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Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in <a href="http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/17-1475.Opinion.12-5-2017.1.PDF" target="_blank" rel="noreferrer noopener">Arctic Cat Inc. v. Bombardier Recreational Products Inc.</a><em>, </em>No. 19-1080 (Feb. 19, 2020), affirming a district court decision denying Arctic Cat pre-complaint damages based on its licensee’s failure to mark.

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Arctic Cat owns patents covering personal watercraft steering systems, which it licensed to Honda. The initial draft license required Honda to mark licensed products with the patent numbers, but that provision was later removed. Honda did not mark the licensed products. Arctic Cat asserts Honda ceased selling licensed products in 2013.

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In 2014, Arctic Cat sued Bombardier for infringing the patents. A jury found Bombardier willfully infringed, and awarded damages starting in 2008—six years before the suit. The district court denied Bombardier’s request to set aside pre-suit damages based on a failure to mark, holding Bombardier did not prove the Honda products were covered by the patents. A 2017 Federal Circuit decision vacated that decision, concluding the district court erred in placing the burden on Bombardier.

On remand, Arctic Cat conceded it could not prove the Honda products did not practice the patents, but argued it was nevertheless entitled to damages starting when Honda ceased selling the licensed products. It alternatively argued the jury’s finding of willful infringement demonstrated actual notice, entitling it to the full six years of pre-suit damages. The district court rejected these arguments on summary judgment. Arctic Cat appealed.

The Federal Circuit affirmed. The Court noted it is well-settled patent marking law that if a patentee or its licensee sells a patent product, it must provide constructive notice (marking) or actual notice of its patent rights to recover pre-suit damages. The Court acknowledged that no notice is required to start the damages clock if no product covered by the patent is sold by the patentee or its licensees. But, where unmarked patented products were previously sold, the cessation of sales does not lift the notice requirement. Regarding Arctic Cat’s reliance on the jury’s willfulness finding, the Court explained that, unlike willfulness, the actual notice aspect of 35 U.S.C. § 287 focuses on the patentee’s actions, not on the infringer’s knowledge.

CAFC Denies Pre-complaint Damages for Licensee’s Prior Failure to Mark