Reprinted with permission from the May 29, 2013 edition of The Am Law Daily© 2013 ALM media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382 or email@example.com or visit www.almreprints.com.
Rogers Family Coffee Co. wants to challenge Keurig Inc.'s dominance in the multi-billion dollar market for single-serving coffee pods. That'll be a difficult task, but Rogers's lawyers at Morgan Lewis & Bockius won a ruling on May 24 that should help.
In a 30-page summary judgment order, U.S. District Judge F. Dennis Saylor IV in Boston ruled that Rogers's coffee pods don't infringe on three Keurig patents. The decision is a blow to Keurig's parent company, Green Mountain Coffee Roasters Inc., which has sought to use its head start in patent applications to stymie competitors.
Keurig is one of the great business stories of the last decade. As explained in this 2011 Boston Globe Magazine story. Keurig's founders came up with their unique single-serving coffee maker back in the early 1990s. They were repeatedly rejected by venture capitalists, who scoffed at the notion that people would pay by the cup for coffee they brew at home. Now, Green Mountain sells $400 million worth of Keurig coffee makers each year. But most of Green Mountain's $4 billion in revenue comes from its "K-Cup" coffee capsules-sort of the way Gillette makes more than from razorblades than razors.
As you might expect, other coffee companies are eager to eat away at Keurig's lead, especially since two of its core patents expired in September 2012. Green Mountain's stock plummeted in late 2011 as short-sellers stoked fears that Keurig's glory days were over, but the company has since rebounded, thanks to partnerships with Starbucks and Dunkin Donuts.
In 2011, Rogers began selling a cheaper alternative to the K-Cup that's compatible with Keurig's coffee machines. Rogers's pods hare designed a bit differently than Keurig's, as you can see in the side-by-side comparison on page 11 of Friday's ruling.
Keurig responded by suing Rogers, alleging infringement of three of its many patents. One patent covered the design of Keurig's pods, while the other two patents related to its coffee-brewing process. Of course, Rogers doesn't actually practice Keurig's patented coffee-brewing process, so Keurig argued that Rogers induced infringement by users of Keurig coffee machines.
In Friday's ruling, Saylor determined that no reasonable juror could find that Rogers infringed the design patent. He then dismissed the contributory infringement claims based on the company's patent exhaustion defense.
"On Keurig's theory, although a consumer may purchase a Keurig brewer, he or she could nonetheless be liable for patent infringement if he or she did not use Keurig beverage cartridges when operating the brewer," the judge wrote. "Such a result would violate the longstanding principle that, when a product is once lawfully made and sold, there is no restriction of its use."
We expect Keurig's lawyers at Wolf Greenfield & Sacks to appeal. Wolf Greenfield partner Michael Albert declined to comment.
"Keurig wanted to maintain its market share and keep its profits high," Morgan Lewis's Daniel Johnson Jr. told us Tuesday. "Our client is a threat to both of those goals."