throbber
Case: 20-1996 Document: 16-1 Page: 1 Filed: 08/07/2020
`
`Appeal Nos. 2020-1996, 2020-2042
`United States Court of Appeals
`for the
`Federal Circuit
`
`
`
`
`
`F’REAL FOODS, LLC, and RICH PRODUCTS CORPORATION,
`
`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.
`
`
`
`
`
`

`

`Case: 20-1996 Document: 16-1 Page: 2 Filed: 08/07/2020
`
`Plaintiffs-Cross-Appellants’ (hereinafter, “f’real”) response raises no new
`
`relevant issues that are not already addressed in Defendants-Appellants’ (hereinafter,
`
`“Appellants”) Motion. f’real’s only asserted harm is lost sales and competition,
`
`which Appellants addressed in their Motion as being compensable by money
`
`damages. By contrast, Appellant Hershey Creamery Company (“Hershey”) has
`
`demonstrated a number of concrete harms posed by imposition of the injuntion or
`
`recall that cannot be remedied if Appellants prevail on appeal in view Hershey’s
`
`discontinuation of the Shake Shop Express (“SSE”) program. Moreover, given the
`
`unrebutted evidence that Hershey is unable to fully recall all of its SSE MIC2000
`
`machines within 30 days, due in part to the COVID-19 pandemic, Hershey also faces
`
`potential sanctions. Furthermore, the District Court declining to revist its own
`
`decisions in asssesing the likelihood of success on appeal should be given little
`
`weight as Appellants have shown clear errors of law that will necessitate a remand.
`
`Therefore, Appellants respectfully request that the Court stay, or alternatively
`
`modify, the Distrct Court’s order enjoining the MIC2000 and recalling machines in
`
`the SSE program.
`
`Rather than focusing on the issues actually raised in Appellants’ Motion,
`
`f’real unfairly and improperly focuses its efforts on framing the Motion as merely
`
`an effort to needlessly prolong litigation. There is no question that this litigation has
`
`a long complicated history, but Appellants have continued this litigation with a good
`
`
`
`1
`
`

`

`Case: 20-1996 Document: 16-1 Page: 3 Filed: 08/07/2020
`
`faith belief they do not infringe any valid patent, as evidenced by the jury’s finding
`
`of no willfulness, which f’real does not contest, and the District Court’s denial of
`
`exceptional case. Moreover, Appellants have already prevailed on a number of key
`
`issues regarding the SSE program offered by Hershey, including a jury verdict of
`
`non-infringement of U.S. Patent No. 5,803,377, judgement as a matter of law of non-
`
`infringement for the ’662 patent, and remittitur of nearly $900,000 in speculative
`
`lost profits damages. When focuing on the actual issues before this Court—
`
`Appellants’ substantial case on the merits and the balance of harms weighing clearly
`
`in Hershey’s favor as a stay or modificaton of recall will not affect f’real’s dominant
`
`market position—Appellants respectfully submit a stay or modification of the
`
`injuntion and/or recall is warranted.
`
`I. The balance of the harms plainly favors Appellants.
`As anticipated by Appellants in their Motion, f’real merely argues that they
`
`are harmed by competition and lost sales. Doc. 15 at 22-23. However, that harm is
`
`outweighed by the harms faced by Hershey from the injunction and/or recall. While
`
`lost sales are a “factor” in deciding irreparable harm, this Court recognizes that such
`
`harm by itself is compensable by money damages. Automated Merch. Sys., Inc. v.
`
`Crane Co., 357 F. App’x 297, 301 (Fed. Cir. 2009) (citing Abbott Labs. v. Andrx
`
`Pharms., Inc., 452 F.3d 1331, 1348 (Fed. Cir. 2006). f’real does not argue that lost
`
`profits are insufficient compensation, and f’real concedes that it was able to greatly
`
`
`
`2
`
`

`

`Case: 20-1996 Document: 16-1 Page: 4 Filed: 08/07/2020
`
`expand its locations and cup sales even with the competing SSE program in the
`
`market. See Doc. 5 at 17-18.
`
`f’real claims that it is harmed because it cannot displace Hershey in current
`
`locations because Hershey does not charge retailers for equipment. Doc. 15 at 22
`
`n.12. But when asserting its entitlement to lost profits, f’real indicated that it would
`
`have adopted Hershey’s model of not charging for machines and instead using a cup
`
`upcharge. Ex. 23 at 606-07. As f’real now suggests that it will use its traditional
`
`business model of selling machines to Hershey’s customers, it is unclear that f’real
`
`would capture any sales even if the stay is denied.1 On the other hand, Hershey will
`
`definitely be unable to sell its remaining pre-filled cup inventory if the injunction
`
`remains in place.
`
`Moreover, the public interest does not weigh in favor of f’real. While f’real
`
`is correct that there is a public interest in upholding patent rights, here f’real would
`
`be fully compensated with lost profits damages (should f’real ultimately prevail on
`
`appeal) for any lost sales as Hershey winds down the SSE program.
`
`
`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.
`
`
`
`3
`
`

`

`Case: 20-1996 Document: 16-1 Page: 5 Filed: 08/07/2020
`
`With respect to the recall, f’real fails to identify any harm if the recall is
`
`dissolved and/or modified. Rather than identifying any harms or providing any
`
`actual evidence rebutting Mr. Waite’s sworn testimony, f’real relies on uncited and
`
`unsupported attorney argument to assert that Hershey2 has the resources to recall all
`
`of its machines within 30-days.3 Doc. 15 at 20. f’real does not even address the
`
`effect COVID-19 pandemic has on Hershey’s ability to perform a recall in such a
`
`short time frame. In view of the injunction, Hershey immediately stopped sales of
`
`pre-filled cups for use with the MIC2000 machines and has already taken affirmative
`
`steps to ensure the SSE machines are not being used and is attempting to recall
`
`machines. Ex. 25. Hershey has even continued with best efforts to recall machines
`
`despite the stay of the recall, and through those efforts has found a large proportion
`
`of machines inaccessible due to the pandemic. Id. If the recall is dissolved and the
`
`injunction remains in place, f’real is still free to try and sell its frozen blocks and
`
`machines into former Hershey’s locations. With the injunction in place, f’real will
`
`not lose sales, regardless of whether there is a recall.
`
`
`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
`
`
`
`

`

`Case: 20-1996 Document: 16-1 Page: 6 Filed: 08/07/2020
`
`To the contrary, leaving the recall in place will harm Hershey for the reasons
`
`enumerated in the Motion to Stay. Moreover, if Hershey is unable to complete the
`
`recall in 30 days, it may face potential sanctions for failure to comply with the
`
`District Court’s order. These harms are amplified by Appellants’ showing that there
`
`is a substantial case on the merits on appeal based on the District Court’s erroneous
`
`rulings. Accordingly, a stay or modification of the recall is warranted as the balance
`
`of the harms militates in Appellants’ favor.
`
`II. Sato on its on face is a publicly accessible printed publication.
`Appellants have always maintained that Sato was publicly accessible as of its
`
`publication date. Doc. 5 Ex. 8 at 26. Neither f’real nor the District Court disputed
`
`the authenticty of Sato, which is self-authenticating document under the rules of
`
`evidence, see Fed. R. Evid. 902(3), and Sato shows on its face that it was published
`
`on December 18, 1992, in the Japanese Public Utility Model Gazette. Ex. 26.
`
`Furthermore, Appellants submitted a certified copy of Sato with their offer of proof
`
`demonstrating that Sato was in fact a public document. See Doc. 5 Ex. 9. Pursuant
`
`to this Court’s decisions, such a publication from a foreign patent office is publicly
`
`accessible as of the date of its publication. See Bruckelmyer v. Ground Heaters, Inc.,
`
`445 F.3d 1374, 1379 (Fed. Cir. 2006) (publication of Canadian patent made papers
`
`in file history publicly accessible); In re Wyer, 655 F.2d 221, 224-26 (C.C.P.A.
`
`
`
`5
`
`

`

`Case: 20-1996 Document: 16-1 Page: 7 Filed: 08/07/2020
`
`1981) (Australian application was accessible to the public as of date published on
`
`microfilm).
`
`f’real’s opposition merely parrots the District Court’s erroneous decision and
`
`cites the searchers’ declarations used to rebut an IPR estoppel argument out of
`
`context. Doc. 15 at 9-10. As is clear from the searchers’ declarations,4 it was
`
`reasonable for them not to find the Sato reference after a diligent search conducted
`
`on a wide range patent databases using English key words. Doc. 5 Ex. 13 ¶¶ 9, 20-
`
`21; Doc. 5 Ex. 14 ¶¶ 10-11. Specfically, they could not identify Sato because there
`
`was no translation in the searched databases that would permit them to find Sato
`
`through keyword searching. Doc. 5 Ex. 13 ¶¶ 25-26; Doc. 5 Ex. 14 ¶¶ 14-15. But
`
`just because the searchers did not find the Japanese-language Sato reference in their
`
`particular searches does not mean Sato was publicly inaccessible. If the standards
`
`under 35 U.S.C. § 102 and § 315 are identical, then any published reference not
`
`found after a diligent search would not qualify as prior art (even if a U.S. patent) and
`
`there would be no exceptions to IPR estoppel. A review of the declarations and the
`
`sources searched show that the searchers would also have not been able to find the
`
`
`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.
`
`
`
`6
`
`

`

`Case: 20-1996 Document: 16-1 Page: 8 Filed: 08/07/2020
`
`thesis indexed in a single card catalog, see In re Hall, 781 F.2d 897, 899-900 (Fed.
`
`Cir. 1986), or a paper presented at a conference, see Massachusetts Institute of
`
`Technology v. AB Fortia, 774 F.2d 1104, 1109 (Fed. Cir. 1985), even though this
`
`Court has deemed such references publicly accessible. By focusing solely on the
`
`declarations, the transcript makes clear the District Court committed legal error
`
`when equating the standards of public accessibility under § 102 and estoppel under
`
`§ 315.5 At a minimum, Appellants have demonstrated a substantial case on the
`
`merits as this appeal raises an issue of first impression at this Court regarding the
`
`interplay of the public acessiblility and IPR estoppel doctrines.
`
`Furthermore, f’real’s arguments regarding the strength of the Sato reference
`
`and its use in other proceedings are irrelevant to whether it is a printed publication.6
`
`f’real did not move for summary judgment of no invalidity based on the asserted
`
`Sato combinations. Instead, f’real only moved to exclude Sato in a motion in limine.
`
`Consequently, notwithstanding the District Court’s improper exclusion, Appellants
`
`
`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
`
`
`
`

`

`Case: 20-1996 Document: 16-1 Page: 9 Filed: 08/07/2020
`
`would have presented its invalidity defense based on Sato at trial. Doc. 5 Ex. 9.
`
`Therefore, there is a strong likelihood of success on appeal because a determination
`
`that Sato is a printed publication as a matter of law compels a remand for a trial on
`
`invalidity.
`
`III.
`
`f’real fails to rebut Festo’s presumption of estoppel.
`
`Rather than addressing Appellants’ prosecution history estoppel arguments,
`
`f’real argues that the evidence was sufficient to establish infringement under the
`
`doctrine of equivalents (“DOE”). Doc. 15 at 13-15. To rebut the presumption, f’real
`
`needs to show that the equivalent was unforeseeable, only tangential to the alleged
`
`equivalent, or some other reason the applicant could not have described the
`
`equivalent. Festo Corp. v. Shoketsu Kinoku Kogyo Kabushiki Co., 344 F.3d 1359,
`
`1365 (Fed. Cir. 2003). Here, f’real appears to argue the amendment was tangential,
`
`relying on the District Court’s holding that the amendment only disclaimed a spring
`
`mechanism. Doc. 15 at 14. However, the tangential relation exception is “very
`
`narrow” and the prosecution history must demonstrate that “‘the reason for the
`
`narrowing amendment was peripheral, or not directly relevant, to the alleged
`
`equivalent.’” Cross Med. Prod., Inc. v. Medtronic Sofamor Danek, Inc., 480 F.3d
`
`1335, 1342 (Fed. Cir. 2007) (quoting Insituform Technologies, Inc. v. CAT
`
`Contracting, Inc., 385 F.3d 1360, 1370 (Fed. Cir. 2004)). But f’real cannot show
`
`any reasoning from the prosecution history as to why the addition of “unrestrained”
`
`
`
`8
`
`

`

`Case: 20-1996 Document: 16-1 Page: 10 Filed: 08/07/2020
`
`is tangential to a separate weight that restrains the splash shield. f’real’s arguments
`
`regarding the design of its splash shield do not explain how “unrestrained” is
`
`tangential to a weight, nor do they cite the prosecution history whatsoever. The
`
`District Court erred in allowing f’real to assert DOE against an equivalent that
`
`restrains the splash shield, thereby vitiating the “unrestrained” limitation. As f’real
`
`concedes, Appellants’ products do not have the identical lid structure as claimed by
`
`the ’658 patent, and the District Court made a material error in allowing f’real to
`
`assert DOE for the ’658 patent.
`
`IV. The District Court improperly resolved a factual dispute regarding the
`“rinse chamber” in granting summary judgment for the ’150 patent.
`
`Contrary to the District Court’s decision, Appellants strongly disagreed with
`
`f’real’s contention that the accused outer door assembly is “an enclosure in which a
`
`rinse apparatus is positioned to provide rinsing.” As shown below from Appellants’
`
`summary judgment briefing, the actual enclosure in which rinsing occurred is
`
`formed by the lid and surrounding cup shield and does not have a door. Ex. 27 at 13
`
`(annotated). These pictures show the actual rinse chamber even when the outer door
`
`assembly is removed.
`
`
`
`
`
`
`
`
`
`
`
`9
`
`

`

`Case: 20-1996 Document: 16-1 Page: 11 Filed: 08/07/2020
`
`Rinse
`
`Lid
`
`Cup Shield
`
`Moreover, f’real’s own expert conceded (1) that all of the rinsing occurs
`
`within the enclosure formed by the lid and cup shield; and (2) no rinsing occurs
`
`within the area between the outer door assembly and the actual rinse chamber of the
`
`accused products. Id. at 16. Indeed, the accused outer door assembly is not even an
`
`“enclosure” suitable for a rinse chamber as the door is not fluid tight and includes
`
`gaps. Id. at 18. Whether the accused products include the claimed rinse chamber is
`
`one of fact. See Biogen Int’l GmbH v. Banner Life Sciences LLC, 956 F.3d 1351,
`
`1355 (Fed. Cir. 2020). Because the record shows a genuine dispute as to this
`
`material fact, Appellants have at least a substantial case on the merits that the District
`
`Court committed legal error in granting summary judgment. Thus, Appellants
`
`maintain they have a strong likelihood of appeal on this issue.
`
`
`
`10
`
`

`

`Case: 20-1996 Document: 16-1 Page: 12 Filed: 08/07/2020
`
`V. Conclusion.
`For the foregoing reasons and those in Appellants’ Motion, Appellants
`
`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
`
`

`

`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
`
`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
`
`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
`
`relied upon the word count feature of this word processing system in preparing this
`
`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
`
`

`

`Case: 20-1996 Document: 16-1 Page: 14 Filed: 08/07/2020
`
`ÿÿ ÿ ÿ !ÿ
` ÿ"ÿ!ÿÿ
`
`ÿÿ
`  ÿÿ
`
 ÿ ÿ
`
 ÿ
`ÿÿ
`ÿ ÿ#ÿ
`$ ÿ%
`ÿ
`Z[Z[\]^^_
`&
` ÿ$ ÿ'
(ÿ
``abcdeÿghhijkÿllmÿnoÿpdqreshtÿucdvwÿubdtijkÿxtvo
` )ÿ*+,,-ÿ,-ÿ/0+1230ÿ2/ÿ,456ÿ+0782+09ÿ:;04ÿ<;0ÿ+850/ÿ/=032-6ÿ<;><ÿ/0+1230ÿ?8/<ÿ
`@0ÿ>33,?=52/;09ÿ,8</290ÿ<;0ÿ3,8+<A/ÿ0503<+,423ÿ-2524Bÿ/6/<0?CÿÿD00ÿE09CÿFCÿG==Cÿ*Cÿ
`HIJ9KLÿE09CÿM2+CÿFCÿHIJ0KCÿÿG<<>3;ÿ>992<2,4>5ÿ=>B0/ÿ>/ÿ400909Cÿ
`Nÿ30+<2-6ÿ<;><ÿNÿ/0+109ÿ>ÿ3,=6ÿ,-ÿ<;0ÿ-,+0B,24Bÿ-2524Bÿ,4ÿ
`@6ÿÿOCDCÿP>25ÿÿQ>49ÿR05210+6ÿ
`E>3/2?250
`S?>25
`T<;0+U
`yz{|ÿmwdq}cbj
`,4ÿ<;0ÿ@05,:ÿ24921298>5/ÿ><ÿ<;0ÿ-,55,:24Bÿ5,3><2,4/Cÿ
`*0+/,4ÿD0+109ÿ
`D0+1230ÿV,3><2,4ÿJG99+0//WÿE>3/2?250WÿS?>25Kÿ
`~vwdq}cbjjricqdtovhq
`€rvwdceÿoÿge|tt
`q`e|ttqtdsovhq
`‚hi~cbÿƒoÿ„qrswkÿxxkÿ
`bjqrswqtdsovhq
`…sshbtc|
`
`‚hi~cbÿƒdeecb|ÿ„qrswkÿxxbijc`rert~qtdsovhq
`G992<2,4>5ÿ=>B0/ÿ><<>3;09C
`R><0UÿXXXXXXXXXXXXXXXXX
`D2B4><8+0Uÿ
`‡j‡ÿ‰reerdqÿ„oÿghjscbkÿbo
`[†‡[ˆ‡Z[Z[
`Y>?0Uÿ
`‰reerdqÿ„oÿghjscbkÿbo
`
`

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket