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Arctic Cat Inc. v. Bombardier Recreational, 19-1080 (2020)

Court: Court of Appeals for the Federal Circuit Number: 19-1080 Visitors: 12
Filed: Feb. 19, 2020
Latest Update: Mar. 03, 2020
Summary: Case: 19-1080 Document: 62 Page: 1 Filed: 02/19/2020 United States Court of Appeals for the Federal Circuit _ ARCTIC CAT INC., Plaintiff-Appellant v. BOMBARDIER RECREATIONAL PRODUCTS INC., BRP U.S. INC., Defendants-Appellees _ 2019-1080 _ Appeal from the United States District Court for the Southern District of Florida in No. 0:14-cv-62369-BB, Judge Beth Bloom. _ Decided: February 19, 2020 _ GREGG LOCASCIO, Kirkland & Ellis LLP, Washington, DC, argued for plaintiff-appellant. Also represented by
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Case: 19-1080    Document: 62    Page: 1   Filed: 02/19/2020




   United States Court of Appeals
       for the Federal Circuit
                 ______________________

                   ARCTIC CAT INC.,
                    Plaintiff-Appellant

                            v.

 BOMBARDIER RECREATIONAL PRODUCTS INC.,
              BRP U.S. INC.,
            Defendants-Appellees
           ______________________

                       2019-1080
                 ______________________

    Appeal from the United States District Court for the
 Southern District of Florida in No. 0:14-cv-62369-BB,
 Judge Beth Bloom.
                 ______________________

                Decided: February 19, 2020
                 ______________________

    GREGG LOCASCIO, Kirkland & Ellis LLP, Washington,
 DC, argued for plaintiff-appellant. Also represented by
 NATHAN S. MAMMEN, JOHN C. O'QUINN, CALVIN ALEXANDER
 SHANK; NICHOLAS STEPHAN BOEBEL, Hansen Reynolds
 LLC, Minneapolis, MN; NIALL ANDREW MACLEOD, AARON
 MYERS, DIANE PETERSON, Kutak Rock LLP, Minneapolis,
 MN.

    LOUIS W. TOMPROS, Wilmer Cutler Pickering Hale and
 Dorr LLP, Boston, MA, argued for defendants-appellees.
Case: 19-1080     Document: 62      Page: 2     Filed: 02/19/2020




 2                ARCTIC CAT INC. v. BOMBARDIER RECREATIONAL




 Also represented by JENNIFER JASMINE JOHN, MICHELLE
 LISZT SANDALS.
                 ______________________

     Before LOURIE, MOORE, and STOLL, Circuit Judges.
 LOURIE, Circuit Judge.
      Arctic Cat Inc. (“Arctic Cat”) appeals from a judgment
 of the United States District Court for the Southern Dis-
 trict of Florida that Arctic Cat is not entitled to recover pre-
 complaint damages from Bombardier Recreational Prod-
 ucts Inc. (“Bombardier”) due to the failure of Arctic Cat’s
 licensee to mark products in accordance with 35 U.S.C.
 § 287. Arctic Cat Inc. v. Bombardier Recreational Prods.,
 
334 F. Supp. 3d 1238
, 1240 (S.D. Fla. 2018). Because we
 agree with the district court that § 287 continues to limit
 damages after a patentee or licensee ceases sales of un-
 marked products, and that willful infringement does not
 establish actual notice under § 287, we affirm.
                         BACKGROUND
     Arctic Cat owns U.S. Patents 6,793,545 (“the ’545 pa-
 tent”) and 6,568,969 (“the ’969 patent”), which are directed
 to thrust steering systems for personal watercraft
 (“PWCs”). The ’545 and ’969 patents issued in 2004 and
 2003 respectively, but Arctic Cat had stopped selling PWCs
 before either patent issued. In 2002, Arctic Cat entered
 into a license agreement with Honda for several Arctic Cat
 patents and patent applications, as well as any later pa-
 tents “that patentably cover Arctic Cat’s Controlled Thrust
 Steering methods, systems, and developments,” which in-
 cludes the ’545 and ’969 patents. J.A. 256 ¶ GG; see J.A.
 4078. The initial draft of the license agreement included a
 provision requiring Honda, as licensee, to mark all licensed
 products with the applicable patent numbers. However,
 that provision was deleted during negotiations, and the fi-
 nal version of the license agreement expressly stated that
 Honda had no marking obligations.
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 ARCTIC CAT INC. v. BOMBARDIER RECREATIONAL                   3



     Thereafter, Honda began making and selling un-
 marked PWCs, and Arctic Cat made no effort to ensure
 that PWCs sold by Honda were marked. The parties dis-
 pute when Honda stopped selling unmarked products un-
 der its license with Arctic Cat, but Arctic Cat asserts that
 Honda stopped selling unmarked products no later than
 September 6, 2013, approximately one year before Arctic
 Cat sued Bombardier. Bombardier contends that Honda
 continued to sell PWCs under the Arctic Cat license as late
 as 2018.
      On October 16, 2014, Arctic Cat sued Bombardier for
 infringement of various claims of the ’545 and ’969 patents.
 Before trial, Bombardier moved to limit Arctic Cat’s poten-
 tial damages because of Honda’s sales of unmarked prod-
 ucts.    The district court held that Bombardier, as
 defendant, bore the burden of proving that Honda’s PWCs
 practiced the asserted claims and, because that proof was
 lacking, denied Bombardier’s motion.
      At trial, the jury found Arctic Cat’s patents not invalid,
 awarded Arctic Cat a royalty to begin on October 16,
 2008—six years before Arctic Cat filed suit—and found
 that Bombardier had willfully infringed the asserted
 claims. After post-trial briefing, as relevant here, the dis-
 trict court denied Bombardier’s renewed motion for judg-
 ment as a matter of law on marking and willfulness. As to
 marking, the district court held that Bombardier had failed
 to meet its burden of proving that Honda’s PWCs practiced
 the asserted claims. Bombardier appealed to this court.
 See Arctic Cat Inc. v. Bombardier Recreational Prods. Inc.,
 
876 F.3d 1350
(Fed. Cir. 2017) (“Arctic Cat I”).
     On appeal, we affirmed as to willfulness but vacated
 and remanded as to marking. 
Id. at 1369.
Specifically, we
 determined that the district court erred in placing the bur-
 den on Bombardier to prove that the Honda PWCs prac-
 ticed the claimed invention. We held that once an alleged
 infringer identifies products that it believes are unmarked
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 4               ARCTIC CAT INC. v. BOMBARDIER RECREATIONAL




 patented articles subject to the notice requirements of
 § 287, the patentee bears the burden of proving that the
 identified products do not practice the claimed invention.
 
Id. at 1368.
Accordingly, we vacated the district court’s
 judgment as to marking and remanded to allow Arctic Cat
 an opportunity to establish that the Honda PWCs do not
 fall within the asserted claims.
      On remand, Arctic Cat conceded that it could not show
 that the Honda PWCs do not practice the asserted claims,
 J.A. 5065 ¶ K; J.A. 589, but nonetheless moved for sum-
 mary judgment that it is entitled to receive pre-complaint
 damages. First, Arctic Cat argued that the damages limi-
 tation of 35 U.S.C. § 287 applies only while a patentee is
 actively making, using, or selling unmarked products.
 Thus, Arctic Cat argued, § 287 did not apply after the time
 that it alleges Honda stopped selling unmarked products,
 and Arctic Cat is therefore entitled to damages during the
 period after the cessation of Honda’s sales but before the
 filing of its suit against Bombardier. More ambitiously,
 Arctic Cat also argued that it is entitled to damages for the
 full six-year period prior to suit allowed under 35 U.S.C.
 § 286—including for the period during which Honda was
 undisputedly selling unmarked products—because the
 jury’s finding of willful infringement is sufficient to demon-
 strate actual notice under § 287.
     In its own motion for summary judgment, Bombardier
 argued that Honda’s PWCs were unmarked patented arti-
 cles and Arctic Cat failed to provide constructive or actual
 notice under § 287, and Arctic Cat therefore cannot receive
 any pre-complaint damages. Bombardier argued that non-
 compliance with § 287 can be cured only by either begin-
 ning to mark or providing actual notice to an alleged
 infringer.
     The district court granted summary judgment in favor
 of Bombardier, and Arctic Cat appealed. We have jurisdic-
 tion under 28 U.S.C. § 1295(a)(1).
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 ARCTIC CAT INC. v. BOMBARDIER RECREATIONAL                   5



                         DISCUSSION
      We review a district court’s grant of summary judg-
 ment according to the law of the regional circuit. Kaneka
 Corp. v. Xiamen Kingdomway Grp. Co., 
790 F.3d 1298
,
 1303 (Fed. Cir. 2015) (citing Halo Elecs., Inc. v. Pulse El-
 ecs., Inc., 
769 F.3d 1371
, 1377 (Fed. Cir. 2014)). The Elev-
 enth Circuit reviews grants of summary judgment de novo.
 Myers v. Bowman, 
713 F.3d 1319
, 1326 (11th Cir. 2013).
 Summary judgment is appropriate when “there is no genu-
 ine dispute as to any material fact and the movant is enti-
 tled to judgment as a matter of law.” Fed. R. Civ. P. 56.
      In this appeal, we are tasked with interpreting the
 marking statute, 35 U.S.C. § 287. Statutory interpretation
 is a question of law that we review de novo. Wyeth v. Kap-
 pos, 
591 F.3d 1364
, 1369 (Fed. Cir. 2010) (quoting Glaxo
 Operations UK Ltd. v. Quigg, 
894 F.2d 392
, 395 (Fed. Cir.
 1990)).
                              I
    Section 287(a) provides in pertinent part:
    Patentees, and persons making, offering for sale, or
    selling within the United States any patented arti-
    cle for or under them, or importing any patented
    article into the United States, may give notice to
    the public that the same is patented . . . by fixing
    thereon the word “patent” . . . . In the event of fail-
    ure so to mark, no damages shall be recovered by
    the patentee in any action for infringement, except
    on proof that the infringer was notified of the in-
    fringement and continued to infringe thereafter, in
    which event damages may be recovered only for in-
    fringement occurring after such notice. Filing of an
    action for infringement shall constitute such no-
    tice.
     The notice provisions of § 287 do not apply to patents
 directed to processes or methods. See Wine Ry. Appliance
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 6               ARCTIC CAT INC. v. BOMBARDIER RECREATIONAL




 Co. v. Enterprise Ry. Equip. Co., 
297 U.S. 387
, 395 (1936).
 Nor do they apply when a patentee never makes or sells a
 patented article. 
Id. at 398.
Thus, a patentee who never
 makes or sells a patented article may recover damages
 even absent notice to an alleged infringer. If, however, a
 patentee makes or sells a patented article and fails to mark
 in accordance with § 287, the patentee cannot collect dam-
 ages until it either begins providing notice or sues the al-
 leged infringer—the ultimate form of notice—and then
 only for the period after notification or suit has occurred.
 Thus, a patentee who begins selling unmarked products
 can cure noncompliance with the notice requirement—and
 thus begin recovering damages—by beginning to mark its
 products in accordance with the statute. See Am. Med.
 Sys., Inc. v. Med. Eng’g Corp., 
6 F.3d 1523
, 1537 (Fed. Cir.
 1993).
     A patentee’s licensees must also comply with § 287.
 See Arctic Cat 
I, 876 F.3d at 1366
(citing Maxwell v. J.
 Baker, Inc., 
86 F.3d 198
, 1111 (Fed. Cir. 1996)). While
 courts may consider whether the patentee made reasona-
 ble efforts to ensure third parties’ compliance with the
 marking statute, 
id., here Arctic
Cat’s license agreement
 with Honda expressly states that Honda had no obligation
 to mark. J.A. 4081 ¶ 6.01; J.A. 259 ¶ JJ. Thus, it is does
 not excuse Arctic Cat’s lack of marking that it is Arctic
 Cat’s licensee, rather than Arctic Cat itself, who sold un-
 marked products.
     A patentee who makes or sells patented articles can
 satisfy the notice requirement of § 287 either by providing
 constructive notice—i.e., marking its products—or by
 providing actual notice to an alleged infringer. Gart v.
 Logitech, Inc., 
254 F.3d 1334
, 1345 (Fed. Cir. 2001). “Ac-
 tual notice requires the affirmative communication of a
 specific charge of infringement by a specific accused prod-
 uct or device.” Amsted Indus. Inc. v. Buckeye Steel Castings
 Co., 
24 F.3d 178
, 187 (Fed. Cir. 1994).
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 ARCTIC CAT INC. v. BOMBARDIER RECREATIONAL                  7



      This case presents a discontinuous situation in which
 unmarked products were sold, such that Arctic Cat could
 not receive damages before providing notice, but the sales
 of unmarked products allegedly stopped for a period of time
 prior to the filing of Arctic Cat’s complaint. Thus, the issue
 presented is whether the cessation of sales of unmarked
 products excuses noncompliance with the notice require-
 ment of § 287 such that a patentee may recover damages
 for the period after sales of unmarked products ceased but
 before the filing of a suit for infringement. We hold that it
 does not.
     Arctic Cat argues that, because § 287 is written in the
 present tense, the statute by its terms only applies while a
 patentee is “making, offering for sale, or selling” its prod-
 ucts. Thus, according to Arctic Cat, the statute limits dam-
 ages only during periods when the patentee is actually
 making, offering for sale, or selling the patented article.
 Bombardier responds that, to begin recovering damages af-
 ter sales of unmarked products have begun, § 287 requires
 that a patentee either begin marking its products or pro-
 vide actual notice to an alleged infringer; cessation of sales
 of unmarked products is not enough. We agree with Bom-
 bardier.
     We begin with the language of the statute. Duncan v.
 Walker, 
533 U.S. 167
, 172 (2001). While § 287 describes
 the conduct of the patentee in the present tense, the conse-
 quence of a failure to mark is not so temporally limited.
 Section 287 provides that “in the event of failure so to
 mark, no damages shall be recovered by the patentee in
 any action for infringement, except on proof that the in-
 fringer was notified of the infringement and continued to
 infringe thereafter” (emphasis added). The statute thus
 prohibits a patentee from receiving any damages in a sub-
 sequent action for infringement after a failure to mark, ra-
 ther than merely a reduced amount of damages in
 proportion to the amount of time the patentee was actually
 practicing the asserted patent.
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 8               ARCTIC CAT INC. v. BOMBARDIER RECREATIONAL




     Arctic Cat’s obligation to mark arose when its licensee
 began selling patented articles. The cessation of sales of
 unmarked products certainly did not fulfill Arctic Cat’s no-
 tice obligations under § 287, nor did it remove the notice
 requirement imposed by the statute. The notice require-
 ment to which a patentee is subjected cannot be switched
 on and off as the patentee or licensee starts and stops mak-
 ing or selling its product. After all, even after a patentee
 ceases sales of unmarked products, nothing precludes the
 patentee from resuming sales or authorizing a licensee to
 do so. In the meantime, unmarked products remain on the
 market, incorrectly indicating to the public that there is no
 patent, while no corrective action has been taken by the
 patentee. Confusion and uncertainty may result. Thus,
 once a patentee begins making or selling a patented article,
 the notice requirement attaches, and the obligation im-
 posed by § 287 is discharged only by providing actual or
 constructive notice.
      This reading of § 287 comports with the purpose of the
 marking statute. The policy of § 287 is to encourage mark-
 ing, not merely to discourage the sale of unmarked prod-
 ucts. We have explained that the notification requirement
 of § 287 “serves three related purposes: (1) helping to avoid
 innocent infringement; (2) encouraging patentees to give
 public notice that the article is patented; and (3) aiding the
 public to identify whether an article is patented.” Arctic
 Cat 
I, 876 F.3d at 1366
(citing Nike, Inc. v. Wal-Mart
 Stores, Inc., 
138 F.3d 1437
, 1443 (Fed. Cir. 1998)). Requir-
 ing a patentee who has sold unmarked products to provide
 notice in order to begin recovering damages advances these
 objectives by informing the public and possible infringers
 that the article is patented. Arctic Cat’s proposed interpre-
 tation, on the other hand, would undermine these objec-
 tives. In Arctic Cat’s view, § 287 should be read to allow a
 patentee to mislead others that they are free to make and
 sell an article that is actually patented, but nonetheless
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 ARCTIC CAT INC. v. BOMBARDIER RECREATIONAL                  9



 allow the patentee to recover damages without undertak-
 ing any corrective action. We reject this view.
     In American Medical 
Systems, 6 F.3d at 1537
, we inter-
 preted § 287 to allow a patentee who had sold unmarked
 products to begin recovering damages after the patentee
 began marking. Otherwise, a patentee who has sold un-
 marked products would have no incentive to begin mark-
 ing, contrary to the objective of the statute. Here, where
 Honda merely stopped selling unmarked products but Arc-
 tic Cat otherwise took no action to remedy prior noncom-
 pliance or to provide notice that the articles were actually
 patented, Arctic Cat never complied with the notice re-
 quirement of § 287 and thus cannot recover damages for
 any period prior to the filing of its complaint.
                               II
      Arctic Cat also argues that, regardless of its failure to
 mark, it should nevertheless recover the maximum amount
 of pre-suit damages allowed by 35 U.S.C. § 286 because the
 jury’s finding that Bombardier willfully infringed the as-
 serted claims should be sufficient to establish actual notice
 under § 287. Arctic Cat acknowledges, as it must, that this
 argument is foreclosed by our precedent. In Amsted Indus.
 Inc. v. Buckeye Steel Castings Co. we held that the deter-
 mination whether a patentee provided actual notice under
 § 287 “must focus on the action of the patentee, not the
 knowledge or understanding of the infringer,” and that “[i]t
 is irrelevant . . . whether the defendant knew of the patent
 or knew of his own infringement.” 
24 F.3d 178
, 187 (Fed.
 Cir. 1994) (citing Am. Med. Sys., 
Inc., 6 F.3d at 1537
n.18)).
 Accordingly, we reject Arctic Cat’s argument.
     Aside from our inability to reverse the decision of an
 earlier panel, see Newell Cos., Inc. v. Kenney Mfg. Co., 
864 F.2d 757
, 765 (Fed. Cir. 1988), we reiterate the conclusion
 that willfulness, as an indication that an infringer knew of
 a patent and of its infringement, does not serve as actual
 notice as contemplated by § 287. While willfulness turns
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 10               ARCTIC CAT INC. v. BOMBARDIER RECREATIONAL




 on the knowledge of an infringer, § 287 is directed to the
 conduct of the patentee. The marking statute imposes no-
 tice obligations on the patentee, and only the patentee is
 capable of discharging those obligations. It is not directed
 to the infringer and does not contemplate mere knowledge
 of the infringer as sufficient to discharge the notice require-
 ments placed on the patentee.
     Arctic Cat bases its argument for reversing Amsted on
 a supposed typographical error in that opinion in a quota-
 tion from the Supreme Court’s decision in Dunlap v.
 Schofield, 
152 U.S. 244
(1894). Where the Supreme Court
 stated that notice “is an affirmative fact,” 
id. at 248,
our
 opinion in Amsted quoted Dunlap as characterizing notice
 as “an affirmative 
act,” 24 F.3d at 187
. Arctic Cat argues
 that this discrepancy undermines the reasoning in Amsted
 and that, properly understood, Dunlap stands for the prop-
 osition that notice is a fact that can be proved by knowledge
 of the infringer. But the alleged mistranscription in Am-
 sted is inconsequential to our analysis of Dunlap because
 the relevant fact is the act of the patentee. The full context
 of Dunlap confirms this understanding:
      The clear meaning of this section is that the pa-
      tentee or his assignee, if he makes or sells the arti-
      cle patented, cannot recover damages against
      infringers of the patent, unless he has given notice
      of his right, either to the whole public, by marking
      his article ‘Patented,’ or to the particular defend-
      ants, by informing them of his patent, and of their
      infringement of it.
      One of these things—marking the articles, or no-
      tice to the infringers—is made by the statute a pre-
      requisite to the patentee’s right to recover damages
      against them. Each is an affirmative fact, and is
      something to be done by 
him. 152 U.S. at 248
. Thus, the fact is the act of marking or
 providing notice, and both are “something to be done by”
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 ARCTIC CAT INC. v. BOMBARDIER RECREATIONAL                 11



 the patentee. Knowledge by the infringer is not enough.
 Actual notice under § 287 requires performance by the pa-
 tentee.
     Finally, we note that other decisions of this court pre-
 dating Amsted similarly interpreted actual notice under
 § 287 to require action by the patentee. See Am. Med. 
Sys., 6 F.3d at 1537
n.18 (Fed. Cir. 1993) (“The notice of infringe-
 ment must therefore come from the patentee, not the in-
 fringer.”); Devices for Med., Inc. v. Boehl, 
822 F.2d 1062
,
 1066 (Fed. Cir. 1987) (“[The patentee] failed to carry its
 burden of convincing the jury that it had performed affirm-
 ative acts in compliance with § 287.”).
                         CONCLUSION
     We have considered Arctic Cat’s remaining arguments
 but find them unpersuasive. Accordingly, for the reasons
 above, we affirm the district court’s denial of pre-complaint
 damages to Arctic Cat.
                         AFFIRMED

Source:  CourtListener

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