Update on Allarco Litigation – Allarco’s Potential Exit Costs in the Federal Court

As I wrote earlier on January 29, 2020,  Allarco is liable to pay costs arising from its discontinuance of its “unusual” (as I described it) Federal Court action. Moreover, Allarco is liable to pay costs of the lengthy motion hearing of January 23, 2020 supported by a reportedly very large amount of documentation in which is sought unsuccessfully to punt on the Federal Court costs issue and kick it over to Alberta or, alternatively. to adjourn or stay the costs matter and a “laundry list” of other requests for relief. As the Case Management Judge Furlanetto noted in an unusually blunt order dated January 27, 2020:

The evidence that the Plaintiff filed on the adjournment motion was lengthy and included five affidavits, including two from experts, the vast majority of which was not relevant to the requested adjournment and related to issues involving the merits of the proceeding. None of the affidavits were previously filed in the proceeding, although one asserted it was in support of a motion for interlocutory injunction, which had never been brought in the proceeding and was not pending before the Court.

As I noted, Allarco has discontinued its Federal Court action and started a new one – including an application for an interlocutory injunction – in the Alberta Court of Queen’s Bench. This is presumably because the Alberta court in theory has a wider jurisdiction to rule on some of the more unusual claims being advanced, such as conspiracy, intentional interference, etc.

Pursuant to the Order of the Case Management Judge, the “4Stores” retailers (as they are being called), have submitted material on February 3, 2020 to substantiate their costs demands. Here is my summary of the bottom line of the amounts they are seeking:

Allarco adjournment etc. motion heard January 23, 2020 – costs sought by 4Stores:                       $74,123.70
Costs following discontinuance sought by 4Stores:	$453,033.03
Total Costs sought by 4Stores in Federal Court as of February 3, 2020:	$527,156.73

Here is the 4Stores complete submission as filed in the Federal Court on February 3, 2020.

Allarco will have until February 13, 2020 to respond and the 4Stores will have until February 18, 2020 to reply.  The Court indicated that “The Defendants’ motion for costs shall thereafter be dealt with based on the written record filed. Should the parties be of the view that additional oral submissions are needed, such request shall be dealt with through case management.”

This is an unusually large amount of costs being sought upon discontinuance at such an early stage of litigation in the Federal Court. That said, this is very “unusual” litigation and the proceedings to date have been very unusual. All the parties are sophisticated, and all the counsel are experienced. So, this is bound to be interesting and potentially important.

I’ll update as soon as I have further useful information.

HPK

PS - May 14, 2020

Here's the Federal Court Docket entry  from May 13, 2020.

Order dated 13-MAY-2020 rendered by Angela Furlanetto, Prothonotary Matter considered without personal appearance The Court's decision is with regard to Motion Doc. No. 19 Result: 1) Defendant Staples Canada awarded costs of $19,700.28; 2) defendant Best Buy Canada awarded costs of $19,978.50; 3)defendant Canada COmputers awarded costs of $2,066.93; 4) defendant London Drugs awarded costs of $17,671.16; 5) Costs shall be paid by plaintiff within 60 days of end of suspension period under 29-APR-2020 Practice Direction (re: Covid-19). Filed on 13-MAY-2020 copies sent to parties entered in J. & O. Book, volume 1453 page(s) 386 - 402 Interlocutory Decision

That's a total of $59,416.87‬ - much less than the total amount sought. I am trying to determine whether there's still more to come and to obtain any written reasons that the Court may have provided. This is not easy at this time due to COVID.

PPS - May 20, 2020

Here's the Court's Order of May 13, 2020 regarding costs. 

Last Minute Discontinuance of Patent Case on “Promised Utility” in Supreme Court of Canada

In a very unusual development in a case that promised to be very interesting and important both domestically and internationally, Apotex has filed a notice of discontinuance literally on the day before and figuratively on the steps into the Court in its appeal against Sanofi in the Supreme Court of Canada that was to have been heard earlier today in Apotex et al v. Sanofi et al.  The notice states that “The Appellants wholly discontinues this Appeal on a without costs basis on consent.” This language suggests that some kind of settlement agreement – presumably very confidential – must have been concluded.

I can think of only one other similar situation in the IP and related galaxies at the Supreme Court of Canada level where an appellant discontinued a closely watched appeal at a late stage, and this was in  Vidéotron Ltée, et al. v. Her Majesty the Queen, et al., where the issue was whether certain broadcasting fees were a tax or a regulatory charge. That discontinuance was filed 12 days before the hearing that had been scheduled for October 19, 2009.

We recently saw an abrupt discontinuance of another notable appeal in the Federal Court of Appeal in the copyright litigation involving Richard Warman and Fournier v. National Post. This case was discontinued 5 days before the hearing for February 19, 2014.

Private parties, of course, have every right to settle their cases. However, when the Supreme Court of Court decides to hear cases that require leave to appeal, it is because “the Supreme Court is of the opinion that any question involved therein is, by reason of its public importance or the importance of any issue of law or any issue of mixed law and fact involved in that question, one that ought to be decided by the Supreme Court or is, for any other reason, of such a nature or significance as to warrant decision by it, and leave to appeal from that judgment is accordingly granted by the Supreme Court.”

So, it can be very frustrating to the public and particularly to interveners when a case is discontinued and certain questions that are obviously of “public importance” may be left in limbo, even though the decision below technically is left standing.

In today’s discontinued case, the “promise doctrine” and “utility” are also very much are the heart of the Eli Lilly NAFTA Chapter 11 investor/state challenge, although today’s case and the NAFTA case are not directly linked. However, whatever the Court might have ruled in today’s discontinued case might well have been of some considerable interest in the NAFTA case that we will hear much about in the future as it unfolds.

HPK

Warman and National Post Drop Appeals - Good News for Canadian Copyright Law

Just in time for  for Valentine's Day, though they probably didn't intend it that way, the National Post and Richard Warman have discontinued their appeals from the decision from Justice Rennie. These were to have been heard on February 19, 2014 here in Ottawa. This is a very pleasant surprise and lets Justice Rennie's decision stand. It will be interesting to see what happens with costs, since this went down to the wire. Such a last minute discontinuance of an appeal is very unusual. Here's what was at issue in the appeal:

• what is substantial?
• how does fair dealing apply in the context of news reporting, blogs, and critical comment?
• when the limitation period begins to run for material posted online?, and
• whether there can be copyright in a headline?

Here's what I've said about this in the past, which has resulted in some very capable interveners and counsel weighing in on this. The outcome is anticlimactic but very satisfactory in the sense that a good trial decision now stands as good law.

Here's the Notices of Discontinuance.

HPK

PS - here are the substantive memoranda filed by the parties and the interveners:

• Here's Warman's memorandum
• Here's the National Post's memorandum
• Here's the Fourniers' memorandum
• Here's CIPPIC's memorandum
• Here's CCIA's memorandum
• Here's the National Post's response to the interveners' memos