Federal courts seeking feedback on cost awards

Intellectual property lawyers are bracing for change as the federal courts move forward with an effort that could see much higher cost awards as a way of discouraging unnecessary and vexatious litigation.

Earlier this month, the rules committee for the Federal Court and Federal Court of Appeal issued a discussion paper that weighs the pros and cons of various approaches to cost awards.

As it stands, Canada’s federal courts rely on a tariff-based scheme where legal services are assigned a category from which a dollar amount is derived. These costs, which often amount to mere thousands, are insignificant for corporations spending millions on patent wars. That, in turn, has led to abuses by litigants dragging out proceedings for strategic purposes.

Alan Macek, an intellectual property lawyer at Dimock Stratton LLP, points out that the federal courts also hear immigration and citizenship cases where the tariff-based system offers predictable costs for individual litigants and improves access to justice.

“Different incentives are at work here, whether you’re trying to provide access to justice, where an individual trying to advance their case is not going to get hit with extremely onerous costs for advancing what they think is a legitimate case,” says Macek.

“And then on the other hand, the court wants tools to guide behaviour of well-heeled litigants who may be bringing motions that are not needed . . . and wants a tool to curb some of that behaviour, which they may see as being abusive, through a cost mechanism.”

One question posed by the discussion paper asks: “Do you think the Courts’ approach to costs should be applied uniformly or be adapted based on litigation type or whether the unsuccessful party is a self-represented litigant?”

The question alludes to a “principle of proportionality” that will likely figure into whatever reform the courts decide to implement. “A single set of tariffs that may apply to an individual trying to advance their case may not apply to a Fortune 500 company that’s spending millions on their legal,” says Macek in explaining the issue.

That being said, anything that stops at merely rewriting the rules or defining the characteristics of unnecessary litigation will be counterproductive, says Macek. He thinks the courts need to be able to exercise stronger discretion on a case-by-case basis when it comes to cost awards.

“A certain motion being brought in one type of proceeding may be seen as entirely proper, and the same type of motion being brought elsewhere is going to be seen as abusive. It really depends on the context,” he says.

For his part, Macek thinks the court needs to combine a more dynamic use of discretionary power with clearer lines of communication through guidelines and practice notices for counsel.

The rules committee will be accepting feedback on research from the discussion paper until Nov. 23, 2015.

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