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 banker’s 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 banker’s 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 won’t 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 record.

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 outboard engines.

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 wasn’t 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
Yamaha’s lawyers decided to try the federal trade commission’s 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 can’t 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 Waverunners.

“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,” Bombardier’s 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 California’s 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 Yamaha’s 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 judge’s order that they try