MasterCraft and Malibu Boats may have finally settled their long-running feud over wake-surfing patents, but there is still a lot of interesting information to be had in looking into the patent cases related to the action.
The first aspect to note in the feud is that Malibu Boats did not have just a single patent at issue, but rather Malibu Boats was working on a portfolio. As sophisticated IP players know, the real goods are a well developed patent portfolio as it significantly increases one’s leverage against a competitor.
Today we review one aspect of Malibu’s strategy in the case to drive settlement - the idea of a pending application. One might think a pending application is useless as it cannot be asserted in litigation (since the patent has not yet issued). But of course the value in a pending application is not whether it can be asserted immediately, but rather that it has the ability to change and can be asserted at some unknown point in the future. One of Malibu’s pending applications (14/075,978) finally reached a decision after the case settled, and likely provided leverage to Malibu as MasterCraft was faced with the idea that even if they won the current lawsuit, they would still face the possibility of another patent lawsuit down the road. And since up to 6 years of past damages can be had, that risk would have been a significant motivator to settle.
Turning now to the pending application, the appeal was finally heard in November of 2018. Here is a link to the oral hearing. Patent practitioners will probably enjoy reading through the transcript as it gives insight as to how various issues play out before the appeal judges at the USPTO.
In the end, Malibu was successful with its appeal and so I suspect MasterCraft was smart to settle when they did.