Federal Court of Appeal Upholds $6.5 Million Cost Award for Patent Infringement

On February 6, 2017, the Federal Court of Appeal upheld a cost award totalling $6.5 million granted to Dow Chemical Company (Dow) by Justice O’Keefe in Nova Chemicals Corporation v. Dow Chemical Company, 2016 FC 91. At the time of this publication, we are not aware of a larger cost award granted by the Federal Court for patent infringement.

In the liability phase of the action (previously reported by E-TIPS Newsletter here), the Court found that Nova Chemical Corporation (Nova) had infringed Dow’s patent relating to film-grade polymers which are used in packaging, such as heavy duty bags (2014 FC 844, affirmed 2016 FCA 216).

The $6.5 million award comprised $3.6 million in disbursements and $2.9 million in legal fees. Disbursements are granted if they are deemed reasonable and necessary. Legal fees, by default under the Federal Court Rules, are determined in accordance with a tariff. However, under Rule 400 the court has the discretion to award legal fees that are not based on the tariff. If the tariff had been used in this case, Dow would have only recovered 11% of its actual legal fees. Instead, the $2.9 million awarded represents approximately 30% of its actual legal fees.

Justice O’Keefe noted a number of factors that he considered in making the decisions to award costs outside of the confines of the tariff. These factors include: the complexity of the technology, the duration of product testing, the length of the trial, and the arguments submitted in closing written submissions (which were 700 pages in length).

On appeal, Nova argued that there was insufficient evidence to establish that the legal fees were reasonable. However, the Federal Court of Appeal rejected this argument and dismissed the appeal finding that there was no error of law or palpable and overriding error on the part of the judge.