Eli Lilly Canada Inc. v. Apotex Inc., 2015 FC 1165; and Eli Lilly Canada Inc. v. Apotex Inc., 2015 FC 1167 (Gleason, J.)
October 15, 2015
Adrian Howard of Borden Ladner Gervais LLP, for Eli Lilly Canada Inc. (Applicant and Respondent Patentee)
Harry B. Radomski, Jordan Scopa, and Jaro Mazzola of Goodmans LLP, for Apotex Inc. (Respondent)
William F. Pentney for the Minister of Health
These were concurrent decisions on costs flowing from two prohibition applications Lilly had filed against Apotex pursuant to section 6 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133. Both applications concerned patents relating to the active ingredient tadalafil. The Court had granted one application, and dismissed the other. In both cases, the Court had determined that costs would follow the event, remitted the issue of the quantification of costs to the parties, and retained jurisdiction to make a costs award in the event that the parties were unable to agree on the quantum of costs. The parties were unable to reach an agreement on costs in either proceeding. In both cases, the principal points of disagreement between them were the following:
Whether assessable costs should be calculated with reference to the mid-point or upper end of Column IV of Tariff B to the Federal Courts Rules, SOR/98-106 [the Rules]; and
Whether assessable costs should be affected by the fact that Apotex failed to ultimately pursue a number of the claims it raised in its Notice of Allegation, only dropping them after Lilly filed its Memorandum
The Court’s first judgment, 2015 FC 1165, concerned the quantum of costs to be awarded to Lilly in T-1598-13, the successful prohibition application.
First, the Court determined that in this case, assessable costs should be calculated in accordance with the mid-point of Column IV of Tariff B to the Rules. In reaching this conclusion, it cited a lengthy list of cases in which the costs in prohibition applications were set at the mid-point. It also referenced Eli Lilly Canada v. Mylan Pharmaceuticals ULC, 2015 FC 17, 249 ACWS (3d) 191 [Mylan Tadalafil], a prior prohibition application concerning tadalafil. In that case, Lilly had agreed to costs at the mid-point of Column IV. The Court found that Lilly’s agreement to costs at the mid-point in that case constituted “evidence of [the mid-point] being the appropriate level for costs”. The Court also held that because Lilly had already argued many of the same issues in Mylan Tadalafil that it argued in T-1598-13, the case in T-1598-13 was less complex, so there was no reason to increase costs beyond the mid-point of Column IV of Tariff B.
The Court then turned to Lilly’s contention that Apotex had engaged in conduct that warranted increasing the cost award by applying a multiplier to the amount provided under the mid-point of Column IV of Tariff B. The conduct Lilly impugned was the fact that Apotex failed to ultimately pursue a number of the claims it raised in its Notice of Allegation, only dropping them after Lilly filed its Memorandum. Lilly argued that this conduct caused it to waste time and money preparing evidence on the issues that Apotex dropped. It also asserted that this conduct led it to address the dropped claims in its Memorandum, and to consequently abbreviate its arguments on the issues that Apotex actually pursued. The Court accepted Apotex’s counterargument that the weakness of the most significant claims it dropped became most apparent after similar claims were dismissed in Mylan Tadalafil, shortly before the memoranda were filed in T-1598-13. It likened these circumstances to those in Sanofi-Aventis Canada Inc. v Apotex Inc., 2009 FC 1138, [2009] FCJ No 1626, aff’d 2012 FCA 265, in which Justice Snider noted that, absent a clear abuse of process, a party should not be penalized for dropping arguments after hearing the evidence. As a result, the Court found no reason to award a multiplier in T-1598-13.
The second decision, 2015 FC 1167, concerned the quantum of costs to be awarded to Apotex in T-1599-13, the prohibition application that had been dismissed. The Court issued a brief judgment stating that the reasons set out in 2015 FC 1165 “determine that the same parameters should apply to the calculation of costs in this file”. Accordingly, the Court held that Apotex’s costs should be assessed at the mid-level of Column IV of Tariff B, and that Apotex had not engaged in any conduct that would warrant a reduction in its costs award.
By: Kathryn May