In Airbus Helicopters v Bell Helicopter Textron,
Justice Martineau of the Federal Court ordered Bell to pay $1.5
million in damages to Airbus for its infringement of Canadian
Patent No. 2,207,787.
Airbus owns the 787 Patent, which
relates to a helicopter landing gear known as
"Moustache". Bell, after examining Airbus' Moustache
landing gear, developed and made 21 copies of the
"Legacy" landing gear, none of which were ever sold
(either as part of a helicopter or as a stand alone item at an
estimated cost $20,000 to $25,000). After being sued by an Airbus
affiliate for infringement of the 787 Patent, Bell developed the
"Production" landing gear, which was based on Legacy, and
incorporated in helicopters that were eventually sold.
In the first phase of litigation,
the Federal Court held that the Legacy landing gears infringed the
787 Patent, but that the Production landing gears did not.
Nevertheless, since Bell had falsely claimed that the Legacy
landing gear was the first implementation of the patented
technology, profited from Legacy, and elected to proceed with
Legacy despite concerns about similarities with Moustache, Justice
Martineau also held that Bell's infringing conduct warranted
punitive damages. That decision was upheld on appeal (see our
The second phase of litigation
involved a 10 day trial to determine of the quantum of damages to
be paid by Bell. Because the infringing landing gear assemblies
were never sold, Justice Martineau noted that this case was unique.
Airbus sought $2 million in compensatory damages, whereas Bell
suggested $5,187. Justice Martineau applied the AlliedSignal factors to arrive at the
reasonable royalty to which Airbus was entitled.
Justice Martineau rejected
Bell's attempt to rely on the Production landing gear as a
non-infringing alternative. While Bell, in the real world,did
develop a non-infringing alternative, Justice Martineau concluded
that Bell had failed to establish that the Production landing gear
would have been available on the eve of first infringement:
 Having considered the
totality of the evidence on record and the parties' respective
submissions, the Court finds that the defendant has failed to prove
on a balance of probabilities, that the Production gear constituted
a valid NIA on the eve of first infringement (Lovastatin FCA). The Court further
finds that the defendant has never fulfilled the "clean
sheet" requirement. Although the defendant submits that they
would have had all the necessary knowledge and tools to develop the
Production gear, the defendant has not produced corroborative
documentation providing particulars about the entire development
process of the Production gear, other than Mr. Gardner's time
estimate for the four sequential stages to the helicopter design
process. Finally, it remains that the creation of the Production
gear was only made possible through the illicit use of the Legacy
gear. There were no development license conferred by Airbus to use
the Legacy gear for the purpose of developing a NIA, either prior
to October 2005 or after.
After an extensive discussion of
the relative bargaining positions of the parties in a hypothetical
negotiation on the eve of the first infringement, Justice Martineau
applied the "broad axe" principle and concluded that the
parties would have agreed to a lump sum royalty payment of
Airbus sought $25 million in
punitive damages; Bell argued that punitive damages of $0.1 to
$0.25 million were appropriate. In awarding $1 million in punitive
damages, Justice Martineau considered the factors set out in Whiten. Of note, in considering the
proportionality of the punitive damages to Bell's conduct,
Justice Martineau concluded that Bell's misconduct was planned,
deliberate, and endorsed by upper management, and that Bell did not
truly repent for its infringement. Justice Martineau also held that
the compensatory damage award alone was insufficiently
proportionate to the need for deterrence.
Materials from a recent "refresher training" for examiners at the Canadian Intellectual Property Office (CIPO) highlight inconsistencies between CIPO's examination practices and Supreme Court precedent.
In this recently reported decision, the Court granted Apotex leave to deliver Fresh as Amended Responding Statement of Issues for the reference into AstraZeneca's damages or Apotex's profits, following the Court's decision that the ‘693 Patent is valid and infringed by Apotex.
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