Trouble in the Skies: the Federal Court Awards Punitive Damages in a Patent Infringement Case

2012-03-05

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TROUBLEINTHESKIES:THEFEDERALCOURTAWARDSPUNITIVE
DAMAGESINAPATENTINFRINGEMENTCASE

A.
SASHAMANDY*
ROBIC,LLP
L
AWYERS,PATENT&TRADEMARKAGENTS

Whendoesapatentinfringer’sbehaviourrisetothelevelthatitshouldbe
sanctionedwithpunitivedamages?Howusefuldoesapatentapplicationfora
mechanicalinventionhavetobeatthetimeofitsfiling?Thesewereamongsomeof
thequestionstheFederalCourtofCanadahadtograpplewithinEurocopterv.Bell
HelicopterTextronCanadaLimitée2012FC113whichwasrenderedonJanuary
30,2012.
Thiscaseisimportanttopatentlitigatorsbecauseitappearstobetheonlycasein
Canadawherepunitivedamageshavebeenawardedforpatentinfringement.The
casewillbeofinteresttopatentpractitionersaswellbecauseitestablishesthatthe
doctrineofsoundpredictioncanbeusedtoinvalidaterelativelysimplemechanical
inventionsortheirpreferredembodiments.
Facts
EurocopterandBellHelicopterarethemainplayersinthehelicoptermanufacturing
industry.In1997,Eurocopterfiledforapatentforanimprovedlandinggear
(referredtointhejudgmentasthe“Moustache”landinggear).Thenoveland
inventiveaspectofthepatentisafrontcross-piece,whichhascurvedareasthat
connecttothefrontofthetwoskidsincontactwiththeground.Thisfrontcross-
piececanbeangledeithertowardsthefrontofthehelicopter,ortowardsitsrear.
TheMoustachegearisdescribedasprovidingcertainadvantages.These
advantagesplayapivotalroleintheCourt’sreasoning,asdiscussedbelow.
Eurocopter’sCanadianpatentissuedonDecember31,2002aspatentnumber
2,207,787.
Intheearly2000s,Bellbegandevelopinganewmodelhelicopter,the“model429”.
Theoriginallandinggearofthe429wascalledthe“Legacy”gear.Bellusedthe
Legacygearforactivitiesrelatedtothe429suchasmanufacturing,regulatory

©CIPS,2012.*OfROBIC,LLP,amultidisciplinaryfirmoflawyers,patentandtrademarkagents.Publishedunder
thetitlePleadingPatentInfringementinCanada:LessonsandAdvicefromtheFederalCourt(2012),
26:4WorldIntellectualPropertyReport.Publication142.261

testing,andsalesfromMarch,2005untilEurocopte
rinstitutedtheiractionbefore
theFederalCourt.Almostimmediatelyafterbeingservedwiththelawsuit,Bell
begunworkingonanewlandinggear,referredtoasthe“Production”gear,whichis
thelandinggearusedonthe429today.
EurocopterallegedthattheLegacyandProductionlandinggearsinfringetheclaims
ofthe‘787patent.TheyfurtherallegethatBellwilfullyandmaliciouslyinfringedtheir
patentrights,andthatBellisliablefor$25,000,000inpunitivedamages.

BellcounteredthatneithertheLegacyorProductionlandinggearsinfringethe
claimsofthe‘787patent,andthattheirbehaviourbenefitsfromcertainlegal
exemptionstoinfringement.Theyfurtherarguethatthe‘787patentisinvalidfor,
amongotherreasons,lackofutility.
Judgement

JusticeMartineauheldthattheProductiongeardidnotinfringeanyoftheclaimsof
the‘787patent,butthattheLegacygeardidinfringe.TheCourtalsofoundBell
liableforpunitivedamages.
HavingcometothisdeterminationregardingtheLegacygear,theCourtneededto
assesstheargumentsraisedbyBellthatthe‘787patentisinvalid.

Validityofthe‘787Patent

Amongtheusualallegationsofanticipationandobviousnessraisedinmostpatent
infringementsuits,Bellalsoarguedthatthe‘787patentwasinvalidbecauseit
lackedutility.Canadianpatentlawrequiresthatatthefilingdateofthepatent
application,theremustbeeitherademonstrationofutilityoftheinvention,orthere
mustbeasoundpredictionofutility.
AttacksagainstmechanicalpatentsforlackingutilityareextremelyrareinCanada,
andthisislikelytheonlymechanicalpatentcasewheresuchanattackwas
considered.ThelawonutilityinCanada,andthedoctrineofsoundprediction,has
beendevelopedfromcasesinvolvingpatentsrelatingtomore“abstract”subject
matter,suchasthoserelatingtopharmaceuticalinventionsorchemical
compositions.
Afterconsideringthepatentspecification,JusticeMartineauconcludedthatthe
promisedutilityofthe‘787patentistosignificantlyreducethedrawbacksoftheprior
art,specifically:(a)elevatedaccelerationfactorsuponlanding(loadfactors);(b)
difficultfrequencyadaptationwithrespecttogroundresonance;and(c)highlanding
gearweight.

Inreviewingthelawastoutility,JusticeMartine
auconcededthatitisveryeasyin
mostcasestomeettheutilitycriteria:InCanada,alowstandardforutilityhasbeenestablished.Itis
sufficientthatitbenew,better,cheaper,oraffordachoice;itcan
includeanadvantageoradisadvantagethatisavoided[…].
However,onemuststillask,astheEnglishCourtofAppealdidin
Lane-FoxvKensington[1892],9RPC413at417“usefulforwhat?”

Canadiancaselawhasusuallyfoundthatwheretheutilityofaninventionisself-
evidenttotheskilledpersonintheart,andwherenoparticularpromisehasbeen
madeinregardtoanyadvantagesoftheinvention,theself-evidentutilityissufficient
tomeettherequiredstandard.Formostmechanicalinventions,theutilityinquiry
endsupondeterminingtheself-evidentutilityoftheinvention.

Thiscouldhavealsobeenthecasewiththe‘787patent.Inallprobability,theCourt
wouldlikelyhaveconsideredtheMoustachelandinggeartohavethe“self-evident”
utilityofbeinganimprovedlandinggearwhichhelpsahelicoptertolandby
supportingitsweightandabsorbingordeflectingtheimpactforcesoflanding.
However,the‘787patentpromisedthatitsMoustachelandinggearprovidedthe
specificadvantageofovercomingthepreviously-mentioneddisadvantages
associatedwithpriorartgears.Thisnowbecamethepromisedutilityofthe‘787
patent,andtheCourtwasthusrequiredtoaddressBell’sargumentsthattheutility
ofallembodimentsoftheMoustachelandinggearwaseithernotestablishedatthe
filingdate,orcouldnotbesoundlypredicted.
Inhisanalysis,JusticeMartineauconcludedthattheBellhadnotmetitsburdenof
establishingthattheinventionasdefinedinthesoleindependentclaimwillnotwork.
However,Bellalsoarguedthatcertainpreferredembodimentsoftheinventionas
definedbythedependentclaims,namelythecross-piecebeingoffsettothefront
(claim15)andtotherear(claim16)ofthehelicopter,lackutility.

TheCourtthusfocusedtheutilityinquiryontheoffsettingofthecross-piece,and
whethertheutilityofhavingitoffseteithertothefront(claim15)andtotherear
(claim16)ofthehelicopterwasestablishedatthefilingdate,orcouldhavebeen
soundlypredicted.Regardingthefront-offsetcross-piece,boththedescriptionand
thefiguresamplydescribethisembodiment,anditisinfactthelandinggearthatis
usedonEurocopter’scurrentlineofhelicoptersandthatwastestedforcertification
purposes.Therefore,JusticeMartineauconcludedthattheutilityofthefront-offset
cross-piecewasestablished.
Regardingtherear-offsetcross-piece,theCourtfoundalackofutility.Thepatent
specificationdoesnotdescribeindetailthefunctionalityorconfigurationoftherear-
offsetcross-piece,mentioningonlythatit“procuresthespecificadvantages”
mentionedelsewhereinthespecification.Althoughthisembodimentisillustratedin
oneofthefigures,JusticeMartineaustillfoundalackofestablishedutilityandalack
ofsoundprediction.

TheCourtconcludedthattheevidenceonrecorddoe
snotsupporttheutilityofthe
backwardly-offsetvariant,andnoevidenceevensuggeststhatitcouldwork.Thus
thisclaimedvariantcannotbeuseful.Sinceindependentclaim1alsocoversthis
variant(itwasdraftedtoprotecttheembodimentswherethefrontcross-pieceis
offsetbothtothefrontandtotherear),itwasheldtobeinvalid,asweredependent
claims2-14,and16.However,dependentclaim15,whichcoversthefrontcross-
pieceoffsettowardthefront,wasupheldandjudgedtobeinfringedbyBell’sLegacy
gear.
PunitiveDamages

TheCourtcondemnedBelltopunitivedamagesforinfringingclaim15ofthe‘787
patent,inadditiontoothergeneraldamages.Thequantumofthedamagesistobe
determinedatalaterdate.
Itshouldbenoted,andnodoubttheCourtwasawareofthisfact,thatnocourtin
Canadahaseverawardedpunitivedamagesinapatentinfringementcase.
Althoughsuchdamagescanneverberuledoutentirely,theCourtdoesnotciteone
authorityawardingpunitivedamagesforpatentinfringement.

AsexplainedbyJusticeMartineau,“Punitivedamagesareawardedwhenaparty’s
conducthasbeenmalicious,oppressiveandhigh-handed,oroffendsthecourt’s
senseofdecency,orrepresentsamarkeddeparturefromordinarystandardsof
decentbehaviour.”TheCourtheldthatBellconductedthemselvesinsucha
fashion.AdjectivesusedbytheCourttodescribeBell’sactionsinclude“badfaith”,
“egregious”,“wilfullblindness”,“intentionalandplannedmisappropriation”,“no
remorse”,and“reprehensible”.Incomingtoitsdetermination,theCourtcited
examplesofBell’sspecificactions:-Bellhad,orshouldhavehad,corporateknowledgeofthe‘787patentand
proceededtobuildtheLegacygearanyway(infact,Bellhadleaseda
EurocoptermodeloutfittedwiththeMoustachegeartoconducttestingandto
trainitsemployeesduringthelifeofthepatent);
-BellproceededwiththedevelopmentoftheLegacygeardespiteconcerns
raisedaboutthesimilaritybetweentheLegacygearandthe‘787gear;
-“BellhadplanstomanufactureandincorporatetheLegacygearinitsBell
429model,assoonasitcouldobtaincertification”;and
-Bellpubliclyportrayedthe429andits“new”landinggearasafirstinthefield.

Conclusion

Thisdecisionraisesnewoptionsandconcernsthatwereheretoforeunknownin
Canadianpatentlaw.

Forlitigators,thepossibilityofclaimingpunitiv
edamagesisprobablythemost
importantfindinginthiscase.However,thoselawyersdefendingagainstanaction
forinfringementshouldnotethattheCourtdrewanegativeinferencefromthefact
thatBellresistedhavingpeoplefromitsintellectualpropertyservicetestifyon
groundsofprivilege,andthattheCourtdescribedas“vindictive”thefactthatBell
raisedtheGillettedefence(i.e.itwasmerelypracticingthepriorart)andthe
regulatoryexemptiondefence.
Patentagents,especiallythosepracticinginthefieldofmechanicalpatents,should
nowbemorehesitantbeforeattributingspecificadvantagestotheinvention.Atthe
veryleast,agentsshouldensurethattheutilityoftheseadvantagesbeestablished
orsoundlypredictedatthedateoffilingthepatentapplication.Forpatentagentsin
themechanicalarts,thedoctrineofsoundpredictionisnolongerameretriviality
thatmustbelearnedforthepurposesofthepatentagentexams.

Ofcourse,bothEurocopterandBellare“high-flyers”,andbothhavereasonto
appealthisjudgement.Thus,itcameasnosurprisethatanappealwasfiledon
February29,2012.Theparties’pleadings,aswellasanydecisionoftheFederal
CourtofAppeal,willbestudiedcarefully.

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