Abbott Laboratories Ltd v Evysio Medical Devices ULC (Sued As Divysio Solutions ULC In HC 06 C 02440)

I handed down judgment in this action on 21st April 2008 and I must now decide what order should be made in respect of costs.

Abbott submits that it should receive the majority of its costs because it is the commercial winner in these proceedings. Of the three Evysio patents in suit, two were held to be invalid and the third was held valid but not infringed. Moreover, although the third patent was held to be valid but not infringed, Abbott’s squeeze argument was successful. In relation to that patent, I found that had Abbott's products infringed then the patent would have been invalid.

Evysio accepts that Abbott should recover a percentage of its costs but submits those costs should be substantially reduced having regard to the issues on which it was unsuccessful, and which increased the costs very significantly.

The general principles which must guide me in exercising my discretion are set out in CPR 44.3, which provides so far as material:

“44.3(1) The court has a discretion as to –

(a)

whether costs are payable by one party to another;

(b)

the amount of those costs; and

(c)

when they are to be paid.

(2)

If the court decides to make an order about costs –

(a)

the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but

(b)

the court may make a different order.

(4)

In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –

(a)

the conduct of all the parties;

(b)

whether a party has succeeded on part of his case, even if he has not been wholly successful…

(5)

The conduct of the parties includes –

(a)

conduct before, as well as during, the proceedings;

(b)

whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(c)

the manner in which a party has pursued or defended his case or a particular allegation or issue…

(6)

The orders which the court may make under this rule include an order that a party must pay –

(a)

a proportion of another party's costs;

(b)

a stated amount in respect of another party's costs;

(c)

costs from or until a certain date only...

(f)

costs relating only to a distinct part of the proceedings...

(7)

Where the court would otherwise consider making an order under paragraph 6(f) it must instead, if practicable, make an order under paragraph 6(a) or (c). ”

The relevance of all these matters to patent actions was affirmed by the Court of Appeal in Smithkline Beecham v Apotex [2004] EWCA Civ 1703, [2005] FSR 24. Moreover, that case and the more recent decisions of this court in Actavis vMerck [2007] EWHC 1625 (Pat), Generics v Lundbeck [2007] EWHC 1606 (Pat), Monsanto Technology v Cargill International [2007] EWHC 3113 (Pat), and RIM v Visto [2008] EWHC 819 (Pat) have confirmed that an issue based approach is one which should be applied in patent cases so far as it reasonably can.

Abbott's application for costs is supported by a witness statement of Mr. Price of Taylor Wessing LLP, its solicitors. He appends at exhibit RCP1 a summary schedule of costs which reveals that Abbott's costs to date are in the region of £2.63 million, a figure which seems to me to be very high indeed bearing in mind the complexity of the case, although I recognise, as Mr. Thorley QC urged upon me during the course of his submissions on behalf of Abbott this morning, that Abbott's business, which is by all accounts very substantial, depended upon its success in these proceedings.

A brief review of the schedule shows that the costs have been incurred as follows:

As to the justification for the sums spent on US lawyers, Mr. Price says in paragraph 4 of his statement that this action is one of a number of parallel proceedings between the parties in other jurisdictions which were coordinated by the US lawyers, Finnegan Henderson, who also helped one of Abbott's experts, Dr. Segal, prepare his reports. Dr Segal is based in Rockville, Maryland, USA which is close to Finnegan Henderson's office in Washington DC and it was therefore more convenient for them to do that work. Accordingly, he says, it is reasonable that Abbott should be able to recover Finnegan Henderson's costs for the work they did in relation to these UK proceedings. He believes that their fees and expenses were both proportionate and reasonable.

Ms. Field of Bristows, Evysio's solicitors, has made a witness statement in response to Abbott's application. She explains that Evysio's costs to date are in the region of £1.46 million made up as follows:

She points out, as is evident from the figures to which I have referred, that Abbott's costs are over £1 million more than those incurred by Evysio. She draws attention, in particular, to the fees of Taylor Wessing, which are 50% more than those of Bristows, and of Abbott's counsel, which are 30% higher than those of Evysio's counsel. She also observes in relation to the inclusion of the figure of some £400,000 in respect of the US lawyers that no expert evidence was given in the case on questions of US law or otherwise by US lawyers and expresses the opinion that unless Abbott can establish that the US lawyers undertook work which Taylor Wessing was unqualified or incapable of doing, which in connection with a UK patent action would be surprising, she would not expect any of this claim to be allowable at a costs assessment. She believes this would equally apply to those parts of the travel and hotel costs incurred as part of Abbott's disbursements by the US lawyers.

Finally, in this regard, I should refer to a further witness statement of Mr. Price, which I received shortly before the hearing this morning, in which he explains that he has discussed the point made about the US lawyers' fees with an experienced costs draftsman, and that the upshot of those discussions is that he believes there to be very little authority relating to the assessment of foreign lawyers' fees. However, in a case called Societa Finanziaria Industrie Turistiche SpA v. Lefebvre d'Ovidio de Clunieres di Balsorano (SCCO 30 June 2006), Master Gordon-Saker did allow fees incurred by foreign lawyers in so far as they were proportionate and reasonable.

I am not able to resolve today whether the sums incurred in respect of the US lawyers will be recoverable or not. However, I do accept Evysio's submission that it is evident that Abbott has massively outspent it. The question this raises is whether the normal rule of a double deduction where Abbott pays Evysio's costs should be departed from. Evysio submits that if it were to be departed from, it would produce an odd result since Abbott would benefit and Evysio would suffer from what Evysio believes to be Abbott's additional and apparently unjustifiable expenditure.

In this regard, Evysio referred to the RIM v. Visto case where the court was faced with a massive disparity in the parties' costs; the costs of RIM's solicitors being nearly five times those of Visto's solicitors. In that case, the court made serious comments about disproportionality and made separate costs orders in respect of RIM and Visto's costs, to be offset following detailed assessment.

Evysio submitted that I should adopt the same course in this case or, alternatively, take the view that once the US lawyers' costs and other apparently excessive items are removed, then the parties' costs are not that different and that that permits me to use the Bristow's figure as the proportionate amount and apply the double deduction to Abbott's costs accordingly.

I am extremely reluctant to make an order which would result in the assessment of the costs of both parties. That would seem to me to be highly undesirable in the circumstances of this case where, as I shall explain, the issues between the parties are relatively limited and the disparity between the parties' costs is far less than it was in the RIM v Visto case.

In my judgment, the appropriate course to adopt is to consider the particular items to which my attention has been drawn in turn and, in relation to them, to decide what is the appropriate figure to allow in respect of them, bearing in mind the matters to which I have referred and, in particular, the respective sizes of the parties' bills. I believe, in the circumstances of this case, I can do justice and arrive at a proportionate and just figure using my own judgment and so avoid the need for a double assessment.

I come then to the specific matters which I must take into account in deciding how the costs burden should be split. At the outset, it is right to acknowledge that Abbott is the clear winner. No claim is valid and infringed; two of the three patents in suit are wholly invalid and there is a complete squeeze on the third.

Secondly, it appears to me that there are two issues which are suitably circumscribed to permit me to make an issue-based order. These concern the prior art citations, Fischell and Prograft. Abbott accepts that it is appropriate for it to pay Evysio's costs in relation to Prograft. It says this is not because Abbott did anything culpable in citing the document and withdrawing it later, but because, with the citation having been withdrawn before trial, I have no material before me which would permit me to find that this is an issue in relation to which exceptional circumstances exist, and because the costs involved are relatively small and the issue was, as I say, abandoned. Abbott says that 1.45% of its overall costs were incurred in relation to Prograft. Evysio, on the other hand, says that 2% of its overall costs were incurred in relation to this citation.

I have come to the conclusion that it is appropriate to assume that about 1.75% of each side's costs were incurred in relation to this issue and that overall a deduction of 3.5% should be made from Abbott's costs incurred in relation to it.

I turn then to Fischell. Abbott contends that it should not have to pay Evysio's cost of Fischell because it ran the argument of invalidity based upon it in good faith and with proper support from its experts. It submits it did not concede that the point was bad but simply dropped it when it became apparent that it would not succeed if the other prior art attack based upon another citation called Medinol failed. It submits that does not constitute exceptional circumstances and that Abbott should not be penalised for rationalising and simplifying the case.

In my judgment justice would not be done by simply deducting the costs which Abbott incurred itself in relation to this citation. I have reached the conclusion that Abbott effectively abandoned its case in the light of the evidence and that it should be in no better position as a result of running it through until after evidence than it would have been in had it abandoned it before the trial began.

Accordingly, I have reached the conclusion that Abbott should pay Evysio's costs in relation to Fischell in addition to Evysio’s costs incurred in relation to Prograft.

Abbott says that it has incurred 3.7% of its overall costs in relation to Fischell. Evysio, on the other hand, submits that 10% of its costs were incurred on this point. In support of its position, Abbott relies upon an assessment of the time spent upon Fischell at trial. It has calculated that discussions in relation to Fischell can be found on 46 pages out of the 1,239 pages of transcript and from this analysis it has arrived at its figure of 3.7%.

In my judgment, Evysio criticises this approach with some justification, in that it takes inadequate account of the extent to which the parties’ respective experts dealt with this citation in their expert reports. Evysio says that once this is taken into account a figure much closer to its own estimate of 10% is arrived at. For my part, I consider that Evysio's estimate of 10% is too high. I believe, taking into account all of the matters to which I have referred, that 7% is a much more realistic figure and overall I believe justice would be done if I deduct a further 14% from Abbott's costs in respect of this citation. Accordingly, I have reached the conclusion that 17.5% of Abbott's costs should be deducted in respect of Prograft and Fischell together.

That completes my analysis of those matters which the parties contended could properly be the subject of an issue based award. However, Evysio submits that I should make further substantial deductions from the costs which Abbott claims as a consequence of it having failed upon a number of further significant issues in the case.

First, Evysio points to the case which Abbott advanced based upon the common general knowledge and founded primarily upon the evidence of Dr. Segal. Evysio says, with some force, that I criticised Dr. Segal's evidence in paragraphs 16 and 17 of my judgment; that I found that his approach to the common general knowledge was misconceived and duly rejected it in paragraphs 61 and 62 of my judgment; and that I found that Dr. Segal's evidence concerning obviousness was fundamentally flawed by hindsight in paragraphs 17 and 198 of my judgment.

Overall, Evysio submits that it is notable how little reliance was placed upon Dr. Segal's reports or his evidence in my judgment and yet their preparation must account for a very substantial proportion of Abbott's costs. In this regard it points to the fact that Dr. Segal has charged more than £139,000 as fees for his expert evidence and submits, and I accept, that a significant proportion of both the costs of Taylor Wessing and the US lawyers must relate to its preparation. Evysio invites me to disallow the costs of Dr. Segal's evidence in total in the light of these various matters and that a deduction of 20% in this regard would be conservative.

I have reached the conclusion that it is appropriate to make a further deduction from Abbott's costs arising from the evidence of Dr. Segal but I believe the figure of 20% would be quite excessive. In my judgment a fair and proportionate sum to disallow is 7.5%.

Secondly, Evysio submits that Abbott failed in its “mere collocation” attack and failed in relation to the combination of the prior art citations Multilink and Medinol, to which much evidence was devoted. Moreover, it says that in relation to the priority and added matter attacks, five distinct arguments were advanced and Abbott lost on three of them.

I do not believe it is appropriate to make any further deduction from Abbott's costs in respect of the collocation attack or the priority or added matter arguments upon which it lost. It seems to me that these were intimately tied together with the issues upon which it won or give rise to general costs of the action and insofar as they depended upon the evidence of Dr. Segal, I have already made an appropriate deduction in relation to them.

Finally, Evysio submits that Abbott advanced six arguments of non-infringement, essentially based on issues of construction. It points out, rightly, that Abbott was unsuccessful on the meaning of "arcuate flexure means", "substantially complementary extension and compression of a diametrically opposed pair of longitudinal struts", "rows of a repeating pattern (A,B)" and "contains a concave shape". Moreover, its construction of "substantially flat apices" as referring to the under-surface and therefore leading to non-infringement was rejected.

Once again, I do not believe it to be appropriate to make any further deduction from Abbott's costs as a result of its failure upon these construction issues. Issues of construction are intimately tied to the general matters which are properly considered to give rise to the general costs of the action. It seems to me that it would be wrong to deprive Abbott of costs incurred in relation to their attempts to discern the proper meaning of the patents asserted against it.

Accordingly, I have reached the conclusion that justice would be done if I allow Abbott 75% of its overall costs of these proceedings, such costs to be assessed bearing in mind the observations I have made in this judgment.