CAFC addresses obviousness, marking, damages in Arctic Cat

In the technical area of thrust steering
systems for personal watercraft (“PWC”) propelled by jet
stream, Arctic Cat sued BRP for infringement.

BRP did not do well before the jury, and sought JNOV:


At trial, the jury found both patents not invalid,
awarded a royalty consistent with Arctic Cat’s model
($102.54 per unit) to begin on October 16, 2008, and found
by clear and convincing evidence that BRP willfully
infringed the asserted claims.

(...)

After post-trial briefing, the district court denied
BRP’s renewed motion for judgment as a matter of law on
all issues. It granted Arctic Cat’s motion for an ongoing
royalty, awarding $205.08 per unit. BRP appeals the
district court’s denial of judgment as a matter of law on
validity, marking, damages, and willfulness, as well as its
grant of an ongoing royalty and decision to treble damages.




Of motivation to combine, the CAFC wrote:


Therefore, a motivation to combine can
be found explicitly or implicitly in the prior art references
themselves, in market forces, in design incentives, or in
“any need or problem known in the field of endeavor at
the time of invention and addressed by the patent.” KSR,
550 U.S. at 420–21; accord Plantronics, Inc. v. Aliph, Inc.,
724 F.3d 1343, 1354 (Fed. Cir. 2013) (“[M]otivation to
combine may be found explicitly or implicitly in market
forces; design incentives; the ‘interrelated teachings of
multiple patents’; ‘any need or problem known in the field
of endeavor at the time of invention and addressed by the
patent’; and the background knowledge, creativity, and
common sense of the person of ordinary skill.” (quoting
Perfect Web Techs., Inc. v. InfoUSA, Inc., 587 F.3d 1324,
1328–29 (Fed. Cir. 2009))). “The court should consider a
range of real-world facts to determine ‘whether there was
an apparent reason to combine the known elements in the
fashion claimed by the patent at issue.’” Intercontinental
Great Brands LLC v. Kellogg N. Am. Co., 869 F.3d 1336,
1344 (Fed. Cir. 2017) (quoting KSR, 550 U.S. at 418).
Motivation to combine is a factual determination as to
whether there is a known reason a skilled artisan would
have been motivated to combine elements to arrive at a
claimed combination. This is not the ultimate legal
determination of whether the claimed combination would
have been obvious to the ordinary artisan—meaning that
it is possible that a reason or motivation may exist, but
nonetheless the ordinary artisan would not have found
the combination obvious.


When a challenger shows that a “motivation” existed
for a relevant skilled artisan to combine prior
art in the way claimed in the patent at issue,
such a showing commonly supports and leads
readily to the further, ultimate determination
that such an artisan, using ordinary creativity,
would actually have found the claimed invention
obvious. But the latter conclusion does not follow
automatically from the former finding, and additional
evidence may prevent drawing it. . . . Even
with a motivation proved, the record may reveal
reasons that, after all, the court should not conclude
that the combination would have been obvious
. . . .
Intercontinental Great Brands, 869 F.3d at 1346–47.



BRP tried the finite, predictable solution approach from KSR:


BRP argues a skilled artisan would have selected the
Challenger system because it was one of a finite number
of identified, predictable solutions to the problem of offthrottle
steering in PWCs. See KSR, 550 U.S. at 421. The
SAE Interim and Draft Final Reports identified the
Challenger’s throttle reapplication as one of four solutions
to the problem of off-throttle steering, along with rudders,
flaps, and scoops. The National Association of State
Boating Law Administrators also explained that jet boats
and PWCs are similar and off-throttle directional control
is a problem for both. Rheault ’833 disclosed that its
steer-responsive throttle “is applicable to single-engine
personal watercraft,” and Rheault ’938 states the Challenger
jet boat’s thrust steering “is applicable to all types
of watercraft vehicles, including personal watercraft
vehicles.” J.A. 8942 at Abstract; J.A. 8920 at 8:15–17.
For these reasons, BRP argues a reasonable jury could
only have found a skilled artisan would have been motivated
to modify a PWC with Challenger’s off-throttle
thrust reapplication system, which would have combined
known elements to improve the system in the same way
and yield expected results



The "substantial evidence" standard was pivotal:


If such a fact finding is supported by substantial evidence,
we may not reverse it. In briefing and oral argument,
BRP devoted much of its argument to re-litigating its case
and its evidence rather than addressing the evidence that
could have supported the jury’s finding of no motivation to
combine. We do not reweigh the evidence and reach our
own factual determination regarding motivation. The
question for us on appeal is only whether substantial
evidence supports the jury’s presumed finding. See, e.g.,
Apple, 839 F.3d at 1052 (“Our job is not to review whether
Samsung’s losing position was also supported by substantial
evidence or to weigh the relative strength of Samsung’s
evidence against Apple’s evidence. We are limited
to determining whether there was substantial evidence
for the jury’s findings, on the entirety of the record.”). We
conclude that it does.



There was asserted ambiguity on motivation to combine:




This evidence may not rise to the level of teaching
away. Nonetheless, in light of this record, the jury’s
determination that there was no motivation to make this
particular combination is supported by substantial evidence.
Evidence suggesting reasons to combine cannot be
viewed in a vacuum apart from evidence suggesting
reasons not to combine. In this case, the same reference
suggests a reason to combine, but also suggests reasons
that a skilled artisan would be discouraged from pursuing
such a combination. Under such circumstances, the jury’s
fact finding regarding motivation is supported by substantial
evidence. Coupled with testimony confirming the
potential problems of automatic throttle reapplication and
suggesting an alternative approach might reduce those
same problems, J.A. 2230–32, a jury could find a skilled
artisan would not have been motivated to combine the
Challenger system with a PWC to arrive at the claimed
combination.


Of some interest is the text


An internal BRP “brainstorming” session identified thirtytwo
possible designs directed to off-throttle steering. J.A.
9454. And there is evidence that other potential solutions
to the off-throttle steering problem existed but were not
fully disclosed for confidentiality and other concerns. See,
e.g., J.A. 7532 (noting that some ideas offered in response
to SAE’s inquiry “have typically either not conveyed
sufficient information or have patent, propriety, or litigation
concerns”).



What can happen when does not object:


BRP argues that substantial evidence does not support
the jury’s presumed factual finding that the claimed
invention received industry praise because “praise from a
Coast Guard official in Arctic Cat’s own press release” is a
“hearsay statement [that] cannot overcome persuasive
evidence that the claimed technology described the same
approach as BRP’s system.” Appellant’s Br. 35–36 (citing
J.A. 7828; J.A. 7871; In re Cree, Inc., 818 F.3d 694, 702
(Fed. Cir. 2016)). We disagree for at least two reasons.
First, Arctic Cat contends—and BRP does not contest—
that BRP failed to object to this evidence as hearsay at
trial, so the jury was entitled to credit the statement.
Appellee’s Br. 12. Second, that Captain Holmes’ statements
appear in Arctic Cat’s press release goes to evidentiary
weight. Captain Holmes’ statements and
Mr. Bernier’s testimony constitute substantial evidence to
support the jury’s presumed factual finding that the
claimed invention received praise from the industry. This
evidence of industry recognition of the significance and
value of the claimed invention weighs in favor of nonobviousness.



Of marking, note


We hold an alleged infringer who challenges the patentee’s
compliance with § 287 bears an initial burden of
production to articulate the products it believes are unmarked
“patented articles” subject to § 287. To be clear,
this is a low bar. The alleged infringer need only put the
patentee on notice that he or his authorized licensees sold
specific unmarked products which the alleged infringer
believes practice the patent. The alleged infringer’s
burden is a burden of production, not one of persuasion or
proof.
(...)
We do not here determine the minimum showing
needed to meet the initial burden of production, but we
hold in this case it was satisfied by BRP. At trial BRP
introduced the licensing agreement between Honda and
Arctic Cat showing Honda’s license to practice “Arctic Cat
patents that patently cover Arctic Cat’s Controlled Thrust
Steering methods, systems and developments.” J.A. 7830
§ 1.01. BRP identified fourteen Honda PWCs from three
versions of its Aquatrax series sold between 2002 and
2009. J.A. 3540–41 ¶ II. BRP’s expert testified that he
“review[ed] information regarding those models” and
believed if BRP’s OTAS system practiced the patents, so
did Honda’s throttle reapplication system in the Aquatrax
PWCs. J.A. 2447–49; J.A. 2482. This was sufficient to
satisfy BRP’s initial burden of production.

(...)

The district
court erred in placing this burden upon BRP and thus we
vacate and remand on marking.

Because the district court adopted this legal approach
at the summary judgment stage, it made clear to the
parties that it would be BRP’s burden to prove that the
unmarked products fell within the patent claims. Arctic
Cat, therefore, did not have a fair opportunity to develop
its case regarding the Honda PWCs at trial. Because
Arctic Cat was not on notice regarding its burden, and in
fact labored under the assumption that BRP had the
burden of proof, reversal would be improper. We thus
vacate the district court’s judgment as to marking and
remand so that Arctic Cat has an opportunity to proffer
evidence related to the identified Honda PWCs.2



Of making arguments in footnotes, from footnote 4 of the
CAFC opinion:


BRP states in a footnote that even if this testimony
were admissible, it is irrelevant and thus Arctic Cat
failed to provide sufficient evidence to support the jury’s
award. Appellant’s Br. 46 n.3. This single sentence,
devoid of any analysis, is insufficient for BRP to meet its
burden on appeal, and we nevertheless conclude
Mr. Bratic’s testimony constitutes substantial evidence
supporting the jury’s reasonable royalty award.



Of a decision without briefing:


Finally, the district court did not abuse its discretion
by trebling damages. While the district court initially
trebled damages without much explanation, J.A. 97–98, it
explained its decision in a subsequent thorough and wellreasoned
opinion. See J.A. 99–116 (applying the factors
outlined in Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed.
Cir. 1992)). Although the district court did not allow the
parties to brief the issue, we will not adopt a blanket rule
that a district court abuses its discretion by deciding an
issue without receiving briefing from the parties. That is
especially true where, as here, BRP attacks the district
court’s procedure but does not explain how additional
briefing would have changed the outcome. In short, BRP
has not shown that the district court’s failure to allow
briefing amounts to an abuse of discretion. We affirm the
district court’s denial of judgment as a matter of law on
willfulness and its order trebling damages.