`
`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
`
`
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`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 2 of 11 PageID #: 15318
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`COLM F. CONNOLLY
`UNITED STATES DISTRICT JUDGE
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`The Court held a four-day jury trial in this patent infringement case filed by
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`Plaintiffs freal Foods LLC and Rich Products Corporation against Defendants
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`Hamilton Beach Brands, Inc. (Hamilton Beach) and Hershey Creamery Company
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`(Hershey). The jury awarded Plaintiffs $2,988,869.00 in lost profits. D.I. 264,
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`Question 7(b). Pending before me is Defendants' Renewed Motion for Judgment
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`as a Matter of Law of No Lost Profits or, in the Alternative, Motion for a New
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`Trial on or Remittitur of Lost Profits. D.I. 296.
`
`I.
`
`BACKGROUND
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`Plaintiffs' only evidence of lost profits concerned the MIC2000 blenders
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`used in Hershey's Shake Shop Express program. See Trial Tr. at 599:8-16.
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`Plaintiffs hired a damages expert, Dr. Akemann, to model the profits Plaintiffs lost
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`due to the Shake Shop Express Program. When Dr. Akemann calculated lost
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`profits, he divided the time period of Hershey's infringement into when Hershey
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`profited by renting its machines to retailers and when Hershey let retailers use its
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`machines for free and profited by adding an upcharge to the cups used in its
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`blenders. Trial Tr. at 607:8-16. He then modelled freal's lost profits on
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`Hershey's business model at the relevant time: part of the model was based on
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`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 3 of 11 PageID #: 15319
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`adding an upcharge to cups and part of the model was based on renting machines.
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`Id.
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`When determining Plaintiffs' market share, Dr. Akemann relied on an email
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`written by freal's COO Jens Voges (the "Voges Email") in which Voges
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`summarized information from external sources regarding freal's competitors.
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`Trial Tr. 656:2-657:2.
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`When modeling Plaintiffs' lost profits due to lost sales on upcharged cups,
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`Dr. Akemann looked to freal's history of using an upcharge model at certain high(cid:173)
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`volume places. Trial Tr. at 387:21-388:2; Trial Tr. at 607:18-25. Dr. Akemann
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`also looked to a "business document that f real generated in the 2013 time period,"
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`which was when infringement from the Shake Shop Express program began. Trial
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`Tr. at 608:5-7. In that document, freal "focused on 70 cents as the appropriate
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`upcharge." Trial Tr. at 608:14-15. Dr. Akemann testified that he relied on the 70-
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`cents upcharge suggested in that document because the infringing blenders in the
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`Shake Shop Express program had been located in a similar business context. Trial
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`Tr. at 608:1-20.
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`When modeling Plaintiffs lost profits due to lost rentals, Dr. Akemann
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`"assume[ d] that [Plaintiffs] would have matched whatever rental fees [Hershey]
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`charged." Trial Tr. at 664:5-6. Hershey charged customers roughly $150.00 per
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`month. Trial Tr. at 664:1-12. When Defendants confronted Dr. Akemann with a
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`2
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`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 4 of 11 PageID #: 15320
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`f'real document that showed f'real rented its machines for a $500.00 down
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`payment and $350.00 per month, Dr. Akemann explained that he used Hershey's
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`pricing to "control for the differences in pricing to do my analysis." Trial Tr. at
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`666:3-4.
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`Dr. Akemann calculated upcharge lost profits as $3,015,367.00; lost rental
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`profits as $897,028.00; and total lost profits as $3,912,395.00. Trial Tr. at 615:4-
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`5. The jury found the Defendants liable for $2,988,869.00 in lost profits. D.I. 264,
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`Question 7(b ).
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`II.
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`LEGAL STANDARDS FOR NEW TRIAL OR REMITTITUR
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`The law of the regional circuit governs the standard for ordering a new trial
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`or remittitur in a patent case. SynQor, Inc. v. Artesyn Techs., Inc., 709 F.3d 1365,
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`1383 (Fed. Cir. 2013) (new trial); Power Integrations, Inc. v. Fairchild
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`Semiconductor Int'l, Inc., 711 F.3d 1348, 1356 (Fed. Cir. 2013) (remittitur). A
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`district court has the discretion to order a new trial when the verdict is contrary to
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`the evidence, a miscarriage of justice would result if the jury's verdict were left to
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`stand, or the court believes the verdict resulted from confusion. Cf Blancha v.
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`Raymark Indus., 972 F.2d 507, 512 (3d Cir. 1992) ("Where a new trial has been
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`granted on the basis that the jury's verdict was tainted by confusion or that a new
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`trial is required to prevent injustice, [the Court of Appeals] reviews [the district
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`court's ruling] for abuse of discretion"). "A remittitur is in order when a trial
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`3
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`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 5 of 11 PageID #: 15321
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`judge concludes that a jury verdict is clearly unsupported by the evidence and
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`exceeds the amount needed to make the plaintiff whole .... " Starceski v.
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`Westinghouse Elec. Corp., 54 F.3d 1089, 1100 (3d Cir. 1995) (quotation marks and
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`citation omitted).
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`III. ANALYSIS
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`While this motion was pending, I granted Defendants' Renewed Motion for
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`Judgment as a Matter of Law ofNoninfringement of Claim 21 of the '662 Patent.
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`D.I. 355. Where, as here, a judge makes a posttrial ruling ofnoninfringement of a
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`patent claim as a matter of law and "the jury rendered a single verdict on damages,
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`without breaking down the damages attributable to each patent, the normal rule
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`would require a new trial as to damages." Verizon Servs. Corp. v. Vonage
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`Holdings Corp., 503 F.3d 1295, 1310 (Fed. Cir. 2007). But the Federal Circuit
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`has also directed courts to "apply a harmlessness analysis" before ordering a new
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`trial and has said that a new trial is not "automatically required" if a reasonable
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`jury would have found the same damages award even without the error.
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`WesternGeco L.L.C. v. ION Geophysical Corp., 913 F.3d 1067, 1074 (Fed.
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`Cir. 2019).
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`In addition to the jury's finding that the MIC2000 infringed claim 21 of the
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`#662 Patent, the jury found that the MIC2000 infringed claims 20 and 22 of U.S.
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`Patent No. 7,144,150 and claims 1 and 5 of U.S. Patent No. 7,520,658. See D.I.
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`4
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`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 6 of 11 PageID #: 15322
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`263. Those other findings of infringement independently support the jury's lost
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`profits award because those apparatus claims cover the entire MIC2000.
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`Accordingly, my ruling of noninfringement of claim 21 of the #662 Patent does not
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`make it necessary to order a new trial on damages.
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`Defendants argue that a new trial on lost profits is warranted because I erred
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`in admitting the testimony of Plaintiffs' damages expert, Dr. Akemann. D.I. 298 at
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`32-34. Defendants initially made this argument in a pretrial motion to exclude.
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`See D.I. 174. Defendants' posttrial brief does not present any new arguments on
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`why Dr. Akemann' s testimony should have been excluded but merely incorporates
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`by reference the arguments Defendants made in their pretrial motion to exclude.
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`See D.I. 298 at 33. Accordingly, I stand by the rationale I articulated when I
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`denied the relevant portion of that pretrial motion. See D.I. 240 ~ l.
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`Defendants also argue that a new trial on damages is necessary because the
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`jury's damages award was not supported by sufficient evidence. See D.I. 298 at
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`25-32. A court should "sustain[] a jury's award of damages unless the amount is
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`grossly excessive or monstrous, clearly not supported by the evidence, or based
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`only on speculation or guesswork." DSU Med. Corp. v. JMS Co., 471 F.3d 1293,
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`1309 (Fed. Cir. 2006) (quotation marks and citation omitted).
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`Defendants first argue that Plaintiffs did not provide sufficient evidence of
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`Plaintiffs' market share. D.I. 298 at 27-29. Plaintiffs' damages expert, Dr.
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`5
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`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 7 of 11 PageID #: 15323
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`Akemann, based his market-share calculation on the Voges Email. Trial Tr.
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`656:2-657:2. At trial, Voges was cross examined about this email as follows:
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`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.
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`Trial Tr. at 373: 19-374:17.
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`Defendants contend that "Voges' s testimony as to the incompleteness and
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`unreliability of his own email demonstrates that Akemann's market share
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`calculations were not based on the requisite sound economic proof .... " D.I. 298
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`at 28. But I interpret Voges's testimony differently. What Voges said was that the
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`Voges Email alone was not enough to determine market share, that he was not sure
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`6
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`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 8 of 11 PageID #: 15324
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`how to calculate market share, and that he would "go to an expert to get a
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`recommendation." He did not say the information contained in the email was
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`unreliable. Plaintiffs hired Dr. Akemann to perform the market share calculation.
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`Although Dr. Akemann's analysis used information from the Voges Email, his
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`analysis went beyond reiterating the contents of that email. See, e.g., Trial Tr. at
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`602. Defendants do not challenge whether that additional market share analysis
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`was sound. I do not find that Voges's testimony undermined Dr. Akemann's
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`model or the jury's damages award.
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`Defendants also argue that Plaintiffs did not provide sufficient evidence of
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`but-for pricing. D.I. 298 at 29-32. Defendants first object to Dr. Akemann using
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`"a model; a fictional construct" because "[t]he pricing Akemann used in his model
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`was never offered by freal or accepted by any actual customers." D.I. 298 at 30.
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`"The but for inquiry ... requires a reconstruction of the market, as it would have
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`developed absent the infringing product, to determine what the patentee would
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`have made." Grain Processing Corp. v. Am. Maize-Prod. Co., 185 F.3d 1341,
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`1350-51 (Fed. Cir. 1999) (quotation marks and citation omitted). Reconstructing
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`the market as it would have developed absent the infringing product is "by
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`definition a hypothetical enterprise" because it "requires the patentee to project
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`economic results that did not occur." Id. It was, therefore, not only permissible for
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`Dr. Akemann to use a model, it was required.
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`7
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`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 9 of 11 PageID #: 15325
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`Defendants next argue that "there is no evidence that freal would have ever
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`offered the 70-cent upcharge that Akemann assumed for his lost profits
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`calculation." D.I. 298 at 31. This is not accurate. Plaintiffs presented evidence at
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`trial that freal had put together a model for a potential customer in a similar
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`business context that used the 70-cent upcharge. See Trial Tr. at 388:16-389:7.
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`Defendants also argue that there is no evidence that any of Hershey's actual
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`customers would have accepted the 70-cent upcharge because Hershey had set its
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`upcharge at 25 cents and Hershey's director of strategic growth testified that was
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`the "absolute maximum that [Hershey] could really charge to allow that price point
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`to stay at a reasonable level." Trial Tr. at 738:14-16. But this argument ignores
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`that the average price of a f real cup was lower than a Hershey cup during the
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`relevant time period and, therefore, the total price of a freal cup plus a 70-cent
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`upcharge was competitive with the total price of a Hershey cup. Hershey's cups
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`ranged in price from $1.67 to $2.07 during the relevant time period, and the price
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`increased as Hershey switched from renting mixing machines to customers to
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`providing the machine for free and upcharging customers for cups. See D.I. 325
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`Ex. 31; D.I. 325 Ex. 32. During the same time period, the price of a freal cup with
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`a 70-cent upcharge ranged from $2.06 to $2.11. D.I. 325 Ex. 33. Retailers using
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`freal products also tended to sell more cups per day than retailers using Hershey
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`products. Trial Tr. at 609:3-22; D.I. 325 Ex. 34. The jury, therefore, had
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`8
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`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 10 of 11 PageID #: 15326
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`sufficient evidence from which it could conclude that customers would have
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`accepted the 70-cent upcharge.
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`Lastly, Defendants argue that the portion of the damages calculation
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`attributable to when Hershey rented its machines is flawed. When Dr. Akemann
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`calculated freal's lost profits due to Hershey renting machines, he used the fees
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`that Hershey charged its customers-roughly $150.00 per month. Trial Tr. at
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`664:1-12. But there was no evidence introduced at trial that freal ever rented its
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`machines for $150.00 per month or would rent its machines for $150.00 per month.
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`"To prevent the hypothetical from lapsing into pure speculation" the Federal
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`Circuit requires sound proof of the "likely outcomes with infringement factored out
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`of the economic picture." Grain Processing Corp., 185 F.3d at 1350. To calculate
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`lost profits as Dr. Akemann did, freal needed to provide some evidence that it
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`would have rented its machines for $150.00 per month had Hershey's infringing
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`blenders not been in the market. Alternatively, f real could have shown that even
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`with a higher rental price freal would have rented its machines to retailers that
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`used Hershey's infringing blenders-though, in that instance, freal would have
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`needed to account for the effect of increased rental price on the number of rentals.
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`As it stands, freal presented no evidence that but for Hershey's infringement freal
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`would have rented its machines for $150.00 per month. Therefore, the portion of
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`9
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`Case 1:16-cv-00041-CFC Document 366 Filed 06/09/20 Page 11 of 11 PageID #: 15327
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`the damages award attributable to lost rentals is clearly not supported by the
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`evidence.
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`Dr. Akemann calculated rental lost profits as $897,028.00. Trial Tr. at
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`615 :4. The jury's lost profits award reduced by that amount is $2,091,841.00.
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`Accordingly, I will deny the motion for new trial on the condition that Plaintiffs
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`accept a remittitur to the amount of $2,091,841.00.
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`IV. CONCLUSION
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`For the foregoing reasons, I will deny the motion for new trial on the
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`condition that Plaintiffs accept a remittitur to the amount of $2,091,841.00.
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`The Court will issue an Order consistent with this Memorandum Opinion.
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`10
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