IP Law Daily Arctic Cat awarded double royalty for Bombardier’s post-verdict sales of infringing jet skis
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Wednesday, January 11, 2017

Arctic Cat awarded double royalty for Bombardier’s post-verdict sales of infringing jet skis

The federal district court in Miami has ordered Bombardier Recreational Products— makers of the "Sea-Doo" line of jet propulsion personal watercraft—to pay $205.08 per unit, or double the jury’s reasonable royalty award, for post-judgment sales of personal watercraft that infringed two Arctic Cat patents on a controlled-thrust steering system. The court also awarded Arctic Cat pre-judgment interest in the amount of $894,717 (Arctic Cat Inc. v. Bombardier Recreational Products, Inc., January 3, Bloom, B.).

Following a ten-day trial, on June 1, 2016, a jury found that Canada-based Bombardier Recreational Products and its U.S. subsidiary, BRP U.S., (collectively, "Bombardier") had willfully infringed Arctic Cat’s U.S. Patent Nos. 6,793,545 and 6,568,969 by selling personal watercraft (PWC), including its Sea-Doo line, that incorporated an off-throttle, assisted-steering technology. The jury determined that $102.54 per unit was Arctic Cat’s reasonable royalty. The court trebled the royalty rate to $307.62 per unit under §284 due to Bombardier’s willful infringement, for a total award of $46,693,640 for sales of 151,790 infringing PWCs between October 16, 2008, and April 30, 2016. Arctic Cat was later awarded supplemental damages of $1,491,385 for Bombardier’s pre-judgment infringements. On August 15, 2017, the court denied Bombadier’s post-judgment motions.

In lieu of a permanent injunction, Arctic Cat sought an ongoing royalty rate for Bombardier’s post-judgment infringing sales. The court ordered the parties to attend mediation to negotiate the terms of a license with respect to post-judgment infringements. However, the parties were unable to reach an agreement and the matter was before the court. In the present order, the court awarded Arctic Cat an ongoing royalty and pre-judgment interest.

Royalty for post-judgment sales. Bombardier argued that the royalty rate determined by the jury of $102.54 per infringing unit sold should not be increased for post-judgment sales, while Arctic Cat sought an enhanced rate of double the jury’s award, or $205.08 per unit.

Applying the factors from Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), the court determined that Arctic Cat’s requested ongoing royalty rate of $205.08 per infringing unit was reasonable. First, following the jury’s willful infringement verdict and the court’s treble royalty award, Arctic Cat was in a better bargaining position. In addition, Arctic Cat pointed to the commercial success of its throttle reapplication device, and the fact that Bombardier did not utilize its non-infringing alternative, instead choosing to use the infringing system to the enhancement its reputation. Bombardier’s argument that Arctic Cat’s proposed rate would foreclose it from making any profit was not persuasive, in the court’s view.

The court also agreed with Arctic Cat the factors set forth in Read v. Portec, 970 F.2d 816, 827 (Fed. Cir. 1992), for determining enhanced damages in cases of willful infringement were relevant. In particular, Bombardier could not have a good-faith belief of non-infringement or invalidity of the patent-in-suit. In addition, statements in Bombardier’s corporate documents and by its representatives that the verdict was "unfounded" and "baseless" "demonstrate a lack of proper respect for the Court, the jury, and the U.S. patent system," the court said.

Arctic Cat was awarded an ongoing royalty rate of $205.08 per infringing unit.

Pre-judgment interest. The court previously determined that an award of pre-judgment interest was necessary to make Arctic Cat whole. Arctic Cat argued for application of the Florida statutory rate, or alternatively, the prime rate, currently 3.5%, while Bombardier sought application of the current T-bill rate, or 0.45%. The court rejected both parties’ suggestions, and decided to award pre-judgment interest according to the T-bill rate on the date of issuance of the ’545 patent in September 2004, or 2.14%, compounded monthly, for a total award of $894,717.

The case is No. 14-cv-62369-BLOOM/Valle.

Attorneys: Aaron A. Myers (Kutak Rock, LLP) and Howard Mitchell Bushman (Harke Clasby & Bushman LLP) for Arctic Cat Inc. Louis W. Tompros (Wilmer Cutler Pickering Hale and Dorr LLP) and Rachael L. Rodman (Dinsmore & Shohl, LLP) for Bombardier Recreational Products Inc. Jason M. Wejnert (Dinsmore & Shohl, LLP) for BRP U.S. Inc.

Companies: Arctic Cat Inc.; Bombardier Recreational Products Inc.; BRP U.S. Inc.

MainStory: TopStory Patent FloridaNews

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