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Arctic Cat Inc. v. Bombardier Recreational Products Inc.

Patentee Has Burden At All Times to Prove Compliance with Marking Statute

Arctic Cat Inc. v. Bombardier Recreational Products Inc., 2017 U.S. App. LEXIS 24700 (Fed. Cir. Dec 7, 2017) (MOORE, Plager, Stoll) (S.D. Fla.: Bloom) (3 of 5 stars)

Fed Cir generally affirms infringement verdict and damages award, while vacating denial of JMOL as to marking. Arctic Cat’s patents related to a thrust steering system for personal watercraft.

Obviousness: The district court did not err in denying JMOL of obviousness. The trial record was sufficient for a jury to conclude that there was no motivation to make the claimed invention, notwithstanding BRP’s contention that there were a finite number of possible solutions to the problem at issue. A jury could have concluded that there were more than BRP’s identified number of solutions and could have concluded that the claimed invention yielded unexpected results. The opinion also discusses objective considerations of industry praise and long-felt need, finding sufficient evidence in the record for the jury to find that each favored nonobviousness.

Marking: The district court erred by placing the burden of proving a marking defense on the defendant, BRP. “The burden of proving compliance with marking is and at all times remains on the patentee.” Op. at 22. However, the alleged infringer “bears an initial burden of production to articulate the products it believes are unmarked ‘patented articles’ subject to § 287. To be clear, this is a low bar.” Id. at 23. Because the district judge committed this error at the summary judgment stage, Arctic Cat was not properly informed of its burden to prove compliance with § 287. The judgment as to marking is thus vacated “so that Arctic Cat has an opportunity to proffer evidence” on the issue. Id. at 25.

Damages: The district court did not abuse its discretion in rejecting BRP’s Daubert challenge to royalty rate testimony from Arctic Cat, nor did it err in denying JMOL on the same issue. The record was sufficient to establish that a later-developed system from BRP could be used as a value benchmark for the infringing system. The district court also did not abuse discretion in granting Arctic Cat an ongoing royalty. Though BRP argued that the ordered rate “impermissibly covers [BRP’s] profits, [the Fed Cir] has affirmed rates at or near the infringer’s alleged profit margin.” Id. at 28. The district court also did not err in denying JMOL on willfulness, as the record included sufficient evidence on the issue. The district court’s jury instruction that willfulness could be proved by evidence that BRP “actually knew or should have known” of the risk of infringement was consistent with Halo, 136 S. Ct. 1923 (2016), and WesternGeco, 837 F.3d 1358 (Fed. Cir. 2016).

KEYWORDS: MARKING; OBVIOUSNESS (NO); WILLFULNESS (YES); DAMAGES; ONGOING ROYALTY