**United States Court of Appeals for the Federal Circuit**

03-1609

JUICY WHIP, INC.,

> Plaintiff-Appellant,

v\.

ORANGE BANG, INC.,

UNIQUE BEVERAGE DISPENSERS, INC.,

DAVID FOX, and BRUCE BURWICK,

> Defendants-Appellees.

[Ernie L. Brooks]{.underline}, Brooks Kushman, P.C., of Southfield,
Michigan, argued for plaintiff-appellant. With him on the brief were
[Frank A. Angileri]{.underline} and [William G. Abbatt]{.underline}.

[Jeffrey A. Schwab]{.underline}, Abelman, Frayne & Schwab, of New York,
New York, argued for defendants-appellees. With him on the brief were
[Anthony A. Coppola]{.underline} and [Richard L. Crisona]{.underline}.

Appealed from: United States District Court for the Central District of
California

Judge Audrey B. Collins

United States Court of Appeals for the Federal Circuit

03-1609

JUICY WHIP, INC.,

Plaintiff-Appellant,

v\.

ORANGE BANG, INC.,

UNIQUE BEVERAGE DISPENSERS, INC.,

DAVID FOX, and BRUCE BURWICK,

Defendants-Appellees.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DECIDED: September 3, 2004

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Before NEWMAN, LOURIE, and LINN, [Circuit Judges]{.underline}.

LOURIE, [Circuit Judge]{.underline}.

This is the latest appeal in the lengthy litigation between Juicy Whip,
Inc. ("Juicy Whip"), the patentee of a beverage dispenser, and the
defendants (collectively, "Orange Bang"), accused infringers. Following
our previous decision reversing a judgment of invalidity and
unenforceability of Juicy Whip's patent by the United States District
Court for the Central District of California, [Juicy Whip, Inc. v.
Orange Bang, Inc.]{.underline}, 292 F.3d 728 (Fed. Cir. 2002), a jury
awarded Juicy Whip compensatory damages totaling \$643,379.75. Juicy
Whip now appeals from the court's decision denying its claim for lost
profits, [Juicy Whip, Inc. v. Orange Bang, Inc.]{.underline}, No. CV
96-08148 ABC (RNBx) (C.D. Cal. Dec. 16, 2002) ("[Lost Profits
Order]{.underline}"). Juicy Whip also appeals from the decision of the
district court denying its motion for enhanced damages and attorney
fees, [Juicy Whip, Inc. v. Orange Bang, Inc.]{.underline}, No. CV
96-08148 ABC (RNBx) (C.D. Cal. July 30, 2003) ("[Final
Judgment]{.underline}"), and requests reassignment of the case to a new
judge. For the reasons set forth below, we vacate the decision denying
lost profits and remand for further proceedings; affirm the decision
denying enhanced damages and attorney fees; and decline to reassign the
case to a different judge.

BACKGROUND

Juicy Whip owns United States Patent 5,575,405, directed to a beverage
dispenser that simulates the appearance of the dispensed beverage to
promote sales. Unlike "pre-mix" beverage dispensers in which the
beverage syrup concentrate and water are pre-mixed and stored in a
display reservoir, Juicy Whip's invention is a "post-mix" dispenser, one
that stores the syrup concentrate and water separately and mixes them
together just before being dispensed, typically after a consumer places
an order. Juicy Whip's dispenser, however, features a transparent bowl
that creates the visual impression that the bowl is the primary source
of the dispensed beverage, which induces sales of the beverage. That
attribute of Juicy Whip's invention also provides more capacity than
pre-mix dispensers and affords resistance to bacterial growth.[^1]

In June 2002, in the second appeal of this case, we reversed the
district court's judgment of invalidity, concluding that there was no
substantial evidence to support the jury's verdict that the claims were
invalid for prior public use. [Juicy Whip]{.underline}, 292 F.3d at 743,
746. We also reversed the district court's decision that the patent was

unenforceable for inequitable conduct because the record lacked
"substantial evidence rising to the level of the clear and convincing
evidence necessary" for such a result. [Id.]{.underline} at 744. We
vacated the court's award of costs and remanded for a determination on
damages, noting that it had the discretion to award enhanced damages
pursuant to 35 U.S.C. § 284. [Id.]{.underline} at 746.

On remand, the district court denied Juicy Whip's motion to introduce
testimony on its lost profits on syrup sales. The court rejected Juicy
Whip's argument that it would have sold more syrup "but for" Orange
Bang's infringement. It concluded that Juicy Whip failed to establish
that the syrup and the patented dispenser constituted a single
functional unit, and the court thus refused to consider whether some of
Orange Bang's syrup sales were attributable to its sales of the
infringing dispenser. [Lost Profits Order]{.underline}, slip op. at 6-8.
Furthermore, the district court denied Juicy Whip's motion for enhanced
damages and attorney fees based on its review of the facts and,
particularly, the closeness of the case. [Final Judgment]{.underline},
slip op. at 7, 11.

Juicy Whip now appeals. We have jurisdiction pursuant to 28 U.S.C.

§ 1295(a)(1).

DISCUSSION

We review a district court's decision on damages for "an erroneous
conclusion of law, clearly erroneous factual findings, or a clear error
of judgment amounting to an abuse of discretion." [Rite-Hite Corp. v.
Kelley Co.]{.underline}, 56 F.3d 1538, 1543 (Fed. Cir. 1995) (en banc).
Whether lost profits are available to a patentee is a question of law
that we review [de novo]{.underline}. [Rite-Hite]{.underline}, 56 F.3d
at 1544. A decision to award enhanced damages and attorney fees is one
committed to the discretion of the trial court, 35 U.S.C. §§ 284-285
(2000), and we thus review that decision for an abuse of discretion.

A decision to exclude evidence and a party's request for reassignment to
a different trial judge are not issues unique to patent law, so we apply
the law of the regional circuit in which the district court sits, in
this case, the Ninth Circuit. [Micro Chem.]{.underline}, 318 F.3d at
1122. A decision to exclude the presentation of evidence and argument to
a jury is subject to review for abuse of discretion. [United States v.
Pang]{.underline}, 362 F.3d 1187, 1194 (9th Cir. 2004). "A district
court abuses its discretion if its decision rests upon an erroneous view
of the law." [Wilson v. City of San Jose]{.underline}, 111 F.3d 688, 691
(9th Cir. 1997).

The Ninth Circuit "remand\[s\] to a new judge only under 'unusual
circumstances'" absent personal bias and considers the following
factors:

> \(1\) whether the original judge would reasonably be expected upon
> remand to have substantial difficulty in putting out of his or her
> mind previously-expressed views or findings determined to be erroneous
> or based on evidence that must be rejected, (2) whether reassignment
> is advisable to preserve the appearance of justice, and (3) whether
> reassignment would entail waste and duplication out of proportion to
> any gain in preserving the appearance of fairness.

[United States v. Sears, Roebuck & Co.]{.underline}, 785 F.2d 777, 780
(9th Cir. 1986) (internal quotation marks omitted). "The first two of
these factors are of equal importance, and a finding of one of them
would support a remand to a different judge. . . . A district judge's
adamance in making erroneous rulings may justify remand to a different
judge." [Id.]{.underline} (citations omitted).

I. [Lost Profits]{.underline}

On appeal, Juicy Whip argues that the district court erred by denying it
the opportunity to present to the jury its theory of lost profits from
lost syrup sales. It claims that there exists a functional relationship
between the patented dispenser and the unpatented syrup, a link adequate
to justify recovery of lost profits. Orange Bang responds that Juicy
Whip has not shown sufficient proof of such a functional relationship
between the two items and that, because the two items are capable of use
independently of each other, Juicy Whip should not be permitted to
recover damages from syrup sales. Orange Bang asserts that the district
court was correct to reject Juicy Whip's lost profits argument pursuant
to its interpretation of the "entire market value rule" and urges us to
affirm the court's decision.

We agree with Juicy Whip that the district court abused its discretion
by disallowing Juicy Whip's presentation of factual support for the
theory of lost profits. While we are reluctant to send this case back to
the district court a third time, we must do so because the court
incorrectly applied the entire market value rule, and that error of law
was the governing factor in its decision. The court was clearly
erroneous in determining that there was no functional relationship
between Juicy Whip's dispenser and the syrup; on the contrary, it is
clear that there is such a relationship and Juicy Whip should be
entitled to prove damages with respect to lost profits from lost syrup
sales.

In [Rite-Hite]{.underline}, we explained that the entire market value
rule was a principle of patent damages that defined a patentee's ability
to recover lost profits on unpatented components typically sold with a
patented item. Although the rule traditionally had been applied to
permit recovery when both the patented and unpatented items were part of
the same machine, we recognized that "the rule has been extended to
allow inclusion of physically separate unpatented components normally
sold with the patented components" with the caveat that both were
"considered to be components of a single assembly or parts of a complete
machine, or they together constituted a functional unit."
[Rite-Hite]{.underline}, 56 F.3d at 1550.

In that case, we considered whether a patentee could recover for lost
sales of dock levelers, devices used to bridge the edges of a vehicle
and a dock, given that the vehicle restraint, an apparatus for securing
a vehicle to a loading dock to prevent separating from the dock during
loading or unloading, was patented. [Id.]{.underline} at 1542. We
rejected the patentee's argument that the recovery on the unpatented
dock levelers was permissible, deciding instead that the two devices had
been sold together merely for convenience and business advantage. We
thus held there that "there is no basis for extending . . . recovery to
include damages for items that are neither competitive with nor function
with the patented invention." [Id.]{.underline} at 1551.

However, the [Rite-Hite]{.underline} "functional unit" test set forth
the key criterion for lost profits of unpatented materials used with a
patented device. [See, e.g.]{.underline}, [Tec Air, Inc. v. Denso Mfg.
Mich., Inc.]{.underline}, 192 F.3d 1353, 1361 (Fed. Cir. 1999)
(affirming a judgment wherein a jury awarded damages based on the entire
market value rule and the functional relationship between patented fans
and unpatented radiator and condenser assemblies); [Festo Corp. v.
Shoketsu Kinzoku Kogyo Kabushiki Co.]{.underline}, 72 F.3d 857, 868
(Fed. Cir. 1995), [vacated on other grounds]{.underline}, 520 U.S. 1111
(1997) (sustaining the jury award of damages based on the lost sales of
accessory items sold with and having a functional relationship to
patented magnetically coupled rodless cylinders). In [Micro
Chemical]{.underline}, a case decided several years later, we decided
that unpatented microingredients could be part of a lost profits
analysis involving a patented machine that weighed the microingredients,
subject to the usual requirements for proving lost profits. 318 F.3d at
1125-26. The microingredients there had a functional relationship to the
machine.

In the present case, the district court held 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.
Furthermore, the court stated that the two items were sold together
"only as a matter of convenience or business advantage." [Lost Profits
Order]{.underline}, slip op. at 6 (quoting [Rite-Hite]{.underline}, 56
F.3d at 1550). While Orange Bang maintains that Juicy Whip's claim for
lost profits failed for lack of persuasive evidence, it is clear from
the district court's opinion that such evidence was excluded because of
its belief that no functional relationship existed between the patented
dispenser and the syrup. We disagree with the district court in its
analysis.

The dispenser and the syrup are in fact analogous to parts of a single
assembly or a complete machine, as the syrup functions together with the
dispenser to produce the visual appearance that is central to Juicy
Whip's '405 patent. Despite some limited interchangeability---other
syrups may be used in Juicy Whip's dispenser and, likewise, other
dispensers could use Juicy Whip's syrups---the two items do "function
together to achieve one result," [Rite Hite]{.underline}, 56 F.3d at
1551. The dispenser needs syrup and the syrup is mixed in a dispenser.
Such is indeed a functional relationship, and a functional relationship
between a patented device and an unpatented material used with it is not
precluded by the fact that the device can be used with other materials
or that the unpatented material can be used with other devices. We
therefore conclude that the district court erred as a matter of law by
denying Juicy Whip the opportunity to present to the jury evidence for
its theory of lost profits on lost syrup sales. Accordingly, we vacate
the jury's award of a reasonable royalty and remand this sticky issue
for further proceedings to allow Juicy Whip to prove lost profits on its
syrup sales.

II\. [Enhanced Damages and Attorney Fees]{.underline}

Juicy Whip argues that the district court abused its discretion by
refusing to enhance damages and award attorney fees. It points out that
Orange Bang was found to be a willful infringer, that Orange Bang had no
good faith belief in its arguments of non-infringement or invalidity,
and that Orange Bang presented a shotgun approach with ten defenses, all
of which were eventually determined to be meritless. Juicy Whip also
claims that the district court made several clearly erroneous findings
of fact in analyzing the factors set forth in [Read Corp. v. Portec,
Inc.]{.underline}, 970 F.2d 816, 826 (Fed. Cir. 1992).

Orange Bang responds that the district court understood and applied the
law correctly, taking into account all the relevant circumstances. It
emphasizes that the court considered the issues of infringement,
willfulness, and damages to be close questions and that the trial judge
was in the best position to weigh those factors. Particularly, Orange
Bang points out that the jury deliberated for four days and that the
appeal of the jury's invalidity verdict was decided by a split panel of
our court. Additionally, Orange Bang argues that the district court
properly considered each of the [Read v. Portec]{.underline} factors.

We agree with Orange Bang that the district court did not abuse its
discretion by denying Juicy Whip's motion to award enhanced damages and
attorney fees. First, our precedent is clear that "a finding of willful
infringement merely [authorizes]{.underline}, but does not
[mandate]{.underline}, an award of increased damages." [Modine Mfg. Co.
v. Allen Group, Inc.]{.underline}, 917 F.2d 538, 543 (Fed. Cir. 1990);
[see also]{.underline} [Transclean Corp. v. Bridgewood
Servs.]{.underline}, 290 F.3d 1364, 1378 (Fed. Cir. 2002). Secondly, the
district court presented a thorough and complete analysis of the [Read
v. Portec]{.underline} factors, and we owe deference to the district
court's conclusion. The court's well-reasoned analysis cannot be
construed as an abuse of discretion. Finally, the court properly
considered the various factors relating to attorney fees, including "the
degree of culpability of the infringer, the closeness of the question,
litigation behavior, and any other factors whereby fee shifting may
serve as an instrument of justice,'" [Superior Fireplace Co. v. Majestic
Prods. Co.]{.underline}, 270 F.3d 1358, 1378 (Fed. Cir. 2001) (quoting
[Nat'l Presto Indus., Inc. v. W. Bend Co.]{.underline}, 76 F.3d 1185,
1197 (Fed. Cir. 1996)). Additionally, we note that the district court
refused to grant Orange Bang's motion for attorney fees in its 2001
decision. Because we are satisfied that the court appropriately
exercised its discretion in denying attorney fees, we affirm that
portion of the district court's decision.

III\. [Reassignment to a Different Judge]{.underline}

Juicy Whip lastly requests that the case be reassigned to a different
district court judge, alleging that the judge "continues to view Juicy
Whip's invention with disdain and is punishing Juicy Whip as a result."
Appellant's Opening Br. at 40. Juicy Whip cites passages from various
opinions issued by the district court that it claims are indicative that
the court may have "substantial difficulty putting out of its mind its
view that the '405 invention lacks utility and/or is unimportant."
[Id.]{.underline} at 43. Orange Bang responds simply that there are
insufficient grounds to require reassignment.

We agree with Orange Bang that reassignment to a different judge is not
warranted in this case. Juicy Whip does not assert personal bias and has
not shown adequate reason to merit the unusual remedy of reassignment.
We cannot say, based on the few excerpts cited by Juicy Whip in view of
the entire lifetime of this litigation spanning nearly seven years, that
the district court judge has demonstrated such irreversibly firm views
that the case requires reassignment or that such action is necessary to
preserve the appearance of justice. The district court judge is quite
familiar with the parties and the issues, and reassignment would only
result in a waste of judicial resources. Because "\[s\]uch unusual
circumstances rarely exist" to justify reassignment, [Glen Holly Entm't,
Inc. v. Tektronix, Inc.]{.underline}, 343 F.3d 1000, 1017 (9th Cir.
2003), and because we do not believe that this is such a case, we
decline to reassign the case on remand.

CONCLUSION

For the reasons stated above, we affirm the district court's denial of
enhanced damages and attorney fees, vacate the jury's award of a
reasonable royalty, and remand for further proceedings to determine
damages to the extent that Juicy Whip is able to prove lost profits. We
reject Appellant's request to reassign the case upon remand.

COSTS

Each party shall bear its own costs.

[AFFIRMED-IN-PART, VACATED-IN-PART, AND REMANDED]{.underline}.

[^1]: For additional discussion of Juicy Whip's patented beverage
    dispenser, see [Juicy Whip, Inc. v. Orange Bang, Inc.]{.underline},
    185 F.3d 1364, 1365-66 (Fed. Cir. 1999).