Partial Success in Patent Infringement Appeal Leads to Costs Award

Date: 20260601 Docket: A-331-24 Citation: 2026 FCA 109 CORAM: [NAME] J.A. [NAME] J.A. [NAME] J.A. BETWEEN: [COMPANY]. Appellant Respondent by Cross-Appeal and [COMPANY]. Respondent Appellant by Cross-Appeal Dealt with in writing without appearance of parties. Order delivered at Ottawa, Ontario, on June 1, 2026.

REASONS FOR

ORDER BY: [NAME] J.A. CONCURRED IN BY: [NAME] J.A. [NAME] J.A. Date: 20260601 Docket: A-331-24 Citation: 2026 FCA 109 CORAM: [NAME] J.A. [NAME] J.A. [NAME] J.A. BETWEEN: [COMPANY]. Appellant Respondent by Cross-Appeal and [COMPANY]. Respondent Appellant by Cross-Appeal

REASONS FOR

ORDER [NAME] J.A. [ 1 ] This decision concerns costs in respect of an appeal by [COMPANY]. ([NAME]) and cross-appeal by [COMPANY]. ([NAME]) to this Court from a decision of the Federal Court in an action alleging infringement of four of [NAME]’s patents. The Federal Court (in 2024 FC 1439) concluded that none of [NAME]’s asserted patent claims was infringed, and that several of them were invalid for various reasons. [ADDRESS]’s decision (2026 FCA 59) allowed the appeal in part (restoring the validity of certain claims of three of the four patents in suit but maintaining the findings of non-infringement) and dismissed the cross-appeal. That decision also invited submissions on costs. [ 2 ] The parties exchanged submissions in chief on costs and then, several days later, submissions responsive to the other side. [ 3 ] [NAME] argues that, despite the restoration of the validity of certain of [NAME]’s patent claims, it was entirely successful in maintaining its defence against [NAME]’s patent infringement allegations. It argues that it should be awarded costs in a lump sum for both [NAME]’s appeal and its cross-appeal. It also argues that costs should be elevated (because the appeal had a very low chance of success) and that Rule 420 of the Federal Courts Rules , S.O.R./98-106 (the Rules), should apply to double costs from the date it made an offer to [NAME] to settle the appeal and cross-appeal, which offer was not accepted. As to quantum, [NAME] seeks $175,000, representing 47% of its actual legal costs. [ 4 ] [NAME] argues for no award of costs because success was divided. It notes that it was partially successful on the appeal and entirely successful on the cross-appeal. [NAME] argues that Rule 420 should not apply in this case because the result that it obtained (restoration of the validity of claims of three of the four patents in suit) was more favourable to it than [NAME]’s offer of $3,500. [NAME] also argues that the quantum of damages [NAME] seeks is out of step with lump sum costs awards in this Court. [ 5 ] Regarding Rule 420, I agree with [NAME] that it should not be applied in this case. While it is difficult to measure the value to [NAME] of having recovered the validity of several of its patent claims, including all of the claims of three of the patents in issue, I find it unlikely that it amounts to less than $3,500. [NAME] pays hundreds of dollars every year to maintain each of the three patents in which claims were recovered. I would not expect [NAME] to do that unless the total value to it of those patents is more than $3,500. [ 6 ] I disagree with [NAME]’s argument that success was divided. It is true that it managed to recover several patent claims and it was successful on the cross-appeal, but [NAME] had the more important overarching victory of successfully defending itself against allegations of patent infringement. [NAME] should be awarded costs. [NAME]’s unsuccessful cross-appeal was essentially to buttress its defence and would likely not have been commenced if not for [NAME]’s appeal. [ 7 ] Having said this, in recognition of [NAME]’s lack of success in its cross-appeal, I would award only a single set of costs on the appeal. [ 8 ] As to the quantum of costs, I disagree with [NAME]’s argument that [NAME]’s appeal had a very low chance of success. I would not award elevated costs. [ 9 ] The hearing of the appeal was a full day in duration, with the cross-appeal accounting for another half-day of hearing time. I note that [NAME], in its memorandum of fact and law on the appeal, proposed a lump sum award of costs in the amount of $25,000 in relation to the appeal. I find this amount reasonable and not out of line with what might have been awarded by following Tariff B of the Rules, recognizing that (i) Tariff B has recently been amended to have three columns instead of five, (ii) the unit value under Tariff B was recently raised to $200, and (iii) this was a complicated case justifying costs higher than in accordance with column 2 as contemplated in Rule 407. [ 10 ] I would award a lump sum of costs in the amount of $25,000 to be paid by [NAME] to [NAME]. As proposed by [NAME], without objection from [NAME], I would award post-judgment interest at a rate of $2.75%. "[NAME]" J.A. "I agree. [NAME]." "I agree. [NAME]." FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-331-24 STYLE OF CAUSE: [COMPANY]. v. [COMPANY]. DEALT WITH IN WRITING WITHOUT APPEARANCE OF PARTIES

REASONS FOR

ORDER BY: [NAME] J.A. CONCURRED IN BY: [NAME] J.A. [NAME] J.A. DATED: JUNE 1, 2026 WRITTEN REPRESENTATIONS BY : [NAME] For The Appellant/ respondent by cross-appeal [NAME] For The Respondent/ appellant by cross-appeal SOLICITORS OF RECORD : [COMPANY], Ontario For The Appellant/ respondent by cross-appeal [COMPANY], Ontario For The Respondent/appellant by cross-appeal