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Battery battle: Duracell’s good faith sparks win over legal costs

Energizer and Gillette (Duracell) could not settle on costs following a decision of the Federal Court. Although Energizer was awarded an injunction and damages for depreciation of the goodwill attached to two of its trademark registrations, it was unsuccessful with concerning several other claims (see 2023 FC 804). This led the Court to examine how the Federal Court Rules apply to split decisions. Rule 400(1), which grants the Court full discretion over costs awards, was central to the Court’s analysis. The Court noted that when there is a split result, “A ruling of “no-costs … is not uncommon …, but by no means mandated” In making costs awards, “fairness and reasonableness are overarching considerations.”

The Court noted that while Energizer had succeeded on the issue of depreciation of goodwill, Duracell had effectively defended against claims of misleading statements, provided evidence showing that Energizer had permitted its activities, and had made reasonable settlement offers. Rule 420 (which allows for double costs in some circumstances when pre-trial settlement offers are rejected) was considered but ultimately found by the Court not to benefit either party directly. Instead, the Court assessed Duracell’s settlement offers under Rule 400(3) and deemed them to have been substantive and made in good faith.

Several factors influenced the Court’s decision under Rule 400(3). Firstly, the result and amounts claimed and recovered were in Duracell’s favour due to Energizer’s limited success and the significant disparity between its claims and the recovery awarded. The complexity and work involved in the case were found by the Court to be a neutral factor, as both parties contributed equally. Settlement negotiations again favoured Duracell, as the Court deemed their offers to have been reasonable and exceeded the final award. Neither party exhibited conduct warranting additional cost consequences, according to the Court. The fact that the Court had disallowed some of Duracell’s expert evidence was considered of minor relevance, leading to a 50% discount on the costs related to that expert.

Ultimately, the Court awarded Duracell $450,000, which represented 13% of its legal fees and 50% of its disbursements, rounded up. Additionally, Duracell was entitled to post-judgment interest at 5% annually.

The full decision can be read here.