For 25 years David Fox had been selling his Orange Bang drinks in Mexican restaurants and convenience stores. Then one day a competitor sued him for patent infringement.

The lawsuit had nothing to do with his trademark frothy drinks. Instead, the competitor, Juicy Whip Inc., claimed to have invented the idea for a type of clear, bubbling dispenser Fox had been using.

“I was very surprised,” said Fox, founder of Orange Bang Inc. “I was surprised they would even get a patent on a device like that.”

But Juicy Whip did get a patent for the dispenser. And last week, its nine-year suit ended after a jury awarded $440,000 in lost profits to Juicy Whip, which already was set to receive hundreds of thousands of dollars in unpaid royalties. Both sides say they will not appeal.

The case is a cautionary tale into the emotions involved when creative foes fight over their inventions. From the beginning, Fox and Juicy Whip’s founder, Gus Stratton, both said they came up with the patented dispenser. But neither was willing to concede to the other, throwing the case into numerous appeals and costing millions of dollars in legal fees.

U.S. District Court Judge Audrey Collins, who oversaw the case, admonished both sides. “Instead of behaving like rational business competitors, Juicy Whip and Orange Bang have allowed their emotions to reign,” she wrote, adding that “this was a run-of-the-mill patent case which assumed mythical proportions only in the minds of the parties.”

In all, Orange Bang, which no longer sells its drinks in the patented dispensers, will have to pay $1.2 million to its competitor and $2.5 million in legal fees. “We had to defend ourselves,” said Fox. “There wasn’t any way out of it.”

The bubbler


Many drink manufacturers that sell concentrate to restaurants and stores install a free dispenser as part of the purchase. These dispensers mix the drink with water just before the customer receives the liquid. Some, called “bubblers,” include transparent bowls that allow customers to see the drink as it actually pours into their cups (studies have shown that customers are more likely to purchase a drink that they can see).

The problem with bubblers is that they have to be cleaned every day to prevent contamination. So Juicy Whip’s machine dispenses the drink from a bag while displaying only colored water in the bubbler, fooling the customer into thinking the bubbler is dispensing it.

It’s like “a waterfall that runs constantly,” said Bob Flaig, vice president of business development for Juicy Whip. “What Gus came up with is an idea to make a machine that just bubbles nonstop that you don’t have to ever clean.”

The La Verne-based company sells primarily Mexican drinks such as horchata and tamarindo. Half the business comes from restaurants, most of them Mexican eateries in Southern California, and the other half comes from convenience stores. In the past decade, Juicy Whip, which made $10 million in sales last year, has distributed about 50,000 of the bubblers, including 15,000 to the Coca-Cola Co. for its Powerade and Hi-C drinks.

Flaig said Stratton invented the dispenser, called the Tower Max, and on Nov. 19, 1996 received a patent for a “Post-Mix Beverage Dispenser With an Associated Visual Display of Beverage.” One day later, the company sued Orange Bang.

“We actually saw it in restaurants,” Flaig said. “If you’re going to get a patent because you came up with a creative idea, you should be able to get some protection on that.”

Fox disputes that Juicy Whip came up with a new idea. He said he developed a similar concept in 1988 while trying to increase brand recognition for Orange Bang, which is currently sold in fast-food chains such as Subway and Fatburger. “I felt it was not patentable, because it was imitating a post-mix dispenser,” he said.

A jury in U.S. District Court in downtown Los Angeles found that Sylmar-based Orange Bang had infringed on Juicy Whip’s patent. The patent itself was found to be not technically valid, but the Federal Circuit Court of Appeals in Washington D.C. reversed that decision two years later.

A second jury in Los Angeles awarded almost $750,000 in unpaid royalties and interest to Juicy Whip. Juicy Whip appealed the decision again, this time to argue that it was entitled to additional damages because it had lost profits due to Orange Bang’s infringement. A second Federal Circuit agreed with Juicy Whip, which won about $440,000 in past profits in a four-day jury trial that ended last week.

At Orange Bang, Fox said the final cost of the suit was less than what Juicy Whip had offered to settle the case. Further, he said the company has moved on, adding illuminated plastic signs onto its dispensers that have an Orange Bang logo on top.

He said that’s turned out to be just as effective as the bubblers.