2023 FC, 2023 FC 1214

Date: 20230908 Docket: T-484-21 Citation: 2023 FC 1214 Ottawa, Ontario, September 8, 2023 PRESENT: Madam Justice Pallotta BETWEEN: THE NOCO COMPANY, INC. Plaintiff/ Defendant by Counterclaim and GUANGZHOU UNIQUE ELECTRONICS CO., LTD., SUI CHENG LIMITED, SHENZHEN GOOLOO E-COMMERCE CO., LTD., AUKEY TECHNOLOGY CO. LTD. Defendants/ Plaintiffs by Counterclaim and SHENZHEN YIKE ELECTRONICAS CO., LTD., SHENZHEN DINGJIANG TECHNOLOGY CO.

LTD., SHENZHEN LIANKE ELECTRON TECHNOLOGY CO., LTD., SHENZHEN TOPDON ELECTRONIC CO., LTD., HUNAN LIANKE ELECTRONIC COMMERCE CO., LTD., SUBSTANBO INNOVATIONS TECHNOLOGY LIMITED LIABILITY COMPANY, AND SUBSTANBO INC. Defendants ORDER AND REASONS [ 1 ] These reasons on costs follow my decision that dismissed a motion for

summary trial in a patent action: Noco Company Inc v Guangzhou Unique Electronics Co Ltd , 2023 FC 208 . Guangzhou Unique Electronics Co Ltd, Sui Cheng Limited, Shenzhen Gooloo E- Commerce Co Ltd, and Aukey Technology Co Ltd (Moving Defendants) sought a declaration, pursuant to subsection 60(2) of the Patent Act , RSC 1985, c P-4 , that certain of their products do not infringe any claim of Canadian Patent No 2,916,782 titled " “Portable Vehicle Battery Jump Start Apparatus with Safety Protection” " . [ 2 ] The parties to the motion were invited to make costs submissions in writing. I.

The Parties’ Positions [ 3 ] The NOCO Company, Inc. (NOCO), as the successful party on the motion, asks for a lump sum cost award of $133,236.49, payable forthwith. The amount represents 40% of NOCO’s legal fees of $237,464.50 plus $38,250.69 for disbursements, calculated according to the bill of costs appended to NOCO’s cost submissions.

NOCO contends affidavit evidence is not required, as it does not claim any costs that are outside the direct knowledge of counsel: Nova Chemicals Corporation v Dow Chemical Company , 2017 FCA 25 at para 14 [ Dow ] . [ 4 ] NOCO submits that an award of 40% of legal fees incurred is within the 25% to 50% range recognized in the jurisprudence: Dow at para 17 . An award closer to the higher end of the range is justified by the complexity, importance, and result of the motion.

The Moving Defendants raised numerous complex issues of patent construction and infringement, NOCO responded fully to the motion and put its best food forward with evidence as it was required to do, NOCO was entirely successful, and the motion did not assist to narrow the issues in dispute or advance the action.

NOCO submits a cost award based on a second bill of costs appended to NOCO’s cost submissions, calculated in accordance with the highest column of Tariff B of the Federal Courts Rules , SOR/98-106 [ FC Rules ], would be an unjust award amounting to less than 16% of legal fees actually incurred. [ 5 ] NOCO states additional factors support a substantial cost award payable forthwith, including NOCO’s success on two contested

evidentiary motions relating to the

summary trial and the Moving Defendants’ refusal to accept NOCO’s proposals to narrow the scope of the

summary trial motion or consolidate issues with a related action. [ 6 ] NOCO further submits the circumstances justify an order for costs payable forthwith. The Moving Defendants failed to present well- defined non-infringement issues suitable for

summary trial, and the motion should not have been brought: FC Rules , r 401(2). Furthermore, the motion was effectively a stand-alone proceeding that did not contribute towards advancing the underlying action to trial. NOCO should not be required to bear its costs until a final disposition of the action. [ 7 ] The Moving Defendants submit the Court should award costs in the cause. NOCO’s success was limited, as it was not successful on any ultimate issue in dispute in the action. The substantive issues that consumed the bulk of the resources, time, and costs on the motion were not decided.

The Moving Defendants remain confident that they will be successful at trial, and as such, the Court should not award costs to NOCO that may be properly awarded to the Moving Defendants if successful at trial. [ 8 ] Alternatively, the Moving Defendants submit the Court should deny costs, as NOCO has provided no evidentiary basis for incurred fees. NOCO has failed to itemize its costs totals and its bare and unsupported submissions prevent meaningful review of claimed fees and no means of confirming what amounts were reasonably incurred for unique steps in the motion.

A similar approach was rejected by this Court in Georgetown Rail Equipment Company v Tetra Tech Eba Inc , 2020 FC 1188 at paragraphs 18 and 28 , and Dow Chemical Company v Nova Chemicals Corporation , 2017 FC 759 at paragraphs 18-20 . NOCO should have provided an affidavit confirming the fees allegedly invoiced by counsel were reasonably incurred, specific to the motion for

summary trial, and paid in full. [ 9 ] The Moving Defendants further submit there is no justification to award a lump sum amounting to 40% of NOCO’s legal fees. Outside of pharmaceutical cases, 25% of fees incurred is the appropriate starting point for a lump sum award, and there is no reason why the percentage should be increased for the motion: Bauer Hockey Ltd v Sport Maska Inc (CCM Hockey) , 2020 FC 862 at para 14 .

A party seeking a lump sum cost award must provide sufficiently detailed evidence so that the Court can be satisfied that the fees were reasonably incurred in respect of a step in the proceeding: Bristol-Myers Squibb Canada Co v Pharmascience Inc , 2021 FC 354 at para 7 ; Patterned Concrete Mississauga Inc v Bomanite Toronto Ltd , 2021 FC 792 at para 20 ; Dow at para 18 .

If the Court is inclined to award costs to NOCO, the Moving Defendants submit any cost award can only be made in accordance with the Tariff, as NOCO’s evidence does not meet the requirements for a lump sum award, and the award should be limited to Column III of the Tariff. Costs calculated according to Column III is the default—Column V is reserved for exceptionally difficult cases. The fact that NOCO’s claimed legal fees incurred far exceed the Tariff amount is not a factor for awarding increased costs: Quigley v Canada (House of Commons) , 2003 FCT 198 at para 7 .

The Moving Defendants submit the appropriate fee award under Column III of Tariff B is $16,480. [ 10 ] The Moving Defendants accept that NOCO incurred certain disbursements, but they challenge NOCO’s expert witness fees and printing disbursements. The fees for NOCO’s expert witness would necessarily involve significant time devoted to work on patent claim construction and infringement issues that remain undecided, and as such, only a fraction of the claimed expert fees would relate uniquely to the motion for

summary trial. Also, there is no way to determine whether the expert fees relate to a separate action before the Federal Court, where NOCO has sued different defendants on the same patent. The Moving Defendants submit expert witness fees, if awarded, should be capped at $10,000 for time spent preparing for and attending cross-examination, representing 10 hours for the cross- examination and 15 hours for preparation time, calculated at $400 per hour. The Moving Defendants submit printing disbursements of $788.39 should be denied or capped at $100 because the

summary trial proceeded on an electronic record. With these adjustments, the Moving Defendants submit reasonable disbursements, if awarded, would be $14,715.40. [ 11 ] Finally, the Moving Defendants state there is no basis to award costs payable forthwith following a

summary trial motion that did not result in a dispositive decision, when the substantive issues remain in dispute. [ 12 ] NOCO counters that its claimed fees incurred are sufficiently supported by the record. NOCO submits it has provided the same type of support for its claimed costs as was considered sufficient in Dow , where the Federal Court of Appeal noted that the trial judge was provided with both a Bill of Costs, as well as a

summary of Dow’s actual solicitor-client fees: Dow at para 22 . Furthermore, the principle stated in Dow is that an affidavit proving disbursements should accompany a request for lump sum costs when the disbursements are outside the knowledge of the solicitor: Dow at para 14 . [ 13 ] NOCO submits the bill of costs provided pertains to costs of the

summary trial. NOCO states that counsel conducted a line-by-line review of the invoices and excluded fees that were unrelated to the motion. The amounts claimed were actually incurred, and entirely reasonable for a

summary trial of this scope. NOCO contends the Moving Defendants speculate as to potential sources of error based on technical evidentiary issues, but they do not argue that NOCO’s claimed fees are excessive or unreasonable. [ 14 ] NOCO states it is entitled to its reasonable disbursements in defending the

summary trial motion, including expert fees. While it is possible the same expert may provide evidence at trial, the expert may not be willing, or available, to act as an expert at trial. The Moving Defendants’ suggestion that the expert’s fees may relate to a separate trial is unfounded. II. Analysis [ 15 ] Costs are in the full discretion of the Court, and governed by Rules 400 - 422 of the FC Rules . Rule 400(3) sets out a list of criteria that the Court may consider in exercising discretion. [ 16 ] Generally, costs are awarded to the successful party.

Costs are often assessed according to Tariff B of the FC Rules ; however, there are circumstances where a lump sum cost award is appropriate to further the objective of securing " “the just, most expeditious and least expensive determination” " of the proceedings: Dow at para 11 . [ 17 ] As NOCO correctly states, the practice of awarding a lump sum based on a percentage of fees reasonably incurred plus disbursements is well established: Dow at para 16 .

The Federal Court of Appeal has recognized a judicial trend to grant costs on a lump sum basis whenever possible, as costs calculated under the Tariff are arbitrary and do not reflect the actual fees incurred by a successful

litigant : Philip Morris Products SA v Marlboro Canada Limited , 2015 FCA 9 at para 4 ; Consorzio del Prosciutto di Parma v Maple Leaf Meats Inc , 2002 FCA 417 at paras 8-10 ; Venngo Inc v Concierge Connection Inc (Perkopolis) , 2017 FCA 96 at para 85 . [ 18 ] The Court has full discretionary power as to the amount and allocation of costs, and in exercising its discretion, the Court may consider the whole of the circumstances, including: (

i) the result of the proceeding; (ii) the importance and complexity of the issues; (iii) the amount of work; (iv) whether any step in the proceeding was improper or unnecessary; and (

v) any other relevant factor: FC Rules , r 400(1), r 400(3). [ 19 ] I am not persuaded that costs should be awarded in the cause. I see no basis to depart from the general rule that costs are awarded to the successful party.

Also, I agree with NOCO that a lump sum award calculated as a percentage of legal fees reasonably incurred is an appropriate basis to quantify a reasonable award of costs. [ 20 ] To arrive at an appropriate percentage, I have considered the complexity of the matter and the amount of work involved (particularly in view of the scope of the motion), the bill of costs submitted by NOCO, cost awards in similar proceedings, the objectives of cost awards, and the factors in Rule 400(3).

I am satisfied that a lump sum award of 40% of fees incurred reflects a reasonable percentage for this matter. [ 21 ] NOCO claims that it incurred legal fees of $237,464.50 to defend the motion. I accept that those fees were actually incurred, and moreover—based on my familiarity with the materials filed, the pre-hearing steps, and the work that evidently went into preparing for the hearing (by both sides)— the fees fall within the range I would expect. Nonetheless, the Moving Defendants raise a legitimate concern with the adequacy of information NOCO has provided to support the number it has put forward.

A party seeking a lump sum award should, as a matter of good practice, provide a sufficient description of the services provided in exchange for the fees to establish that it would be appropriate to be compensated for those services: Dow at para 18 . Therefore, while I acknowledge the complexity of the

summary trial motion, the fees incurred by NOCO in responding to it, and NOCO’s success on the evidentiary motions, in my view a lump sum award should be reduced to account for a level of uncertainty about whether it would be appropriate to compensate NOCO for the services provided . Accordingly, I have applied a 20% reduction to the fee base. The lump sum fee award, based on 40% of the reduced fee amount, is $75,988.

I am satisfied this represents a reasonable lump sum fee award in the circumstances of this case. [ 22 ] With respect to the disbursements, printing charges of $788.39 are not excessive, even though the matter proceeded based primarily on an electronic record. However, in the absence of sufficient details about the printing charges I have reduced the allowable amount by roughly 20%, to $630. In my view, NOCO’s remaining claimed disbursements, including expert fees, were necessary and reasonable.

NOCO is awarded disbursements totalling $38,092. [ 23 ] I am not persuaded by NOCO’s arguments that costs should be payable forthwith, either because the motion " “should not have been brought” " (Rule 401(2)) or in the Court’s discretion. The result on the motion was not a foregone conclusion. The motion did not lack a reasonable foundation, nor was it apparent from the outset that the motion had no chance of success. I decline to order that the cost award be paid forthwith. [ 24 ] In conclusion, NOCO is awarded costs in the all-inclusive amount of $114,080, payable by the Moving Defendants.

ORDER in T-484-21 THIS COURT ORDERS that : 1 . NOCO is awarded its costs of the motion, in the all-inclusive amount of $114,080. "Christine M. Pallotta" Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: T-484-21 STYLE OF CAUSE: NOCO COMPANY, INC v GUANGZHOU UNIQUE ELECTRONICS CO, LTD SUBMISSIONS ON COSTS CONSIDERED AT OTTAWA, ONTARIO PURSUANT TO THIS COURT’S JUDGMENT AND REASONS IN 2023 FC 208 ORDER AND REASONS : PALLOTTA J. DATED: SEPTEMBER 8, 2023 WRITTEN SUBMISSIONS BY :

Daniel S. Davies Matthew Norton FOR THE PLAINTIFF/ DEFENDANT BY COUNTERCLAIM John Norman Will Boyer Alexander Camenzind FOR THE DEFENDANTS/ PLAINTIFFS BY COUNTERCLAIM SOLICITORS OF RECORD : Smart & Biggar LLP Barristers and Solicitors Ottawa, Ontario FOR THE PLAINTIFF/ DEFENDANT BY COUNTERCLAIM Gowling WLG (Canada) LLP Barristers and Solicitors Ottawa, Ontario FOR THE DEFENDANTS/ PLAINTIFFS BY COUNTERCLAIM