Absent Unusual Circumstances, Column IV Costs Remain the Standard in PM(NOC) Proceedings

Justice O’Reilly’s decision in Novartis Pharmaceuticals Canada Inc. v. Teva Canada Limited confirms that costs awarded at the upper end of Column IV remain the normal in a PM(NOC) proceedings, absent unusual circumstances.

Justice O’Reilly’s order on costs followed his earlier decision which held that Novartis was entitled to an order of prohibition, notwithstanding Teva’s successful allegations in respect of certain claims of the patent at issue (see our previous post here). In its costs submissions, Novartis argued for partial indemnity at 60 percent of its actual costs which amounted to approximately $1.1 million. Novartis’ basis for seeking elevated costs was that Teva was the “aggressor” in the proceeding, having served an NOA with multiple allegations that were not all pursued at the hearing. Novartis also argued that Teva prolonged the proceeding by filing lengthy expert affidavits, cross-examining all of Novartis’ witnesses, and making unfounded allegations of fraud.

Teva argued that Novartis’ request for partial indemnity was unprecedented and unsubstantiated. Teva acknowledged that it had alleged that there were incorrect statements in the patent at issue, but argued that it did not accuse Novartis of fraud. Teva also argued that there was no need to impose a high cost award as a deterrent because some of its arguments on invalidity were accepted by the Court.

In dismissing Novartis’ claim for costs on a partial indemnity basis, Justice O’Reilly held that the roles of the respective parties in the litigation did not justify such an award:

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.

In the result, Justice O’Reilly agreed that these types of proceedings are inherently complex compared to other Federal Court proceedings, and was satisfied that costs calculated at the upper end of Column IV should be awarded.

Justice O’Reilly’s decision can be found here.

Teva was represented by Aitken Klee LLP.