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Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 1 of 11 PageID #: 15317
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELA WARE
`
`F'REAL FOODS, LLC and RICH
`PRODUCTS CORPORATION,
`
`Plaintiff,
`
`V.
`
`Civil Action No. 16-41-CFC
`
`HAMILTON BEACH BRANDS,
`INC. and HERSHEY CREAMERY
`COMPANY,
`
`Defendant.
`
`Rodger D. Smith II, Michael J. Flynn, and Taylor Haga, MORRIS, NICHOLS,
`ARSHT & TUNNELL LLP, Wilmington, Delaware; Guy W. Chambers and Peter
`Colosi, SIDEMAN & BANCROFT LLP, San Francisco, California
`
`Counsel for Plaintiff
`
`Francis Di Giovanni and Thatcher A. Rahmeier, F AEGRE DRINKER BIDDLE &
`REA TH LLP, Wilmington, Delaware; William S. Foster Jr., Kenneth M. V orrasi,
`and Brianna L. Silverstein, FAEGRE DRINKER BIDDLE & REATH LLP,
`Washington, D.C.
`
`Counsel for Defendant
`
`MEMORANDUM OPINION
`
`June 9, 2020
`Wilmington, Delaware
`
`

`

`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 2 of 11 PageID #: 15318
`
`COLM F. CONNOLLY
`UNITED STATES DISTRICT JUDGE
`
`The Court held a four-day jury trial in this patent infringement case filed by
`
`Plaintiffs freal Foods LLC and Rich Products Corporation against Defendants
`
`Hamilton Beach Brands, Inc. (Hamilton Beach) and Hershey Creamery Company
`
`(Hershey). The jury awarded Plaintiffs $2,988,869.00 in lost profits. D.I. 264,
`
`Question 7(b). Pending before me is Defendants' Renewed Motion for Judgment
`
`as a Matter of Law of No Lost Profits or, in the Alternative, Motion for a New
`
`Trial on or Remittitur of Lost Profits. D.I. 296.
`
`I.
`
`BACKGROUND
`
`Plaintiffs' only evidence of lost profits concerned the MIC2000 blenders
`
`used in Hershey's Shake Shop Express program. See Trial Tr. at 599:8-16.
`
`Plaintiffs hired a damages expert, Dr. Akemann, to model the profits Plaintiffs lost
`
`due to the Shake Shop Express Program. When Dr. Akemann calculated lost
`
`profits, he divided the time period of Hershey's infringement into when Hershey
`
`profited by renting its machines to retailers and when Hershey let retailers use its
`
`machines for free and profited by adding an upcharge to the cups used in its
`
`blenders. Trial Tr. at 607:8-16. He then modelled freal's lost profits on
`
`Hershey's business model at the relevant time: part of the model was based on
`
`

`

`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 3 of 11 PageID #: 15319
`
`adding an upcharge to cups and part of the model was based on renting machines.
`
`Id.
`
`When determining Plaintiffs' market share, Dr. Akemann relied on an email
`
`written by freal's COO Jens Voges (the "Voges Email") in which Voges
`
`summarized information from external sources regarding freal's competitors.
`
`Trial Tr. 656:2-657:2.
`
`When modeling Plaintiffs' lost profits due to lost sales on upcharged cups,
`
`Dr. Akemann looked to freal's history of using an upcharge model at certain high(cid:173)
`
`volume places. Trial Tr. at 387:21-388:2; Trial Tr. at 607:18-25. Dr. Akemann
`
`also looked to a "business document that f real generated in the 2013 time period,"
`
`which was when infringement from the Shake Shop Express program began. Trial
`
`Tr. at 608:5-7. In that document, freal "focused on 70 cents as the appropriate
`
`upcharge." Trial Tr. at 608:14-15. Dr. Akemann testified that he relied on the 70-
`
`cents upcharge suggested in that document because the infringing blenders in the
`
`Shake Shop Express program had been located in a similar business context. Trial
`
`Tr. at 608:1-20.
`
`When modeling Plaintiffs lost profits due to lost rentals, Dr. Akemann
`
`"assume[ d] that [Plaintiffs] would have matched whatever rental fees [Hershey]
`
`charged." Trial Tr. at 664:5-6. Hershey charged customers roughly $150.00 per
`
`month. Trial Tr. at 664:1-12. When Defendants confronted Dr. Akemann with a
`
`2
`
`

`

`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 4 of 11 PageID #: 15320
`
`f'real document that showed f'real rented its machines for a $500.00 down
`
`payment and $350.00 per month, Dr. Akemann explained that he used Hershey's
`
`pricing to "control for the differences in pricing to do my analysis." Trial Tr. at
`
`666:3-4.
`
`Dr. Akemann calculated upcharge lost profits as $3,015,367.00; lost rental
`
`profits as $897,028.00; and total lost profits as $3,912,395.00. Trial Tr. at 615:4-
`
`5. The jury found the Defendants liable for $2,988,869.00 in lost profits. D.I. 264,
`
`Question 7(b ).
`
`II.
`
`LEGAL STANDARDS FOR NEW TRIAL OR REMITTITUR
`
`The law of the regional circuit governs the standard for ordering a new trial
`
`or remittitur in a patent case. SynQor, Inc. v. Artesyn Techs., Inc., 709 F.3d 1365,
`
`1383 (Fed. Cir. 2013) (new trial); Power Integrations, Inc. v. Fairchild
`
`Semiconductor Int'l, Inc., 711 F.3d 1348, 1356 (Fed. Cir. 2013) (remittitur). A
`
`district court has the discretion to order a new trial when the verdict is contrary to
`
`the evidence, a miscarriage of justice would result if the jury's verdict were left to
`
`stand, or the court believes the verdict resulted from confusion. Cf Blancha v.
`
`Raymark Indus., 972 F.2d 507, 512 (3d Cir. 1992) ("Where a new trial has been
`
`granted on the basis that the jury's verdict was tainted by confusion or that a new
`
`trial is required to prevent injustice, [the Court of Appeals] reviews [the district
`
`court's ruling] for abuse of discretion"). "A remittitur is in order when a trial
`
`3
`
`

`

`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 5 of 11 PageID #: 15321
`
`judge concludes that a jury verdict is clearly unsupported by the evidence and
`
`exceeds the amount needed to make the plaintiff whole .... " Starceski v.
`
`Westinghouse Elec. Corp., 54 F.3d 1089, 1100 (3d Cir. 1995) (quotation marks and
`
`citation omitted).
`
`III. ANALYSIS
`
`While this motion was pending, I granted Defendants' Renewed Motion for
`
`Judgment as a Matter of Law ofNoninfringement of Claim 21 of the '662 Patent.
`
`D.I. 355. Where, as here, a judge makes a posttrial ruling ofnoninfringement of a
`
`patent claim as a matter of law and "the jury rendered a single verdict on damages,
`
`without breaking down the damages attributable to each patent, the normal rule
`
`would require a new trial as to damages." Verizon Servs. Corp. v. Vonage
`
`Holdings Corp., 503 F.3d 1295, 1310 (Fed. Cir. 2007). But the Federal Circuit
`
`has also directed courts to "apply a harmlessness analysis" before ordering a new
`
`trial and has said that a new trial is not "automatically required" if a reasonable
`
`jury would have found the same damages award even without the error.
`
`WesternGeco L.L.C. v. ION Geophysical Corp., 913 F.3d 1067, 1074 (Fed.
`
`Cir. 2019).
`
`In addition to the jury's finding that the MIC2000 infringed claim 21 of the
`
`#662 Patent, the jury found that the MIC2000 infringed claims 20 and 22 of U.S.
`
`Patent No. 7,144,150 and claims 1 and 5 of U.S. Patent No. 7,520,658. See D.I.
`
`4
`
`

`

`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 6 of 11 PageID #: 15322
`
`263. Those other findings of infringement independently support the jury's lost
`
`profits award because those apparatus claims cover the entire MIC2000.
`
`Accordingly, my ruling of noninfringement of claim 21 of the #662 Patent does not
`
`make it necessary to order a new trial on damages.
`
`Defendants argue that a new trial on lost profits is warranted because I erred
`
`in admitting the testimony of Plaintiffs' damages expert, Dr. Akemann. D.I. 298 at
`
`32-34. Defendants initially made this argument in a pretrial motion to exclude.
`
`See D.I. 174. Defendants' posttrial brief does not present any new arguments on
`
`why Dr. Akemann' s testimony should have been excluded but merely incorporates
`
`by reference the arguments Defendants made in their pretrial motion to exclude.
`
`See D.I. 298 at 33. Accordingly, I stand by the rationale I articulated when I
`
`denied the relevant portion of that pretrial motion. See D.I. 240 ~ l.
`
`Defendants also argue that a new trial on damages is necessary because the
`
`jury's damages award was not supported by sufficient evidence. See D.I. 298 at
`
`25-32. A court should "sustain[] a jury's award of damages unless the amount is
`
`grossly excessive or monstrous, clearly not supported by the evidence, or based
`
`only on speculation or guesswork." DSU Med. Corp. v. JMS Co., 471 F.3d 1293,
`
`1309 (Fed. Cir. 2006) (quotation marks and citation omitted).
`
`Defendants first argue that Plaintiffs did not provide sufficient evidence of
`
`Plaintiffs' market share. D.I. 298 at 27-29. Plaintiffs' damages expert, Dr.
`
`5
`
`

`

`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 7 of 11 PageID #: 15323
`
`Akemann, based his market-share calculation on the Voges Email. Trial Tr.
`
`656:2-657:2. At trial, Voges was cross examined about this email as follows:
`
`Q. This is not an exhaustive list of all of freal's
`competitors ... you mentioned there are other competitors
`of freal?
`A. Correct.
`Q. All right. And the e-mail does not provide any
`information that would allow a person to make a reliable
`market share calculation as to freal's market share; is that
`correct?
`A. Correct.
`Q. Okay. And based on this e-mail or otherwise, you do
`not know what freal's market share is, the percentage; is
`that correct?
`A. I do not.
`Q. All right. And isn't it true then in order to determine
`what freal's market share would be, you would have to
`commission an individual study that would be in depth and
`take some time to complete?
`I can't answer that
`A.
`I'm not a marketing expert.
`question for you. I don't know how exactly you would go
`about doing that.
`Q. All right. So in your mind, you are not even sure how
`one would even calculate freal's market share?
`A.
`I mean, I would go to an expert to get a
`recommendation.
`
`Trial Tr. at 373: 19-374:17.
`
`Defendants contend that "Voges' s testimony as to the incompleteness and
`
`unreliability of his own email demonstrates that Akemann's market share
`
`calculations were not based on the requisite sound economic proof .... " D.I. 298
`
`at 28. But I interpret Voges's testimony differently. What Voges said was that the
`
`Voges Email alone was not enough to determine market share, that he was not sure
`
`6
`
`

`

`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 8 of 11 PageID #: 15324
`
`how to calculate market share, and that he would "go to an expert to get a
`
`recommendation." He did not say the information contained in the email was
`
`unreliable. Plaintiffs hired Dr. Akemann to perform the market share calculation.
`
`Although Dr. Akemann's analysis used information from the Voges Email, his
`
`analysis went beyond reiterating the contents of that email. See, e.g., Trial Tr. at
`
`602. Defendants do not challenge whether that additional market share analysis
`
`was sound. I do not find that Voges's testimony undermined Dr. Akemann's
`
`model or the jury's damages award.
`
`Defendants also argue that Plaintiffs did not provide sufficient evidence of
`
`but-for pricing. D.I. 298 at 29-32. Defendants first object to Dr. Akemann using
`
`"a model; a fictional construct" because "[t]he pricing Akemann used in his model
`
`was never offered by freal or accepted by any actual customers." D.I. 298 at 30.
`
`"The but for inquiry ... requires a reconstruction of the market, as it would have
`
`developed absent the infringing product, to determine what the patentee would
`
`have made." Grain Processing Corp. v. Am. Maize-Prod. Co., 185 F.3d 1341,
`
`1350-51 (Fed. Cir. 1999) (quotation marks and citation omitted). Reconstructing
`
`the market as it would have developed absent the infringing product is "by
`
`definition a hypothetical enterprise" because it "requires the patentee to project
`
`economic results that did not occur." Id. It was, therefore, not only permissible for
`
`Dr. Akemann to use a model, it was required.
`
`7
`
`

`

`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 9 of 11 PageID #: 15325
`
`Defendants next argue that "there is no evidence that freal would have ever
`
`offered the 70-cent upcharge that Akemann assumed for his lost profits
`
`calculation." D.I. 298 at 31. This is not accurate. Plaintiffs presented evidence at
`
`trial that freal had put together a model for a potential customer in a similar
`
`business context that used the 70-cent upcharge. See Trial Tr. at 388:16-389:7.
`
`Defendants also argue that there is no evidence that any of Hershey's actual
`
`customers would have accepted the 70-cent upcharge because Hershey had set its
`
`upcharge at 25 cents and Hershey's director of strategic growth testified that was
`
`the "absolute maximum that [Hershey] could really charge to allow that price point
`
`to stay at a reasonable level." Trial Tr. at 738:14-16. But this argument ignores
`
`that the average price of a f real cup was lower than a Hershey cup during the
`
`relevant time period and, therefore, the total price of a freal cup plus a 70-cent
`
`upcharge was competitive with the total price of a Hershey cup. Hershey's cups
`
`ranged in price from $1.67 to $2.07 during the relevant time period, and the price
`
`increased as Hershey switched from renting mixing machines to customers to
`
`providing the machine for free and upcharging customers for cups. See D.I. 325
`
`Ex. 31; D.I. 325 Ex. 32. During the same time period, the price of a freal cup with
`
`a 70-cent upcharge ranged from $2.06 to $2.11. D.I. 325 Ex. 33. Retailers using
`
`freal products also tended to sell more cups per day than retailers using Hershey
`
`products. Trial Tr. at 609:3-22; D.I. 325 Ex. 34. The jury, therefore, had
`
`8
`
`

`

`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 10 of 11 PageID #: 15326
`
`sufficient evidence from which it could conclude that customers would have
`
`accepted the 70-cent upcharge.
`
`Lastly, Defendants argue that the portion of the damages calculation
`
`attributable to when Hershey rented its machines is flawed. When Dr. Akemann
`
`calculated freal's lost profits due to Hershey renting machines, he used the fees
`
`that Hershey charged its customers-roughly $150.00 per month. Trial Tr. at
`
`664:1-12. But there was no evidence introduced at trial that freal ever rented its
`
`machines for $150.00 per month or would rent its machines for $150.00 per month.
`
`"To prevent the hypothetical from lapsing into pure speculation" the Federal
`
`Circuit requires sound proof of the "likely outcomes with infringement factored out
`
`of the economic picture." Grain Processing Corp., 185 F.3d at 1350. To calculate
`
`lost profits as Dr. Akemann did, freal needed to provide some evidence that it
`
`would have rented its machines for $150.00 per month had Hershey's infringing
`
`blenders not been in the market. Alternatively, f real could have shown that even
`
`with a higher rental price freal would have rented its machines to retailers that
`
`used Hershey's infringing blenders-though, in that instance, freal would have
`
`needed to account for the effect of increased rental price on the number of rentals.
`
`As it stands, freal presented no evidence that but for Hershey's infringement freal
`
`would have rented its machines for $150.00 per month. Therefore, the portion of
`
`9
`
`

`

`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 11 of 11 PageID #: 15327
`
`the damages award attributable to lost rentals is clearly not supported by the
`
`evidence.
`
`Dr. Akemann calculated rental lost profits as $897,028.00. Trial Tr. at
`
`615 :4. The jury's lost profits award reduced by that amount is $2,091,841.00.
`
`Accordingly, I will deny the motion for new trial on the condition that Plaintiffs
`
`accept a remittitur to the amount of $2,091,841.00.
`
`IV. CONCLUSION
`
`For the foregoing reasons, I will deny the motion for new trial on the
`
`condition that Plaintiffs accept a remittitur to the amount of $2,091,841.00.
`
`The Court will issue an Order consistent with this Memorandum Opinion.
`
`10
`
`

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