IP Law Daily Mixed decision issued in Polaris and Arctic Cat’s patent dispute over off-road vehicles
Tuesday, March 12, 2019

Mixed decision issued in Polaris and Arctic Cat’s patent dispute over off-road vehicles

By Brian Craig, J.D.

Arctic Cat did not infringe one patent owned by plaintiff Polaris, but Polaris may seek lost profits damages for infringement of a second patent.

In an infringement case between Polaris and Arctic Cat involving two patents for recreational off-road vehicles, the federal district court in Minneapolis, Minnesota has ruled that defendant Arctic Cat did not infringe one patent but allowed plaintiff Polaris to seek damages on lost profits for a second patent. The court construed the claims and found that Arctic Cat did not infringe one patent based on the placement of shocks. Arctic Cat stipulated that its Wildcat Trail vehicles infringed a second patent owned by Polaris for a side-by-side vehicle, and the court concluded that Polaris can seek lost profits for its wholly owned subsidiary (Polaris Industries, Inc. v. Arctic Cat Inc., March 11, 2019, Tunheim, J.).

Plaintiff Polaris Industries, Inc. ("Polaris") filed a series of patent-infringement actions against defendants Arctic Cat Inc. and Arctic Cat Sales Inc. (collectively "Arctic Cat") arising from the entry of Arctic Cat into the market for 4x4 trail recreational off-road vehicles. Before 2013, Polaris had a 90 percent market share in the 4x4 trail recreational off-road vehicle market. In 2013, Arctic Cat introduced a competing product—the Wildcat Trail—which allegedly reduced Polaris’s market share by 10 percent. In the present case, Polaris alleged infringement of U.S. Patent No. 8,944,449 (the ’449 patent) and U.S. Patent No. 9,217,501 (the ’501 patent). Both parties moved for summary judgment on various issues.

The ’449 Patent. The court first addressed whether Arctic Cat infringed the ’449 patent. In claim construction, claim terms are given their ordinary and customary meaning as understood by one of ordinary skill in the art at the time of the invention. The parties disagreed about the meaning of "interior region" in the patent claim. The court held that the meaning of "interior region" is a columnar space that takes the shape of the space bounded by the sway bar and extends upward to the lowest height of the cargo bed and downward to the lowest height of the of the ground engaging members. The shocks on the allegedly infringing Arctic Cat vehicles pass through the interior region of the sway bar. Thus, the shocks are not set apart from the interior region of the sway bar and do not infringe on the ’449 patent. Therefore, the court granted Arctic Cat’s motion for noninfringement of the ’449 patent.

The ’501 patent. Arctic Cat stipulated that its vehicles infringed the ’501 patent for a side-by-side vehicle. Accordingly, the court granted Polaris’s motion for summary judgment as to infringement of the ’501 patent.

Lost profits. Arctic Cat also moved for summary judgment of no lost profits of the ’501 patent. Polaris claimed lost profits for its wholly owned subsidiary PSI. Arctic Cat argues that Polaris failed to show that profits inexorably flowed from PSI to Polaris, and thus, Polaris’s lost profits claim fails. Courts generally allow patentees to claim lost profits where a reasonable probability that, but for the infringing activity, the patentee would have made the infringer’s sales. Showing inexorable flow of profits from one entity to another is an extremely high bar to meet.Here, an expert for Polaris submitted a declaration that Polaris’s Off-Road Vehicle Segment and PSI share a bank account wherein PSI deposits proceeds from its sales of Polaris vehicles. All PSI costs related to sales of Polaris vehicles, such as employee expenses, are borne by Polaris.Despite the high bar, Polaris showed a history of inexorable flow of profits, and a structural relationship through a shared bank account with PSI. Therefore, the court denied Arctic Cat’s motion for summary judgment as to lost profits for the ’501 patent.

Invalidity of the ’501 patent. Finally, the court addressed whether the ’501 patent is invalid due to prior art, a vehicle manufactured by Kymco, the Kymco UXV 500. The priority date for the ’501 Patent is August 3, 2010. Polaris argues that Arctic Cat must show that the Kymco vehicle was in public use or on sale prior to the priority, August 3, 2010, and in materially the same configuration and condition that Arctic Cat obtained in 2017. Arctic Cat responds by arguing that its expert inspected the Kymco vehicle and found that it was in materially the same condition now as it was before the priority date. The court found that Polaris’s arguments, however, go to the weight of the evidence. Arctic Cat provided sufficient evidence to create a genuine dispute of material fact. Thus, the court denied Polaris’s motion for summary judgment as to Arctic Cat’s invalidity defense based on the Kymco vehicle.

This case is No. 0:15-cv-04129-JRT-TNL.

Attorneys: Alan G. Carlson, Dennis C. Bremer, Nathan Louwagie, Peter Kohlhepp and Samuel T. Lockner (Carlson Caspers Vandenburgh Lindquist & Schuman PA) for Polaris Industries, Inc. Joseph Herriges, John C. Adkisson, Conrad A. Gosen, Jason M. Zucchi and Maria Elena Stiteler (Fish & Richardson P.C.) for Arctic Cat Inc. and Arctic Cat Sales Inc.

Companies: Polaris Industries, Inc.; Arctic Cat Inc.; Arctic Cat Sales Inc.

MainStory: TopStory Patent MinnesotaNews

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