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ABS Global, Inc. v. Inguran, LLC

United States District Court, W.D. Wisconsin

July 22, 2016

ABS GLOBAL, INC., Plaintiff/Counterclaim Defendant,
INGURAN, LLC, Defendant/Counterclaimant/Third-Party Plaintiff, and XY, LLC, Intervening Defendant/Counterclaimant/Third-Party Plaintiff and CYTONOME/ST., LLC, Intervening Defendant,
GENUS PLC, Third-Party Defendant.

          OPINION & ORDER

          William M. Conley District Judge

         This matter is scheduled for trial to begin on August 1, 2016. In advance of the parties’ final pretrial conference, which will take place on July 26, 2016, at 1:00 p.m., this order addresses ABS’s motions in limine. (Dkt. #480.)

         1. During the liability phase of the trial, ST and XY should be barred from presenting evidence about or otherwise referring to Kathy Mean.

         ABS concedes liability for misappropriation of trade secrets based on former XY employee Kathy Mean’s use of XY’s ejaculate addition protocols to prepare similar protocols in 2011 for ABS, her former employer, but asserts that it terminated Mean once it learned of her use of XY’s protocols, and then hired Professor John Parks to develop new protocols independently using information in the public domain. While the jury will need to resolve the parties’ dispute regarding damages, ABS argues that Kathy Mean only has limited relevance to: (1) ST’s breach of contract claim based on the confidentiality provision, since the XY protocols do not constitute information “that is disclosed by ST or its Affiliates to ABS” or (2) ABS’s § 2 argument that the research restrictions of the Agreement constitute unlawful exclusionary conduct.

         ST responds that Ms. Mean’s actions are relevant and not overly prejudicial because they: (1) demonstrate the need for the non-compete protections; (2) rebut ABS’s credibility attack on ST witnesses as to the business reasons for the non-compete provisions; and (3) rebut ABS’s contention that it suffered antitrust injury caused by ST’s alleged anticompetitive conduct because to prepare similar protocols for ABS in connection with its GSS technology and after terminating her, ABS had to work to recreate its protocols to avoid use of Means misappropriated XY protocols, which do not work well and have pushed the launch of the technology well beyond resolution of this trial.

         Since ST persuasively established that evidence of Means’ misappropriation is relevant to its defense of ABS’s antitrust claim, ST will be permitted to submit evidence of Means’ misappropriation in the liability phase of trial. Accordingly, this motion is DENIED.

         2. Defendants should be barred from suggesting that ABS’s technical expert, Professor John Parks, obtained knowledge about XY ejaculate addition protocols during a 2010 consulting project for “A.I. Technologies.”

         Parks’s consulting work for A.I. Technologies, which he testified at his deposition “might have been an affiliate of ST, ” only consisted of three days of work on the post-thaw quality of bull semen, and thus his consulting work had nothing to do with ejaculate addition protocols. ST responds that Parks’ knowledge of XY protocols is relevant ST’s trade secret misappropriation claim -- if Parks claims that his work was independent of XY’s protocols, ST should be able to pursue on cross examination whether his work was, in fact, independent.

         While it appears that Parks’ past work might fall within the scope of ABS’s defense that he developed GSS independent of any knowledge about XY’s protocols, ST will not be permitted to cross-examine Parks on his 2010 consulting project without some evidence that it involved access to or knowledge of XY’s protocols. Any such proffer must be made in advance of trial. This motion is GRANTED without prejudice to a further proffer.

         3. ST should be barred from offering testimony or making arguments based on the relative size of the parties or the fact that Genus or ABS are “big” companies.

         ABS anticipates that ST will characterize itself as a “little guy, ” or at least that ABS and Genus are relatively larger. It correctly points out that in this circuit, “appealing to the sympathy of jurors through references to the relative wealth of the defendants in contrast to the relative poverty of the plaintiffs” is inappropriate. Adams Labs, Inc. v. Jacobs Eng’g. Co., 761 F.2d 1218, 1226 (7th Cir. 1985).

         ST responds, however, that the relative size of the parties is relevant to the reasonableness of the contract terms between the parties, as well as ABS’s allegations about ST’s market power. Specifically, ST contends that evidence suggesting ABS is a sophisticated party will support its legitimate need for the contract terms, as well as that ST’s small size is relevant to its antitrust defense that sexed and conventional semen are part of the same market (based on downstream competition). ST cites to several cases permitting this type of evidence with respect to Sherman Act § 2 claims. The court agrees. ST may, therefore, offer this evidence for purposes of defining the relevant market, and the relative sizes of ST and ABS during negotiations and in the relevant market, but may not use this evidence to argue or appeal to the jury based on sympathy or other irrelevant purposes. This motion is, therefore, DENIED in part and GRANTED in part.

         4. ST and XY should be barred from making emotional arguments or presenting witness commentary that is keyed to ABS being a “foreign-owned company.”

         ST responds that the fact that Genus is U.K.-based bears on the scope of the relevant market. In particular, ST points out that in defense of the antirust claim, it plans to submit evidence that ABS and Genus were able to enter into a separate sorting agreement in the U.K., and that more than half of ABS’s sorted semen is sold overseas, with much of it going to the U.K. It also points out the fact that Genus is a U.K.-based company is relevant to the validity of worldwide geographic scope of the Section 18 of the 2012 Agreement.

         At the same time, ST concedes that it may not make the emotional-type arguments ABS seeks to bar. Thus, while ST will be permitted to submit evidence that Genus is a U.K.-based company, the court will bar “emotional” arguments about the fact that ABS is a foreign-owned company or use of that fact for any other irrelevant purposes. Accordingly, the motion is GRANTED in part and DENIED in part.

         5. ST should be barred from offering testimony or making arguments that any of its license agreements with XY were approved by the U.S. Department of Agriculture.

         ABS points out that the USDA was required to “approve” ST’s 2004 license agreement with XY, because the USDA had the contractual authority to review and approve sub-licenses of patents it owned. Its concern is that this “approval” could be viewed as an implied repeal of the antitrust laws. In response, ST argues that it needs to refer to the USDA’s approval of ST’s license with XY (“Lead License”) to rebut ABS’s assertions that ST entered into the Lead License to engage in anticompetitive conduct. It also contends that it needs to include the USDA’s approval to explain XY’s statement that it is the “master licensee in control of all sperm sorting in non-human mammals worldwide.” (O’Neill Decl., Ex. 6.)

         The court agrees that the USDA’s approval of a Lead License has some relevance. Moreover, any confusion as to relevance of USDA approval can be addressed during cross examination, argument and, if necessary, a limiting instruction. Accordingly, the motion is DENIED.

         6. ST should be barred from offering testimony or making arguments that ST’s conventional semen straws cost less and are of higher quality than ABS’s conventional semen straws.

         ABS suspects that ST may try to suggest that ABS is a “bad company” because it sells inferior conventional semen straws at a high price. ST responds that it will offer this evidence not to show that ABS produces a poor product in the conventional semen market, but to show that ST is a strong competitor. ST asserts that this evidence is relevant to rebut ABS’s assertion that the GSS technology will permit it to be a strong competitor in the United States’ sexed semen market. Although this argument may have some limited relevance as to ABS’s claim for lost profit damages based on theoretical sales of sexed semen straws using its processing technology arising out of a violation of § 2 of the Sherman Act, ST has not explained the relevance of the quality of ABS’s conventional semen straws for any other relevant purpose as to liability. Accordingly, this motion will be GRANTED.

         7. ST should be barred from offering testimony or making arguments about supposed “barriers to entry” or customer contracts in Genus’s porcine genetics business.

         ABS suspects that ST will attempt to compare its customer contracts to those of PIC, a Genus subsidiary that provides genetically superior pig breeding stock and technical support to commercial pork producers. ABS argues that such evidence is irrelevant and potentially confusing because PIC is not a party, its business is unrelated to the industry involved here and it is not a monopolist.

         ST responds that PIC’s contracting practices are relevant insofar as they align with ST’s contractual arrangements with ABS, which ABS asserts are improper. ST also argues that similar industry practices are “routinely considered” in antitrust cases, but neither party has addressed in detail whether ST and PIC actually operate in the same industry.

         Even so, the court agrees that industry practices are relevant to ABS’s antitrust claim, and will allow ST to establish what are typical contracting practices in an arguably similar market, while at the same time ABS is free to point out that differences in those markets. Accordingly, this motion is DENIED.

         8. ST should be barred from offering testimony or makingarguments about how ABS could have bought or licensed the XY patents, the Monsanto patents ...

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