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Functional Relationship Between Patented Beverage Dispenser and Unpatented Syrup Merits Lost Profits on Both

September 03, 2004
Lombardi, Anthony J.

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Last Month at the Federal Circuit - October 2004

Judges: Lourie (author), Newman, and Linn

In Juicy Whip, Inc. v. Orange Bang, Inc., No. 03-1609 (Fed. Cir. Sept. 3, 2004), the Federal Circuit vacated the district court’s decision denying lost profits to Juicy Whip, Inc. (“Juicy Whip”) and remanded the case on that issue. The Federal Circuit also affirmed the district court’s decision denying enhanced damages and attorney fees to Juicy Whip, and declined Juicy Whip’s request to reassign the case to a different judge.

Juicy Whip owns U.S. Patent No. 5,575,405, which discloses a beverage dispenser that simulates a dispensed beverage’s appearance to promote sales. Juicy Whip’s dispenser features a transparent bowl that creates a visual impression that the bowl is the primary source of the dispensed beverage to induce sales, but the dispenser actually stores the syrup concentrate and water separately, and mixes them together just before being dispensed.

With regard to the issue of lost profits, Juicy Whip argued that the district court had erred by denying it the opportunity to present to the jury its theory of lost profits due to lost syrup sales. According to Juicy Whip’s theory, an adequate functional relationship exists between the patented dispenser and the unpatented syrup to justify recovery of lost profits. The district court had determined that Juicy Whip’s patented dispenser and the syrup did not share a functional relationship because the dispenser had been sold separately from the syrup on occasion and because other syrups could be used in Juicy Whip’s dispenser.

The Federal Circuit disagreed. In reaching its conclusion, the Federal Circuit indicated that the patented dispenser and the syrup are analogous to parts of a single assembly or a complete machine because the syrup functions with the dispenser to produce a visual appearance that is central to Juicy Whip’s patent. Accordingly, the Federal Circuit vacated the jury’s award of a reasonable royalty and remanded the case to allow Juicy Whip to prove lost profits on its syrup sales.

With regard to enhanced damages and attorney fees, although Orange Bang had been found to willfully infringe, the Federal Circuit concluded that the district court did not abuse its discretion by denying Juicy Whip’s motion to award enhanced damages and attorney fees. The Court explained that precedent was clear that a finding of willful infringement authorizes, but does not mandate, an award of increased damages. Moreover, the Court concluded that the district court had properly considered the degree of culpability of the infringer, the closeness of the question, litigation behavior, and other factors indicating fee shifting may serve justice.

With regard to Juicy Whip’s request to reassign the case to a different district court judge, Juicy Whip alleged that the judge viewed its invention with disdain and, as a result, was punishing Juicy Whip. The Federal Circuit disagreed and concluded that reassignment to a different district court judge was not warranted because Juicy Whip had not asserted that the judge had a personal bias, nor had Juicy Whip shown adequate reasons to merit the unusual remedy of reassignment.