By Mark Engstrom, J.D.
Bombardier Recreational Products and BRP U.S. (collectively, "Bombardier’) were not entitled to a post-verdict judgment of non-infringement of two Arctic Cat patents on a controlled-thrust steering system for watercraft, the federal district court in Miami has ruled. Because the jury verdict was not compromised by the court’s instruction on willful infringement, and because Bombardier waived any argument regarding the deficiency of the court’s marking instruction, the court denied Bombardier’s renewed motion for judgment as a matter of law. The court ordered the parties to mediate the terms of a license for Bombardier’s post-judgment infringement of the patents in suit (Arctic Cat Inc. v. Bombardier Recreational Products, Inc., August 15, 2016, Bloom, B.).
Infringement and Damages
A jury found that Bombardier had willfully infringed U.S. Patent Nos. 6,793,545 and 6,568,969 by selling personal watercraft (PWC) that incorporated an off-throttle, assisted-steering technology. With respect to damages, the jury found that October 16, 2008, was the starting date of Bombardier’s infringement, and that $102.54 was Arctic Cat’s reasonable royalty per unit sold. The parties stipulated to the number of units sold since October 16, 2008 (151,790).
The court noted that the jury ruled on the issue of subjective willfulness after the court had found that objective willfulness was present under the Seagate test for willfulness, which the U.S. Supreme Court thereafter discarded—in Halo Electronics, Inc. v. Pulse Electronics., Inc., 136 S.Ct. 1923 (2016)—as inconsistent with Section 284 of the Patent Act.
Because the district court found that Arctic Cat was entitled to treble damages, it directed Bombardier to return $46.7 million, plus applicable interest, to Arctic Cat. Bombardier filed a renewed motion for JMOL, or a new trial, under Rules 50(b) and 59 of the Federal Rules of Civil Procedure. Arctic sought supplemental damages and an ongoing royalty for post-judgment infringements.
Bombardier failed to show that "no liability" was the only reasonable outcome. According to the court, the jury verdict was consistent with applicable law and the manifest weight of the evidence. In fact, Bombardier raised only two fresh considerations: the jury instruction on willfulness and the jury instruction on marking.
Willfulness. Bombardier argued that the jury verdict could not stand because the jury had been instructed under Federal Circuit’s now-overruled Seagatestandard for determining willfulness. In re Seagate Tech., LLC, 497 F.3d 1360 (2007). However, the jury instruction on willful infringement was limited to subjective willfulness, and Bombardier failed to explain how the Supreme Court’s Halo decision had affected the jury instruction on willful infringement. According to the court, the use of the Seagate standard could only have benefited Bombardier because the jury was told to hold the evidence to a standard that was more scrutinizing than the proper standard (the preponderance of the evidence), and the willfulness instruction did not create a misleading impression or an inadequate understanding of the issues or the law.
Marking. Bombardier also argued that the court’s marking instruction was erroneous. However, the parties had stipulated to the marking instruction. Moreover, Bombardier did not object to the court’s inclusion of a question regarding Honda’s purported manufacture and sale of a "patented article" on the jury’s verdict form. In fact, Bombardier had argued for its inclusion. For that reason, Bombardier waived any argument that the jury was not properly instructed on the requirements of 35 U.S.C. §287(a). Furthermore, the jury was properly instructed regarding the burden for establishing marking and notice under 35 U.S.C. §287(a).
Ultimately, the court concluded that the verdict and subsequent judgment were supported by "overwhelming evidence," and for that reason, Bombardier was not entitled to judgment as a matter of law or a new trial.
Supplemental damages, ongoing royalty. Arctic Cat argued that sections 283 and 284 of the Patent Act entitled it, as the prevailing party, to an award of supplemental damages for Bombardier’s sales of the infringing PWCs—from April 30, 2016, through June 14, 2016 (the date of judgment)—at an enhanced rate. It further argued those sections entitled Arctic Cat to the entry of an ongoing royalty for Bombardier’s sales of the infringing PWCs from the date of the final judgment through the expiration of the ’545 patent.
With respect to supplemental damages, the jury found a per-unit reasonable royalty rate of $102.54 for Bombardier’s past infringement, and the experts of both parties had agreed that Bombardier had sold 151,790 infringing PWCs between October 16, 2008, and April 30, 2016, the date of Bombardier’s most-current sales data.
The jury further found that Bombardier’s past infringement was willful, and the court awarded treble damages under §284. Because that enhancement amounted to an effective royalty rate of $307.62 per unit, the court assessed the total disclosed enhanced damages at $46,693,639.80, which represented the product of the effective royalty rate ($307.62) and the infringing sales (151,790) through April 30, 2016.
Arctic Cat argued that the royalty for Bombardier’s sales of infringing PWCs from April 30, 2016, through June 14, 2016, should be assessed at the implied royalty rate of $307.62. The court agreed. Because the pre-judgment sales of Bombardier’s infringing PWCs were willful infringements, they were appropriately included in the verdict. Assessed at that royalty rate, Arctic Cat was awarded supplemental damages of $1,491,385 for Bombardier’s pre-judgment infringements.
With respect to an ongoing royalty, Arctic Cat argued that Bombardier continued to manufacture and sell, post judgment, its infringing PWCs. In lieu of an injunction, Arctic Cat sought an ongoing royalty rate for Bombardier’s post-judgment infringing sales.
Rather than evaluate a post-verdict "hypothetical" negotiation, the court required the parties to engage in actual licensing negotiations. More specifically, the court ordered the parties to attend mediation to negotiate the terms of a license with respect to post-judgment infringements. The additional relief that Arctic Cat requested, including the imposition of a periodic accounting, was denied pending the outcome of the licensing discussions.
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. Rachael L. Rodman (Dinsmore & Shohl, LLP) and Scott M. Sarason (Rumberger, Kirk & Caldwell) for Bombardier Recreational Products, Inc. Jason M. Wejnert (Dinsmore & Shohl, LLP) for BRP US Inc.
Companies: Arctic Cat Inc.; Bombardier Recreational Products, Inc.; BRP US, Inc.
MainStory: TopStory Patent FloridaNews
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