`
`Appeal Nos. 2020-1996, 2020-2042
`United States Court of Appeals
`for the
`Federal Circuit
`
`
`
`
`
`F’REAL FOODS, LLC, and RICH PRODUCTS CORPORATION,
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`Plaintiffs-Cross-Appellants,
`
`– v. –
`HAMILTON BEACH BRANDS, INC., and HERSHEY CREAMERY
`COMPANY
`
`Defendants-Appellants.
`
`
`Appeal from the United States District Court for the District of Delaware,
`Civil Action No. 16-41-CMC
`
`DEFENDANTS-APPELLANTS’ REPLY IN SUPPORT OF
`MOTION FOR STAY OF INJUNCTION PENDING APPEAL
`
`William S. Foster, Jr.
`Brianna Lynn Silverstein
`Bethany N. Mihalik
`FAEGRE DRINKER BIDDLE & REATH LLP
`1500 K Street N.W.
`Washington, DC 20005-1209
`(202) 842-8800
`
`Defendants-Appellants
`for
`Attorneys
`Hamilton Beach Brands, Inc. and Hershey
`Creamery Co.
`
`
`
`
`
`
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`Case: 20-1996 Document: 16-1 Page: 2 Filed: 08/07/2020
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`Plaintiffs-Cross-Appellants’ (hereinafter, “f’real”) response raises no new
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`relevant issues that are not already addressed in Defendants-Appellants’ (hereinafter,
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`“Appellants”) Motion. f’real’s only asserted harm is lost sales and competition,
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`which Appellants addressed in their Motion as being compensable by money
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`damages. By contrast, Appellant Hershey Creamery Company (“Hershey”) has
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`demonstrated a number of concrete harms posed by imposition of the injuntion or
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`recall that cannot be remedied if Appellants prevail on appeal in view Hershey’s
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`discontinuation of the Shake Shop Express (“SSE”) program. Moreover, given the
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`unrebutted evidence that Hershey is unable to fully recall all of its SSE MIC2000
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`machines within 30 days, due in part to the COVID-19 pandemic, Hershey also faces
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`potential sanctions. Furthermore, the District Court declining to revist its own
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`decisions in asssesing the likelihood of success on appeal should be given little
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`weight as Appellants have shown clear errors of law that will necessitate a remand.
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`Therefore, Appellants respectfully request that the Court stay, or alternatively
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`modify, the Distrct Court’s order enjoining the MIC2000 and recalling machines in
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`the SSE program.
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`Rather than focusing on the issues actually raised in Appellants’ Motion,
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`f’real unfairly and improperly focuses its efforts on framing the Motion as merely
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`an effort to needlessly prolong litigation. There is no question that this litigation has
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`a long complicated history, but Appellants have continued this litigation with a good
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`1
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`
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`Case: 20-1996 Document: 16-1 Page: 3 Filed: 08/07/2020
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`faith belief they do not infringe any valid patent, as evidenced by the jury’s finding
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`of no willfulness, which f’real does not contest, and the District Court’s denial of
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`exceptional case. Moreover, Appellants have already prevailed on a number of key
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`issues regarding the SSE program offered by Hershey, including a jury verdict of
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`non-infringement of U.S. Patent No. 5,803,377, judgement as a matter of law of non-
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`infringement for the ’662 patent, and remittitur of nearly $900,000 in speculative
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`lost profits damages. When focuing on the actual issues before this Court—
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`Appellants’ substantial case on the merits and the balance of harms weighing clearly
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`in Hershey’s favor as a stay or modificaton of recall will not affect f’real’s dominant
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`market position—Appellants respectfully submit a stay or modification of the
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`injuntion and/or recall is warranted.
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`I. The balance of the harms plainly favors Appellants.
`As anticipated by Appellants in their Motion, f’real merely argues that they
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`are harmed by competition and lost sales. Doc. 15 at 22-23. However, that harm is
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`outweighed by the harms faced by Hershey from the injunction and/or recall. While
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`lost sales are a “factor” in deciding irreparable harm, this Court recognizes that such
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`harm by itself is compensable by money damages. Automated Merch. Sys., Inc. v.
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`Crane Co., 357 F. App’x 297, 301 (Fed. Cir. 2009) (citing Abbott Labs. v. Andrx
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`Pharms., Inc., 452 F.3d 1331, 1348 (Fed. Cir. 2006). f’real does not argue that lost
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`profits are insufficient compensation, and f’real concedes that it was able to greatly
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`2
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`Case: 20-1996 Document: 16-1 Page: 4 Filed: 08/07/2020
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`expand its locations and cup sales even with the competing SSE program in the
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`market. See Doc. 5 at 17-18.
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`f’real claims that it is harmed because it cannot displace Hershey in current
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`locations because Hershey does not charge retailers for equipment. Doc. 15 at 22
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`n.12. But when asserting its entitlement to lost profits, f’real indicated that it would
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`have adopted Hershey’s model of not charging for machines and instead using a cup
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`upcharge. Ex. 23 at 606-07. As f’real now suggests that it will use its traditional
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`business model of selling machines to Hershey’s customers, it is unclear that f’real
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`would capture any sales even if the stay is denied.1 On the other hand, Hershey will
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`definitely be unable to sell its remaining pre-filled cup inventory if the injunction
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`remains in place.
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`Moreover, the public interest does not weigh in favor of f’real. While f’real
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`is correct that there is a public interest in upholding patent rights, here f’real would
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`be fully compensated with lost profits damages (should f’real ultimately prevail on
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`appeal) for any lost sales as Hershey winds down the SSE program.
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`1 The District Court already held a large portion (almost 30%) of the alleged lost
`profits based on Hershey’s rental model were speculative and granted remittitur of
`$897,028. Ex. 24. Appellants are appealing the remaining lost profits based on
`Hershey’s upcharge model award as equally speculative because they are based on
`unreliable evidence of market share, a speculative cup multiplier, and a cup upcharge
`exceeding what retailers would be willing to pay and f’real never offered.
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`
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`3
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`Case: 20-1996 Document: 16-1 Page: 5 Filed: 08/07/2020
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`With respect to the recall, f’real fails to identify any harm if the recall is
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`dissolved and/or modified. Rather than identifying any harms or providing any
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`actual evidence rebutting Mr. Waite’s sworn testimony, f’real relies on uncited and
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`unsupported attorney argument to assert that Hershey2 has the resources to recall all
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`of its machines within 30-days.3 Doc. 15 at 20. f’real does not even address the
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`effect COVID-19 pandemic has on Hershey’s ability to perform a recall in such a
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`short time frame. In view of the injunction, Hershey immediately stopped sales of
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`pre-filled cups for use with the MIC2000 machines and has already taken affirmative
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`steps to ensure the SSE machines are not being used and is attempting to recall
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`machines. Ex. 25. Hershey has even continued with best efforts to recall machines
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`despite the stay of the recall, and through those efforts has found a large proportion
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`of machines inaccessible due to the pandemic. Id. If the recall is dissolved and the
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`injunction remains in place, f’real is still free to try and sell its frozen blocks and
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`machines into former Hershey’s locations. With the injunction in place, f’real will
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`not lose sales, regardless of whether there is a recall.
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`2Appellants reiterate that Hamilton Beach has no custody or control of machines
`used in the SSE program.
`3 Contrary to f’real’s suggestion, Hershey had no obligation to recall machines until
`the District Court issued its order. In fact, the District Court declined to enjoin most
`models of the accused products erroneously found to infringe in this action,
`including: the IMI2000, the BIC2000, and the BIC3000-DQ. Doc. 5 Ex. 1.
`4
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`Case: 20-1996 Document: 16-1 Page: 6 Filed: 08/07/2020
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`To the contrary, leaving the recall in place will harm Hershey for the reasons
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`enumerated in the Motion to Stay. Moreover, if Hershey is unable to complete the
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`recall in 30 days, it may face potential sanctions for failure to comply with the
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`District Court’s order. These harms are amplified by Appellants’ showing that there
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`is a substantial case on the merits on appeal based on the District Court’s erroneous
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`rulings. Accordingly, a stay or modification of the recall is warranted as the balance
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`of the harms militates in Appellants’ favor.
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`II. Sato on its on face is a publicly accessible printed publication.
`Appellants have always maintained that Sato was publicly accessible as of its
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`publication date. Doc. 5 Ex. 8 at 26. Neither f’real nor the District Court disputed
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`the authenticty of Sato, which is self-authenticating document under the rules of
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`evidence, see Fed. R. Evid. 902(3), and Sato shows on its face that it was published
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`on December 18, 1992, in the Japanese Public Utility Model Gazette. Ex. 26.
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`Furthermore, Appellants submitted a certified copy of Sato with their offer of proof
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`demonstrating that Sato was in fact a public document. See Doc. 5 Ex. 9. Pursuant
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`to this Court’s decisions, such a publication from a foreign patent office is publicly
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`accessible as of the date of its publication. See Bruckelmyer v. Ground Heaters, Inc.,
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`445 F.3d 1374, 1379 (Fed. Cir. 2006) (publication of Canadian patent made papers
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`in file history publicly accessible); In re Wyer, 655 F.2d 221, 224-26 (C.C.P.A.
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`
`5
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`Case: 20-1996 Document: 16-1 Page: 7 Filed: 08/07/2020
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`1981) (Australian application was accessible to the public as of date published on
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`microfilm).
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`f’real’s opposition merely parrots the District Court’s erroneous decision and
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`cites the searchers’ declarations used to rebut an IPR estoppel argument out of
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`context. Doc. 15 at 9-10. As is clear from the searchers’ declarations,4 it was
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`reasonable for them not to find the Sato reference after a diligent search conducted
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`on a wide range patent databases using English key words. Doc. 5 Ex. 13 ¶¶ 9, 20-
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`21; Doc. 5 Ex. 14 ¶¶ 10-11. Specfically, they could not identify Sato because there
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`was no translation in the searched databases that would permit them to find Sato
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`through keyword searching. Doc. 5 Ex. 13 ¶¶ 25-26; Doc. 5 Ex. 14 ¶¶ 14-15. But
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`just because the searchers did not find the Japanese-language Sato reference in their
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`particular searches does not mean Sato was publicly inaccessible. If the standards
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`under 35 U.S.C. § 102 and § 315 are identical, then any published reference not
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`found after a diligent search would not qualify as prior art (even if a U.S. patent) and
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`there would be no exceptions to IPR estoppel. A review of the declarations and the
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`sources searched show that the searchers would also have not been able to find the
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`4 f’real and the District Court erroneously referred to the searchers as “experts,” but
`there is no evidence that either searcher was even a person or ordinary skill in the art
`in the relevant field. Doc. 5 Ex. 13 ¶ 22 (semiconductor technology and microchips);
`Doc. 5 Ex. 14 ¶ 3 (chemical engineering). The declarations were based on personal
`knowledge of experienced patent searchers who merely outlined the parameters of
`their respective diligent searches.
`
`
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`6
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`
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`Case: 20-1996 Document: 16-1 Page: 8 Filed: 08/07/2020
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`thesis indexed in a single card catalog, see In re Hall, 781 F.2d 897, 899-900 (Fed.
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`Cir. 1986), or a paper presented at a conference, see Massachusetts Institute of
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`Technology v. AB Fortia, 774 F.2d 1104, 1109 (Fed. Cir. 1985), even though this
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`Court has deemed such references publicly accessible. By focusing solely on the
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`declarations, the transcript makes clear the District Court committed legal error
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`when equating the standards of public accessibility under § 102 and estoppel under
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`§ 315.5 At a minimum, Appellants have demonstrated a substantial case on the
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`merits as this appeal raises an issue of first impression at this Court regarding the
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`interplay of the public acessiblility and IPR estoppel doctrines.
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`Furthermore, f’real’s arguments regarding the strength of the Sato reference
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`and its use in other proceedings are irrelevant to whether it is a printed publication.6
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`f’real did not move for summary judgment of no invalidity based on the asserted
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`Sato combinations. Instead, f’real only moved to exclude Sato in a motion in limine.
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`Consequently, notwithstanding the District Court’s improper exclusion, Appellants
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`5 The District Court observed that “it struck me that if I were writing the law from
`scratch, it might make sense to distinguish 315 from 102. 315 seems to be concerned
`about process, judicial efficiency. 102 seems to be concerned about substantive,
`validity of patents. I can see that.” Doc. 5 Ex. 8 at 24.
`6 Appellants strongly disagree with the PTAB’s denial of institution of IPR for the
`’659 and ’150 patents but those decisions are not appealable. Moreover, the denial
`of IPR for the ’658 patent was based on the PTAB’s discretionary authority under §
`325. Hamilton Beach Brands, Inc. v. f’real Foods, LLC, IPR2017-00765, 2017 WL
`3268945, at *5 (P.T.A.B. July 31, 2017).
`7
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`Case: 20-1996 Document: 16-1 Page: 9 Filed: 08/07/2020
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`would have presented its invalidity defense based on Sato at trial. Doc. 5 Ex. 9.
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`Therefore, there is a strong likelihood of success on appeal because a determination
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`that Sato is a printed publication as a matter of law compels a remand for a trial on
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`invalidity.
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`III.
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`f’real fails to rebut Festo’s presumption of estoppel.
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`Rather than addressing Appellants’ prosecution history estoppel arguments,
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`f’real argues that the evidence was sufficient to establish infringement under the
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`doctrine of equivalents (“DOE”). Doc. 15 at 13-15. To rebut the presumption, f’real
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`needs to show that the equivalent was unforeseeable, only tangential to the alleged
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`equivalent, or some other reason the applicant could not have described the
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`equivalent. Festo Corp. v. Shoketsu Kinoku Kogyo Kabushiki Co., 344 F.3d 1359,
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`1365 (Fed. Cir. 2003). Here, f’real appears to argue the amendment was tangential,
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`relying on the District Court’s holding that the amendment only disclaimed a spring
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`mechanism. Doc. 15 at 14. However, the tangential relation exception is “very
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`narrow” and the prosecution history must demonstrate that “‘the reason for the
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`narrowing amendment was peripheral, or not directly relevant, to the alleged
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`equivalent.’” Cross Med. Prod., Inc. v. Medtronic Sofamor Danek, Inc., 480 F.3d
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`1335, 1342 (Fed. Cir. 2007) (quoting Insituform Technologies, Inc. v. CAT
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`Contracting, Inc., 385 F.3d 1360, 1370 (Fed. Cir. 2004)). But f’real cannot show
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`any reasoning from the prosecution history as to why the addition of “unrestrained”
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`8
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`Case: 20-1996 Document: 16-1 Page: 10 Filed: 08/07/2020
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`is tangential to a separate weight that restrains the splash shield. f’real’s arguments
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`regarding the design of its splash shield do not explain how “unrestrained” is
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`tangential to a weight, nor do they cite the prosecution history whatsoever. The
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`District Court erred in allowing f’real to assert DOE against an equivalent that
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`restrains the splash shield, thereby vitiating the “unrestrained” limitation. As f’real
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`concedes, Appellants’ products do not have the identical lid structure as claimed by
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`the ’658 patent, and the District Court made a material error in allowing f’real to
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`assert DOE for the ’658 patent.
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`IV. The District Court improperly resolved a factual dispute regarding the
`“rinse chamber” in granting summary judgment for the ’150 patent.
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`Contrary to the District Court’s decision, Appellants strongly disagreed with
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`f’real’s contention that the accused outer door assembly is “an enclosure in which a
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`rinse apparatus is positioned to provide rinsing.” As shown below from Appellants’
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`summary judgment briefing, the actual enclosure in which rinsing occurred is
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`formed by the lid and surrounding cup shield and does not have a door. Ex. 27 at 13
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`(annotated). These pictures show the actual rinse chamber even when the outer door
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`assembly is removed.
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`9
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`Case: 20-1996 Document: 16-1 Page: 11 Filed: 08/07/2020
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`Rinse
`
`Lid
`
`Cup Shield
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`Moreover, f’real’s own expert conceded (1) that all of the rinsing occurs
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`within the enclosure formed by the lid and cup shield; and (2) no rinsing occurs
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`within the area between the outer door assembly and the actual rinse chamber of the
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`accused products. Id. at 16. Indeed, the accused outer door assembly is not even an
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`“enclosure” suitable for a rinse chamber as the door is not fluid tight and includes
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`gaps. Id. at 18. Whether the accused products include the claimed rinse chamber is
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`one of fact. See Biogen Int’l GmbH v. Banner Life Sciences LLC, 956 F.3d 1351,
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`1355 (Fed. Cir. 2020). Because the record shows a genuine dispute as to this
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`material fact, Appellants have at least a substantial case on the merits that the District
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`Court committed legal error in granting summary judgment. Thus, Appellants
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`maintain they have a strong likelihood of appeal on this issue.
`
`
`
`10
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`
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`Case: 20-1996 Document: 16-1 Page: 12 Filed: 08/07/2020
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`V. Conclusion.
`For the foregoing reasons and those in Appellants’ Motion, Appellants
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`respectfully request this Court grant the Motion.
`
`Dated: August 7, 2020
`
`
`
`Respectfully submitted,
`
`/s/ William S. Foster, Jr.
`William S. Foster, Jr.
`William.Foster@faegredrinker.com
`Brianna Lynn Silverstein
`Brianna.Silverstein@faegredrinker.com
`Bethany Mihalik
`Bethany.Mihalik@faegredrinker.com
`FAEGRE DRINKER BIDDLE & REATH LLP
`1500 K Street N.W.
`Washington, DC 20005-1209
`(202) 842-8800
`
`Attorneys for Defendants-Appellants Hamilton
`Beach Brands, Inc. and Hershey Creamery Co.
`
`
`
`11
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`
`
`Case: 20-1996 Document: 16-1 Page: 13 Filed: 08/07/2020
`
`CERTIFICATE OF COMPLIANCE
`
`Pursuant to Fed. R. App. 27(d) and 32(g), the undersigned hereby certifies
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`that this Reply complies with the type-volume limitation of Circuit Rule 27(d).
`
`1. Exclusive of the accompanying documents as authorized by Fed. R. App.
`
`P. 27(a)(2)(B) and the exempted portions of the response as provided by Fed. R.
`
`App. P. 27(d)(2) and 32(f), the Reply contains 2,453 words.
`
`2. The Reply has been prepared in proportionally-spaced typeface using
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`Microsoft Word 2016 in 14 point Times New Roman font as provided by Fed. R.
`
`App. P. 32(a)(5)-(6). As permitted by Fed. R. App. P. 32(g), the undersigned has
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`relied upon the word count feature of this word processing system in preparing this
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`certificate.
`
`Dated: August 7, 2020
`
`
`
`
`
`Respectfully submitted,
`
`/s/ William S. Foster, Jr.
`William S. Foster, Jr.
`William.Foster@faegredrinker.com
`Brianna Lynn Silverstein
`Brianna.Silverstein@faegredrinker.com
`Bethany Mihalik
`Bethany.Mihalik@faegredrinker.com
`FAEGRE DRINKER BIDDLE & REATH LLP
`1500 K Street N.W.
`Washington, DC 20005-1209
`(202) 842-8800
`
`Attorneys for Defendants-Appellants Hamilton
`Beach Brands, Inc. and Hershey Creamery Co.
`
`12
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`
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`Case: 20-1996 Document: 16-1 Page: 14 Filed: 08/07/2020
`
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