In its comprehensive Reasons, the Federal Court of Appeal upholds Martineau J.’s 2012 trial decision in Bell Helicopter Textron Canada Limitée v. Eurocopter.  The September 24, 2013 appeal decision is largely focused on the concepts of claim construction, utility and sound prediction, and punitive damages.  Bell Helicopter appealed principally on the grounds that its Legacy landing gear does not infringe the ‘787 Patent, that claim 15 of the ‘787 Patent is invalid, and that the punitive damages award was inappropriate.  In turn, Eurocopter cross-appealed on the basis that all ‘787 Patent claims are valid, and that Bell Helicopter’s Production landing gear infringed those claims.

Some notable conclusions by the Court are summarized below:

Claim Construction (paras. 73-103)

The Court of Appeal found no error with Martineau J.’s construction of the claims.  On the issue of essential elements of claim 15, the Court held that for an element to be considered non-essential and therefore substitutable, one must show either that a) on a purposive construction of the claim, the element was not intended to be essential; or b) at the date of the patent’s publication, the POSITA would have appreciated that a particular element could be substituted without changing the working of the invention.  Citing Free World Trust, the Court of Appeal rejected Eurocopter’s submission that an invention’s functionality should be considered when determining whether infringement has occurred.   The Court found that Eurocopter’s functional equivalency argument went against the foundation of claim construction, namely, the primacy of the language of the claims in determining the essential elements of the invention.

Sound Prediction and Utility (paras. 129-162)

Bell Helicopter claimed that Eurocopter’s demonstrated utility for the ‘787 Patent’s claim 15 was insufficient.  The Court of Appeal disagreed, finding that it is not necessary to test every minute variant when determining utility.  Eurocopter also claimed that claims 1-14 and 16 were invalid for lack of utility or sound prediction, as Martineau J. ignored the presumption of validity as set out in subsection 43(2) of the Patent Act.  In doing so, Eurocopter claimed that the Federal Court wrongly imposed the burden of proving utility on Eurocopter, whereas the burden should have been placed on Bell Helicopter to show the lack of utility.  The Court of Appeal agreed with Eurocopter on this point, stating that Bell Helicopter was indeed required to prove a lack of utility or sound prediction, but it had done so.  The Court then held that Eurocopter submitted insufficient evidence to rebut Bell Helicopter’s experts, having failed to put forward any evidence of testing or calculations supporting a sound line of reasoning.

Eurocopter also claimed that Martineau J. erred in applying sound prediction (developed in the context of pharmaceuticals) to mechanical inventions.  Referring to Binnie J.’s reasons in Wellcome, the Federal Court of Appeal disagreed with Eurocopter’s submissions, and found that the doctrine of sound prediction is not limited to the pharmaceutical sphere but rather can be applied more generally.  The Court of Appeal added, however, that if the factual basis of an invention can be found in scientifically accepted principles or within the common general knowledge of the POSITA, then disclosure might not be required to support sound prediction.

Punitive Damages (paras. 163-193)

Justice Martineau awarded punitive damages against Bell Helicopter on the basis of its credibility issues, bad faith, and egregious conduct, including its willfully blind or intentional and planned misappropriation of the Eurocopter’s invention.  Bell Helicopter appealed on the basis that the Federal Court should not have awarded punitive damages before the quantum of compensatory damages was established, given that punitive damages are awarded solely when compensatory damages are insufficient to accomplish the objectives of deterrence, denunciation, and retribution.  While the Court of Appeal agreed with this general proposition, it held that it is within the Court’s discretion to determine a party’s entitlement to punitive damages before the exact measure of compensatory damages has been ascertained.

In finding that the punitive damage award is appropriate, the Court stated that when “a person infringes a patent which it knows to be valid, appropriates the invention as its own, and markets it as its own knowing this to be untrue, punitive damages may be awarded when an accounting of profits or compensatory damages would be inadequate to achieve the objectives of retribution, deterrence and denunciation” (para. 192).  The Court held that such conduct was a marked departure from ordinary standards of decency, and must be denounced to deter such future misbehaviour.  This decision may open the door to further awards of punitive damages in patent cases, as it applies a less stringent test than that found in previous jurisprudence.