Executive Summary: Key Legal and Evidentiary Issues

• Central to the dispute was whether Skotidakis and Frimasco built the contested cooling cells before or after the expiry of Fromfroid's patent, which determined infringement.
• Because no direct evidence fixed the construction date, the trial judge relied on circumstantial evidence and presumptions of fact under the Civil Code of Québec, together with adverse credibility findings.
• Punitive damages turned on whether attempts to mislead the Court amounted to highly reprehensible conduct, even without a finding that any specific document had been falsified.
• Compensatory damages were challenged over which of Fromfroid's pricing proposals should ground the lost-profit calculation.
• On appeal, the palpable and overriding error standard governed the evidentiary and damages findings, sharply limiting the scope for reweighing evidence.
• Following the appeal, an assessment officer fixed the respondent's costs under column III of Tariff B, including doubled costs triggered by a Rule 420 settlement offer.

Facts of the case

The appellant, 1048547 Ontario Inc., is a family-run milk and cheese products business in Ontario known as Skotidakis. In 2014, it began looking to acquire a system to cool its dairy products more quickly and contacted Geosaf Inc., the Canadian commercial agent for the respondent, Fromfroid S.A., a French company specializing in the manufacture and installation of air-conditioning and refrigeration equipment for the agri-food industry. Fromfroid held Canadian Patent No. 2,301,753 (the 753 patent), covering a rapid cooling ventilation system for food products. Through Geosaf, Fromfroid loaned Skotidakis a cooling cell on a trial basis for about six weeks and then offered to build 24 cells; despite further proposals at a reduced price, Skotidakis took none of them up.

The 753 patent expired on July 30, 2018. About three months later, on October 26, 2018, a Geosaf representative attending Skotidakis' facilities on unrelated business discovered 24 cooling cells strongly resembling Fromfroid's and took photographs. Skotidakis claimed the cells had been built by Frimasco Inc. in the three months after the patent expired. Doubting the cells could have been built so quickly, Fromfroid brought a patent infringement action against Skotidakis and Frimasco in the Federal Court. In its July 6, 2023 decision (2023 FC 925, per Grammond J.), the Federal Court found that Skotidakis and Frimasco had built the cells before the patent expired and thus willfully infringed it. It ordered them to pay Fromfroid $149,270 plus interest in compensatory damages — the Canadian dollar equivalent of the net profit Fromfroid would have earned had its latest proposal been accepted. Finding their conduct before and during the proceeding highly reprehensible, the Court also ordered Skotidakis to pay an additional $200,000 and Frimasco an additional $50,000 in punitive damages, plus interest. By a separate judgment, the Court ordered $127,000 in costs to Fromfroid (2023 FC 1187, the Cost Award). Skotidakis appealed both decisions; Frimasco did not appeal or take part in the appeal.

Statutory framework and the settlement offer at issue

The appeal engaged the standard of review from Housen v. Nikolaisen: questions of fact and of mixed fact and law are reviewed for palpable and overriding error, while questions of law are reviewed for correctness. The trial-level infringement finding rested in part on articles 2846 and 2849 of the Civil Code of Québec, which govern presumptions of fact, allowing the trial judge to treat the circumstantial evidence as a "serious, precise and concordant presumption" that the cells were built before the patent expired. The punitive damages analysis was framed by the factors in Whiten v. Pilot Insurance Co., which set the threshold of highly reprehensible misconduct.

The later costs assessment was governed by the Federal Courts Rules and Tariff B. The parties agreed costs fell under column III (Rule 407) but disagreed on the level within that range. Central to the assessment was a written settlement offer dated January 18, 2024, made under Rule 420, in which Fromfroid offered to have the compensatory damages reduced from $149,270 to $108,097 (with interest unchanged) in exchange for dismissal of all other grounds of appeal; the offer expressly excluded costs and remained open until the hearing began. Because that offer satisfied Rule 420 — made in writing at least 14 days before the December 12, 2024 hearing, clear and unequivocal, containing an element of compromise, and capable of ending the litigation — it triggered a doubling of the assessable services rendered between January 18, 2024 and the August 25, 2025 judgment.

The court's reasoning and analysis

Writing for a unanimous panel, Pamel J.A. first rejected Fromfroid's argument that the compensatory damages issue was moot despite full payment already received from Frimasco, reasoning that a successful appeal could still have practical effects for Skotidakis given its possible liability to Frimasco. On punitive damages, the Court rejected the argument that the trial judge had contradicted himself by finding no obvious signs of document falsification while still awarding punitive damages for misleading conduct; a document need not be falsified for a party to mislead the Court, and the trial judge had not relied on any falsification finding. The Court pointed to the trial judge's specific findings — including a witness's attempt to conceal the existence of a prototype and a "ploy" to deliberately evade a relevant question — as ample support for the conclusion that Skotidakis had engaged in a deliberate attempt to mislead. The Court was also unpersuaded that the misconduct fell short of the Whiten threshold, and although it acknowledged the $200,000 award was on the higher end for such cases, it declined to interfere, finding the amount not beyond what was rationally required to punish the misconduct.

On compensatory damages, the trial judge had used the price of Fromfroid's latest offer to Skotidakis. Skotidakis pointed to a third iteration involving a two-step sale through Geosaf that would have yielded a lower profit margin, but the trial judge had found that this iteration was never actually proposed to Skotidakis, and the Court of Appeal saw no palpable and overriding error. The Court similarly found no reviewable error in the trial judge's discounting of Skotidakis' expert evidence on the construction date, describing it as a factually suffused conclusion that was open to the trial judge. Throughout, the Court emphasized that Skotidakis was largely asking it to reweigh the evidence, which is not the role of an appellate court.

In the costs assessment, the assessment officer concluded that the upper end of column III was appropriate, citing the respondent's success in defending the appeal, the importance and complexity of the issues (including the recognized attributes of intellectual property proceedings and the five issues raised), and the settlement offer. She allowed items 18, 19, 20 and 26, adjusted the first-counsel hearing fee under item 22(a) to reflect the correct unit rate and a rounded hearing duration of 3.5 hours, denied the 3 units claimed for a confidentiality motion that the Court had ordered without costs, and disallowed the second-counsel fee under item 22(b) for want of any direction from the Court. After applying the doubling to the eligible items, she allowed 45 units totalling $8,100.00 for assessable services, plus GST of $229.50 and PST of $457.85 as disbursements, noting that taxes cannot be doubled under Rule 420.

Ruling and overall outcome

The Federal Court of Appeal dismissed Skotidakis' appeal with costs and dismissed Fromfroid's cross-appeal — which sought reconsideration of a motion to reopen the evidentiary phase — on a without-costs basis, as it no longer served any purpose. Fromfroid was the successful party: the trial awards, including the $149,270 in compensatory damages and the punitive damages of $200,000 against Skotidakis and $50,000 against Frimasco, were left undisturbed. On the subsequent assessment, the respondent's bill of costs was allowed in Fromfroid's favour for a total of $8,787.35 including taxes, payable by 1048547 Ontario Inc.