Pollard Banknote Limited v Babn Technologies Corp, 2016 FC 1193

Poor conduct during patent litigation can result in significantly elevated costs awards, even if the conduct is not so reprehensible as to warrant a lump sum award.

In this case, the Federal Court (“FC”) awarded costs to Pollard Banknote Limited (“Pollard”) calculated at the top of Column IV of Tariff B of the Federal Court Rules (“Rules”) and elevated by 50%, due to Scientific Games Products (Canada) ULC’s (“Scientific Games”) conduct during the case. [35-36]

Scientific Games’ Conduct Warrants Elevated Costs Award

This decision concerned the determination of costs following the finding that Scientific Games’ Canadian Patent No. 2,752,551 (“the ‘551 Patent”) was invalid. [1] Pollard sought a lump sum award of 50% of its legal fees and 100% of its disbursements, arguing that a trend in recent caselaw favours the awarding of lump sums based on a percentage of actual costs when dealing with sophisticated commercial litigants. [2-3] Pollard noted that a number of factors in Rule 400(3) of the Rules were relevant in this case and should result in a higher cost award. [4]

The FC stated that the court must be prudent in exercising its discretion when awarding costs to prevent parties whose conduct is not reprehensible from being ordered to pay costs of an unforeseeable quantum. [9] The FC found that although there were grounds that justified an elevated costs award, Scientific Games’ conduct was not so reprehensible as to justify a lump sum award at the level sought by Pollard. [10] Many of the factors alleged to warrant a higher or lower cost award were found to be insufficient in this case by the FC. The FC did, however find that Scientific Games’ conduct regarding three matters warranted elevating the fees portion of the costs by 50%. [36] These matters were (i) Scientific Games’ standard of review argument, which the FC found to little to no chance of success, (ii) the manner in which Scientific Games’ dealt with their expert witness’s testimony, who acknowledged on cross-examination that he had grossly mischaracterized the principal prior art reference in the case, and (iii) Scientific Games’ argument for a claim construction that defers to the Patent Office’s decision to allow the ‘551 Patent to issue, while ignoring the circumstances that led to that decision. [26, 27, 32] Additionally, the FC awarded Pollard $2,500 for costs associated with the present submissions due to Scientific Games’ disrespect of the Rules regarding font size and line spacing in its submissions on costs. [37]