Arctic Cat Inc. v. Bombardier Recreational Products, Inc.

198 F. Supp. 3d 1343, 2016 WL 4249951, 2016 U.S. Dist. LEXIS 107724
CourtDistrict Court, S.D. Florida
DecidedJuly 27, 2016
DocketCase No. 14-cv-62369-BLOOM/Valle
StatusPublished
Cited by6 cases

This text of 198 F. Supp. 3d 1343 (Arctic Cat Inc. v. Bombardier Recreational Products, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Arctic Cat Inc. v. Bombardier Recreational Products, Inc., 198 F. Supp. 3d 1343, 2016 WL 4249951, 2016 U.S. Dist. LEXIS 107724 (S.D. Fla. 2016).

Opinion

ORDER

BETH BLOOM, UNITED STATES DISTRICT JUDGE

THIS CAUSE is before the Court upon the Motion of Defendants Bombardier Recreation Products, Inc. and BRP U.S. Inc. (hereinafter, referred to together as “BRP” or “Defendant”) for an Order (A) Vacating the Portion of the June 14, 2016, Final Judgment Enhancing Damages, ECF No. [157] (“Judgment”), and (B) Setting Briefing Schedule for Consideration of Motion by Plaintiff for Enhanced Damages. ECF No. [158] (the “Motion”). The Court has reviewed the Motion, all supporting and opposing submissions and exhibits,1 and the applicable law, and is otherwise fully advised. For the reasons set forth below, the Motion is denied.

I. Background

Following a jury trial, a verdict issued in the' above-styled case finding BRP liable to Plaintiff Arctic Cat Inc. (“Plaintiff’ or “Arctic Cat”) for willful infringement through the sale of certain models of personal watercraft (or “PWCs”) under the name, Sea-Doo, which incorporated an off-throttle assisted steering technology. See ECF No. [153] (Jury “Verdict,” dated June 1, 2016). Therein, the jury found by a preponderance of the evidence that BRP infringed ten claims in Arctic Cat’s Patents, United States Patent Numbers 6,793,545 (“the ’545 Patent”) and 6,568,969 (“the ’969 Patent”), including claims 13,15, 17,19, 25, and 30 of the ’545 Patent as well as claims 15, 16, 17, and 19 of the ’969 Patent. See id. at 1-2. The jury further held that BRP failed to prove its invalidity defenses of anticipation, obviousness, and enablement. Id. at 2-3. As to damages, the jury identified October 16, 2008, as the [1345]*1345proper starting date, and $102.54 as the reasonable royalty per unit sold to which Arctic Act is entitled. The parties stipulated to the number of units sold, sinee October 16, 2008, to wit, 151,790. See EOF No. [149] (trial minutes, May 31, 2016).

Moreover, the jury found, by clear and convincing evidence, that BRP infringed the above-listed claims “with reckless disregard of whether such claim was infringed or was invalid or unenforceable,” entitling Arctic Cat to treble damages. Verdict at 4. The issue of subjective willfulness reached the jury after the Court found objective willfulness by clear and convincing evidence, pursuant to the two-part Seagate test, in its Order Denying Judgment as a Matter of Law, EOF No. [148] (“Order Denying JMOL”) (citing In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed.Cir.2007)). Under the first, objective prong of this test, a patent owner must “show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” Seagate, 497 F.3d at 1371. Under the second, subjective prong, the patentee must demonstrate, also by clear and convincing evidence, that the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.” Id.2

Coincidentally, the Supreme Court issued a ruling shortly after the conclusion of trial that, inter alia, discarded the Sea-gate test for willfulness as inconsistent with Section 284 of the Patent Act. See Halo Elecs., Inc. v. Pulse Elecs., Inc., — U.S. -, 136 S.Ct. 1923, 1923, 195 L.Ed.2d 278 (2016) (citing 35 U.S.C. § 284). Halo. held that “an independent showing of objective recklessness should [not] be a prerequisite to enhanced damages” and that a determination as to enhancement should be governed by a preponderance of the evidence standard. 136 S.Ct. at 1925. Moreover, it concluded that enhancement of damages should be governed by a preponderance of the evidence standard that “has always” governed all other aspects of patent-infringement litigation. Id. This decision, importantly, did not impact the validity of the Judgment because, as the Court explained, “where both objective willfulness and subjective willfulness were found by clear and convincing evidence, a more lenient inquiry as to subjective willfulness, without the additional hurdle imposed by the objective willfulness inquiry, and by the lesser preponderance of the evidence standard, would reach the same result.” Judgment at 3. Pursuant to the applicable law, including the issuance of Halo, the, Court held that the. Verdict entitled Arctic Cat to the trebling of damages and, thus, directed judgment against BRP and in favor of the Plaintiff for $46,693,639.80, and any applicable interest.

BRP identifies no procedural basis for its Motion under the Federal Rules of Civil Procedure, which would inform the Court’s standard of review. Regardless, it asks the Court to vacate the instant Judgment, suggesting that the enhancement of damages under 35 U.S.C. § 284 was improper. Accordingly, the Court takes this opportunity to examine the relevant law, including the Supreme Court’s recent decision in Halo, entered on the same day as the Court’s Judgment3—and, thus, to ensure that the Court’s decision in which it trebled damages comports with the Supreme Court’s new guidance.

[1346]*1346II. Authority

Section 284 of the Patent Act provides that, in a case of infringement, courts “may increase the damages up to three times the amount found or assessed.” 35 U.S.C. § 284. In 2007, the Federal Circuit adopted the two-part Seagate test for determining when a district court may increase damages pursuant to § 284.4 But, as noted, the Supreme Court rejected the Seagate test in Halo as “unduly rigid” and held that, instead, “district courts [should] exercise their discretion” as provided in § 284 to determine whether to award enhanced damages. 136 S.Ct. at 1933-34 (“Section 284 permits district courts to exercise their discretion in a manner free from the inelastic constraints of the Sea-gate test.”). Accordingly, “[t]he subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless.” Id. 136 S.Ct. at 1926; see SOCIEDAD ESPANOLA DE ELECTROMEDICINA Y CALIDAD, S.A., v. BLUE RIDGE X-RAY CO., INC., DRGERM USA INC., & DRGEM CORP., No. 1:10-CV-00159-MR, 2016 WL 3661784, at *2 (W.D.N.C. July 8, 2016) (“Thus, in Halo, the Supreme Court [] overruled the objective prong of Sea-gate, leaving the issue of willfulness as solely a factual issue which can readily be addressed by a jury.”).5 Additionally, as explained in the Final Judgment, Halo “disavowed the burden of proof prescribed by Seagate and opted for the lesser preponderance of the evidence standard for a patentee to prove an alleged infringer’s recklessness.” PPC Broadband, Inc. v. Corning Optical Commc’ns RF, LLC, 193 F.Supp.3d 133, 143, 2016 WL 3365437, at *5 (N.D.N.Y. June 16, 2016) (citing id. at 148, at *9).

Enhanced damages “are not to be meted out in a typical infringement case, but are instead designed as a ‘punitive’ or ‘vindictive’ sanction for egregious behavior.

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198 F. Supp. 3d 1343, 2016 WL 4249951, 2016 U.S. Dist. LEXIS 107724, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arctic-cat-inc-v-bombardier-recreational-products-inc-flsd-2016.