Southern District of Florida Awards Ongoing Royalty and Pre-Judgment Interest

The Southern District of Florida, in Arctic Cat Inc. v. Bombardier Recreational Products, Inc., Case No. 14-cv-62369 (Judge Bloom) (Jan. 3, 2017), awarded Plaintiff an ongoing royalty and pre-judgment interest.

In an earlier order, the Court determined that Plaintiff was entitled to an ongoing royalty based on Defendant's concession that it is continuing to sell the infringing personal watercrafts and that the jury's royalty rate of $102.54 per unit set the "floor" for the ongoing royalty rate.  The Court ordered the parties to negotiate an ongoing royalty rate, but mediation was unsuccessful.

Plaintiff took the position that the ongoing royalty should be twice the jury's rate, $205.08. Plaintiff argued that its bargaining position (Georgia-Pacific factor 5), the commercial success of its device (Georgia-Pacific factor 8), Defendant's failure to use its non-infringing alternative (Georgia-Pacific factor 9), Defendant's enhanced reputation from use of the invention (Georgia-Pacific factor 8), and the trebled jury award all weigh in favor of a royalty rate higher than what the jury awarded. (Slip op. at 5). Defendant argued the rate should not exceed the jury's rate because only 3 years remain on the patent (Georgia-Pacific factor 7), and Plaintiff is no longer licensing its patents (Georgia-Pacific factor 4). Id.

Taking into consideration the Georgia-Pacific factors, the Court concluded the ongoing royalty rate should be higher than the jury rate. The Court rejected Defendant's argument in part because it failed to recognize the change in the parties' relative bargaining positions after the jury verdict. (Slip op. at 4). Relying on the Federal Circuit's decision in Amado v. Microsoft Corp., 517 F. 3d 1353, 1362 (Fed. Cir. 2008), the Court recognized:

In this case, [Plaintiff's] bargaining position is significantly different, precisely because the jury determined validity and infringement. Therefore, [Defendant] continues to willfully infringe the ‘545 patent. See Paice III, 609 F. Supp. 2d at 626 ("Toyota never considers the fact that its continued infringement is willful and that a new lawsuit by Paice would likely result in treble damages and could potentially be considered an exceptional case."). Here, as in Paice III, the "systematic flaw" in [Defendant's] contention that the jury rate is appropriate is the failure to consider that validity and infringement have now been determined. See id.

(Slip op. at 5).

The Court further concluded Plaintiff's proposed rate, $205.08, was reasonable. (Slip op. at 6). The Court rejected Defendant's position that such rate would not allow it to make a reasonable profit, noting that "[t]he purpose of an ongoing royalty rate is precisely to reduce the incentive to infringe." Id. The Court also applied the factors from Read v. Portec, 970 F.2d 816 (Fed. Cir. 1992) in its discretion stating, "there is little indication that doing so is improper or misplaced, especially because [Defendant's] post-judgment infringement . . . continues to be willful." Id. The Court concluded that the Read factors supported Plaintiff's proposed rate based on factors 2 (good faith belief of invalidity and non-infringement) and 4 (litigation behavior). The Court stated Defendant's post trial actions demonstrated "a lack of proper respect for the Court, the jury and the U.S. patent system." (Slip op. at 7). Such actions included: referring to the verdict

as "unfounded" and "baseless" on several occasions in [Defendant's] fiscal year 2017 first quarter results, and by corporate representatives, including [Defendant's] president and CEO . . . to the Montreal Gazette, and [Defendant's] spokeswoman . . . to the Financial Post.

Id.

The Court also awarded pre-judgment interest using the T-bill rate on the date the patent-in-suit issued, compounded monthly. The Court rejected Plaintiff's request for the Florida statutory rate because that would encourage forum shopping. The Court also rejected Defendant's request for the current T-bill rate because it was too low. The Court further rejected Plaintiff's alternative proposal to use the interest rate on its borrowings because Plaintiff's borrowings were not connected to Defendant's infringement.