Executive Summary: Key Legal and Evidentiary Issues

• Intellectual property appeal concerning costs in complex patent litigation, focusing on whether lump-sum costs should be tied to a percentage of actual legal fees.

• Dispute over the scope of the Federal Court of Appeal’s discretion to depart from Tariff B of the Federal Courts Rules when fixing costs “with costs” after an unsuccessful patent appeal.

• Consideration of whether the complexity of the patent issues, extensive expert evidence, and high stakes justified elevating costs beyond the Tariff at the appellate level.

• Evaluation of the respondent’s argument that costs in intellectual property appeals should mirror trial-level practice of awarding 30–50% (or more) of actual legal fees, versus the appellant’s contention that Tariff-based costs (Column III) should cap the award.

• Analysis of formal settlement offers and whether they engaged Rule 420, including whether the offers contained a genuine “ingredient of compromise” sufficient to trigger double costs.

• Determination of a reasonable post-judgment interest rate and final fixation of a lump-sum costs award in favour of the successful respondent.

Facts and background

This case arises out of a Federal Court of Appeal proceeding in a patent infringement dispute between AGI Suretrack, LLC as appellant and Farmers Edge Inc. as respondent. The underlying trial in the Federal Court involved a highly technical patent, significant expert evidence, and substantial monetary stakes. At trial, Farmers Edge prevailed and obtained a very large costs award based on actual fees—about $2.5 million in legal fees plus $1.77 million in disbursements, for a total of approximately $4.28 million. On appeal, AGI Suretrack challenged aspects of the Federal Court’s decision, including issues of claim construction, anticipation, and obviousness. The court dismissed the appeals in Dockets A-291-24 and A-16-25, leaving Farmers Edge as the successful party both at trial and on appeal. The present decision deals solely with how to fix the costs of the appeal.

Issues on costs and the role of the Tariff

The primary question was how to quantify appellate costs in a complex intellectual property case. Farmers Edge sought a very elevated award: about $441,195, which represented roughly 90% of its actual appellate fees and disbursements. It urged the court to extend to appeals the trial-level practice in patent and other IP cases of awarding a percentage of actual costs, often in the 30–50% range, to reflect complexity, sophistication of the parties, and legal bills far exceeding Tariff B. AGI Suretrack countered that the appeal judgment “with costs” meant that Rule 407 confined costs to Column III of Tariff B, and argued that the award should be fixed around $15,000. It also maintained that its appeal was not meritless, noting that it had succeeded in overturning at least one point of law, and that the high stakes had already been accounted for in the generous trial-level costs award.

The court reaffirmed that it has broad discretion over costs under Rule 400 and is not locked into Column III just because the judgment said “with costs.” The Rules allow the court to consider factors such as the result, the importance and complexity of the issues, and any offers to settle. However, the court emphasized that lump-sum awards based on percentages of actual fees cannot be justified merely because actual fees exceed Tariff amounts; that is almost always the case and would make the Tariff meaningless. The court distinguished appellate proceedings from intellectual property trials: appeals are shorter, more constrained by the grounds and standard of review, and involve fewer evidentiary and procedural burdens than trials, which may span years and require extensive expert evidence and multiple motions.

Complexity of the appeal and limits on percentage-based costs

Farmers Edge argued that the appeal warranted a very high uplift from Tariff B because it involved particularly complicated subject matter, an immense evidentiary record, and what it characterized as a “less than a low-chance” appeal by AGI Suretrack. The court accepted that the claim construction issue was novel and the appeal was complicated, but not exceptionally so. It rejected the suggestion that the appeal was frivolous or entirely lacking in merit, pointing out that issues like anticipation and obviousness fell away only after the construction issue was resolved, and much of the voluminous trial evidence was not central to the appellate arguments. Ultimately, the court was not persuaded that appellate costs should be anchored to a percentage of actual legal fees in this case. At the same time, the court concluded that strict application of Tariff B, even at the high end of Column V, would under-compensate Farmers Edge given the work required, including preparation of compendia and focused oral argument on a novel construction question.

Settlement offers and Rule 420

Another key issue was whether Rule 420 (which allows for enhanced or “double” costs after a valid offer to settle is refused) applied. Farmers Edge argued that its settlement offers justified an award of 90% of its actual legal costs—double the 45% it said the court should otherwise award, as of the date of its first offer. After initially making one offer, Farmers Edge later replaced it with two identical offers, one tied to each appeal file. Each offer required AGI Suretrack to discontinue its appeal, with costs to the respondent calculated at the high end of Column V of Tariff B. AGI Suretrack did not respond to these offers.

The court held that Rule 420 was not engaged. For the rule to apply, an offer must be clear, unequivocal, time-compliant, and contain a real element of compromise or incentive to accept. The later offers did not offer AGI Suretrack anything better than what the court was prepared to award; they simply mirrored the maximum Tariff-based costs the appellant could reasonably expect to pay on a loss. As such, they lacked the necessary “ingredient of compromise” and did not warrant double costs. The original offer was rendered moot when the two new offers were made and thus carried no consequences.

Interest and final outcome

A further issue concerned post-judgment interest on the appellate costs. Farmers Edge requested, and AGI Suretrack accepted, an interest rate of 2.75%. Applying section 37(2) of the Federal Courts Act, the court found that 2.75% was a reasonable rate. Both parties are headquartered in Manitoba, and the prevailing post-judgment interest rate under The Court of King’s Bench Act at the relevant time was 2.75%. Although rates decreased slightly after October 1, the underlying merits judgment pre-dated that change, and the costs motion was filed shortly thereafter, so the higher rate was considered appropriate in the circumstances.

Ruling and overall outcome

In the result, the court fixed the costs of the appeal at a lump sum of $25,000 plus post-judgment interest at 2.75%, together with reasonable disbursements to be assessed by an Assessment Officer. The court thus rejected both extremes: it declined Farmers Edge’s request for 90% of its actual costs, but also declined to limit costs strictly to Tariff B. The final order confirms that Farmers Edge Inc., as the respondent, was the successful party at both trial and on appeal, and that while complex patent appeals can justify a modest premium over Tariff B, they do not automatically warrant converting appellate costs into a high percentage of actual legal fees.