Ban Sea Doo Imports for Patent Theft
Yamaha Asks United States Trade Commission
If Yamaha is found to be correct in its claims by the Commission and
the decision is upheld by President George Bush, Bombardier says it
would be forced to cease exporting many Sea-Doo water scooters to its
800 American dealers and forced to lay off workers in Florida and Wisconsin.
A similar lawsuit with 34 claims of patent infringement has been filed
by Yamaha in a California federal court. An earlier suit filed by Yamaha
against Bombardier was dismissed. A follow-up suit in Florida by Bombardier
against Yamaha was dismissed and a suit by Yamaha against Arctic Cat
was also dropped.
||With the pending
California patent suit on hold until 2004, this makes the United
States International Trade Commission (USITC) the focal point of
a global he said, she said, that pits the Japanese conglomerate
against the Canadian conglomerate.
So far the law suits, claims and counter claims have enriched a gaggle
of lawyers and a pride of expert witnesses. The conflict has also sheet-fed
a small forest, creating a mountain of paper that blurs with rancor,
charges and countercharges. A review of 800 pages of court documents
that have not been sealed, shows that the various legal actions amount
to diligent efforts by powerful companies to use the trade and patent
laws of the United States to extract in-depth information about the
business organization, research schemes and future development plans
of their rivals.
Court documents in the USITC case show that more than 71 bankers
boxes filled with one hundred fifty thousand pages of documents had
been presented by Yamaha to Bombardier by June of 2001. At that point
Bombardier complained that this was nowhere near enough information
it needed to satisfy its efforts to defend itself.
The paper avalanche
Complainants document production has been woefully inadequate,
the Bombardier attorneys told the judge. Relatively few internal
documents have been produced.
To make their point the Bombardier lawyers said, In contrast
respondents have produced 187 bankers boxes of documents
(approximately 380,000 pages). Most of these files are from respondents
internal files and records.
Yamaha claims that a dozen of the gizmos developed and patented in
the Orient and the US were copied by Bombardier for its Sea-Doo water
scooters. The list includes an exhaust system that wont fill up
with water, a folding two part riders seat, an electrical kill
switch and a series of chambers and attenuators to reduce the aggravating
sound common to water scooters.
The Yamaha request for the USITC investigation was approved in February
at the same time Bombardier was bidding to buy the assets of Outboard
Marine Corporation. As the demand for discovery grew in
intensity over the succeeding five months, the number of motions asking
for orders to insure confidentiality also grew.
Finally, in June, after the administrative law judge ordered Yamaha
and Bombardier to cooperate, Bombardier filed a motion to summarily
dismiss some of the Yamaha charges. That was followed by a flurry of
sealed communication with the court.
The next public record reflects a scheduled settlement conference on
July 13, 2001 followed by a report to the court about the conference
on July 20, 2001. What happened in the mean time is not on the public
The court has given the two sides until May 14, 2002 to conclude discovery
or work out the problem before a trial is held. The court has also ordered
three separate settlement conferences, one at the beginning, one in
the middle and one just before trial, to avert a court decision or reduce
the issues. Since much of the record is sealed by court order, many
of the details are missing.
What the record shows
What is known is that Yamaha buys its Waverunner engines and water pumps
from Sanshin Kogyo Kabushiki Kaisha, dba Sanshin Industries Company
Ltd., a Yamaha subsidiary. Yamaha and Sanshin (a black lute in Japanese)
have been after Bombardier at least since 1998. Sanshin also makes Yamaha
The public court records show that two years of negotiations over the
patent dispute ended in June of 2000 when Yamaha filed suit in U. S.
District Court for the central district of California. Yamaha said Bombardier
had violated 34 patents issued to Yamaha and Sanshin.
Bombardier said it wasnt so and threatened to counter sue, alleging
a wide range of torts and defenses including antitrust violations, patent
invalidity and noninfringement, laches and estoppel, failure to mark,
inequitable conduct, unclean hands and patent misuse.
That California trial is stalled in the discovery stages with no end
it sight. Both sides believe it will drag on until 2004.
A faster course
Yamahas lawyers decided to try the federal trade commissions
tribunal on fair trade practices because it is quicker in reaching a
decision on patent claims and Sea-Doo keeps producing products in violation
of its patents. The company picked 11 patents from the thousands developed
or purchased by Yamaha and Sanshin and it made 74 different but interlocking
claims against Bombardier.
Yamaha Hatsudoki Kabushiki Kaisha, dba Yamaha Motor Company Ltd and
Sanshin Kogyo Kabushiki Kaisha, dba Sanshin Industries Company Ltd,
had to first prove that they were entitled to United States protection
from the import of the foreign (Canadian) products manufactured by Bombardier
Inc. and sold by Bombardier Motor Corporation of America, because they
were abusing the American and Japanese patents filed in the United States.
Yamaha had to prove it was a genuine American company; under the law
a domestic industry, with a real manufacturing presence
in this country and a stake in its future that was worthy of Trade Commission
protection. Yamaha owns and operates YMCC, which builds Waverunners
in Newnan, Georgia and TWI that builds the Waverunner model SUV1200
in Vonore, Tennessee.
Yamaha and Sanshin asked for an official investigation, which they
got. As a result of the investigation, Yamaha asked for a permanent
exclusion order, pursuant to Section 377 forbidding entry into the United
States of personal watercraft and personal watercraft components that
infringe the asserted patents, should it win.
Yamaha did not ask for an immediate injunction or other relief to stop
the import of the Sea-Doos in question, although the Trade Commission
has procedures that allow this.
You cant patent that
Bombardier had argued in California and again in the USITC hearings
that Yamaha had no legal right to patent what it had patented. In some
cases, Bombardier said, Yamaha patented everything without regard to
its uniqueness. In other cases it argued that Bombardier was already
using technology in Sea Doos that Yamaha later patented and used in
The 11 patents asserted ...resulted from a scheme in which Complainants
(Yamaha) flooded the Patent Office with patent applications directed
to every conceivable design option in a personal watercraft regardless
of their patentability, Bombardiers lawyers told the USITC
administrative law judge, Delbert R. Terrill Jr.
The claims are narrow in scope and are directed to routine
design choices that are either not being used by Respondent (Bombardier)
or were obvious if not completely anticipated, the lawyers said.
Bombardier said that it was prepared to prove to the Judge Terrill
that Yamaha was not entitled to relief because of patent invalidity
and noninfringement, laches and estoppel, failure to mark, inequitable
conduct, unclean hands and patent misuse.
Bombardier has also asserted a counterclaim in the California courts
for attempted monopolization and violations of Californias
unfair competition laws.
The Bombardier attorneys accused Yamaha of dodging the California court
by going to the USITC. They pointed out that the Trade Commission is
by far faster in conducting its investigation and making a decision
than the California courts.
Repeatedly Bombardier asked for more time to depose witnesses and review
the massive heap of records, most of them in Japanese. But the court
refused any lengthy delays and insisted that Yamaha and Bombardier cooperate
in the discovery of evidence.
On July 1, 2001 Bombardier asked the court to throw out some of the
Yamaha claims. Bombardier said it had proved in its motion that several
Yamaha patents either had not been infringed or were invalid.
The Commission investigative staff recommended that the Bombardier
motion be denied and the investigation should continue.
On July 2, 2001 Bombardier followed with a confidential declaration
and two confidential briefs. On July 3, 2001 Bombardier filed two more
confidential motions and offered three confidential declarations.
On July 5, the next public filing in the case, Yamaha moved to reschedule
a second settlement conference from July 6, 2001 to July
13, 2001 with the report from the conference due July 20, 2001. Nothing
in the record reflected the occurrence of a first settlement conference.
Based on motions filed the next day, Bombardier had apparently challenged
Yamahas claim to be a domestic industry and asked the court to
dismiss the action because Yamaha had no legal standing. Yamaha responded
with a 125 page brief on July 6, the day the second settlement conference
was to begin.
Both sides apparently agreed to the July 13 settlement conference date
and agreed to file their report to the court on July 20.
Trade Commission staff members said that mandatory settlement conferences
are rare and there is no clear-cut pattern to predict whether the parties
will use them to settle their differences or simply to comply with the
judges order that they try