Friday, 15 January 2010

Okay to split costs where actions are joined, says CA

Actavis UK Ltd v Eli Lilly & Co. Ltd, 13 January 2010, doesn't seem to have found its way on to BAILII yet, but this ruling of the Court of Appeal for England and Wales (Lords Justice Jacob, Lloyd and Stanley Burnton) was caught by subscription service Lawtel. According to the keynote,
"An order for costs requiring two pharmaceutical companies, which had unsuccessfully applied for the revocation of a patent, to split equally the costs of the successful party could not be criticised as the two actions were indistinguishable and the bulk of costs incurred by the successful party arose from defeating both claims".
The two revocation actions -- each brought by a pharmaceutical company-- were originally independent, the second action being brought through the applicant's anxiety that the first applicant might obtain a market advantage. A case management conference directed that the two actions be heard simultaneously before the same judge, that the evidence given in the one case would serve as evidence given in the other. The two actions subsequently proceeded together but, before trial, one of the applicants for revocation discontinued its application.

The question of an order for consequential costs was stood over until the outcome of the trial was known. After the patent was held valid both at trial and on appeal, the patent owner stated that the substantial majority of its costs were incurred in seeking to defeat both actions, and that the additional costs incurred once the second revocation application was dropped were relatively small. The judge ordered that the costs of the patent owner's action be split equally between the two applicants for revocation since (i) it was impossible to distinguish between the two actions and (ii) the vast majority of its costs were attributable to both actions.

The Court of Appeal affirmed that this approach reflected the fact that the judge had a wide discretion and had exercised it properly. Nor was it contrary to the spirit of the Civil Procedure Rules to hold the applicants equally accountable for the costs -- though a different result might have occurred, had the two prepared their cases completely separately from each other.

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