Reference no: EM131274560
Cooper Industries v. Leatherman Tool Group, Inc.
United States Supreme Court 121 S. Ct. 1678 (2001)
Leatherman (plaintiff) sued Cooper (defendant) in federal district court for unfair competition. Leatherman Tool Group, Inc., manufactured and sold a multifunctional tool called the PST that improved on the classic Swiss Army knife. Leatherman dominated the market for multifunctional pocket tools.
In 1995, Cooper Industries, Inc., decided to design and sell a competing multifunctional tool under the name "ToolZall." Cooper introduced the ToolZall in August 1996 at the National Hardware Show in Chicago. At that show, Cooper used photographs in its posters, packaging, and advertising materials that purported to be a ToolZall but were actually of a modified PST.
When those materials were prepared, the first of the ToolZalls had not yet been manufactured. A Cooper employee created a ToolZall "mock-up" by grinding the Leatherman trademark off a PST and substituting the unique fastenings that were to be used on the ToolZall. At least one of the photographs was retouched to remove a curved indentation where the Leatherman trademark had been. The photographs were used not only at the trade show, but also in marketing materials and catalogs used by Cooper's sales force throughout the United States.
The lower court found for Leatherman in the amount of $50,000 in compensatory damages and $4.5 million in punitive damages. Cooper appealed, but the court of appeals affirmed the lower court's decision, seeing no "abuse of discretion" by the lower court as to punitive damages. Cooper appealed to the U.S. Supreme Court, petitioning for a de novo review of the facts as to the size of the punitive damages.
Although compensatory damages and punitive damages are typically awarded at the same time by the same decision maker, they serve distinct purposes. The former are intended to redress the concrete loss that the plaintiff has suffered by reason of the defendant's wrongful conduct. The latter, which have been described as "quasi-criminal," operate as private fines intended to punish the defendant and to deter future wrongdoing.
A jury's assessment of the extent of a plaintiff's injury is essentially a factual determination, whereas its imposition of punitive damages is an expression of its moral condemnation. The question [of] whether a fine is constitutionally excessive calls for the application of a constitutional standard to the facts of a particular case, and in this context de novo review of that question is appropriate.