Pre-Complaint Damages for Willful Infringement Sunk by Failure to Comply With Marking Statute

| Karen Cassidy Selvaggio

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

Before Lourie, Moore, and Stoll. Appeal from the Southern District of Florida.

Summary: To recover pre-complaint damages for infringement after sales of unmarked products have occurs a patentee must begin marking its products or provide actual notice to an alleged infringer—neither a finding of willful infringement nor ceasing the sale of unmarked products is sufficient.

Arctic Cat negotiated a license of patents to Honda, with the final version of the agreement expressly stating that Honda had no patent marking obligations. Honda made and sold unmarked products, but eventually ceased sales. Arctic Cat subsequently sued Bombardier for infringement of the licensed patents. A jury in that case found willful infringement and awarded damages in the form of a royalty that included six years of pre-complaint damages. Following trial, the district court denied Bombardier’s renewed motion for judgment as a matter of law on marking and willfulness. Bombardier appealed. The Federal Circuit affirmed the willful infringement finding but vacated the district court’s findings on marking and remanded for further proceedings. On remand, Artic Cat argued that § 287 only applies while actively making, using, or selling unmarked products and that it was entitled to pre-complaint damages once the sale of unmarked goods ceased. Additionally, Arctic Cat argued that Bombardier’s willful infringement entitled it to all six years of pre-complaint damages including time when Honda was selling unmarked goods. The district court disagreed, granting Bombardier summary judgment of no pre-complaint damages. Arctic Cat appealed.

The Federal Circuit affirmed the district court’s denial of pre-complaint damages. Section 287 provides that “[i]n 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 infringer thereafter, in which event damages may be recovered only for infringement occurring after such notice.” The Federal Circuit noted that the policy of this statute is to encourage marking, and thereby disseminate notice of the patent, as opposed to merely discouraging the sale of unmarked products. Thus, when Honda began selling unmarked products, an obligation arose under § 287 and this obligation was not discharged by the cessation of unmarked product sales. Nor was the jury’s verdict of willful infringement sufficient to find actual notice under the marking statute. The Federal Circuit noted that this theory was foreclosed by precedent and declined to revisit the conclusion that willfulness, as an indication that an infringer knew of a patent and its infringement, does not serve as actual notice under § 287.

Editor: Paul Stewart