Bayer AG et al. v. Novopharm Ltd. et al., 2009 FC 1230

• Court: Federal Court (Canada)
• Case Date: September 23, 2009
• Jurisdiction: Canada (Federal)
• Citations: 2009 FC 1230;(2009), 361 F.T.R. 42 (FC)

Bayer AG v. Novopharm Ltd. (2009), 361 F.T.R. 42 (FC)

MLB headnote and full text

Temp. Cite: [2009] F.T.R. TBEd. DE.002

Bayer AG, Bayer Healthcare AG and Bayer Inc. (applicants) v. Novopharm Limited and The Minister of Health (respondents)

(T-697-04; 2009 FC 1230)

Indexed As: Bayer AG et al. v. Novopharm Ltd. et al.

Federal Court

Preston, Assessment Officer

December 1, 2009.

Summary:

Bayer developed a medicine using Cipro, an antibacterial drug of the fluoroquinolone class which was ready to use in injection or infusion solutions. The patent for the medicine was Patent No. 1,228,547 (the '547 patent). The medicine had significant and harmful physiological effects of local intolerance and kidney crystalluria. After two years of research, Bayer developed a new drug principally through finding the proper balance of the key elements of the '547 medicine. The patent for new medicine was Patent No. 1,282,006 (the '006 patent). Bayer applied to prohibit the Minister of Health from issuing a notice of compliance to Novopharm until the expiry of the '006 patent. Novopharm asserted that the '006 patent was invalid for reason of obviousness type double patenting and that its drug would not infringe the '006 patent because the now expired '547 patent had taught what Novopharm proposed to do. Novopharm also asserted that if the '006 patent was claimed to be a "selection patent", it did not meet the criteria for a selection patent.

The Federal Court, in a decision reported 289 F.T.R. 263, allowed the application and ordered that Bayer was to have its costs and disbursements assessed in accordance with the top end of Column III of the Federal Court Tariff. Bayer's bill of costs totalled $605,293.01. At the assessment hearing, the parties were given time to discuss the issues. The parties agreed on several items under assessable services. The assessable services that remained outstanding were second counsel fees under Items 9 and 14(b) and travel by counsel under Item 24.

An Assessment Officer of the Federal Court determined the issues and allowed the Bill of costs for a total of $483,860.04.

Practice - Topic 7063

Costs - Party and party costs - Counsel fees - Special or additional counsel - A successful applicant was awarded costs and disbursements assessed in accordance with the top end of Column III of the Federal Court Tariff - At issue included second counsel fees under Items 9 and 14(b) and travel by counsel to attend a hearing or examination under Item 24 - An Assessment Officer of the Federal Court held that it had no jurisdiction to award costs under either Item 14(b) or Item 24, absent a clear direction of the court - The applications judge, in awarding costs at the high end of Column III might have recognized the work of second counsel - However, he did not award the costs of second counsel - As for Item 9, absent a direction of the court, it was intended to be a global fee regardless of the number of counsel engaged - Accordingly, the Assessment Officer denied second counsel fee under Items 9, 14(b) and 24 - See paragraphs 4 to 12.

Practice - Topic 7063.3

Costs - Party and party costs - Counsel fees - Out-of-town counsel costs - A successful applicant was awarded costs and disbursements - The applicant's bill of costs included $2,910.32 for a conference room at a hotel in Vancouver - The respondent asserted that the expense should be disallowed where the applicant's counsel had an office in Vancouver - The applicant asserted that they were running the case from their home office in Toronto with people doing the research and contacting them - Further, there was a three hour time change and they were living and working in the hotel which was close to the court - The applicant asserted that it was unreasonable to apply a hindsight approach to out-of-town case preparation - An Assessment Officer of the Federal Court denied the expense - The case preparation could have been accomplished from the counsel's Vancouver officer without the need to rent meeting space and equipment - This was not an expense that was reasonable and necessary in a party and party assessment - See paragraphs 74 to 76.

Practice - Topic 7063.3

Costs - Party and party costs - Counsel fees - Out-of-town counsel costs - A successful applicant was awarded costs and disbursements - The applicant's bill of costs included an amount for alcoholic beverages - The respondent asserted that the amount should be disallowed - The applicant asserted that the consumption of alcohol with dinner was a part of normal life and consequently, the costs of alcohol should not be distinguished from the cost of the meal - An Assessment Officer of the Federal Court disallowed the claim - Disbursements for alcoholic beverages, having been challenged, even during meals, were not reasonable and necessary on a party and party assessment - See paragraphs 86 to 88.

Practice - Topic 7066

Costs - Party and party costs - Counsel fees - Written argument - A successful applicant was awarded costs and disbursements assessed in accordance with the top end of Column III of the Federal Court Tariff - An Assessment Officer of the Federal Court allowed the applicant's claim for a PowerPoint presentation, stating that it considered it to be the same as written argument requested or permitted by the court - See paragraph 13.

Practice - Topic 7085

Costs - Party and party costs - Witness fees and costs of preparation for trial or appeal - Expert witness fees - A successful applicant was awarded costs and disbursements assessed in accordance with the top end of Column III of the Federal Court Tariff - The applicant's bill of costs included an expert fee of $212,378.22 paid to Dr. Arcieri, a former employee of the applicant - The respondent disputed that Arcieri was an expert and asserted that he was a fact witness, giving evidence concerning who did what, when and where - Alternatively, the respondent asserted that the amount charged was outrageous and that the invoices were devoid of the evidence needed to justify 340 hours of work - An Assessment Officer of the Federal Court concluded that Arcieri was both an expert witness and a fact witness - However, the applications judge considered Arcieri to be an expert and that finding was determinative of the fact that Arcieri should be considered an expert in any determination of costs - The respondent's criticism of Arcieri's invoices were harsh - Although a better explanation of the expenses would have been preferable, a thorough review revealed that there was a breakdown of the expenses by event - The court disallowed a claim for 56 hours at $500/hour for travel as being unreasonable - Although the test was not the length of the affidavit or cross-examination, but rather whether what was said carried the day, the claim for 340 hours for drafting a 19 page affidavit was somewhat excessive - Although it might have been necessary for Arcieri to review the path that the applicant took 20 years ago, it was not prudent and reasonable for the respondent to be required to reimburse the full amount claimed - The court, after making deductions for the 56 hours of travel time and for an invoice that should have been split with another file, allowed the disbursement in the amount of $138,375 - See paragraphs 17 to 41.

Practice - Topic 7132

Costs - Party and party costs - Disbursements - Evidence required in support of - A successful applicant was awarded costs and disbursements - The applicant's bill of costs included a disbursement of $542.52 to the Receiver General of Canada - The respondent asserted that the only receipt provided as proof of payment was $50 for the filing of the notice of application - The respondent further asserted that the disbursement report provided by the applicant did not provide adequate support to justify that the claimed articles and loan renewals were reasonable and necessary - The applicant relied on the disbursement report and the affidavit in support which indicated that the disbursements were paid and related to filing of documents or photocopying of court records - An Assessment Officer of the Federal Court stated that it agreed "... that the process of an assessment was rough justice, compounded of much sensible approximation. I also agree that a party should not be placed in the position of having to incur greater expense to prove costs than the costs intended to be recovered. There is, however, an obligation to provide evidence which is consistent. Counsel has submitted that the fees to the Receiver General were for filing of documents and photocopying of court records. Having reviewed the printout I was able to confirm the filing fee, however other expenditures were for articles and loan renewals. I was not able to locate any expenditure for photocopying court records. There may well be an issue with the method of recording the law firm's disbursements, however, the evidence required to persuade me that the disbursements to the Receiver General, other than the filing fee, were reasonable and necessary, is lacking. I will allow this disbursement at $50.00." - See paragraphs 51 to 53.

Practice - Topic 7135

Costs - Party and party costs - Disbursements - Telephone expenses - A successful applicant was awarded costs and disbursements - An Assessment Officer of the Federal Court disallowed the applicant's claims for telephone, parking and car rental - The applicant had already claimed long distance telephone calls and had not provided any evidence to establish that, in a party and party assessment, the expenses were reasonable and necessary to the litigation process - See paragraph 58.

Practice - Topic 7136

Costs - Party and party costs - Disbursements - Travelling expenses - General - [See Practice - Topic 7085 ].

Practice - Topic 7136

Costs - Party and party costs - Disbursements - Travelling expenses - General - A successful applicant was awarded costs and disbursements - The applicant's bill of costs included amounts for meeting with four witnesses: Arcieri (seven trips), Ball (two trips), Brenner (two trips) and Evans (two trips) - The meetings with Ball were held in Spain -The respondent asserted that the expenses should be denied where there was no evidence that what was accomplished at the meetings could not have been done using telephone calls, videoconferencing, faxing, e-mails and couriers - Further, there was no evidence to justify why so many in-person meetings were needed for a matter that would proceed to hearing based on written evidence - Alternatively, the respondent asserted that the expenses were excessive (Arcieri - $25,138.07; Ball - $20,888.10; Brenner - $7,702.50; and Evans - $19,072.57) - An Assessment Officer of the Federal Court accepted that, as the meetings with Ball were during the winter, they were held in Spain because that was where Ball resided during the winter - Given the complexity of the technical issues and the volume of prior art/affidavit evidence that had to be reviewed by each witness, what was accomplished at those meetings could not have been done using telephone calls, videoconferencing, faxing, e-mails and couriers - The determination of the best method of proceeding had to be made at the time without the benefit of hindsight - The Assessment Officer allowed all of the trips - However, the quantum of the disbursements relating to the trips was an amalgam of the various disbursements which the Assessment Officer addressed separately - See paragraphs 60 to 66.

Practice - Topic 7136

Costs - Party and party costs - Disbursements - Travelling expenses - General - A successful applicant was awarded costs and disbursements - The applicant's bill of costs included amounts for meeting with four witnesses - The respondent asserted that all flights in business class had to be reduced by half - An Assessment Officer of the Federal Court reduced a return domestic flight from Toronto to Vancouver to an amount comparable to a full fare economy ticket - However, the Assessment Officer distinguished overseas flights of a duration exceeding six hours from longer domestic flights of substantially shorter duration and allowed the claim for business class fares for the international flights - See paragraphs 67 to 73.

Practice - Topic 7138

Costs - Party and party costs - Disbursements - Computer research - A successful applicant was awarded costs and disbursements - The applicant's bill of costs included $3,581.03 for books, texts and legal research - The respondent asserted that the amount was exorbitant - The applicant asserted that online legal research was a fact of life - An Assessment Officer of the Federal Court agreed that online legal research was a fact of life - However it appeared that the applicant used multiple search engines (Quicklaw, Westlaw and Lexis Nexis) on the same date - That was excessive and duplicative - The court allowed $2,400 for reasonable and necessary legal research - See paragraphs 54 to 56.

Practice - Topic 7144

Costs - Party and party costs - Disbursements - Room rental for proceedings - [See first Practice - Topic 7063.3 ].

Practice - Topic 7150.4

Costs - Party and party costs - Disbursements - Items not recoverable as disbursements - [See Practice - Topic 7063 , both Practice Topic 7063.3 and Practice - Topic 7135 ].

Practice - Topic 7150.5

Costs - Party and party costs - Disbursements - Court fees - [See Practice - Topic 7132 ].

Cases Noticed:

AB Hassle v. Genpharm Inc. (2004), 34 C.P.R.(4th) 18 (F.C.), refd to. [para. 5].

Merck & Co. v. Canada, 2007 FC 312 (Assess. Off.), refd to. [para. 5].

Nycomed Canada Inc. et al. v. Novopharm Ltd. et al. (2008), 326 F.T.R. 1; 2008 FC 454 (Protho.), dist. [para. 7].

VIA Rail Canada Inc. v. Cairns et al., [2002] N.R. Uned. 74; 2002 FCA 120, dist. [para. 7].

Abbott Laboratories et al. v. Canada (Minister of Health) et al. (2008), 352 F.T.R. 78; 66 C.P.R.(4th) 301 (F.C.), refd to. [para. 10].

Wellcome Foundation Ltd. v. Apotex Inc. (1992), 52 F.T.R. 241; 40 C.P.R.(3d) 376 (T.D.), refd to. [para. 22].

Halford v. Seed Hawk Inc., [2006] N.R. Uned. 162; 2006 FCA 422, refd to. [para. 23].

Dableh v. Ontario Hydro, [1994] F.C.J. No. 1810 (Assess. Off.),  agreed with [para. 34].

Laboratoires Servier et al. v. Apotex Inc. et al., [2007] F.T.R. Uned. 201; 2007 FC 344, refd to. [para. 42].

Pharmacia Inc. v. Canada (Minister of National Health and Welfare), [1999] F.C.J. No. 1770 (Assess. Off.), refd to. [para. 52].

Biovail Corp. et al. v. Canada (Minister of National Health and Welfare) et al., [2007] F.T.R. Uned. 483; 2007 FC 767, dist. [para. 54].

Aventis Pharma Inc. v. Apotex Inc. et al., [2009] F.T.R. Uned. 669; 2009 FC 51, refd to. [para. 54].

Carlile v. Canada, [1997] F.C.J. No. 885 (Assess. Off.), refd to. [para. 65].

AstraZeneca AB et al. v. Apotex Inc. et al., [2009] F.T.R. Uned. 454; 2009 FC 822, refd to. [para. 68].

Goodman Yachts LLC v. Penguin Boat International Ltd. et al. (2002), 227 F.T.R. 29; 2002 FCT 1168, appld. [para. 68].

Fournier Pharma Inc. et al. v. Canada (Minister of Health) et al., [2008] F.T.R. Uned. A37; 2008 FC 929, refd to. [para. 72].

Almecon Industries Ltd. v. Anchortek Ltd., 2003 FC 1298, refd to. [para. 72].

Korea Heavy Industries & Construction Co. et al. v. Polar Steamship Line et al., [2002] F.T.R. Uned. 681; 2002 FCT 1041, refd to. [para. 72].

Janssen-Ortho Inc. et al. v. Novopharm Ltd., [2006] F.T.R. Uned. 768; 2006 FC 1333, refd to. [para. 77].

Allied Signal Inc. v. Dupont Canada Inc. et al. (1997), 81 C.P.R.(3d) 129 (F.C.T.D.), refd to. [para. 77].

Milliken & Co. v. Interface Flooring Systems (Canada) Inc., 2003 FC 1258, refd to. [para. 83].

Authors and Works Noticed:

Orkin, Mark M., The Law of Costs (2nd Ed.), vol. 1, p. 2-277 [para. 20].

Counsel:

Neil Belmore, for the applicants;

Andy Radhakant and Katrina Reyes, for the respondent, Novopharm.

Solicitors of Record:

Belmore McIntosh Neidrauer, LLP, Toronto, Ontario, for the applicants;

Heenan Blaikie, LLP, Toronto, Ontario, for the respondent, Novopharm.

This appeal was heard at Toronto, Ontario on September 23, 2009, by Preston, Assessment Officer, of the Federal Court, who delivered the following judgment on December 1, 2009.