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8 December 2017Patents

Federal Circuit steers patent case back to court

The US Court of Appeals for the Federal Circuit has ordered part of a quarrel centring on steering systems for personal watercraft back to a lower court.

Yesterday, December 7, the Federal Circuit vacated a decision by the US District Court for the Southern District of Florida, finding that the court had erred in placing a burden on Bombardier Recreational Products (BRP) concerning patent markings.

The Federal Circuit also rejected BRP’s appeal against a judgment finding no obviousness, BRP’s argument on royalties and an appeal against the court’s decision to triple damages.

US patent numbers 6,568,969 and 6,793,545, which disclose a “thrust steering system for personal watercraft (PWC) propelled by jet stream”, are at the centre of the dispute.

All-terrain vehicle maker Arctic Cat sued BRP for infringement through the sale of some of its PWC models called Sea-Doo PWC.

Before trial, BRP had failed to obtain summary judgment on several issues, including that Arctic Cat’s sole licensee Honda failed to mark its products with the licensed patent numbers.

A Florida jury found that the patents were not invalid, awarded royalties, found that BRP had wilfully infringed the asserted claims, and tripled the damages.

Arctic Cat was awarded $46.7 million in damages and BRP appealed.

Under 35 USC section 287(a), a patentee who makes or sells a patented article must mark its articles or notify infringers of its patent in order to recover damages. A patentee’s licensees must also comply with the section.

In February 2002, Arctic Cat entered into a licence agreement with Honda, which paid $315,000 for licences to two earlier-issued Arctic Cat patents and any later patents covering “Arctic Cat’s controlled thrust steering methods, systems and developments”.

The agreement stated that Honda didn’t have an obligation to mark its licensed products.

The only dispute between the parties is whether any of the Honda PWCs were covered by the patent claims at issue, said Circuit Judge Kimberly Moore, on behalf of the Federal Circuit.

On summary judgment, the lower court held that the burden of proving compliance with marking is placed on the defendant (BRP).

“This was a legal error. The burden of proving compliance with marking is and at all times remains on the patentee,” noted Moore.

BRP had identified 14 unmarked Honda PWCs, which it argued fell within the patent claims.

According to the Federal Circuit, it was Arctic Cat’s burden to establish compliance with the marking statute.

The district court found that BRP had identified Honda PWCs and “presented an array of evidence” alleging it practises the asserted patents at summary judgment.

But the Florida court concluded that BRP had failed to meet its burden because it did not conduct a claim analysis of the products.

BRP’s motion for judgment as a matter of law was then denied because BRP failed to meet its burden in proving that Honda sold patented articles, the court said.

Moore stated that the district court erred when it placed this burden on the alleged infringer.

“Because we conclude BRP has met its initial burden of production, Arctic Cat must now establish the Honda PWCs do not practise the asserted patents to recover damages under the constructive notice provisions of section 287,” concluded the Federal Circuit.

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Federal Circuit steers patent case back to court

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