Polaris Industries, Inc. v. Arctic Cat Inc.

Background

Polaris brought patent-infringement actions against Arctic Cat Inc. and Arctic Cat Sales Inc. The cases involved Claim 1 of Polaris’s ’449 Patent and Claims 1, 10, and 11 of its ’501 Patent. The patents concerned features of four-wheel-drive trail recreational off-road vehicles.

Both sides filed motions for summary judgment, which asks the court to decide an issue without a trial when no genuine dispute of important fact remains. Arctic Cat also moved to exclude the lost-profits opinions of Polaris’s expert, Timothy J. Nantell, under Federal Rule of Evidence 702.

The ’449 Patent

The court had previously interpreted the ’449 Patent’s requirement that the shocks be “spaced apart from an interior region” of a generally U-shaped sway bar. After additional briefing, the court held that the “interior region” is a column-shaped space that follows the area bounded by the sway bar, extends upward to the lowest height of the cargo bed, and extends downward to the lowest height of the ground-engaging members.

The court found that the shocks on Arctic Cat’s allegedly infringing vehicles passed through this interior region. Because the shocks therefore were not spaced apart from it as required by the claim, the court granted Arctic Cat’s motion for summary judgment of noninfringement of the ’449 Patent.

The ’501 Patent

Polaris moved for summary judgment that Arctic Cat infringed the ’501 Patent. Arctic Cat stipulated that its vehicles infringed that patent. Based on the stipulation, the court found no remaining dispute of important fact and granted Polaris’s motion for summary judgment of infringement of the ’501 Patent.

Lost profits and expert testimony

Polaris sought lost profits based on sales by its wholly owned subsidiary, Polaris Sales Inc. The court explained that a patent owner generally cannot claim a related company’s lost profits unless it shows that those profits inevitably flow to the patent owner. Polaris submitted evidence that Polaris and Polaris Sales shared a bank account, that Polaris controlled the revenue, that Polaris paid costs related to sales of Polaris vehicles, and that Polaris accounted for the subsidiary’s revenue, costs, and profits.

The court held that this evidence was enough to create a factual basis for Polaris’s lost-profits claim. It therefore denied Arctic Cat’s motion for summary judgment of no lost profits under the ’501 Patent.

The court also denied Arctic Cat’s motion to exclude Nantell’s testimony. Although Arctic Cat argued that parts of Nantell’s report lacked specific citations and were inconsistent with a marketing and distribution agreement, the court concluded that these arguments concerned the weight of the evidence rather than whether the testimony was admissible. Nantell’s declaration stated that his opinions were based on Polaris materials and discussions with William Au-Yeung, who had been identified as a source in the report.

Kymco vehicle and invalidity defense

Arctic Cat argued that the ’501 Patent was invalid because a Kymco UXV 500 vehicle was prior art—that is, an earlier product that could be used to challenge the patent’s validity. Polaris sought partial summary judgment on whether a 2009 vehicle acquired by Arctic Cat in 2017 could be used as evidence of that prior art.

Polaris argued that Arctic Cat had not shown that the vehicle was in materially the same condition before the patent’s August 3, 2010 priority date. Arctic Cat relied in part on its expert’s comparison of the vehicle with Kymco owner’s and service manuals. The court held that Arctic Cat had provided enough evidence to create a genuine dispute of important fact. It therefore denied Polaris’s motion for partial summary judgment concerning the Kymco-based invalidity defense.

Disposition

The court granted Arctic Cat’s motion for summary judgment of noninfringement of the ’449 Patent. It granted Polaris’s motion for summary judgment of infringement of the ’501 Patent. It denied Arctic Cat’s motions for summary judgment of no lost profits under the ’501 Patent and to exclude Nantell’s expert testimony. It also denied Polaris’s motion for partial summary judgment concerning Arctic Cat’s invalidity defense based on the Kymco vehicle.