Federal Court Awards Elevated Costs On The Basis Of Refusal To Bifurcate

• Published date: 16 June 2022
• Subject Matter: Intellectual Property, Litigation, Mediation & Arbitration, Patent, Trials & Appeals & Compensation
• Law Firm: Bereskin & Parr LLP
• Author: Mr Adam Bobker and Bruna Kalinoski

Can a litigant be penalized with a higher cost award for its refusal to agree to bifurcate a patent infringement action? A recent Federal Court decision suggests so.

In Paid Search Engine Tools, LLC v. Google Canada Corporation, 2022 FC 519 ("Paid Search"), Justice McDonald accepted Google's argument that the increased litigation costs owing to Paid Search Engine Tools refusal to bifurcate should bear on a higher costs award. Google did not seek a lump sum, so the Court ultimately awarded costs at a higher level by reference to the upper range of Column of IV of Tariff B.

Up to this point, the Federal Court has not typically given any weight to a party's failure to seek bifurcation or refusal to agree to bifurcation as a factor relevant to increasing the ultimate costs award. In two prior cases, the successful litigants had asked the Court to consider the role of litigation conduct in the assessment of costs, including the tactical decisions of the adverse party around bifurcation. However, unlike in Paid Search, the Court concluded that the parties' strategic choices were already reflected in the base amount of the calculation of the lump sum award, which was based on legal fees. The Court did not increase the percentage of the recovery based on the decision not to bifurcate.

In Seedlings Life Science Ventures, LLC v. Pfizer Canada ULC, 2020 FC 505 ("Seedlings"), Pfizer submitted that Seedlings' failure to seek bifurcation, among other things, should weigh in favour of a higher costs award. The Court rejected the argument and held in paragraph 25 that:

"[...] While it is common for parties to seek bifurcation in intellectual property cases, they are not required to do so. Nor is it always the case that bifurcation will expedite a trial [...]. Seedlings will already face the consequences of not bifurcating the trial [...] as the costs award will be based on an amount that includes the fees Pfizer spent defending the compensation aspects of the claim, with respect to both reasonable royalty and accounting of profits. Moreover, Seedlings will have to pay for the fees of the experts Pfizer retained to provide opinion evidence about compensation issues. It is not necessary to punish Seedlings further by raising the percentage of recovery."

Subsequently, in Bauer Hockey Ltd. v. Sport Maska Inc. (CCM Hockey), 2020 FC 862 ("Bauer"), CCM argued that it should be entitled to a higher percentage of lump-sum costs owing to Bauer's litigation conduct in, among...