Quebec-based Ski-Doo and Sea-Doo manufacturer BRP Inc. has won a key court decision in a long-running patent-infringement battle that will ban rival Arctic Cat from selling some of its snowmobiles in Canada.
In a ruling made public this week, the Federal Court of Appeal upheld a lower court’s injunction order prohibiting Arctic Cat from selling snowmobiles in Canada that violate specific BRP patents. The decision means Textron-owned Arctic Cat is shut out of the Canadian market for new sleds that have that design until BRP’s patent expires in roughly one year.
Canada is the world’s second-largest market for snowmobiles after the United States, with about 43,500 machines made by four main manufacturers sold annually. Orders and deposits are typically taken months in advance for the next model year and dozens of Arctic Cat dealers, which are independently owned, now find themselves grappling with orders they might not be able to deliver to customers.
“We’re the ones that are going to pay the price for this,” said Brian Enns, owner of Keystone Kat Ltd. in Altona, Man., which sells only Arctic Cat. “I’m a snowmobile dealer. It’s what we do. If I don’t have snowmobiles for sale, I’m not sure what it is that we’re supposed to sell and how we’re going to keep my people employed this winter.”
For Valcourt, Que.-based BRP, the stakes involve not only current sales volumes but also strategy and reputation. The company, which was founded as a snowmobile manufacturer, is betting it can continue to grow its share of the industry (currently topping 50 per cent in North America) by introducing new innovations and it wants to protect them at all costs.
“We invest a lot of money every year in R&D, roughly between 4 and 4.5 per cent of our revenues,” said Martin Langelier, BRP’s senior vice-president of legal services and public affairs. “If we’re to invest that much money, it is important that we maintain our ability to protect the resulting [intellectual property].”
The key innovation in contention here is BRP’s snowmobile technology called Rev, introduced in 2002. The design introduced a pyramidal frame that pushed the seating position of the driver forward by 30 centimetres, which increases the feeling of control.
BRP says the innovation was a game-changing development that allowed it to reverse its falling market share at the time and it began noticing similar designs made by rivals in the years that followed. The company sued Arctic Cat for patent infringement in the United States and lost, but it also took up the matter in Canada in 2011.
After a lengthy delay, the Federal Court of Canada confirmed in 2018 that there was infringement of what’s known as BRP’s ’264 patent, clearing the way for a ruling on damages and an injunction that came last month. That decision prevents Arctic Cat and its dealers from marketing, selling and distributing in Canada any snowmobile or component subject to the ’264 patent.
Arctic Cat subsequently asked the Federal Court of Appeal to stay the injunction and damages until its appeal is heard. The company said in its legal filings that it wanted to give Canadian customers who hadn’t been able to order a new snowmobile before or during the COVID-19 pandemic a second window of opportunity in August to buy one.
In its ruling released this week, the court declined Arctic Cat’s request. The court said Arctic Cat failed to prove it would suffer irreparable harm if the sales ban was not lifted and said that without such a ban, BRP would “lose all practical benefits from its patent.”
BRP will receive $135 in royalties for each snowmobile subject to patent infringement from 2008 to June, 2021, Mr. Langelier said. He said there were about 21,000 such Arctic Cat snowmobiles sold from 2008 to 2014 in Canada and thousands afterward as well, because Arctic Cat has expanded the use of the pyramid frame in its products.
Officials with Arctic Cat did not respond to e-mailed requests for comment. Textron bought the business, based in Thief River Falls, Minn., in 2017.
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