Federal Court of Appeal Upholds Lower Court Costs Award of Over $1 Million

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On January 14, 2015, the Federal Court of Appeal released its reasons and judgment in Philip Morris Products S.A. v. Marlboro Canada Limited, 2015 FCA 9. The Court dismissed the appeal, finding that Justice de Montigny of the Federal Court made no reviewable error in awarding the respondents over $1 million in legal costs and disbursements. The award amounted to nearly half of the respondents’ actual costs.

The appeal decision and Justice de Montigny’s underlying reasons are a stark reminder to potential litigants that substantial costs awards may be granted in complex intellectual property disputes even in the absence of any party misconduct. Although the Federal Courts Rules prescribe default tariff rates for costs awards, the court has discretion to award a lump sum in lieu of, or in addition to, any costs assessed by reference to the tariff. Indeed, the Federal Court of Appeal suggested that there is a “judicial trend” to grant costs on a lump sum basis, particularly when dealing with sophisticated commercial parties.

In reasons incorporated by reference to the decision under appeal, Justice de Montigny explained that a costs award should bear some semblance to the actual costs of the litigation, even if this requires departing from tariff rates. He observed that the present action required voluminous evidence and involved novel and complex issues, some of which had never been raised in Canada or internationally. As such, the amount of work done and the complexity of the issues were major factors leading to his sizable costs award.




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