No patent marking? No damages for lost sales.

If you export to the US, or have businesses there, and you have patents: ensure your products are marked with the relevant patent numbers, or you may be unable to recover in Court any monetary losses caused by patent infringement.

That is the key message for businesses from the recent case of Arctic Cat Inc., v Bombardier Recreational Products Inc., in the United States Court of Appeals for the Federal Circuit.

The Court denied Arctic Cat Inc., (“Arctic Cat”) damages for patent infringement for products sold before it sued, because the products were not marked with Arctic Cat’s patent numbers.

THE PATENTS

Arctic Cat owns two patents – US Patents 6,793,545 and 6,568,969 – which are directed to thrust steering systems for personal watercraft (the “Thrust Patents”). The Thrust Patents were issued in 2004 and 2003 respectively.

ARCTIC CAT’S LICENCE AGREEMENT WITH HONDA

In 2002, Arctic Cat licensed Honda to sell personal watercraft covered by its patents, however, it did not include a clause requiring Honda to mark any licenced products with the patent numbers of the Thrust Patents.

Honda then made and sold personal watercraft licensed under this agreement not marked with any patent numbers; Arctic Cat made no effort to ensure the personal watercraft sold by Honda were patent marked.

THE DISPUTE BETWEEN ARCTIC CAT AND BOMBARDIER

In 2014, Arctic Cat successfully sued Bombardier Recreational Products Inc., (“Bombardier”) for infringing its Thrust Patents in the District Court for the Southern District of Florida. The District Court awarded damages to Arctic Cat for the infringement for sales made from 2008 onwards.

Bombardier, however, appealed. It argued that Arctic Cat could not claim damages for any sales before 2014, because it did not know it was infringing the Thrust Patents before 2014 as the products it sold were not marked with any patent numbers.

The Federal Circuit Court of Appeals for the Eleventh Circuit, which heard the appeal, agreed with Bombardier and overturned the District Court’s ruling on damages.

It held instead that despite Bombardier’s infringement Arctic Cat was not entitled to any damages for products sold before Arctic Cat sued Bombardier in 2014 because the watercraft were not marked with its patent numbers, as required by title 35 USC § 287.

The Court of Appeals held that Arctic Cat could not blame Honda for not marking the patents. It held that Arctic Cat, as patentee, held responsibility to take reasonable steps to ensure Honda would mark the patents. But, because Arctic Cat had not kept the clause requiring patent marking in the license agreement and the agreement instead included a clause to the contrary, the Court held Arctic Cat had not taken reasonable steps to ensure its patented products were marked in accordance with § 287.

As a result, Arctic Cat could only claim damages on any sales made by Bombardier after 2014.

ALWAYS MARK YOUR PATENTED PRODUCTS

Arctic Cat’s loss serves as a cautionary tale – patent marking in the US is important, and it’s important to ensure licence agreements cover patent marking. Otherwise, just like Arctic Cat, you could be left out in the cold.