Canada Corp. (2008), 447 A.R. 89; 100 Alta. L.R.(4th) 356; 2008 ABQB 770, refd to. [para. 32].

Counsel:

D. Doak Horne and Shaun Cody (Gowling Lafleur Henderson LLP), for the plaintiff;

Timothy Ellam and Kara Smyth (McCarthy Tetrault LLP), for the defendants.

This application was heard on December 17 and 21, 2009, before A.D. Macleod, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following costs memorandum on March 1, 2010.