Bell Helicopter: Punitive Damages do Fly!

2014-01-06

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BELLHELICOPTER:PUNITIVEDAMAGESDOFLY!

J
ASONMOSCOVICI*
ROBIC,LLP
LAWYERS,PATENTANDTRADE-MARKAGENTS

TheCanadianFederalCourtofAppealrecentlyupheldthatthegrantingofpunitive
damagesinBellHelicopterTextronCanadaLimitéev.Eurocopter2013FCA219
[previouslydiscussedathttp://newsletter.www.robic.ca/nouvelle.aspx?lg=EN&id=215]was
appropriate,distancingitselffromthecommonlyacceptedcaselawregarding
punitivedamages.
TheFacts

Briefly,thecaserelatedtotheusea“moustachestyle”landinggear(“Legacygear”)
inBellHelicopter’s“429”modelhelicopter,whichEurocopterallegedwasinfringing
itsrightsresidinginthe2,207,787patent(‘787patent).Giventhefactsandthetiming
ofwhenandhowBellstartedworkinganddesigningitsLegacylandinggear,
includingitsawarenessofEurocopter’slandinggear,itwasfoundthatthe‘787
patentwasinfringedandthatBellwasliableforpunitivedamages.Traditionally,this
typeofrulingisrare,asexplicitknowledgeofsomeoneelse’spatentrightsdidnot
normallyopenthedoorforsuchpunitivedamages.Thesetypesofdamageswere
usuallyreservedforcaseswhereaparty’sconduct“hasbeenmalicious,oppressive
andhigh-handed,oroffendsthecourt’ssenseofdecency”.

Appeal

OnappealtheCourtwasaskedtore-evaluateiftherewas,infact,infringementof
the‘787patentandifthetrialjudgehaderredinfindingthatpunitivedamageswere
tobeawarded.Withrespecttotheanalysispertainingtotheconstructionofthe
relevantclaimsofthepatent,itwasfoundthatnopalpableandoverridingerrorwas
madebytheCourtindefiningthecommongeneralknowledge,norinitsstudyofthe
priorart.Therewasalsoadebateregardingwhetherornotthesubjectmatterofthe
‘787patentcouldalreadyhavebeenanticipatedandifthetrialJudgeerredin
declaringthepatentvalidinlightofthispriorart.TheCourtofAppealwasnot
convincedandtheinfringementrulingwasupheld.

©CIPS,2013.*FromROBIC,LLP,amultidisciplinaryfirmofLawyers,andPatentandTrade-markAgents.Published
intheWinter2013(Vol.17,no.3)Newsletterofthefirm.Publication068.169E.

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Ofmoreparticularinterestwasthequestiononwhethertheawardofpunitive
damageswouldberevised.TheCourtreiteratedthatpunitivedamagesmaybe
awardedin“exceptionalcasesofhigh-handed,malicious,arbitraryorhighly
reprehensiblemisconductthatrepresentsamarkeddeparturefromordinary
standardsofdecentbehavior”,whichhasalwaysbeenthestandardandwhichcan
beinfluencedbymanyfactors.Procedurallyspeaking,thegrantingofpunitive
damagesinthepresentcasewasmadebeforesubmissionsconcerningthequantum
forcompensatorydamageswereheard,sincetheproceedinghadabifurcationorder
inplace.Assuch,BellsubmittedthatthetrialJudgeshouldnothavebeenableto
grantpunitivedamages,sincesuchentitlementislinkedtotheawardof
compensatorydamages,suchthat“punitivedamagesshouldonlybeawardedin
thosecircumstanceswherethecombinedawardofgeneralandaggravated
damageswouldbeinsufficienttoachievethegoalofpunishmentanddeterrence”.

Itwasneverthelessdecidedthat:“inappropriatecircumstancesanddependingon
thecontext,itmaybesometimespossibletoascertainanentitlement(oranon-
entitlement)topunitivedamagesbeforetheexactquantumofcompensatory
damageshasbeenestablished.Forexample,thiswouldbethecasewherethe
compensatorydamages,thoughnotpreciselyquantified,willlikelybeinsufficientto
accomplishtheobjectivesofretribution,deterrenceanddenunciation.”

Thepresentcasewasfoundtobepreciselythesituationidentifiedabove,sincethe
Legacylandinggearwasneveractuallysold.Therefore,quantumforordinary
damageswouldbeminimal.Assuch,accordingtothecourt,ordinarydamages
wouldbeinsufficientastoaccomplishtheobjectivesofretribution,deterrenceand
denunciation.
Therewasalsoaninterestingsubmissionregardingtheopportunitytoevenclaim
punitivedamagesinpatentinfringementcases.BellHelicoptersubmittedthat
“punitivedamagesshouldnotbeawardedagainstapartythatintentionallyinfringes
apatentsince“policyprinciplesfavortheremovalofimpropermonopoliesthrough
thechallengeofaninvalidpatent”.However,thecourtdisagreedandfoundthat“The
submissionthatpatentinfringersshouldbeimmunizedfrompunitivedamagesfor
publicpolicyreasonsconsequentlyhasnolegalfoundation.[…]Indeed,punitive
damages“areverymuchtheexceptionratherthantherule”and“shouldberesorted
toonlyinexceptionalcasesandwithrestraint”.
Itturnsouthoweverthatthiswasoneofthoseexceptionalcases.

Conclusion

WhiletheCourtuphelditsdecisionwithrespecttopatentinfringement,thiscasealso
reinforcedthecaselawregardingwhenpunitivedamagesshouldbegrantedfor
patentinfringementcasesinCanada.Itremainstobeseenhowpractitionerswill

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