Canadian Federal Court Awards Reasonable Royalties, Punitive Damages in Helicopter Landing Gear Dispute

The case is Airbus Helicopters, S.A.S. v. Bell Helicopter Textron Canada Limitée, available here.  The decision came down in early March, so I'm a little delinquent in reporting it, but it is quite lengthy (461 paragraphs, 220 pages), and at the end of the day I don't really have much to add beyond what Norman Siebrasse has already written about the case (here, here here and here).  Airbus sued Bell for infringing a patent relating to helicopter landing gear, and prevailed as to one claim on both infringement and validity.  In the damages hearing, Airbus sought a reasonable royalty, even though as Professor Siebrasse points out the two companies are competitors and it's very unlikely that Airbus ever would have licensed Bell to use its patented landing gear.  This makes the hypothetical negotiation construct a bit strained in this context, but that may be unavoidable if the plaintiff can't or won't prove its lost profit.  Anyway, at the end of the day the court awarded Bell Can.$500,000 in reasonable royalties based on a split of what the judge believed were the parties' respective maximum willingness to pay and minimum willingness to accept.  

In addition, the court awarded Can.$1,000,000 in punitive damages, which are relatively uncommon in Canadian patent litigation (see paras. 390-91 for discussion of awards in other cases), based in part on Bell's having deliberately infringed.  (Professor Siebrasse's two posts on the punitive damages aspects of the case (here and here) raise a number of cogent critiques.)  As the U.S. courts work through the implications of Halo v. Pulse, U.S. patent litigators might find the court's recitation of the relevant factors in Canada (see para. 384) of interest to wit: 

The Supreme Court of Canada has identified six relevant considerations (Whiten c Pilot Insurance Co, 2002 CSC 18,[2002] 1 RCS 595 at paras 111-126 [Whiten]) relevant to quantification of punitive damages which should first and foremost seek proportionality:

(1) Proportionality to the defendant’s blameworthiness, which can be further broken down into sub-factors (Whiten at para 113); 

(2) Proportionality to the plaintiff’s vulnerability (Whiten at para 114); 

(3) Proportionality to the harm directed at the plaintiff; this includes potential harm, which may only have been avoided by happenstance (Whiten at para 117); 

(4) Proportionality to the need for deterrence; this is particularly important in cases where the defendant’s conduct is egregious and known to top management (Whiten at para 120), and it should reflect the defendant’s financial means – the means both of Bell Helicopter Textron Canada and its parent company Bell Helicopter Textron – when finances are directly linked to the defendant’s conduct (Whiten at para 119); 

(5) Proportionality even after taking into account other penalties, both civil and criminal, which have been or are likely to be inflicted on the defendant; and 

(6) Proportionality to the advantage wrongfully gained by the defendant from its misconduct; this would prevent the defendant from profiting from its infringement (Whiten at paras 124-125).

And, by the way, Happy Canada Day (tomorrow, July 1) to my readers up north.