Southern District of Florida Finds Defendant Failed to Meet its Burden With Laches Defense

The Southern District of Florida, in Arctic Cat Inc. v. Bombardier Recreational Products, Inc., Case No. 14-cv-62369 (Judge Bloom) (May 31, 2016), denied Defendant's Motion for Judgment as a Matter of Law on laches, and found Defendant had failed to meet its burden of proving the defense.

Defendant contended the doctrine of laches precluded Plaintiff's recovery of post-filing damages. The evidence during the Plaintiff's case-in-chief showed that Plaintiff knew Defendant was selling personal watercrafts more than 10 years before Plaintiff filed suit. Defendant argued that Plaintiff should be charged with constructive knowledge of Defendant's sale of personal watercrafts with the accused technology because well over 6 years before suit was filed (a) Defendant openly distributed product information clearly disclosing the use of the accused technology; (b) operator's guides and published articles were publically available clearly disclosing the use of the accused technology; and (c) Defendant's website included product information saying its products included the accused technology.

The Court, however, did not agree, finding that Plaintiff had presented evidence sufficient to show the reasonableness of the delay. The Court explained:

First, the articles, product specification sheets, and other advertisements did not outline the elements of the [accused] system so as to establish that the system contained components bearing directly on the [asserted patents]. For this reason, [Plaintiff] would not have reasonably been put on notice of [Defendant's] potentially infringing activities from these documents. Second, although Defendant points to 2004 as the pertinent date for constructive knowledge, in 2004, Defendant incorporated [the accused technology] only on a single [product] . . . in its lineup - a PWC that was discontinued due to low sales volume, as corroborated by trial testimony. See Tripp v. United States, 406 F.2d 1066, 1071 (Ct. Cl. 1969) (finding that a plaintiff may reasonably delay an infringement suit until it can "determine that the extent of possible infringement made litigation monetarily ripe"). Accordingly, had Arctic Cat known of this single model, it would have been reasonable for the Plaintiff to determine that bringing a suit against the Defendant for infringement made little economic sense.

(Slip op. at 17).

The Court also found persuasive the details of a March 2000 meeting between Plaintiff and Defendant. At that meeting, Defendant told Plaintiff that it intended to achieve off-throttle steering using a fin or rudder based system, and not using the patented technology. Given Defendant's express statement, Plaintiff has no reason to investigate Defendant's products further. (Slip op. at 17-18). Lastly, the Court noted that the unrebutted evidence showed that Defendant moved to the accused technology in 2009, only 5 years before suit was filed. (Slip op. at 18). Based on the evidence, the Court concluded that Plaintiff's delay was reasonable.

With regard to material prejudice, the Court concluded that Defendant did not establish evidentiary prejudice or economic prejudice. Specifically, Defendant could not show the delay caused missing prior art evidence because the prototype in question "is not significant evidence against validity, as it was never released to the public and, thus, does not qualify as prior art." (Slip op. at 18).

For economic prejudice, the Court said:

With respect to economic prejudice, [Defendant] was aware of each [Plaintiff] controlled thrust steering patent shortly after each one issued - and even beforehand, as evidenced by Goudrault's testimony and notes - as well as before [Defendant] sold any PWC with [accused] technology. [Defendant] believed that the [Plaintiff's] patents were invalid when issued and never changed its position. [Defendant] cannot, for this reason, make any serious claim that it implemented [accused technology] on its Sea-Doo PWC as a result of Plaintiff's delay in filing suit.

(Slip op. at 19-20).