Arctic Cat Inv. V. Bombardier Recreational Products Inc. et al.

Docket Nos. 2017-1475

December 7, 2017

Brief summary: DC denial of BRP’s JMOL that the asserted claims would have been obvious and that the royalty, willfulness and trebling of damages were improper affirmed. Patent marking issue vacated and remanded as the alleged infringer is only initially required to put the patentee “on notice that he or his authorized licensees sold specific unmarked products which the alleged infringer believes practice the patent”; “the patentee” then “bears the burden to prove the products identified do not practice the patented invention.”

Summary: BRP appealed DC denial of JMOL that the asserted claims of AC’s US 6,568,969 and 6,793,545 relating to personal watercraft (PWC) “including…a controlled thrust steering system” would have been obvious, that AC failed to mark patented products, that the jury’s royalty award was based on improper expert testimony, that BRP did not willfully infringe the claims, and the award of treble damages and an ongoing royalty. The FC panel opinion explained that JMOL decision are reviewed under the law of the regional circuit (here, the Eleventh Circuit so de novo) “unless the issue pertains to or is unique to patent law” (AbbVie, FC 2014), viewing the evidence in the light most favorable to the non-moving party.

It also explained that an obviousness determination “requires consideration of all the facts”, including “all four Graham factors” (including “objective indicia of nonobviousness”), whether an “explicit or implicit[]” motivation to combine references existed (KSR, US 2007), whether there was a teaching away that would have “discouraged” one from “following the path set out in the reference” or “taken by the applicant” (Allergan, FC 2015; WL Gore, FC 1983 (must consider art in its entirety); In re Gurley, FC 1994), and a reasonable expectation of success (PAR Pharm., FC 2014) and that the failure to do so is erroneous (Millenium Pharm., FC 2017). On appeal, the FC panel explained, “[t]he only question” for it is “whether substantial evidence supports the jury’s presumed finding” (here, the motivation to combine) (Apple, FC 2016), and “[e]vidence suggesting reasons to combine cannot be viewed in a vacuum apart from evidence suggesting reasons not to combine.” And here it found “the same reference suggests a reason to combine, but also suggests reasons that a skilled artisan would be discouraged from” the same and “[u]nder such circumstances, the jury’s fact finding regarding motivation is supported by substantial evidence” (e.g., “a reasonable jury could have determined that more than four solutions existed” and “modifying a PWC with the Challenger system would not have been a predictable solution yielding expected results”). The FC panel also refused to reverse the jury’s finding that AC’s secondary consideration evidence of industry praise and a long-felt need, finding these “weigh[] in favor of nonobviousness.” Thus, no error was found “in the conclusion that BRP failed to prove that the asserted claims would have been obvious by clear and convincing evidence.”

“Under 35 U.S.C. § 287(a), a patentee who makes or sells a patented article must mark his articles or notify infringers in order to recover damages”, and “[a] patentee’s licensees must also comply” (Dunlap, US 1894; Maxwell, FC 1996; Motorola, FC 1984 (§ 287 is “a limitation on damages, and not an affirmative defense”)). AC licensed its products to Honda and did not require it to mark the products. The dispute here is whether “Honda sold PWC products covered by the patents at issue” (“were required to be marked”); if it did, then AC “has failed to satisfy the marking requirements.” The DC concluded the burden of proof on this issue was on BRP. The FC panel noted “[t]here is a split among the” DCs on this point, but held the “initial burden” is on the alleged infringer, but that “this a low bar” only requiring that the patentee be put “on notice that he or his authorized licensees sold specific unmarked products which the alleged infringer believes practice the patent” (“a burden of production, not one of persuasion or proof”). “[T]he patentee” then “bears the burden to prove the products identified do not practice the patented invention.” And, here, the FC panel concluded, BRP satisfied its burden and the DC erred in not placing the burden to prove Honda’s products “do not practice the patent-at-issue.” The marking issue was therefore vacated and remanded.

The FC panel affirmed the DC’s denial of JMOL regarding the jury’s reasonable royalty rate, the ongoing royalty rate (“hypothetical negotiation using the Georgia-Pacific factors” (Fresenius, FC 2009)), and wilfullness (“jury’s willfulness finding is supported by substantial evidence” (Halo, US 2016 (“subjective willfulness alone…can support an award of enhanced damages”); Octane Fitness, US 2014 (preponderance of the evidence); WesternGeo, FC 2016). The FC panel also found the DC did not abuse its discretion by trebling damages even though it did not allow the parties to brief the issue and its decision was “initially…without much explanation” since it subsequently “explained its decision in a subsequent thorough and well-reasoned opinion” (Read, FC 1992).

This entry was posted in Damages, Obviousness, Obviousness-Teaching Away, Royalties, Willfullness. Bookmark the permalink.

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