Date: 20210422
Dockets: T-97-19
T-98-19
T-503-19
T-504-19
Citation: 2021 FC 354
Ottawa, Ontario, April 22, 2021
PRESENT: The Honourable Mr. Justice Zinn
Docket: T-97-19
BETWEEN:
BRISTOL-MYERS SQUIBB CANADA CO. AND BRISTOL-MYERS SQUIBB HOLDINGS IRELAND UNLIMITED COMPANY
Plaintiffs
and
PHARMASCIENCE INC.
Defendant
Docket: T-98-19
AND BETWEEN:
BRISTOL-MYERS SQUIBB CANADA CO. AND BRISTOL-MYERS SQUIBB HOLDINGS IRELAND UNLIMITED COMPANY, AND PFIZER INC.
Plaintiffs
and
PHARMASCIENCE INC.
Defendant
Docket: T-503-19
AND BETWEEN:
BRISTOL-MYERS SQUIBB CANADA CO. AND BRISTOL-MYERS SQUIBB HOLDINGS IRELAND UNLIMITED COMPANY, AND PFIZER INC.
Plaintiffs
and
SANDOZ CANADA INC.
Defendant
Docket: T-504-19
AND BETWEEN:
BRISTOL-MYERS SQUIBB CANADA CO. AND BRISTOL-MYERS SQUIBB HOLDINGS IRELAND UNLIMITED COMPANY
Plaintiffs
and
SANDOZ CANADA INC.
Defendant
JUDGMENT AND REASONS
[1] The Plaintiffs [collectively BMS] commenced these actions pursuant to subsection 6(1) of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 to prevent the Defendants, Pharmascience Inc. [Pharmascience] and Sandoz Canada Inc. [Sandoz] from obtaining notices of compliance to market their generic versions of BMS’s product ELIQUIS™. On consent order, the actions were tried together on a coordinated basis.
[2] After 12 days of a hard-fought trial, and two days of closing arguments, the Court found that the two BMS patents at issue (Canadian Patent No. 2,461,202 [the 202 Patent] and Canadian Patent No. 2,791,171 [the 171 Patent]) were valid and would be infringed by the Pharmascience and Sandoz products. Costs were awarded to BMS “on the usual basis”
with a hope that the parties might reach agreement on costs.
[3] Regrettably, the issue of costs has become equally hard-fought.
[4] BMS submits that the Court should award it a lump sum for costs equal to 50% of the actual fees incurred ($3,579,700) and 100% of its reasonable disbursements ($420,833.28) for a total of $2,210,684. Alternatively, it seeks costs at the upper end of Column V of the Tariff, plus disbursements for a total of $695,330.06.
[5] The Defendants oppose a lump sum award of costs and are of the view that costs ought to be awarded based on the Tariff. They also raise many objections to items claimed as fees and challenge the “reasonableness” of some expenses in relation to the expert witnesses. They further submit that there is a double accounting because of an earlier action concerning these same patents brought by BMS against Apotex Inc. (T-351-18). It was discontinued by BMS on November 28, 2019, just prior to trial.
[6] It is fair to say that the Court is moving away from the Tariff in intellectual property trials and towards awards of fixed costs. The Chief Justice in Allergan Inc v Sandoz Canada Inc, 2021 FC 186 [Allergan] at paragraph 22 observed that this is “increasingly common” and Justice Grammond in Bauer Hockey Ltd v Sport Maska Inc (CCM Hockey), 2020 FC 862 at paragraph 13, said it “has become the norm.” The Federal Court of Appeal in Philip Morris Products SA v Marlboro Canada Limited, 2015 FCA 9 at paragraph 4 noted the “judicial trend to grant costs on a lump sum basis whenever possible.”
[7] At the same time, however, as is pointed out by Pharmascience, the Federal Court of Appeal in Nova Chemicals Corp v Dow Chemical Co, 2017 FCA 25 [Nova FCA] at paragraph 18 cautions that a party seeking a lump sum award of costs must provide sufficient detailed evidence so that the court can be satisfied that the fees were actually incurred. Moreover, at paragraph 19, it provides direction to judges when fixing costs:
While, as noted above, a judge fixing costs on a lump sum basis has a wide discretion, the discretion is not unfettered. As noted, it is not a matter of plucking a number out of the air. The discretion must be exercised prudently. The criteria set forth in Rule 400(3), the case law and the objectives that underlie awards of costs are all relevant considerations. Efficiency in the administration of justice is one value that underlies lump sum awards, but costs must also be predictable and consistent so that counsel can properly advise and clients can make informed decisions about litigation risks. The ability to forecast cost consequences also bears both on the ability of parties to settle and on the question of access to the courts.[emphasis added]
[8] The Chief Justice in Allergan at paragraphs 19 – 36 sets out the costs principles in patent litigation and I will not repeat them. He observes at paragraph 27 that in patent litigation “a lump sum award in the range of 25-50% of actual fees, plus reasonable disbursements, is often made.”
He also observes that in approaching this assessment “it should be kept in mind that determining the level of a lump sum award ‘is not an exact science’.”
Further, at paragraph 35, he says that adopting “the mid-point of the 25%-50% range as the starting point for determining a lump sum cost award”
provides a better incentive “for parties to conduct their litigation in a manner that permits the Court to achieve its objective of shorter trials in the drug patent area.”
[9] There are two main issues for this Court: (1) whether a lump sum award of costs is appropriate in these actions and (2) if so, what is an appropriate amount.
[10] One factor favouring a lump sum award is where “costs generated even at the high-end of Column V of Tariff B bear little resemblance to the objective of making a reasonable contribution to the cost of litigation”
: see Nova FCA and Apotex Inc v Shire LLC, 2021 FCA 54 [Shire FCA]. BMS says that its costs at the high-end of Column V, and permitting fees for four counsel, amounts to approximately $243,000, or approximately 6.8% of the fees it incurred.
[11] Other factors have been noted by the Federal Court of Appeal in Nova FCA and Shire FCA, and by the Federal Court in the authorities that the parties place before the Court in their submissions. In my view, taken together the relevant factors favour a lump sum award for the following reasons.
[12] BMS was entirely successful in this litigation. It involved two separate patents, both of which BMS had to defend. Although the Defendants coordinated their defences, BMS was still faced with the evidence of seven expert witnesses. Additionally, it had to prepare to cross-examine another expert whom, at the last minute, the Defendants chose not to call. The stakes in the litigation were very high. ELIQUIS is the most prescribed direct oral anticoagulant, and it occupies a lucrative market. The two patents at issue provide BMS with protection to 2031. It is not surprising that BMS and the Defendants left no stone unturned to advance their respective positions given the rewards to be reaped if successful.
[13] In this vein, it is notable that the Defendants raised virtually every attack on these patents that the law provides. Many were of questionable application based on the evidence. The 202 Patent was attacked based on insufficiency, double patenting, anticipation, obviousness, overbreadth, inutility, and on insufficiency and inutility as a selection patent. The 171 Patent was attacked based on obviousness, overbreadth, insufficiency, inutility, and ambiguity. BMS was required to respond to each basis of attack for each patent.
[14] The Defendants submit that because they coordinated their defences, BMS enjoyed a reduction in its costs, and that this was not, as BMS submits the equivalent of two actions. I must disagree. While the coordination somewhat reduced Court time, having to fight two challengers at the same time is no less difficult than fighting each separately at different times. In many respects, it may create a greater challenge.
[15] BMS also observes that the costs it incurred in these actions were reduced because of the prior Apotex litigation. It says that its counsel billed over 8,000 hours of work at a value of nearly $5.5 M in that litigation and that “they were able to leverage this work to the within actions, significantly bringing down the overall cost of these actions from what it would have been had the Plaintiffs litigated the ELIQUIS patents for the first time against the Defendants.”
The submission that the Defendants’ costs obligation was reduced by virtue of the Apotex action strikes me to be fair and reasonable.
[16] The complexity and importance of this litigation to the parties is reflected in the number of counsel involved. Pharmascience and Sandoz each have four counsel listed on the backing page of the Judgment, and BMS has seven. Counsel for these parties included many of the most senior and experienced patent litigation lawyers in Canada.
[17] All of these factors cause me to conclude, all other things being equal, that a lump sum award of costs would be appropriate. However, as detailed below, I find that I am unable to fix an appropriate lump sum amount.
[18] In its submissions in support of its claim for a 50% lump sum of the fees incurred and its disbursements, BMS submits the following:
To support the reasonableness of the costs being claimed herein, the Plaintiffs have included with these submissions the following evidence:
(a) A Bill of Costs setting out in detail all incurred legal fees and disbursements;
(b) Copies of all legal invoices;
(c) Detailed descriptions of the work performed for each invoice;
(d) Copies of all disbursement invoices, including for experts; and
(e) An affidavit from Christina Vincent, a law clerk at McCarthy Tétrault, who explains how the above detailed information was generated from McCarthy’s accounting system, and confirms that the costs claimed have been paid, or will be paid when due.
[19] The Defendants raise several issues arising from these documents and the manner in which this litigation proceeded that lead me to conclude that I am unable to make a lump sum award of costs. The following sets out my principal concerns.
[20] First, as the Defendants note, the invoices have been “redacted for privilege and confidential banking information.” They submit that the redaction of the description of services performed is not proper, and makes any informed assessment of the work performed impossible. Although BMS has provided a Table of Invoices that summarizes the redacted entries it is hardly a substitute for detailed docket entries.
[21] I agree with the Defendants that BMS should not have provided redacted invoices for services performed. Had this been before the assessment officer that detail would be expected. When a party is seeking its costs, it must disclose the detail of its dockets, absent a finding by the Court that this is truly privileged information. In most cases, it will not be, as it will not disclose any solicitor and client privilege.
[22] The scant detail offered in the Table of Invoices is insufficient to satisfy myself as to what work was performed, what that work involved, and that it relates to these actions.
[23] Second, the Defendants also note that two invoices describe the services to be in relation to the Defendants’ reply motions; however, the Court determined that each party would bear its own costs of those motions. Accordingly, they correctly point out that BMS has “no basis to seek recovery of such costs.” Absent detailed invoices, it is impossible to determine the amount of fees claimed in this regard.
[24] Third, it is noted that the January 2020 invoice states “corresponding with Dr. Weitz, Dr. Greenlee and Dr. Taft re: expert reports” but none of those experts’ invoices indicates any services performed in January 2020. BMS has not directly responded to this observation and it leaves open the question of whether those services were actually performed.
[25] Fourth, invoice 3167680, which has fees in excess of $250,000, does not reference this litigation but the McT-Litigation. Again, I am unable to conclude whether this is properly claimed by BMS as fees it incurred.
[26] Fifth, the fees charged by the experts has been complicated because of the Apotex action. The Defendants point to the report prepared by Dr. Davies in the Apotex matter and assert that his $166,000 fee to prepare his report is excessive given that much of it is reproduced from his Apotex report. This observation calls out for an affidavit from Dr. Davies explaining his charges and attesting that they do in fact relate to these actions and not the Apotex action. A similar concern relates to others who provided expert reports in both Apotex and these actions.
[27] For these reasons, any attempt to fix a lump sum award based on the materials filed would be akin to plucking a number out of the air.
[28] Therefore, I will be sending this matter to an assessment officer. A few discrete items need to be addressed, as they will no doubt be raised again by the Defendants before the assessment officer.
[29] First, the Defendants raise invoice 3162786 which they say relates not to fees billed but to a $500,000 bonus for success. BMS entered into a fixed fee arrangement with its counsel. If successful, counsel could bill a further sum of $500,000, which it did by way of this invoice. However, while not previously billed, counsel says that they performed legal services that were not billed, and that were in excess of $500,000. If so, then on this basis, the sum claimed is recoverable.
[30] Second, the Defendants take issue with the fees charged by the experts and in particular, the hourly rates of Dr. Weitz ($1,000 USD) and Dr. Davies (£550 GBP). I am satisfied that although high, those rates are appropriate given their expertise.
[31] Third, they challenge the fees charged by Dr. Greenlee, as he was not called to testify. Like the Defendants, BMS chose not to call one of the experts it had retained. He prepared a report that was filed in these actions. It was a last minute litigation decision and I am satisfied that his fees are justified and recoverable.
[32] No objection was taken to BMS being compensated for all four counsel at trial, and I agree that all are recoverable fees in these circumstances.
[33] Given the factors set out in the opening paragraphs of these reasons, I find that costs at the upper end of Column V of Tariff B are appropriate. BMS submits that costs assessed on that basis and including its disbursements is $695,330.66. This Court cannot blindly accept that given the difficulties noted earlier with the evidence; however, the Court hopes that the parties will have a dialogue as to whether the Defendants are prepared to accept that sum, rather than challenge the fees and disbursements before an assessment officer.
JUDGMENT IN T-97-19, T-98-19, T-503-19 and T-504-19
THIS COURT’S JUDGMENT is that having awarded the Plaintiffs their costs of these actions, and the Court declining to fix costs at a lump sum amount, costs are to be taxed in accordance with these Reasons at the upper end of Column V of Tariff B.
“Russel W. Zinn”
Judge
FEDERAL COURT
SOLICITORS OF RECORD
DOCKETS:
t-97-19
BRISTOL-MYERS SQUIBB CANADA CO ET AL v PHARMASCIENCE INC
T-98-19
BRISTOL-MYERS SQUIBB CANADA CO ET AL v PHARMASCIENCE INC
T-503-19
BRISTOL-MYERS SQUIBB CANADA CO ET AL v SANDOZ CANADA INC
T-504-19
BRISTOL-MYERS SQUIBB CANADA CO ET AL v SANDOZ CANADA INC
JUDGMENT AND REASONS:
zinn J.
DATED:
APRIL 22, 2021
APPEARANCES:
Steven Mason
David Tait
Rebecca Crane
Sanjaya Mendis
Jamie S.S. Holtom
FOR THE PLAINTIFFS
Kavita Ramamoorthy
Neil Fineberg
Belle Van
Ben Wallwork
For The defendant
PHARMASCIENCE INC
Carol Hitchman
Nathaniel Dillonsmith
Nick Kawar
Rae Daddon
FOR THE defENDANT
sandoz canada inc
SOLICITORS OF RECORD:
McCarthy Tétrault LLP
Barristers and Solicitors
Toronto, Ontario
For The plaintiffs
Fineberg Ramamoorthy LLP
Barristers and Solicitors
Toronto, Ontario
FOR THE defendant
pharmascience inc
Sprigings IP Law
Barristers & Solicitors
Toronto, Ontario
For The defendant
sandoz canada inc