Date: 19990622.
Docket: T-2027-97
BETWEEN:
NIKE CANADA LTD., NIKE INTERNATIONAL LTD. and
NIKE (IRELAND) LTD.
Plaintiffs
- and -
JANE DOE and JOHN DOE and OTHER PERSONS,
NAMES UNKNOWN, WHO OFFER FOR SALE,
SELL, IMPORT, MANUFACTURE, DISTRIBUTE,
ADVERTISE, ORDEAL IN UNAUTHORIZED OR
COUNTERFEIT NIKE MERCHANDISE, AND
THOSE PERSONS LISTED IN SCHEDULE "A"
TO THE STATEMENT OF CLAIM
Defendants
REASONS FOR COSTS ORDERS
GIBSON J.:
BACKGROUND
[1] On the 19th of April, 1999, counsel representing seven different plaintiffs or sets of plaintiffs on seven court files, including the plaintiffs herein, in actions where Anton Piller orders had issued, appeared before the Court on a regular Motions day in Toronto. Counsel"s appearance flowed from a requirement in each of the Anton Piller orders that, where the Anton Piller order had been executed, counsel for the plaintiff was to appear before the Court, within a short delay, to seek review of the execution of the Anton Piller order. In each case, in addition to the required review, the plaintiffs sought further relief flowing from the execution of the Anton Piller order.
[2] Each of the Anton Piller orders had been executed in the course of observations and subsequent searches conducted at a single flea market on the 3rd of April, 1999. Eight separate defendants were identified. Three of those defendants were served with five Anton Piller orders, two were served with three Anton Piller orders, two were served with two Anton Piller orders and one was served with only one Anton Piller order. In the result, twenty-six services were effected in the course of the observations and searches conducted at the flea market in the course of the day.
[3] Certain of the defendants served with one or more Anton Piller orders settled with the plaintiffs on whose behalf they were served before the hearing on the 19th of April. Consent orders acknowledging the review and providing for a permanent injunction were signed with respect to these defendants. The orders made no provision for costs.
[4] Hearings were adjourned with respect to certain other of the defendants, presumably because settlement discussions were ongoing.
[5] Five of the defendants, on whom seventeen services had been executed, remained unheard from between the time of the executions on them and the time of the hearing before the court. In respect of each of these defendants, and in respect of each service, the plaintiffs sought costs in the amount of $1,250.
[6] The Court expressed concern that, if costs were ordered as requested, total costs in respect of the two hour appearance before the Court, the related time and expenditures incurred in the observations and executions, preparations for the observations and executions and for the Court appearance, would amount to $21,250. In the absence of consent judgments and adjournments, total costs of the day would have amounted to $32,500.
[7] In the result, the issue of costs was, in each case, adjourned to allow counsel to provide written submissions in justification of the requested costs awards.
THE SUBSTANCE OF COSTS SUBMISSIONS
[8] Counsel submitted that the number of Anton Piller orders served and the number of defendants served on the day in question was not representative. Rather both as to the number of orders served and the number of defendants, the numbers on the day in question were above the norm. Counsel pointed out that, in order to ensure fairness in the observations and executions, given the intrusive nature of Anton Piller orders, the costs of an investigator, a lawyer and a police officer were involved with related expenditures for preparation of service materials, travel costs and travel time and significant costs in transporting, segregating, and itemizing of articles seized. Costs associated with preparation for the hearing before the Court on applications for review and other reliefs involved costs associated with preparation and swearing of an investigator"s affidavit, preparation of solicitor"s reports and related affidavits, costs associated with preparation of motion records and with the actual appearance before the Court, and costs of preparation of draft orders. Finally, costs associated with preservation and storage of seized articles pending final disposition were cited.
[9] Counsel urged that, in virtually all cases, costs of enforcement against a single defendant exceed $1,250. It was acknowledged that certain savings could be associated with service of more than one Anton Piller order on a particular defendant. There was no acknowledgement that costs could be further reduced where a number of defendants are served at the same location in the course of a single investigative visit.
GENERAL PRINCIPLES REGARDING COSTS AWARDS
[10] The Court has full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid.1 Federal Court Rule 400(3) enumerates a number of factors that the Court may consider in exercising its discretion with regard to costs. One of the factors is the amount of work involved in the proceedings. None of the other factors enumerated appear to be directly relevant in the circumstances here before the Court.
[11] In an award of costs, neither the ability to pay nor the difficulty of collection should be a deciding factor.2 In the circumstances with which we are here concerned, it may well be that some or all of the defendants against whom costs are sought lack the ability to pay. For others, enforcing a costs award against them may well be difficult if not impossible. These are not factors that I should consider.
[12] While I have found no authority to support the following propositions, nor, for that matter, to contradict them, I am satisfied that they should apply on the facts here at issues:
| - Costs awards should not be punitive. They should not amount to a disguised award of damages, nominal or otherwise; |
| - Costs awards should not be such as to benefit the plaintiffs from "economies of scale". A number of plaintiffs who agree to utilize a single observation and search team and a single counsel on the resulting appearance before the Court should not thereby reap a disproportionate reward in costs. Such plaintiffs have sought and obtained from the Court an extraordinary weapon in their very legitimate battle against "knock-offs" or counterfeit copies. They are generally in agreement that they must exercise prudence and restraint in the use of the weapon. That same prudence and restraint should extend to the claims of counsel on their behalf for costs awards. Put another way, plaintiffs such as those who appeared before the Court on the 19th of April are acknowledged to hold valuable intellectual property. They have the burden of ensuring the integrity of their intellectual property rights. They should not be able to cast the cost of that burden on defendants beyond what would normally be recoverable in costs, absent the existence of Anton Piller orders. |
CONCLUSIONS
[13] On the facts that were before the Court on the 19th of April, and against the foregoing general principles regarding costs awards, I am satisfied that the costs awards sought on behalf of the plaintiffs are excessive. I draw the following generalized conclusions.
[14] Costs awards on applications for orders reviewing the execution of Anton Piller orders, adding defendants and granting interlocutory injunctions should not exceed an amount in the range of $500., inclusive of disbursements, per order granted and should not exceed, in the aggregate, an amount in the order of $5,000., inclusive of disbursements, per appearance before the Court, no matter how many plaintiffs are represented and how many defendants have been served. Where the maximum of $5,000. per appearance is sought, it should be shared equally among all orders granted on the particular appearance before the Court.
[15] The arbitrariness of the foregoing generalized conclusions is acknowledged. At the same time, the discretion of the Court in these matters is emphasized.
[16] Applying the foregoing principles to the appearance before the Court on the 19th of April, the maximum of $5,000. per appearance would come into play. Pro-rated among the seventeen review orders adding defendants and granting interlocutory injunctions, the costs award on each order is fixed at $300.
[17] Counsel is invited to submit draft orders for review and signature on behalf of the Court.
[18] While these reasons have been prepared on file T-2027-97, they apply equally in respect of the other six files, dealing with Anton Piller matters, that were before the Court on the 19th of April, 1999, at Toronto. The Court directs that a copy of these reasons be placed on each of those files, namely files T-945-98, T-1058-98, T-2192-95, T-2295-98, T-550-99 and T-551-99.
____________________________
Judge
Ottawa, Ontario
June 22, 1999
__________________
1 Federal Court Rules, 1998, SOR/98-106, Rule 400(1).
2 Soloski v. The Queen [1977] 1 F.C. 663 (F.C.T.D.); affirmed without comment on this point [1978] 2 F.C. 632 (C.A.); affirmed without comment [1980] 1 S.C.R. 821.