Arctic Cat Inc. v. Bombardier Recreational Products Inc.

Arctic Cat Inc. v. Bombardier Recreational Products Inc.
Court (s) Database
Federal Court Decisions
Date
2016-09-16
Neutral citation
2016 FC 1047
File numbers
T-1353-13
Decision Content
Date: 20160916
Docket: T-1353-13
Citation: 2016 FC 1047
Ottawa, Ontario, September 16, 2016
PRESENT: The Honourable Mr. Justice Roy
BETWEEN:
ARCTIC CAT INC. AND
ARTIC CAT SALES, INC.
Plaintiffs/Defendants
by counterclaim
and
BOMBARDIER RECREATIONAL PRODUCTS INC.
Defendant/Plaintiff
by counterclaim
PUBLIC JUDGMENT AND REASONS
(Confidential Judgment and Reasons issued September 16, 2016)
TABLE OF CONTENTS
I. The parties. 6
II. Two-stroke engine operation.. 7
III. The 738 Patent. 10
A. An overview / Disclosure. 10
B. The claims at issue. 17
IV. Foreign litigation.. 19
V. The witnesses. 20
A. Brad Darling. 21
B. Troy Halvorson. 22
C. Greg Spaulding. 28
D. Bernard Guy. 35
E. Steward Strickland. 37
F. Bruno Schuehmacher 41
G. The Experts. 47
VI. Credibility of experts. 48
VII. Person of skill in the art. 58
VIII. Claims construction.. 71
A. “Ignition Pattern”. 72
B. Controlling the activation of the ignition source according to an ignition pattern in which an ignition point during the compressing movement varies with operation speed of the engine [and throttle position]. (claims 33(28), 47(41) and 16) 77
A controller for activating the ignition source ..., the controller activating the ignition source according to an ignition pattern in which an ignition point during the compressing movement varies with the operation speed of the engine [and throttle position]. (claims 40(34) and 11) 77
C. The ignition pattern being selected from a plurality of different ignition patterns. 80
D. The particular ignition pattern used by the controller being selected based upon the sensed exhaust gas temperature. 81
E. The different ignition patterns having different relationships between ignition point and engine speed. 82
F. The ignition pattern being selected from a plurality of different basic ignition patterns. (Claims 11 and 16) 85
G. The basic ignition pattern used by the controller being modified based upon the sensed exhaust gas temperature. (Claims 11 and 16) 87
IX. Infringement. 91
A. The 440 HO and 600 RS engines. 96
B. The 600 ETEC and 800 ETEC Engines. 97
C. Analysis. 99
X. Invalidity.. 106
A. Anticipation. 110
B. Obviousness. 114
XI. Overbreadth.. 137
XII. Inventor.. 146
XIII. Conclusion.. 159
XIV. Damages. 160
A. Mr. A. Carter for the Plaintiffs. 164
(1) The expert compared two engines produced by BRP. One engine, the 800 P-TEC does not practice the invention. That engine was compared to the 800 E-TEC which practices the invention. That engine is a direct injection engine which does not use a carburetor. 166
(2) The second method put forth by Mr. Carter was, in fact, a variation on the theme summarized under (1). This time, instead of multiplying the contribution margins derived from the difference from the contribution margin for the E-TEC snowmobile and for the P-TEC snowmobile, amounts that reach $[REDACTED] in 2012 and $[REDACTED] in 2014, the expert multiplied these figures by a market share of 20%, which would represent the patent holders’ market share. He arrives at figures of $[REDACTED] (20% of $[REDACTED]) and $[REDACTED] (20% of $[REDACTED]). 169
(3) Mr. Carter compared the additional profit that BRP was expecting for its new 600 E-TEC engine as it was comparing it to its “600” semi-direct injection engine. The expert indicates that BRP was projecting an increased retail price attributable to the direct-injection engine of $[REDACTED]/unit. Given that BRP in 2002 expected that some additional costs for the production for the E-TEC engine would be $[REDACTED], Mr. Carter projected an incremental profit of between $[REDACTED] and $[REDACTED] that would be associated with moving to the E-TEC technology, which included the invention. 170
(4) The preferred method offered by the expert is his comparison of AC snowmobiles using model year 2005, where the engine does not include the invention, and model year 2006, where the said invention is included. 172
B. Dr. Ugone for the Defendant 179
(1) Incremental cost-based apportionment 180
(2) Relative cost and inputs-based apportionment 183
(3) Accused functionality usage-based apportionment 187
XV. Objections. 198
A. Objections to admissibility of evidence. 200
(1) Lack of factual basis. 200
B. Case splitting. 203
C. Failure to comply with Expert Code of Conduct 209
D. Improper factual evidence. 212
E. Opinion beyond stipulated expertise. 213
XVI. Post scriptum... 214
JUDGMENT. 216
ANNEX “A”. 218
ANNEX “B”. 230
PUBLIC JUDGMENT AND REASONS
[1] This action for infringement (section 54 of the Patent Act, RSC, 1985, c. P-4, hereinafter Patent Act) is concerned with some claims found in Canadian Patent No 2,322,738, to which we refer as the 738 Patent. In essence, Arctic Cat Inc. and Arctic Cat Sales Inc. allege that four engines, used by Bombardier Recreational Products Inc. (BRP) in more than 125 000 snowmobiles sold in Canada in the last few years, infringe one or more of five asserted claims (3 of the five asserted claims are dependent on another independent claim such that there are in fact eight claims in play in this case). The Defendant argues that it does not practice the Patent-in-suit. Even if it did, it would argue that the 738 Patent would have to be invalid for anticipation (lack of novelty) or obviousness (lack of inventiveness), is overbroad and the person presented as the inventor is not, such that the Plaintiffs as the assignees do not have the standing required to enforce the Patent. As for appropriate damages if a valid claim has been infringed, the parties remain at a considerable distance from one another. The trial took place over a period of 25 days.
[2] This action for infringement of a patent originated as a counterclaim to an action for infringement launched by BRP against AC with respect to patents held by BRP that have a different subject-matter, one which is not concerned with engines. The Patent bears the title “Two-cycle Engine with temperature-Controlled Ignition Timing”. By order dated July 25, 2013, Prothonotary Aronovitch determined that the whole matter be severed from the original action and that it be pursued separately. As a result, AC became the Plaintiff in the action for infringement, and BRP became the Defendant in that action and counterclaimed that the asserted claims of the 738 Patent were, at any rate, invalid and void.
[3] Over and above the damages sustained by the patentee which would come from a declaration that its valid patent has been infringed, the Plaintiffs seek a permanent and interlocutory injunction restraining BRP from infringing the asserted claims of the 738 Patent, together with an order for the destruction of all vehicles that infringe its Patent. Exemplary, aggravated and punitive damages, with pre and post judgment interests are also sought.
I. The parties [4] One Plaintiff, Arctic Cat Inc., is a recreational vehicle manufacturer founded in the early 1960s by Edgar Hetteen, who has been described as the grandfather of the snowmobile industry. Arctic Cat Inc. currently produces snowmobiles and other recreational vehicles destined for the United States, Canada, and markets around the world.
[5] The other Plaintiff, Arctic Cat Sales, Inc., is a wholly owned subsidiary of Arctic Cat, Inc. that is responsible for the sale of Arctic Cat snowmobiles to independent third-party dealers in Canada. Both Arctic Cat, Inc. and Arctic Cat Sales, Inc. (collectively, Arctic Cat or AC) are incorporated pursuant to the laws of the U.S. State of Minnesota and have a head office located at 601 Brooks Avenue South in Thief River Falls, Minnesota. Both are also Defendants by counterclaim in view of the allegations of invalidity made by the Defendant.
[6] The Defendant and Plaintiff by counterclaim, Bombardier Recreational Products Inc. (BRP), is a public company incorporated pursuant to the Canada Business Corporations Act, RSC 1985, c C-44. Like Arctic Cat, BRP is a recreational vehicle manufacturer. It traces its lineage back to the 1940s with the first “autoneige” designed by Joseph Armand Bombardier, as well as the Ski-Doo mark snowmobiles that began production in the 1960s. Bombardier acquired Lohnwerke GMbH, which manufactures Rotax engines, in 1970.
[7] BRP now employs people in approximately 20 different countries and sells six different lines of products, including Ski-Doo snowmobiles, in the United States, Canada, and elsewhere in the world. BRP’s head office is located at 726 rue Saint-Joseph in Valcourt, Québec.
II. Two-stroke engine operation [8] Before tackling the 738 Patent, a brief description of the operation of the two-stroke engine could prove to be useful. Evidence to that effect was led at trial.
[9] In his testimony, Dr. Checkel, the expert retained by AC, elaborated at length on the general operation of two-stroke engines, so named because they complete five basic processes (specifically intake, compression, combustion, expansion and exhaust) in two strokes (one up, one down) of the reciprocating piston typically found inside an engine cylinder. A four-stroke engine, by contrast, requires four reciprocating piston strokes to complete these same five basic engine processes.
[10] In both cases, the piston is typically attached to a connecting rod and crank shaft, the latter of which is in turn attached to an engine flywheel used to deliver output power from the engine. This is normally paired with a cylinder head that closes off the top of the engine, forming a chamber between it and the piston inside the cylinder. The objective is to ignite the mixture of air and fuel compressed into that chamber while the piston is close to its highest point in the cylinder (commonly called “top-dead-centre” or “TDC”). The mixture then burns as the piston passes through the TDC position and begins to move downwards, increasing the pressure and imparting more energy into the downward-moving piston than was required for the upward-moving piston to compress that mixture before combustion. The net energy gain is then delivered to the vehicle through the flywheel.
[11] The ability of two-stroke engines to provide energy output in this manner on each engine cycle allows for the engine to be lighter and more compact than four-stroke engines for a given power level. They have thus proven popular for small vehicles like motorcycles, all-terrain vehicles and snowmobiles. However, two-stroke engines must also accomplish the five processes listed above in only two piston strokes, rather than the four afforded to four-stroke engines.
[12] On small vehicles like snowmobiles, the engines typically accomplish this task through the combination of cylinder ports rather than valves for the intake and exhaust processes, pre-compression in the crank shaft case, and an exhaust expansion chamber. These extra features allow the engine to accomplish both the intake and compression processes as the piston moves up towards the cylinder head on the first stroke. After the combustion process occurs as the piston passes the TDC position, the engine accomplishes the remaining expansion and exhaust processes as the piston moves down towards its lowest point in the cylinder (bottom dead centre or BDC) on the second stroke.
[13] While the piston is at the BDC position, the intake ports in the upper part of the cylinder are exposed, and the mixture of air and fuel from the crank shaft case is forced through the ports in the cylinder wall. This pushes out remaining combustion products through the exhaust ports and into an expansion chamber that forms part of the engine's exhaust system. That chamber, if sized (or “tuned”) correctly, creates an exhaust pressure wave at the right instant to prevent the new mixture of air and fuel from being forced out of the chamber alongside these remnants before the exhaust ports close as the piston moves back up the cylinder. Proper tuning varies with current conditions, including engine speed and the temperature inside the chamber itself. When done correctly, however, this process provides an important power boost to the engine.
[14] Traditionally, engines have used carburetors to manage the mixture of air and fuel at the engine intake. As explained by Dr. Bower, the mechanical engineer expert retained by BRP, a carburetor is a mechanical fuel admission device that does not rely on a controller or electronic input. These devices have been progressively replaced with direct fuel injection technology, which injects fuel directly into the chamber above the piston at the start of compression rather than drawing it into the cylinder along with the air.
[15] Dr. Checkel explained that the amount of power a two-stroke engine produces is typically controlled using a valve (the throttle), which is used to restrict the air flowing into the engine during intake. Knowing how hard the engine is working compared with its maximum capability (engine load) is useful for engine control purposes.
[16] The precise timing of the ignition in each engine cycle would be instrumental for engine power, efficiency, durability and controlling exhaust emissions in both two-stroke and four-stroke engines. If combustion occurs too late in the cycle, the engine produces lower output power, more waste heat, and is generally less efficient. If it occurs too early in the cycle, the engine is doing more work to complete the compression process, similarly reducing engine power output and efficiency, and increasing undesirable exhaust emissions.
III. The 738 Patent A. An overview / Disclosure [17] Before considering more closely the 738 Patent, some basic information about the Patent should be stated:
• The inventor is Greg L. Spaulding, an employee of AC, and he testified at trial.
• The Patent was open to public inspection on May 25, 2001.
• The Patent was issued on February 18, 2003, having been filed on October 10, 2000.
• The Patent signals as priorities December 1, 1999 for U.S. Patent 09/452,657 and May 10, 2000 for U.S. Patent 09/568,449.
[18] Originally, AC was asserting a large number of the 47 claims found in the Patent-in-suit. However, by the time the matter came for trial, the number of claims asserted had been reduced to 5.
[19] The title given to the Patent is not particularly illuminating: Two-cycle Engine with exhaust temperature-controlled Ignition Timing. The abstract of the Patent states:
A two-cycle internal combustion engine has an ignition timing that varies with engine speed. A plurality of ignition patterns (the relationship between ignition timing and engine speed) are used. The engine exhaust gas temperature is sensed and is used to determine the particular engine pattern used at a particular time.
[20] Evidently, this invention is concerned with engines and, more specifically, the two-cycle, or two-stroke, internal combustion engine. In the two-stroke engine, it is possible to vary the point at which the fuel-air mixture is ignited within the cylinder in which the piston is operating, such that the optimization of the engine operation will be provided. The invention under consideration would allow for the selection of different “ignition patterns” based on the exhaust gas temperature. There are two ways of using the exhaust gas temperature according to the Patent. Three of the five asserted claims are dealing with the selection of ignition patterns based on the exhaust gas temperature. They will be referred to collectively as the “selection claims”. There are also two claims that refer to the selection of the ignition pattern from a plurality of basic ignition patterns, the basic ignition pattern selected being modified based on the sensed exhaust gas temperature. They will be known as the “modifications claims”. The background of the invention provides some information and it reads:
Background of the Invention
The present invention is directed to a two-cycle internal combustion engine and the operation of such an engine. Such engines are used, for example, to drive various vehicles such as snowmobiles, motorcycles, personal watercraft and others.
The operation of such engines is based on the ignition of a compressed fuel-air mixture within a cylinder, with the resulting expansion of the ignited mixture driving a reciprocating piston located in the cylinder. The reciprocating movement of the piston then is used to drive the vehicle powered by the engine.
It is desirable to vary the point during the reciprocation cycle of the piston at which the fuel-air mixture is ignited, i.e. a point between “bottom dead center” and ''top dead center”, to provide optimum operation of the engine. Thus, as one example the optimum point of ignition during acceleration can differ from that for a normal running operation. Because the piston usually is driven by a rotating crank shaft, the ignition point often is expressed in terms of degrees of advancement with respect to top dead center, in other words the position with respect to degrees of rotation of the rotating crank shaft ahead of the top dead center position.
Typically, different engine operating speeds, which usually are expressed in revolutions per minute, will be associated with different engine conditions. For example, higher engine speeds often are associated with acceleration. Thus, it has been considered that the point of ignition during the reciprocation cycle of the piston should be varied, depending on the engine operating speed at the particular time, and engine ignition control systems can be programmed to vary the ignition point depending on the engine speed.
Other factors can affect the optimum ignition timing. For example, an engine operating shortly after start-up may require a different relationship between ignition timing and engine speed (hereinafter “ignition pattern”) than an engine that has been operating from some time. Consideration has been given in the past to a system that allows the user to switch between two different ignition patterns. This has not been completely satisfactory in optimizing engine performance.
[21] Under the title “Summary of the Invention” in the disclosure part of the specification, one finds the replication of the claims. The only paragraph worth reproducing is the following, at page 2 of the 738 Patent:
Summary of the Invention
The present invention seeks to provide a two-cycle engine that enjoys improved performance by selecting from a plurality of relationships between ignition timing and engine speed (ignition patterns) based on exhaust gas temperature. In one aspect of the present invention, individual ignition patterns cover ranges of exhaust gas temperature of about 50C. The sensitivity of the control system increases as the temperature range decreases. In another aspect of the present invention the exhaust gas temperature is determined by use of a sensor that is in contact with the exhaust gas, for example in an exhaust pipe. In a further aspect of the invention, a capacitor discharge ignition system is used to control the ignition timing of a spark plug. Yet another aspect of the invention provides for a default ignition pattern when there is a malfunction of the temperature sensor.
On its face, the invention is centered on various ignition patterns that will be selected based on the exhaust gas temperature, or will be modified based on exhaust gas temperature, that will have been detected by an appropriate sensor. The ignition patterns are merely the relationships between ignition timing and the engine speed, expressed in revolutions per minute (RPMs). For different engine speeds there could be different ignition timings. The piston, in a two-stroke engine, will move towards the top of the cylinder and, at some point, the air-fuel mixture will be ignited, the explosion thus created generating energy that will send the piston back toward the bottom of the cylinder. Through the operation of a rotating crankshaft that is activated by the piston going to the bottom of the cylinder (bottom dead center), the vehicle moves. The ignition patterns are selected according to the Patent with a view to optimize the operation of the engine in different conditions. That point is described in terms of the degrees of rotation of the crankshaft ahead, or possibly after, the piston has reached the top of the cylinder (top dead center).
[22] Before reaching the claims, the disclosure presents in five tables (A to E) data that are each representing an ignition pattern. For a given engine speed (RPMs) there is an angle which is the number of degrees before top dead center. The angle may vary with different RPMs. In the ignition patterns depicted in the five tables, there is an angle that corresponds to different RPMs, from 1000 to 8800 RPMs. Each of the tables presents an ignition pattern that is a function of a range of different exhaust gas temperature. In this particular case, the temperatures are presented in ranges, Table A covering a range of 0 to 250 C, and the other tables operating in increments of 50 C (250 to 300, 300 to 350, 350 to 400) until one reaches 400 and higher. As long as the temperature of the exhaust gas remains within a range, it will be that ignition pattern that will control. Thus, as the RPMs change, a different ignition point, representing a different angle, will be chosen in a particular table.
[23] I have reproduced Table E from the 738 Patent. This is an example of an ignition pattern. The table applies once the temperature of the exhaust gas has reached at least 400 degrees. Other ignition patterns are said to apply for different temperature ranges:
E: Exhaust Temperature 400C or higher
RPM
Angle
8800
11.0
8600
11.0
8400
11.0
8200
11.5
8000
13.0
7750
15.0
7250
19.0
7000
20.0
6500
22.0
6000
24.0
5000
24.0
4000
20
3000
10
2000
10
1000
8
0
8
An ignition point will correspond to the angle, the number of degrees before top dead center at a particular RPM. Hence, at 8000 RPMs, the angle will be 13º, which means that the ignition source will ignite the mixture air-fuel at 13 degrees before TDC. The angle differs for different RPMs for temperature above 400C, as the table shows. Similarly, the angle may be different for different exhaust gas temperature ranges. In table A, for temperature lower than 250C, the angle before TDC is 10 at 8000 RPMs. Once the exhaust gas temperature leaves a particular range, it is a new ignition pattern that kicks in.
[24] The specification refers to figures found after the claims. Figure 1, reproduced here, is a rather rudimentary drawing of a two-cycle engine, where 10 is the engine itself, 12 the cylinder, 14 the piston, 16 the crankshaft, 18 the ignition source (like a spark plug), 20 the controller for the ignition of the ignition source, 22 the coil through which a spark plug could be activated, 24 the exhaust gas temperature sensor and 26 is the exhaust pipe (at p 3 of the disclosure, it referred to “exhaust pipe 28”; that is manifestly an error).
[25] Figures 2 and 3 illustrate examples of the control of the ignition timing. Figures 4 to 8 are graphs illustrating different ignition patterns. The graphs do not appear to correspond precisely to tables A to E found at pages 7 to 9 of the specification. Nevertheless, each is presented as an ignition pattern covering a particular temperature range. Neither the tables nor the figures provide information concerning what these patterns are supposed to achieve in order to optimize the operation of an engine. There is no information either about the diagnosis that comes from sensing the temperature.
[26] As a matter of first impression, the ignition pattern is at the heart of the invention. Tables A to E present numbers that correspond to ignition points for various RPMs once the exhaust gas temperature has reached a particular range. When considering figures 4 to 8, they are no more than the graphical representation of the ignition patterns. The ignition point is found at the intersections of the speed of the engine and the number of degrees before top dead center for a particular exhaust gas temperature range. It is the collection of those points that is represented graphically. An ignition pattern is never one point. The pattern is simply the relationship between the engine speeds and the degrees of advance before top dead center, the ignition timings, for different temperature ranges. Figures 4 to 8 and tables 1 to 5 present in different formats the same information: an ignition pattern is composed of various ignition points; there is no pattern if there is one ignition point according to the tables and figures 4 to 8. That fundamental concept is not altered if is added how open the throttle is in a given case (two of the asserted claims are said to be “three dimensional” in that the ignition pattern is the relationship of degrees in advance of top dead center, engine speed and throttle opening).
B. The claims at issue [27] From the 47 claims found in the 738 Patent, AC is now asserting five claims: claims 11 and 16, the “modification claims”, as well as claims 33, 40 and 47, the selection claims. Claims 11 and 16 are related to each other in that claim 11 is the engine claim to claim 16’s method claim of the same engine. The same is true of claims 40 and 47. They are in fact the mirror image of one another and conclusions reached by the Court regarding the engine would apply altogether to the method of operating. While claims 40 and 47, which are written in dependent form from claims 34 and 41, are specific to snowmobiles, claims 11 and 16 do not have that specificity. They are not limited to snowmobiles. Finally, claim 33 is the dependent claim of “method claim” claim 28, wherein the engine is a snowmobile engine. Although claims 40 and 47 are three dimensional, i.e. the ignition point varies with the speed of the engine and the throttle position, as opposed to the ignition point varying only with the engine speed for the other three claims, that proved to be largely immaterial. The claims are reproduced in Annex “A”. The asserted claims, together with their independent claims, are highlighted.
[28] It is not disputed that all the engine claims are with respect to a two-cycle engine comprising:
• a cylinder
• a piston
• an ignition source
• a controller
• a sensor.
Similarly, the method claims all include a method of operating a two-cycle engine comprising:
• Moving a piston in a cylinder
• Activating an ignition source in the cylinder during the compression movement
• Expelling exhaust gas from combustion
• Sensing a temperature of the exhaust gas
BRP does not contest that its engines on their accused snowmobiles comprise these elements. Indeed, BRP does not contest that its engines have all of the elements presented at Figure 1 of the 738 Patent (reproduced at para 24 of these reasons). That is not where the debate is situated.
[29] There are evidently differences between the claims and there are issues with respect to the construction of those claims. These will be reviewed later in these reasons. For now, an overview will suffice.
[30] Claims 11 and 16 will be examined together. According to them a plurality of “basic ignition patterns” must exist; out of that plurality of basic ignition patterns one will be selected and that basic ignition pattern will be modified based on exhaust gas temperature. That is the reason why they have been referred to as “modification claims”. That modified basic ignition pattern becomes the ignition pattern. It is according to that ignition pattern that the activation of the ignition source by the controller will occur. Claims 11 and 16 are only concerned with the relationship of ignition timing and engine speed.
[31] The other three asserted claims are “selection claims” in that it is the selection of the ignition pattern out of a plurality of ignition patterns that is effected based on the exhaust gas temperature. Claim 33, which is dependent on claim 28, a method claim, is a selection claim. However, contrary to selection claims 40(34) and 47(41), the other two selection claims, claim 33(28) is two-dimensional, as are claims 11 and 16, as the throttle is not featured.
[32] As pointed out earlier, claims 40(34), 47(41) and 33(28) are all concerned with engines that are snowmobile engines. That is not the case for the modification claims 11 and 16.
IV. Foreign litigation [33] It has transpired, during the course of the trial, that there has been, and there continues to be, litigation in the United States concerning patents that relate to the Patent-in-suit in this case between the parties. This came to the attention of the Court through the cross-examination of witnesses involved in some manner in the other pieces of litigation.
[34] Thus, it appears that there is litigation in the Federal Court of Minnesota; however, the matter will not be heard for some time as it has not been set for trial. As for the litigation before the United States International Trade Commission, it was terminated in May 2015, following the withdrawal of the complaint filed by Arctic Cat Inc. in December 2014. As I understand it, Arctic Cat Inc. alleged that snowmobiles were imported in the U.S. that infringed certain claims of their U.S. patents. The allegation is no more.
[35] There would have also been some litigation between Polaris, another snowmobile manufacturer, and AC more than ten years ago.
[36] Having said that, I consider that litigation taking place elsewhere has no bearing on the case that must be decided in Canada on the basis of Canadian Law and the evidence put forth by the parties. At any rate, there is no foreign decision that has been rendered.
V. The witnesses [37] The parties relied on a number of witnesses to advance their position at trial. First and foremost, they each relied on one expert to discuss and put forth their theory of the case concerning the alleged infringement of the Patent and, by counterclaim, the alleged invalidity of the claims. The parties also produced experts with respect to the damages claimed in case a valid patent had been infringed. Each side had three other witnesses. I will begin with the non-experts and the evidence of the experts will be referred to, as needed, when their expertise is required.
A. Brad Darling [38] Mr. Darling was AC’s corporate representative. Mr. Darling has been working for Arctic Cat since 2000 and is currently the vice-president, general manager of the snowmobile division of Arctic Cat Inc., a position he has held since January 2011.
[39] Mr. Darling explained that Arctic Cat first became aware, and first believed, that BRP was infringing the 738 Patent in early 2012, following a review of all of Arctic Cat’s patents by its new in-house counsel. This happened shortly after BRP launched its own patent lawsuit against Arctic Cat, but Mr. Darling was uncertain if the review of Arctic Cat’s patents was done in order to retaliate, as suggested by BRP. Whether the Court’s action was in retaliation or not is of no moment as far as this Court is concerned. The only relevant consideration is to establish that a valid patent has been infringed or not.
[40] It appears that AC approached BRP after it formed the opinion that its 738 Patent was infringed with a view to conclude a cross-licence arrangement. Obviously, the discussion did not produce an agreement.
[41] Mr. Darling explained the dealer distribution aspect of his position, which involved keeping track of competitive dealers and Arctic Cat dealers across Canada. This analysis is conducted based on model year, calendar year, and then snowmobile season. The takeaway from these surveys is that Arctic Cat is competitive in Canada within the dealer base of the competition in the industry (Polaris, Ski-Doo, and Yamaha). Mr. Darling testified that for the 2016 model year, Arctic Cat will produce 26,000 snowmobiles, down from just over 41,000 in 2005, before the recession. This corresponds to an industry-wide decline.
[42] AC relies on racing snowmobiles for marketing its product as well as to assist in research and development. The 738 Patent in particular started being used on racing models in the 2000 model year, and was used in consumer models starting with the 2001 model year. By 2008, the 738 Patent was being used on all of Arctic Cat’s 600 and 800 two-stroke models. That “technology” was very well received in the industry, as it gave a remarkable advantage in terms of acceleration when “starting out of the gate”.
[43] On cross-examination, Mr. Darling explained that he was not aware of the technology used for the first time in conjunction with a “hot button” on 1999 model year snowmobiles. He also wasn’t aware of previous technology to manually adjust “tuning in the pipe”. He confirmed that Suzuki had been Arctic Cat’s sole supplier of engines until 2008.
[44] Is noteworthy that Mr. Darling did not testify concerning how AC is practicing its invention. No one did.
B. Troy Halvorson [45] Mr. Halvorson has worked for Arctic Cat since 1997. In 2004, he became high performance product team manager, where he was responsible for the development of the Firecat models, among others. Mr. Halvorson is currently the snowmobile product manager at Arctic Cat, a position he has held since April 2015. In that capacity, he helps to guide the product plan, which governs the development of new products over a five-year cycle generally.
[46] As was to become obvious later, the testimony of Mr. Halvorson, based largely on written material produced by AC, was offered for the purpose of comparing two snowmobiles manufactured by AC with a view to distinguish between model years 2005 and 2006 to lay the groundwork for the expert on damages.
[47] Thus, Mr. Halvorson explained that the F6 Firecat EFI EXT, the F6 Firecat EFI, and the F6 Firecat EFI Sno Pro were the available models listed on the specification sheet in model year 2005. “EFI” designates electronic fuel injection, while “EXT” designates a longer track than the F6 Firecat EFI (the base model) or the F6 Firecat EFI Sno Pro. An additional model, the F6 Firecat EFIR, was also available – the “R” designates that it had a reverse. All models are said to have the same engine specifications. He explained that the engines used in the 2006 models are the same as in the 2005 ones. However, the 2006 brochure lists an exhaust pipe temperature sensor (EPTS), introduced in the F6 for that model year. Another listed difference exists with respect to the shocks, with the 2005 using Arctic Cat gas internal floating piston shocks and the 2006 using Fox gas internal floating piston shocks. As for the 2005 F6 Firecat EFIR, it would have had the same specifications as the F6 Firecat EFIR from 2006 had it been listed in the brochure for model year 2005. Mr. Halvorson then provided two final differences between the 2005 and 2006 model years: a change in colour scheme, and Arctic Cat no longer offering the EXT model in 2006. Next, Mr. Halvorson explained that Arctic Cat did not list the electric start as available optional equipment in 2005, but did in 2006. However, the offering in 2006 did not affect the price Arctic Cat charged its dealers for snowmobiles, as optional equipment was sold to customers by the dealers separately from the snowmobiles themselves.
[48] The witness did not offer any information about how the 2006 model year F6 snowmobile practiced the invention. In fact, surprisingly, Mr. Halvorson only referred to the addition of an exhaust pipe temperature sensor on the later engine.
[49] On cross-examination, Mr. Halvorson explained that knowledge of Arctic Cat’s models of those years was quite limited, as is his knowledge of marketing material he did not develop. He confirmed that Arctic Cat purchased its engines for the Firecat models during those years from Suzuki. As for the specification sheets on the brochures, they were accurate to a point, as specifications could be changed by the time production started and errors could slip in.
[50] Mr. Halvorson explained that the reference to an exhaust pipe temperature sensor, which is to be found on the specification sheet but not in the brochure, could have been connected by a knowledgeable reader to “breakthrough performance regardless of temperature”. It was not disputed by the witness that AC was promoting its suspension in 2006.
[51] It was established before the Court that the witness is a graduate of CalPoly (California Polytechnic State University) in what he described as industrial technology. Although he is not an engineer, and does not profess to be one, Mr. Halvorson has been employed by AC since 1997, yet he was incapable to give any explanation about the engine that is supposed to make a difference.
[52] The Court has no doubt whatsoever about the integrity of this witness: he was honest and forthcoming. He readily conceded that his knowledge about the engine was limited. Here are the important portions of the cross-examination which are found at pages 2441 to 2445:
A. I don’t hold a mechanical engineering degree.
Q. Right. And you don’t hold an electrical engineering degree either?
A. No, I don’t.
Q. Okay. You mentioned the F6 Firecat EFI. EFI stands for electronic fuel injection. Correct?
A. Correct.
Q. Yeah. Do you know how electronic fuel injection works, generally speaking?
A. Generally speaking, yes, I do.
Q. So, what is the extent of your knowledge?
A. In an older conventional system with carburetors, the fuel delivery system is based off of – is how the fuel flows into the carburetor into the engine. In an electronic fuel injection system, it’s injected into the engine through electrical pulses that’s supplied by – dictated by the computer, the ECU of a snowmobile.
Q. Okay. And to control the electronic fuel injection of an ECU, do you know what are the inputs and outputs of that ECU?
A. There are a lot of inputs and outputs, yes.
Q. Would you be able to name them?
A. Probably not all of them.
Q. And would you know how the control of that electronic fuel injection works within the controller based on the inputs of the sensors and the outputs?
A. I am not knowledgeable about how exactly it works.
Q. And that’s not your responsibility in any way?
A. No, it is not.
…
So you mentioned you are not familiar with how the ECU works. Correct? You don’t know the inner functionings of the ECU, the logic, the software?
A. Right. I – I don’t – I know how a – I mean. I have an idea how a computer works. If I had to tell somebody how to build a computer, I would struggle.
Q. Yes. And you wouldn’t be able to tell or help someone program the ECU of the ECUs used by Arctic Cat?
A. No.
Q. Back in 2005 or 2006?
A. I would not be able to tell them.
Q. So that EPTS, you don’t know what it does?
A. Yes, I know what the EPTS does.
Q. It’s connected to the ECU?
A. I know the electronic or the exhaust pipe temperature sensor measures the temperature of the exhaust.
Q. Right. And that signals input into the ECU?
A. It is a sensor that the ECU relies on for that information, yes.
Q. But beyond that, you don’t know what the ECU does with that and how it accomplishes it?
A. Well, I – I don’t know how it does it, no.
Q. Thank you.
Back in 2006, the model year 2006, equipped with the EPTS, again, that was a Suzuki engine. Correct?
A. Correct.
Q. Equipped with Kokusan ECUs? Does that ring any bells for you?
A. Yes.
Q. So that’s K-O-K-U-S-A-N. And those were delivered with the engines. Correct?
A. You would have to define “delivered with the engine”.
Q. So they were already installed on the engine or ready to be installed on the engine. That’s how the engine came?
A. No.
Q. No, they were not. Were they shipped together with the engine for a given engine?
A. I have – they were part of a packet that would have been with the engine, but not directly with the engine.
Q. Right. So Engine A