Date: 19971104
Docket: T-421-97
BETWEEN:
FAULDING (CANADA) INC.
Plaintiff
- AND -
PHARMACIA S.P.A.
Defendant
REASONS FOR ORDER
McKEOWN, J.
[1] The defendant seeks an Order pursuant to Rule 700(3) of the Federal Court Rules and subsection 60(3) of the Patent Act requiring the plaintiff to post further security for costs in the amount of $220,227.99. The plaintiff had obtained an earlier Order requiring the posting of $12,000 as security for costs. The plaintiff raises two issues. Firstly, that no further security is required since adequate security has already been provided. As an alternative submission, the plaintiff submits that the proper additional amount is far less than the amount of $220,227.99. In my view, the amount of $12,000 posted pursuant to the Order of Tremblay-Lamer, J. is inadequate to provide the security for costs under Rule 700(3) until trial.
[2] As Strayer J. stated in Electec Ltd. v. Comstock Canada (1989), 24 C.P.R. (3d) 137 (F.C.T.D.) at 140:
| Rule 700(3) empowers the court "at any time, in its discretion" to order the plaintiff in a patent impeachment action to give security for costs "before taking any further step" ... |
[3] He then states at 141:
| ... the patentee is thereby given some protection against frivolous attacks on his duly-obtained patent to which is attached at least some statutory presumption of validity ... [footnote omitted] |
[4] Strayer, J. finds that:
| But once such an order is required, it is an order for "security for costs" ... |
[5] He then states at 141-142:
| ... The obvious conclusion to be drawn is that indeed the defendant patentee is to be protected for his costs to the extent that this is normally done when "security for costs" are awarded by a court. What the proper quantum of security should be is left to the discretion of the court just as it is once the court determines that the preconditions of Rule 446 have been met. By s-s. 62(3) a quantum must be fixed at the outset, and by Rule 700(3) it may be adjusted at any time after that. |
[6] I am not satisfied that an adequate amount for security for costs has been provided. I must, therefore, take into account factors normally considered in ordering "security for costs". However, as Prothonotary Hargrave stated in International Hollowcore Engineering Inc. v. Ultra-Span Technologies Inc. et al., August 12, 1997, Court File T-626-97 (F.C.T.D.) at 5:
| ... Here a factor that must be included is the new Tariff B, which comes closer than the previous Tariff B to reflecting actual costs of litigation. |
[7] Although I appreciate that patent litigation is complex, it is my view that it is appropriate to use the middle column of Tariff B; however, at this stage of the proceedings one should not use the top end of the range within column III thereof. I also am of the view that I do not have to consider the factor of residency because it is the patentee that is supposed to be protected regardless of whether the plaintiff is a resident or non-resident in subsection 60(3) of the Patent Act then Rule 700(3) of the Federal Court Rules. The question of whether the top end of the range of Column III of Tariff B or any other column is appropriate is a matter that can be dealt with after completion of the trial when costs are fixed.
[8] I note that the defendant has claimed in their list of costs the time spent upon hearing the motion for particulars. However, in that motion, the prothonotary awarded costs to the plaintiff in the cause and the appeal was dismissed. It is not appropriate to take into account any time spent on the motions before Prothonotary Giles and the Associate Chief Justice in light of the foregoing disposition of costs of the motion. I understand the matter is under appeal. I also note that the defendant has claimed five hours for the appearance on a motion whereas the registrar's abstract shows only 2.5 hours. I am also concerned as to the accuracy of some of the other figures as a result of this misstatement.
[9] Accordingly, I agree with the plaintiff that counsel fees for the events to date should be $1,900. I will now review costs in the immediate future relating to discovery and examinations of the parties. I am in agreement with the plaintiff that the more appropriate amount would be $25,800. I also agree with the proposed amounts for fees of $2,300 for pre-trial and pre-hearing procedures as set out by the plaintiff. It is very difficult to judge at this time whether junior counsel will be required and, accordingly, I agree with the plaintiff's submission in this respect.
[10] Notwithstanding the recent Rule changes which are intended to bring costs more in line with actual costs of litigation, I agree with the plaintiff that many of the disbursements are calculated on a scale more appropriate on a solicitor/client bill than on a party and party bill. For example, with respect to photocopying, as Teitelbaum, J. said in Diversified Products Corp. v. Tye-Sil Corp. (1990), 34 C.P.R. (3d) 267 (F.C.T.D.) at 276:
| ... The item of photocopies is an allowable disbursement only if it is essential to the conduct of the action. Therefore, this is intended to reimburse a party for the actual out-of-pocket cost of the photocopy ... |
[11] The defendant provided me with no information on the actual out-of- pocket cost of the photocopying and I have allowed nothing in this respect. I am also unable to calculate the out-of-pocket cost of facsimile transmission charges. The disbursements to date are $307.06. The defendant has also included in the security for costs the cost of translator with respect to discoveries as stated in Rule 465.1:
| ... the examining party shall arrange for the attendance and pay the fees and disbursements of an independent and competent person to accurately interpret |
| (a) the administration of the oath or affirmation; |
| (b) the questions that are asked of the person being examined; and |
| (c) the answers to those questions. |
[12] Accordingly, there is no need for these translation costs to be included. The travel disbursements should be cut in half because at this time we should only allow for one counsel. Accordingly, the extended disbursements for the immediate future total $12,900. It is very difficult to predict the cost of experts at this time and particularly when we are dealing with strictly the cost of the experts up until the time of the trial. In my view, it is useful to follow what Prothonotary Hargrave stated in Tough Traveler, Inc. v. Taymor Industries, Ltd. (1994), 59 C.P.R. (3d) 186 at 190 (F.C.T.D.) where he stated:
| In deciding on appropriate security for costs there are also other points that I have kept in mind including that "an allowance will have to be made for the unquenchable fire of human optimism and the likelihood that the figure of taxed costs put forward would not emerge unscathed after taxation" (Procon Ltd., supra,, at p. 571); that every case, this included, will not necessarily be fought through to a finish and therefore security for costs might be somewhat less; that security for costs ought not to be illusory, but at the same time ought not to be oppressive so as to hamper the plaintiff in bringing a legitimate lawsuit; and that if the security proves inadequate, the defendant can always apply for additional security at a later date. |
[13] In my view, it would be appropriate to allow only one third of the proposed expert cost at this time which would be $8,000 U.S. ($11,200 Can). I would also allow $2,333 for travel and accommodation expenses for experts and $5,000 for consultation with the clients. The total disbursements for the possible future equal $18,533. Even when a trial date had been set such as in Richter Gedeon Vegyészeti Gyar RT v. Merck & Co. (1996), 66 C.P.R. (3d) 36 (F.C.T.D.), Denault, J. was not prepared to "exclude the possibility of a settlement or that the duration of the trial will not be as lengthy as anticipated" (pp. 39-40). In that case, he felt all the perspective disbursements were too speculative and were disallowed. Accordingly, I have not allowed any fees or disbursements relating to the trial. However, I am making this Order without prejudice to the right of the defendant to move for increased security for costs immediately prior to trial.
[14] I have allowed $61,740.06 in total at this point to cover the potential costs through discovery including pre-trial conferences and notice to admit facts. Since the plaintiff has only put up $12,000 to date as security for costs the plaintiff shall give an additional amount of $49,740.06 as security for costs. The cost of this motion will be in the cause.
___________________________________
JUDGE
OTTAWA, ONTARIO
November 4, 1997