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Wilful Patent Infringement: A David vs Goliath Story

Gavin Doherty | June 2nd, 2016

"How do I stop a big company from blatantly copying me after I have disclosed my invention to them, even if I have a patent? They know I wouldn’t have the money to defend it!"

This is perhaps the most common question posed by inventors during an initial consultation.

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On the one hand, it demonstrates a good level understanding of the costs associated with enforcing a patent against an infringercosts which can be significant and which can vary from country to country.  

On the other hand, it shows a lack of understanding of the remedies available to address such a wilful act of patent infringement. This is particularly so in the U.S. where enhanced damages may be awarded in instances where wilful infringement is found, which can make even the biggest companies wary about taking on a small competitor.

In June 2016, this very issue was played out before the US District Court of Florida in the case, Arctic Cat Inc. v Bombardier Recreational Products Inc., and BRP U.S. Inc.

The case

For those readers who view the beach as a place of relaxation more than recreation, Bombardier Recreational Products Inc. (BRP) are the manufacturers and distributors of Sea-Doo personal watercrafts (PWC). PWCs operate by way of a moveable nozzle connected to a jet pump to propel the vessel, rather than a conventional propeller.

However, one problem with PWCs is that if the power to the jet pump is removed by releasing the throttle, the PWC loses its ability to be steered. So if you are a novice and you are travelling towards a hazard in the water, the natural instinct is to take your hand off the throttle and steer away from the hazard. The problem is that by releasing the throttle, you lose the ability to steer. 

It is not surprising then that in a 1998 study by the US National Transport Safety Board it was found that ’in PWC fatalities, more persons die from blunt force trauma than from drowning’.

To address this, Arctic Cat Inc. (AC) developed an off-throttle assisted steering technology whereby riders were provided with a temporary ’steerable thrust’ in conditions where the rider turns the steering mechanism of the PWC whilst the throttle is in an idle position. This technology was protected by AC through a number of patents and a prototype was demonstrated to the PWC industry, including BRP representatives in 1999 and 2000.

In 2009, BRP released its ’Off-Throttle Assisted Steering’ technology that employed magnets on the steering column of the Sea-Doo. This meant that, when turning the steering column with the throttle in an off position, a switch was activated to increase engine speed for a temporary period to provide the rider with steerable thrust.  This was promoted by BRP as a ’key safety innovation’.

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The findings

Early last month, a jury found that the BRP technology employed on a number of Sea-Doo PWCs sold from 2009 infringed a number of claims of AC’s US Patents and awarded AC just over US$15 million in damages.  The jury concluded that not only did BRP infringe, they infringed ’with reckless disregard of whether such claim was infringed or was invalid or unenforceable’. 

The jury followed a two-part test that found that the infringer acted despite an objectively high likelihood of infringement and also that the risk of infringement was either known or so obvious that it should have been known.  Accordingly, the Federal Judge tripled the damages awarded to US$46.7 million under the wilful damages provisions of 35 U.S.C. 284.

Uncannily, on the date that this judgement was handed down, the US Supreme Court decided to remove the aforementioned two-part test, and replace it with a simpler test for assessing wilful infringement, which could be applied more liberally.

In any event, BRP was well aware of AC’s technology and should have at least sought formal advice over the validity of the patents and whether their proposed technology was an infringement. Their failure to do this left them exposed the company to considerably higher damages.

Take Home Points

Under Australian law, there is no equivalent provision for trebling damages due to wilful infringement.  The fact that an infringer is aware of a patent and potential infringement will have a considerable impact on the time period from which damages or accounting profits can be assessed.

For clients seeking to expand their practices into the US, this case raises two important points:

  1. The importance of patent protection in the US, and the deterrent that a potential infringement action can provide, especially with treble damages payable if such an action is found as wilful; and
  2. The importance of obtaining advice with respect to any alleged infringement, as well as conducting infringement and clearance searches in the USA before undertaking commercial activities.

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Gavin Doherty

Gavin is regarded as one of Australia’s foremost Patent Attorneys, having developed and managed world-renowned intellectual property (IP) portfolios for some of Australia’s most innovative international companies and has almost twenty years’ experience in international patent applications from both a regulatory and commercial perspective.