Arctic Cat Inc. v. Bombardier Recreational Prods. Inc.

• Decision Date: 19 February 2020
• Docket Number: 2019-1080
• Citation: 950 F.3d 860
• Parties: ARCTIC CAT INC., Plaintiff-Appellant v. BOMBARDIER RECREATIONAL PRODUCTS INC., BRP U.S. Inc., Defendants-Appellees
• Court: U.S. Court of Appeals — Federal Circuit

950 F.3d 860

ARCTIC CAT INC., Plaintiff-Appellant

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

2019-1080

United States Court of Appeals, Federal Circuit.

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. 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 District of Florida that Arctic Cat is not entitled to recover pre-complaint damages from Bombardier Recreational Products 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 unmarked 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 patent") 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 patents "that patentably cover Arctic Cat’s Controlled Thrust Steering methods, systems, and developments," which includes 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 final version of the license agreement expressly stated that Honda had no marking obligations.

Thereafter, Honda began making and selling unmarked PWCs, and Arctic Cat made no effort to ensure that PWCs sold by Honda were marked. The parties dispute when Honda stopped selling unmarked products under 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 potential damages because of Honda’s sales of unmarked products. 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 district court denied Bombardier’s renewed motion for judgment 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 burden on Bombardier to prove that the Honda PWCs practiced the claimed invention. We held that once an alleged infringer identifies products that it believes are unmarked 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 summary judgment that it is entitled to receive pre-complaint damages. First, Arctic Cat argued that the damages limitation 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 demonstrate actual notice under § 287.

In its own motion for summary judgment, Bombardier argued that Honda’s PWCs were unmarked patented articles 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 noncompliance with § 287 can be cured only by either beginning 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 jurisdiction under 28 U.S.C. § 1295(a)(1).

DISCUSSION

We review a district court’s grant of summary judgment 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 Elecs., Inc. , 769 F.3d 1371, 1377 (Fed. Cir. 2014) ). The Eleventh 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 genuine dispute as to any material fact and the movant is entitled 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. Kappos , 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 article 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 failure 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 infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.

The notice provisions of § 287 do not apply to patents directed to processes or methods. See Wine Ry. Appliance Co. v. Enterprise Ry. Equip. Co. , 297 U.S. 387, 395, 56 S.Ct. 528, 80 L.Ed. 736 (1936). Nor do they apply when a patentee never makes or sells a patented article. Id . at 398, 56 S.Ct. 528. 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 damages until it either begins providing notice or sues the alleged 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 1098, 1111 (Fed. Cir. 1996) ). While courts may consider whether the patentee made reasonable 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 unmarked 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). "Actual notice requires the affirmative communication of a specific charge of infringement by a specific accused product or device." Amsted Indus. Inc. v. Buckeye Steel Castings Co. , 24 F.3d 178, 187 (Fed. Cir. 1994).

This case presents a discontinuous situation in which...