Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

ABS Global, Inc. v. Inguran, LLC

United States District Court, W.D. Wisconsin

March 31, 2017

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

          OPINION AND ORDER

          WILLIAM M. CONLEY District Judge.

         After a ten-day trial, a jury found that defendant Inguran, LLC d/b/a Sexing Technologies (“ST”) willfully maintained its monopoly power in the market for sexed bovine semen processing services in the U.S. through anticompetitive acts in violation of Section 2 of the Sherman Act, but that plaintiff ABS Global, Inc. (“ABS”) had suffered no antitrust injury. The jury further found ABS liable for patent infringement and breach of contract with ST. Finally, the jury awarded monetary damages to ST on its contract and patent counterclaims.

         In this opinion, the court will address the parties' post-trial motions, which challenge various aspects of the jury's well balanced, carefully considered verdict. (Dkt. ##738, 741.) The court will also address ABS's motion for permanent injunctive relief based on the jury's findings that ST is a monopolist. (Dkt. #680.)

         BACKGROUND[1]

         ABS is a “bull stud, ” meaning it is in the business of selling semen from its own bulls in “straws” for use in artificial insemination, which are prized by dairy farmers and beef producers for their specified genetic characteristics. ST provides semen-processing services to ABS and other bull studs to produce “sexed semen straws, ” a product consisting of predominantly male or female sperm cells. The former is valued by beef producers, and the latter by dairy farmers, ever more so as improvements in sexed semen straw processing have begun to achieve fertility rates approaching those of traditional semen straws.

         A relatively new technology, the parties entered into their first, formal contractual relationship for sexed semen processing or “sorting” in 2006. In August of 2012, ABS and ST entered into their most recent contract (the “2012 Agreement”). Almost two years into that Agreement, ABS filed this antitrust lawsuit, alleging that ST had unlawfully maintained its monopoly power in the market for sexed semen processing services by insisting on anticompetitive terms in the 2012 Agreement and by acquiring related patents for the purpose of keeping others out of the market. In addition to treble damages, ABS sought a permanent injunction for ST's anticompetitive acts, relieving it of provisions in the 2012 Agreement that restricted ABS from the development and marketing of a competing sexed semen sorting technology (the “GSS technology”). In response to ABS's lawsuit, ST and its wholly owned subsidiary, XY, LLC, brought counterclaims and third party claims, respectively, for patent infringement, breach of contract and trade secret misappropriation against ABS and its parent company, Genus plc.

         After the court denied ST's motion for summary judgment on ABS's Sherman Act claim, the case proceeded to jury trial.

         OPINION

         I. Sherman Act and Wisconsin Unfair Competition Claims

         ABS moves for a new trial on the jury's finding of no antitrust injury under Federal Rule of Civil Procedure 59 on the grounds that the court's jury instructions were faulty. For its part, ST moves for judgment as a matter of law on the jury's finding of a relevant market and anticompetitive acts under the Sherman Act. Both parties further move for judgment on ABS's related state law claim for unfair competition, which was not presented to the jury as a separate verdict question. For the reasons that follow, the court will deny both motions with respect to the jury's special verdict on the Sherman Act claim, finding it eminently reasonable on the facts of record, and will enter judgment under state unfair competition law consistent with those same findings.

         A. New trial on antitrust injury

         To obtain a new trial based on erroneous jury instructions, ABS must show that “(1) the instructions did not accurately state the law, and (2) the error prejudiced [it] because the jury was likely to be misled or confused.” Johnson v. Gen. Bd. of Pension & Health Benefits of United Methodist Church, 733 F.3d 722, 733 (7th Cir. 2013). ABS essentially merges these two elements by arguing not so much that the jury instruction on antitrust injury failed to state the law accurately, as the instruction did not fit its theory of the case. See Florists' Nationwide Tel. Delivery Network -- Am.'s Phone-Order Florists, Inc. v. Florists' Tel. Delivery Ass'n, 371 F.2d 263, 270 (7th Cir. 1967) (“A party is entitled to instructions presenting [its] theory of the case if there is evidence to support it.”). Specifically, ABS argues that the jury was likely confused by the instruction that ST caused an antitrust injury “[i]f ABS is able to prove by a preponderance of the evidence that its injuries were caused by a reduction in competition, acts that would lead to a reduction in competition, or acts that would otherwise harm consumers.” (Closing Liability Instructions (dkt. #692) at 17 (emphasis added).) According to ABS, this jury instruction contradicted the facts of the case, since ST did not “reduce, ” but rather “prevented competition from emerging in a market that had none.” (Pl.'s Opening Br. (dkt. #739) at 2 (emphasis in original).)

         In response, ST argues that the theory ABS presented to the jury was that ST's anticompetitive acts caused “a reduction in competition that otherwise would not have occurred . . . absent those acts, ” and any reasonable jury would have read the “reduction in competition” instruction in accordance with that theory. (Def.'s Resp. Br. (dkt. #752) at 6 (emphasis added).) The court largely agrees. ABS's strained interpretation of the injury instruction would restrict “competition” to a knowable, readily quantifiable number that could only be reduced by deterring or eliminating competition from an existing firm already selling competing services to buyers in the relevant market. Such a narrow reading would not only be inconsistent with the parties' arguments in the monopolization context, but would also read out the broader, more abstract consumer welfare concept in the last clause of the jury instruction as embraced by Section 2 of the Sherman Act. See, e.g., Fishman v. Estate of Wirtz, 807 F.2d 520, 535-36 (7th Cir. 1986) (“[T]he enhancement of consumer welfare is an important policy -- probably the paramount policy -- informing the antitrust laws.”). Moreover, the Sherman Act liability instructions, which referenced “potential” competition or competitors multiple times (Closing Liability Instructions (dkt. #692) at 3, 7, 11, 15), expressly embraced this “consumer welfare-centered” interpretation. See Alloy Int'l Co. v. Hoover-NSK Bearing Co., 635 F.2d 1222, 1228 (7th Cir. 1980) (considering “the instructions as a whole” in finding it unlikely that the jury was misled).

         That the jury was not misled by this “reduction in competition” language in the jury instruction is further bolstered by ABS's own closing argument to the jury based on the evidence at trial. During closing argument, ABS's counsel asked the jury to find antitrust injury because it was not “able to use [its GSS] technology to supply itself and its customers” due to ST's anticompetitive actions. (8/9/16 Trial Tr. (dkt. #729) at 68:5-7.) Ultimately, there is no reason to think that the jury was misled by the presentation of the evidence, nor by the jury instructions, into believing that it needed to find ST had reduced some particular degree of existing “competition, ” as opposed to analyzing whether ST's actions harmed competition and consumers by preventing (or at least delaying) the launch of ABS's semen sorting technology into the relevant market. Having failed to demonstrate any likelihood that the jury actually misunderstood the appropriate standard for finding antitrust injury, ABS's motion for a new trial on antitrust injury will be denied. See Alloy Int'l, 625 F.2d at 1228 (“The test, then, is not what meaning the ingenuity of counsel can at leisure attribute to the instructions, but how and in what sense, under the evidence before them and the circumstances of the trial, ordinary men acting as jurors will understand the instructions.”).

         Even if the court were to find that the instruction on antitrust injury was incorrect (or as ABS styles it, inappropriate), it must nevertheless take into account “the instructions as a whole, along with all of the evidence and the arguments.” Susan Wakeen Doll Co., Inc. v. Ashton Drake Galleries, 272 F.3d 441, 452 (7th Cir. 2001); see also Ernst v. City of Chi., 837 F.3d 788, 794 (7th Cir. 2016) (“District courts have substantial discretion in how to precisely word jury instructions, provided that the final result, read as a whole, is a complete and correct statement of the law.”). Here, between the jury instructions as a whole, as well as expert testimony and lengthy closing arguments by counsel, the court is satisfied the jury understood full well what it was being asked to decide. Moreover, as discussed more fully in the opinion below, there was an ample evidentiary basis for the jury to find no present injury given that ABS and the rest of the bull stud industry were reluctant to even offer sexed semen until ST had demonstrated its ability to compete with conventional semen, and ABS was forced to retool its processes to eliminate use of ST's wrongfully taken proprietary information. For both reasons, there was ample evidence for the jury to find that ABS was not yet ready to compete as of the date of trial even if the restrictive provisions in the 2012 Agreement were not present to inhibit it from doing so.[2]

         B. Relevant antitrust market and anticompetitive acts

         ST argues alternatively that judgment as a matter of law should have been entered against ABS on whether a separate submarket existed in the U.S. for sexed semen straws. There is even less merit in this argument. Generally, the parties agree that “under Seventh Circuit law, ABS must adduce ‘economic evidence' rather than ‘conclusory assumption[s]' to do so.” (Pl.'s Trial Br. (dkt. #650) at 1 (quoting Reifert v. S. Cent. Wis. MLS Corp., 450 F.3d 312, 318 (7th Cir. 2006)).) Here, ST faults ABS's expert, Professor Kevin Murphy, for failing to present sufficient economic evidence or analysis to meet this standard. More specifically, since ABS had the burden to prove a relevant antitrust market at trial, ST argues that Murphy acknowledged that analyzing price changes in the relationship between sexed semen straws and conventional semen straws was “important, ” but then failed to present actual economic evidence on whether those products are reasonably interchangeable and instead “testified in a conclusory manner based on hypotheticals.” (Def.'s Opening Br. (dkt. #742) at 6.) In response, ABS points to Professor Murphy's testimony that no other “good substitutes for sexing services” exist, including his analysis of the price of sexed semen versus conventional semen over time. (8/3/16 Trial Tr. (dkt. #709) at 50:17-51:3.) Because the price of “sexed semen was going down relative to conventional semen much faster, and most of that decline came out of the bull studs, ” rather than ST, Professor Murphy concluded that the price of conventional semen did not constrain the price ST could charge for sexed semen processing services. (Id. at 54:11-55:17.)

         Based on overwhelming evidence that bull studs increasingly felt the need to offer both sexed and conventional semen for sale in order to remain competitive, Murphy also testified that they had no reasonable alternative to purchasing sexed semen processing services from ST. (Id. at 59:9-23.) Along with other factual evidence of the growing importance of the niche being carved out for sexed semen in the bull stud market (especially after fertility rates for sexed semen began to climb to rival those of conventional semen), Professor Murphy reasonably analyzed the effect of competition between sexed and conventional semen straws on ST's ability to price sexed semen sorting services. This evidence was far more than conclusory or anecdotal. The strong consensus of all actors in the industry was that ST had taken the sexed semen market from a small afterthought to an indispensable, growing part of every bull stud's product offering in less than a decade, at least if it wanted to remain competitive, even in the market for conventional semen. Accordingly, ST's motion for judgment as a matter of law on the element of the relevant antitrust market will be denied.

         C. Anticompetitive contracting practices

On the element of willful maintenance of monopoly power, the jury found that ST insisted on anticompetitive contract terms. As it did unsuccessfully before the jury, ST again contends that the contract terms ABS now insists were anticompetitive actually served a “normal business purpose.” State of Ill. ex rel. Burris v. Panhandle E. Pipe Line Co., 935, F.2d 1469, 1481 (7th Cir. 1991) (“Conduct that tends to exclude competitors may therefore survive antitrust scrutiny if the exclusion is the product of a ‘normal business purpose[.]'”) (quoting Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 608-10 (1985)). Given its monopoly position, the court agrees with ABS that the evidence was sufficient for the jury to reasonably find “ST's insistence on long-term, take or pay contracts with high minimum purchase commitments, research and field trial restrictions, and restrictions on the commercialization of competing technologies was anticompetitive.” (Pl.'s Reply. Br. (dkt. #737) at 28 (incorporated by reference in Pl.'s Resp. Br. (dkt. #751) at 8).)

         In its brief, ST identifies procompetitive justifications for each of these challenged contract terms:

(1) the liquidated damages provision benefited ABS by providing a certain price at which it could exit the contract, and it was designed to cover some of the cost of staff and equipment that ST would need to incur to perform under the contract (Def.'s Resp. Br. (dkt. #727) at 29 (incorporated by reference in Def.'s Opening Br. (dkt. #742) at 7));
(2) the evergreen and three-year notice of cancellation provisions were designed to give ST enough time to relocate the equipment and staff at ABS's facility and give the parties enough time to negotiate any contract renewal (id. at 29-30);
(3) the non-compete clause addressed ST's concern that ABS would misuse its confidential information (id. at 30-31); and
(4) the five-year term and annual minimum purchase commitments provided the parties with long term certainty and guaranteed ST future sales to defray the upfront costs of setting up at ABS's facility (id. at 31).

         While there is some merit to the justifications set forth for (1) and (2), the longer non-compete in (3) and the 5-year term and annual minimums in (4) are substantially more suspect, as is the duplicative and constraining nature of all four contract terms together. Regardless, ST's own documents and witnesses at trial were enough for a reasonable jury to disbelieve ST's assertion that it was motivated by these procompetitive purposes. (Pl.'s Reply Br. (dkt. #737) at 28-29.)

         In reply, ST argues that Professor Murphy's testimony and the other statements ABS identifies demonstrate that “regardless of the effect of the Agreement on ABS's ability to compete . . ., each of the allegedly anticompetitive contract provisions nevertheless also had a sensible business purpose, ” and so the jury's verdict is improper as a matter of law. (Def.'s Reply Br. (dkt. #756) at 9.) But ST incorrectly frames the issue the jury was asked to decide. ST contends “[i]t is well established that anticompetitive conduct is ‘conduct without a legitimate business purpose that makes sense only because it eliminates competition.” (Def.'s Reply Br. (dkt. #756) at 9 (quoting Morris Commc'ns Corp. v. PGA Tour, Inc., 364 F.3d 1288, 1295 (11th Cir. 2004) (emphasis added)).) The question for the jury, however, was not whether the restrictive contract terms had any legitimate business justifications, but “[w]hether valid business reasons motivated a monopolist's conduct[, which] is a question of fact.” Panhandle E. Pipe Line Co., 935 F.2d at 1481-82; see also Aspen Skiing Co., 472 U.S. at 602 (“In [a monopolization] case evidence of intent is merely relevant to the question whether the challenged conduct is fairly characterized as ‘exclusionary' or ‘anticompetitive.'”).

         As the jury was instructed, “generally, the desire to maintain monopoly power or to block entry of competitors is not a legitimate business purpose.” (Closing Liability Instructions (dkt. #162) at 11.) Since the jury was not required to believe that ST was motivated by valid business reasons with respect to any of the challenged contract provisions, the court must now assume the jury did not do so in considering ST's Rule 50(b) motion. May v. Chrysler Grp., LLC, 716 F.3d 963, 971 (7th Cir. 2012).

         “[B]ecause the jury found that ST lawfully acquired the patents that cover the sorting process” addressed in the parties' contracts, ST further asserts that “neither the sorting contracts nor ST's insistence on any terms in them can be unlawfully exclusionary.” (Def.'s Opening Br. (dkt. #742) at 7.) Some parsing of ST's argument on this point may be helpful to illustrate its flaws. Generally, ST contends that because the jury found that it attained monopoly power by virtue of its lawful acquisition of patents, “the allegedly anticompetitive provisions in ST's sorting contracts are merely the legal exercise of ST's lawfully acquired patent rights.” (Def.'s Reply Br. (dkt. #756) at 12.) More specifically, ST asserts that in the absence of “illegal tying, fraud, or sham litigation, a patentee's conduct only runs afoul of the antitrust laws when it (1) ‘impermissibly broaden[s] the physical or temporal scope of the patent grant, ' and (2) ‘does so in a manner that has anticompetitive effects.'” (Def.'s Resp. Br. (dkt. #727) at 34 (emphasis in original) (quoting In re Indep. Serv. Orgs. Antitrust Litig., 203 F.3d 1322, 1328 (Fed. Cir. 2000)).) Because the jury found that ST did not acquire its sexed semen sorting patents for anticompetitive reasons, and because the jury did not find that “the sorting contracts' terms ‘impermissibly broaden' the scope of ST's lawfully acquired patents, ” ST further argues the jury's finding that it insisted on anticompetitive contract terms is contrary to law. (Id. at 34-35.)

         While conceding the jury found ST's acquisition of its patent portfolio was lawful, ABS correctly points out that ST never proposed a jury instruction on, nor was the jury explicitly asked to decide, whether “the sorting contracts' terms impermissibly broaden” the scope of its patents. Accordingly, neither can ABS be faulted for failing to make that showing, nor can the jury be faulted for failing to make that express finding. Even so, ST argues that it did not waive this argument, having proposed the ABA model jury instruction on the general relationship between the patent and antitrust laws -- “as long as the patent owner acts only to take full advantage of the right to exclude created by his or her patent, he or she does not violate the antitrust laws.”

         There are several flaws in this argument. As an initial matter, the court provided that very instruction to the jury. Indeed, because it was provided at the outset of trial, ST was free to refer to it in opening statements, as well as closing arguments. As importantly, this instruction does not support ST's implicit interpretation of it: a firm lawfully attaining monopoly power due to patent rights can insist on contract terms that would otherwise be anticompetitive provided the contract is generally related to the patented technology. Nor does the case ST cites in its Rule 50(a) motion, SCM Corp. v. Xerox Corp., 645 F.2d 1195 (2d Cir. 1981), stand for that proposition. (See Def.'s Reply Br. (dkt. #756) at 12 n.3.) Finally, ST waived this argument. See Thompson v. Mem'l Hosp. of Carbondale, 625 F.3d 394, 403 (7th Cir. 2010) (finding waiver of an argument a party presented in a motion for judgment as a matter of law but did not make to the jury or request a relevant jury instruction).

         Even if the court were to consider ST's argument that its contracting practices were somehow immunized because its semen sorting contracts were related to patents it acquired lawfully, the court agrees with ABS that the lawful acquisition of patents does not authorize a monopolist's insistence on anticompetitive contract terms to downstream customers with no other options in order to freeze out a possible future entrant into that market. Cf. Ford Motor Co. v. United States, 405 U.S. 562, 576 n.11 (1972) (“Even constitutionally protected property rights such as patents may not be used as levers for obtaining objectives proscribed by the antitrust laws.”).

         D. Anticompetitive conduct as a whole

         In addition to finding that ST willfully maintained its monopoly power by insisting on specific anticompetitive contract terms, the jury also found that it did so by its “anticompetitive conduct as a whole.” Because the jury found that ST's acquisition of patents was not anticompetitive, ST again argues that there was no evidence post-dating its acquisition of monopoly power in July of 2012 to support the jury's finding of “anticompetitive conduct as a whole, ” other than evidence of allegedly anticompetitive contract terms. Accordingly, ST moves to vacate the jury's finding on that element as both duplicative and as potentially leaving ambiguity regarding what conduct the jury found to be anticompetitive to be used for purposes of estoppel or equitable relief.[3]

         In reply to ABS's assertion that ST failed to move for judgment as a matter of law on this issue in a Rule 50(a) motion, ST seeks to clarify that it is really moving to alter an inconsistent judgment under Rule 59(e). (Def.'s Reply Br. (dkt. #756) at 15 n.4.) More specifically, if the court were to hold that the jury's liability findings with respect to ST's patent acquisitions and its anticompetitive conduct as a whole are internally inconsistent, then ST asserts that the court “may dissipate the inconsistency by setting aside one of the conflicting verdicts, if that verdict was unsupported by the evidence.” Am. Cas. Co. of Reading, Pa. v. B. Cianciolo, Inc., 987 F.2d 1302, 1305 (7th Cir. 1993); see also Fox v. Hayes, 600 F.3d 819, 844 (7th Cir. 2010) (“A new trial based on inconsistent verdicts is warranted only when a jury's verdict cannot be reconciled with the evidence at trial.”).

         Of course, “[any] plausible explanation for the verdict precludes reversal.” Id.; see also Kapelanski v. Johnson, 390 F.3d 525, 530 (7th Cir. 2004) (a jury verdict should not be set aside “if a reasonable basis exists in the record to support the verdict, viewing the evidence in the light most favorable to the prevailing party, and leaving issues of credibility and weight of evidence to the jury”). On this record, there was more than sufficient evidence to support the jury's reasonable finding that ST violated the antitrust laws outside of its insistence on anticompetitive contract terms after it obtained monopoly power. Indeed, ABS identifies eight such examples. Three of those examples involve activity related to patents that the jury expressly found ST acquired lawfully --securing additional patents using patent applications it purchased from Monsanto, choosing not to license its patents and blocking competitors from using those patents. ABS argues that this patent activity could support an “as a whole” finding because the Seventh Circuit has explained that conduct that may be lawful when analyzed separately could support § 2 liability when considered in concert with other conduct. See City of Mishawaka, Ind. v. Am. Elec. Power Co., 616 F.2d 976, 986 (7th Cir. 1980). For conduct to be included in a holistic approach, however, it must still support a finding of willful maintenance of monopoly power as a matter of law. See Kochert v. Greater Lafayette Health Servs., Inc., 463 F.3d 710, 717 (7th Cir. 2006); see also Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 414 (2004) (warning courts against the risk of false positives expanding Section 2 liability to “chill the very conduct the antitrust laws are designed to protect”) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 594 (1986)). And, as ST correctly points out, SCM holds that “where a patent has been lawfully acquired, subsequent conduct permissible under the patent laws cannot trigger any liability under the antitrust laws.” 645 F.2d at 1206.

         Even without applying a per se rule adopted by the Second Circuit in SCM, this court agrees with its general reasoning that the patent-related activities ABS identifies could not support Section 2 liability under the circumstances of this case, particularly given the evidence of the substantial risk ST took in acquiring those patents and developing its technology to create a new market for sexed semen. (See, e.g., 8/9/16 Trial Tr. (dkt. #729) at 81-86.) See also III Phillip E. Areeda, et al, Antitrust Law § 704 (4th ed. 2015) (“[T]he Patent Act creates a federal right to exclude others from practicing the patent, and the right is generally asserted in court through a constitutionally protected process. As a result, claims that a patent owner's enforcement activities constitute monopolization must generally be treated very circumspectly.”).

         ST argues that of the other five examples of misconduct ABS identifies, all are “contracting practices” necessarily subsumed within the jury's finding that ST willfully maintained its monopoly power by “insisting on anticompetitive contract terms.” But at least one of the additional instances of arguably anticompetitive conduct to which ABS points -- ST's efforts to block ABS from obtaining sexed semen from Boviteq (Dep. of Andre Barnabe (dkt. #316) at 16:8-18:4) -- reflects conduct post-dating the formation of ST's contracts, particularly given that the jury was instructed that it could find Section 2 liability if ABS proved that ST acted in an anticompetitive way by “[i]nsisting on specific terms in contracts with customers, whether potential competitors or potential customers of those competitors.” (Closing Liability Instructions (dkt. #692) at 11.) The “insisting on anticompetitive contract terms” question on the liability special verdict arguably focuses on the formation of ST's contracts with the bull studs. Therefore, since there was evidence in the record for the jury to find that ST's conduct other than its insistence on particular terms in its contract with ABS and activity related to its lawfully acquired patents was anticompetitive, the court will not vacate the jury's finding that ST's conduct as a whole was anticompetitive.

         E. Unfair competition

         Both parties move for judgment on ABS's unfair competition claim under Wisconsin common law. The parties' dispute centers around two issues: (1) whether ABS waived its right to pursue liability or damages under an unfair competition claim separate from its Sherman Act claim; and (2) whether ABS established the elements of an unfair competition claim at trial.[4] With respect to waiver, ABS argues that it agreed to be bound by ST's “conten[tion] that ABS's claim that Wisconsin's unfair competition law rises or falls with ABS's antitrust claims” only “for purposes of summary judgment.” (Pl.'s Opening Br. (dkt. #739) at 43 (quoting Pl.'s Opp'n Br. (dkt. #324) at 58).) In addition, ABS proposed a separate unfair competition instruction and special verdict question in its initial proposals. (Pl.'s Proposed Special Verdict (dkt. #491) at 2; Pl.'s Proposed Jury Instrs. (dkt. #492) at 20-21.) Furthermore, ABS objected to ST's failure to include a separate unfair competition instruction in ST's initial proposed jury instructions, arguing that a separate instruction was required because “[t]he standards for finding liability are different for the two claims, and the jury could possibly find no violation of the Sherman Act, but unfair competition under Wisconsin law.” (Pl.'s Objections (dkt. #534) at 7.)

         As to these preliminary skirmishes between the parties, the court agrees with ABS, but the assertion that “ABS expressly objected to the omission from the [court's] draft instructions of any mention of ABS's unfair competition claim or of the legal standards for resolving that claim” is misleading at best. (Pl.'s Opp'n Br. (dkt. #751) at 43 (emphasis added).) While ABS objected to ST's omission of the unfair competition instruction in its initial proposed jury instructions -- other than noting that it did not waive any objections it raised earlier and contending the instructions it originally proposed should be given (Dkt. #608 at 1; Dkt. #629 at 1; Dkt. #653 at 2 n.1; Dkt. #661 at 9) -- ABS failed to alert the court as to any specific, unique instructions that needed to be included in the multiple draft instructions circulated by the court during any one of the several discussions about jury instructions that the parties had with the court both before and during trial that were required to differentiate its liability for unfair competition under Wisconsin law as opposed to federal law.

         Federal Rule of Civil Procedure 51 requires that “a party who objects to an instruction or the failure to give an instruction must do so on the record, stating distinctly the manner objected to and the grounds for the objection.” Fed.R.Civ.P. 51(c)(1). “Rule 51 requires that objections to jury instructions be made in a timely fashion, on the record and with sufficient specificity to allow the presiding judge the opportunity to correct potential mistakes.” Consumer Prods. Research & Design, Inc. v. Jensen, 572 F.3d 436, 439 (7th Cir. 2009) (emphasis added); see also Schobert v. Ill. Dep't of Transp., 304 F.2d 725, 729-30 (7th Cir. 2002) (“The [Rule 51] objection must be specific enough that the nature of the error is brought into focus.”). Under Seventh Circuit law, merely proposing an instruction that the court does not include is not enough to preserve an objection to that exclusion. See Jensen, 572 F.3d at 439 (collecting cases).

         ABS's failure to raise a particular objection to an unfair competition instruction not being included in the court's draft instructions, despite multiple opportunities, is particularly egregious given its further failure to correct the court's observation at summary judgment that “[t]he parties agree that ABS's unfair competition claim under the common law of Wisconsin rises or falls with its Sherman Act claim.” (See 7/21/16 Op. & Order (dkt. #572) at 28 n.8.) Regardless, ABS's initial proffer of a separate, largely generic instruction does not comport with the expectations under Rule 51, nor with the purpose of raising specific objections to jury instructions expressed by the Seventh Circuit.[5] See Petkus v. Richland Cty., Wis., 767 F.3d 647, 654 (7th Cir. 2014) (“Although it submitted its own instructions, which the judge declined to give, it failed to object to the instructions that the judge did give. That was another forfeiture.”); Chestnut v. Hall, 284 F.3d 816, 819-20 (7th Cir. 2002) (holding that a party could did not satisfy the specificity requirement of Rule 51 by objecting to a “similar” proposed instruction because “[t]o hold so would be no different than allowing the appellant to rely on a general objection, which is insufficient under Rule 51”). ABS's failure to raise a specific objection is even more egregious given its position that it is somehow entitled to damages under the state law claim even though the jury found that it did not suffer antitrust injury under the Sherman Act.

         The court similarly rejects ABS's argument that a finding of waiver would be unfair because of the court's statement on the evening of the sixth day of trial that it had “considered each of the briefs and the changes proposed by the parties as objections to my proposals” and observation that “to the extent the final version of the closing instructions is inconsistent with the submissions by the parties, I think you've preserved your record and your objection to the other language, including your comments now.” (8/8/16 Trial Tr. (dkt. #720) at 156:19-157:2.) Both the court's statement and observation immediately followed a discussion about the antitrust liability instructions, which both parties contested vigorously, but not about the need for a wholly separate instruction for ABS's state unfair competition claim, much less some wholly unarticulated difference in the scope of recoverable damages between that claim and its Sherman Act claim.

         Nor is ABS's citation to Dawson v. N.Y. Life Insurance Co., 135 F.3d 1158 (7th Cir. 1998), persuasive for the proposition that “if the district court judge assured the parties that the record adequately contains their objections, the parties should not be penalized for relying on such assurances.” Id. at 1165. In Dawson, the Seventh Circuit gave several reasons for finding that the defendant preserved its objection to the jury instructions, none of which are present here:

First of all, New York Life did more than propose an instruction and then remain silent when the court rejected its proposal. New York Life submitted a memorandum relating its position on the court's own instructions and proposing modifications to the court's instructions that, if adopted, would have brought the instructions back into line with what New York Life wanted in the first place. Second, at some point further objection became useless. The effect New York Life desired from its many objections was the crafting of an instruction that the court had already rejected. Further objection would have been unavailing.

Id. at 1166 (internal quotation marks and citations omitted). In contrast to the defendant in Dawson, ABS never raised a specific objection to the omission of its proposed unfair competition instruction after the court circulated draft instructions, despite multiple invitations for both written and oral objections from the court.

         The court does not find waiver here casually or with indifference to any possible unfairness. To the contrary, the court finds the application of the requirements of Rule 51 to be wholly appropriate and fair because ABS never explained what subtle nuances existed in state and federal law that required separate treatment, much less offered adequate, supplemental instructions distinguishing “antitrust injury” under the Sherman Act and “injury” or “harm” under state law for either the liability or damages phases of trial.

         Even if the court were to consider the merits of ABS's argument that it is entitled to a new trial on damages because its state unfair competition claim applies a different, more lenient standard of proof than Section 2 of the Sherman Act, ABS faces another insurmountable hurdle. Under Federal Rule of Civil Procedure 51(d)(2), a party can obtain relief for an erroneous omission of a jury instruction only if that error affected its substantial rights and it can “articulate how [it] was affected by the refused jury instruction.” Jensen, 572 F.3d at 439-40. Here, ABS argues that a new trial based on its unfair competition claim is necessary because an “antitrust injury is not an element of unfair competition, ” which somehow entitles ABS “to a new trial limited to the question of whether ABS suffered harm as a result of ST's unfair competition, since the jury's monopolization verdict already conclusively establishes that ST engaged in unfair competition.” (Pl.'s Reply Br. (dkt. #754) at 36 (emphasis in original).) This argument is nonsensical, since it is premised on a finding of liability for exactly the same conduct the jury found violated the Sherman Act, yet argues the same jury that found no “injury, ” would nevertheless find “harm.” Even if the court were willing to entertain that decidedly remote possibility, ABS again offered no proposed instruction at trial, and still offers no explanation now, that articulates this supposedly unique standard for determining harm under Wisconsin common law of unfair competition. Hence, ABS meets the same dead end. See Lewis v. City of Chi. Police Dep't, 590 F.3d 427, 438-39 (7th Cir. 2009) (“Even if a party is entitled to an instruction, it is required to tender an instruction that correctly stated the law in order to challenge the district court's refusal to use it.”) (internal quotation marks and citations omitted).

         For all these reasons, while ABS is entitled to judgment as a matter of law on its unfair competition claim given the jury's findings as to its Sherman Act claim, it is not entitled to a new trial on damages.

         II. Patent Claims

         Both parties also challenge the jury's findings as to ST's counterclaims for infringement of two of its patents. With respect to U.S. Patent No. 8, 198, 092 (the “‘092 patent”), the jury found that ABS infringed all but one of the eight asserted claims (claim 13), but found that two of those infringed claims (1 and 13) were invalid. (Special Liability Verdict #2 (dkt. #697); Special Liability Verdict #4 (dkt. #699).) ABS also conceded that its sexed bovine semen sorting technology infringed the three asserted claims of the other patent, U.S. Patent No. 8, 206, 987 (the “‘987 patent”), but the jury found one of those claims (claim 2) was invalid. (Special Liability Verdict #2 (dkt. #697).)

         A. Infringement of the ‘092 Patent

         ST asserted infringement of independent claims 1 and 40 of the ‘092 patent at trial, as well as dependent claims 4, 13, 41, 42, 44 and 46. Among other things, claims 1 and 40 require the step of “detecting waveform pulses, ” which the court earlier construed to mean “applying logic to distinguish waveform pulses that represent live cells from waveforms that represent noise, debris, or dead cells.” (7/22/16 Op. & Order (dkt. #572) at 71-72.) Notwithstanding the jury's verdict, ABS argues that it is entitled to judgment as a matter of law on all of the asserted claims of infringement of the ‘092 Patent because ST presented no evidence at trial that its GSS technology performed the step of “detecting waveform pulses.”

         In response, ST effectively concedes that it needed to show that the GSS system actually performed the step of detecting waveform pulses to establish infringement -- rather than to show merely that it was capable of detecting waveform pulses -- since all of the asserted claims of the ‘092 patent are either method claims or apparatus claims. (See Pl.'s Opening Br. (dkt. #739) at 20.) Therefore, the parties primarily focus their attention on the evidence at trial regarding the “minimum span, ” or “min span, ” feature of the GSS system.

         At trial, ST's expert, Dr. John Nolan, testified that the GSS system used the min span feature to avoid processing waveforms that are not likely to be live cells. As support, Nolan referenced Trial Exhibit 1174, an ABS document, which includes a diagram of a sample waveform rejected by the GSS system's min span function, as well as a “snippet of code” describing the min span feature. (8/8/16 Trial Tr. (dkt. #717) at 39:7-42:8.) ST also points to testimony at trial from ABS's expert, Dr. J. Paul Robinson, that the min span feature can detect and exclude “events, ” including “electronic spikes, ” or “electronic noise” (8/8/16 Trial Tr. (dkt. #720) at 126:18-127:1, 128:9-12), as well as testimony from ABS's engineer, Adam Schilffarth, that if an event “fails the minimum span test, it's rejected” (id. at 32:6-10).

         ABS first argues that this evidence fails to support a finding that its sorting process actually detected waveform pulses using the min span feature. Specifically, ABS asserts that the values in the diagram in Exhibit 1174, including the min span value, were exaggerated and that ABS had never actually “built a GSS system that's on the scale shown in [Exhibit] 1174.” (Id. at 10:18-24, 11:35.) The court agrees with ABS that Trial Exhibit 1174 alone would be insufficient to establish infringement, since it merely illustrated an example of how the min span function was designed to work.

         ABS also points to Schilffarth's trial testimony that as the GSS technology developed, ABS recognized that it need not even use the min span feature. Instead, it was set to 0.1 microseconds, which “has no significant difference from zero.” (Id. at 13:8-14:3.) Schilffarth further testified that the GSS system uses a 400 kilohertz low pass analog filter to block “higher speed, shorter things, ” like “noise, ” from being converted to a digital signal and analyzed by the system's processor, but claimed the system does not apply “logic” in doing so. (Id. at 15:15-17:10.) As a result, Schilffarth testified on direct examination that the min span setting was set so low that it would not filter out any noise that had not already been rejected by the analog filter, and as he clarified on redirect, to the extent that min span was “used” in the GSS system, it was “not a meaningful feature.” (Id. at 41:24-42:4.) Finally, Schilffarth testified that the GSS system determines whether to fire its kill laser based on whether an event is inside of a “gate” drawn by the operator of the machine, regardless whether events outside the gate represent live or dead cells. (Id. at 7:5-15.)

         Based on this testimony, ABS argues, the GSS system does not practice the step of detecting waveform pulses, or “applying logic to distinguish waveform pulses that represent live cells from waveforms that represent noise, debris, or dead cells.” Put more succinctly, ABS argues that since the parties agree “logic” can only be applied digitally, the GSS system's analog filter that blocks noise from being processed as a digital signal cannot perform logic, and since the kill laser fires at everything outside of a drawn gate, it also applies no logic to distinguish live cells from noise, debris, or dead cells.

         In response, ST points out that “the jury was free to disregard or disbelieve Mr. Schilffarth's testimony” that the GSS system's analog filter rejects noise, debris and dead cells without using logic. (Def.'s Opp'n Br. (dkt. #752) at 29.) More specifically, ST attempts to draw a contrast between Schilffarth's response to a question from the court, indicating that the GSS technology does not use the min span feature “at all, ” and a description of the min span function in another one of ABS's documents, Trial Exhibit 518. That document was created by ABS's instrumentation development manager, Dr. Dave Appleyard, and states that its purpose is to “detail[] the computational steps involved in event detection, processing and laser triggering that are used in the GSS instrumentation.” (Trial Ex. 518 at 4.) The min span function is described in that document as “[t]he minimum span value that an event must exceed to be processed further. Used as a way to remove extremely short events (noise or particulates in the stream) from further processing.” (Id. at 7.)

         Even if the jury disbelieved Schilffarth's testimony about the GSS system's usage of the min span feature, ABS argues it would still be entitled to judgment of noninfringement as a matter of law because ST failed to present any other evidence that its technology actually performs the step of detecting waveform pulses. Specifically, ABS rejects ST's infringement theory that the min span feature rejects noise in the form of “electronic spikes, ” arguing that ST presented no evidence of, nor is ABS aware of any, waveforms with “a high enough amplitude to cross the threshold, but a short enough duration to fall below the ‘min span' limit of 0.1 microseconds.”[6] (Pl.'s Opening Br. (dkt. #739) at 24.) On cross, ABS expert Robinson acknowledged that the min span function “could” reject electronic spikes, but agreed with Schilffarth that they were “not going to be seen” by the digital processor because “the 400 kilohertz filter will cut [them] out, so [they] won't get there.” (8/8/16 Trial Tr. (dkt. #720) at 126:14; 127:6-10.)

         Still, ST points to one last portion of Robinson's testimony. As ST's counsel emphasized during its closing argument, Robinson acknowledged that it was “possible” noise could be introduced between the conversion of the analog signals to digital ones, including by the unit responsible for that conversion itself. (8/8/16 Trial Tr. (dkt. #720) at 127:11-16; 8/10/16 Trial Tr. (dkt. #722) at 16:8-17:6.) For its part, ABS argues that Robinson's concession as to that possibility is merely hypothetical, lacking evidence to support the jury's verdict, just as Schilffarth acknowledged on cross examination that the min span feature would reject an event “if for some reason the analog filter didn't work.” (8/8/16 Trial Tr. (dkt. #720) 32:23-33:3.)

         While this evidence of infringement of the ‘092 patent at trial was far from overwhelming, the court is persuaded that the description of the min span function in Trial Exhibit 518, as well as Robinson's and Schilffarth's testimony that min span would reject noise from further processing in the event that a waveform pulse was not rejected by the threshold analog filter, was sufficient to support a reasonable jury's finding of infringement, particularly given Robinson's admission that the processor that converts analog to digital signals could itself introduce noise.[7]

         ABS's final argument as to infringement of the ‘092 patent is that ST's electronic spike theory misapplies the meaning of “detecting waveform pulses” as construed by the court. According to ABS, it is not enough for ST to show that the GSS digital processing system “did something to distinguish at least some kinds of noise from live cells, ” but rather distinguished “between live cells on one hand, and debris or dead cells on the other hand.” (Pl.'s Opening Br. (dkt. #739) at 26.) ABS appears to argue that the court's claim construction required that the “noise” be filtered out using logic to eliminate anything that might contaminate the sorted semen or create inefficiency and waste in processing (see id.) rather than “[s]imply distinguishing noise from live cells.” (Pl.'s Reply Br. (dkt. #754) at 19.)

         ST asserts, and the court agrees, that ABS's attempts at further refinements really amount to additional, late claim construction to argue that an infringing system must actually distinguish live cells from: (1) noise, debris and dead cells, rather than noise only; or (2) all, rather than only some, types of noise. (Def.'s Opp'n Br. (dkt. #752) at 32.) In reply, ABS attempts to characterize this claim construction argument as instead a “postverdict elaboration” that “only clarified what was inherent in the construction, ” making “plain what . . . should have been obvious to the jury.” (Pl.'s Reply Br. (dkt. #756) at 19 (quoting Cordis Corp. v. Boston Sci. Corp., 658 F.3d 1347, 1356 (Fed. Cir. 2011)).) To the contrary, the court explained in construing “detecting waveform pulses” that claims 1 and 40 of the ‘092 patent and its specification describe “‘pulse detection' as a process by which the system identifies particles likely to be sorted, suggesting that the step of detecting waveform pulses uses logic to identify live cells from other waveforms.” (7/21/16 Op. & Order (dkt. #572) at 68-69.) No further specificity regarding the court's claim construction was necessary, much less inherent in that construction. Accordingly, a system infringed even if it only filtered out some noise in the detecting waveform pulses step consistent with the ordinary meaning of the court's claim construction. See Cordis Corp., 658 F.3d at 1355-56 (“[B]ecause [the defendant] did not object to the court's jury instruction regarding the construction of the term, . . . the verdict must be tested by the charge actually given under the ordinary meaning of the language of the jury instruction.”) (internal quotation marks, citation and brackets omitted); see also SkinMedica, Inc. v. Histogen Inc., 727 F.3d 1187, 1199 (Fed. Cir. 2013). For all these reasons, the court will not disrupt the jury's verdict as to infringement of the ‘092 patent.

         B. Validity of claims 1 and 13 of the ‘092 patent

         In finding that claims 1 and 13 of the ‘092 patent were invalid, the jury was obviously persuaded by ABS's only invalidity argument -- those claims are anticipated by the FACS DiVa system (“DiVa”). ABS argues that the verdict was amply supported by “testimony from both sides' experts establishing that the digital electronics in the DiVa system distinguished between live cells and a certain type of noise -- e.g., noise that is substantially shorter in duration than 0.1 microseconds -- in the same way the GSS system did.” (Pl.'s Opp'n Br. (dkt. #751) at 23.) ST, on the other hand, argues that ABS did not establish at trial that the DiVa detects waveform pulses in light of the court's claim construction.[8]

         Instead of applying logic to distinguish waveform pulses, ST contends, the evidence showed that the DiVa “analyzes and classifies every signal that crosses its preset threshold.” (Def.'s Opening Br. (dkt. #742) at 25 (emphasis in original).) As support, ST points to testimony from Nolan, who opined that “a threshold isn't logic, ” as well as Robinson's testimony agreeing that the DiVa processes every signal that crosses the threshold, “including live cells, noise, debris and dead cells.” (Id. at 25-27.)

         In response, ABS cites Nolan's acknowledgment on cross-examination that a signal that was “much shorter” than 0.1 microseconds might not be detected as an event by the DiVa's electronics. (8/9/16 Trial Tr. (dkt. #721) at 106:22-107:4.) But, as ST points out in reply, Nolan made clear in his testimony that the contingency regarding whether that short signal would be detected is dependent only on the DiVa's 0.1-microsecond sampling rate (meaning one sample taken every 0.1 microseconds); because “if any signal passed the threshold during that .1 microsecond, it would cross the threshold and be recorded as an event.” (Id. at 15-21.) In other words, ST argues because the DiVa did not apply “logic” to distinguish waveform pulses at the step in which it analyzed every signal that crossed its pre-set threshold, then ABS was required to show that its rejection of signals shorter than 0.1 microseconds limitation was an application of “logic, ” which ABS failed to do.

         The court agrees with ST that without any showing that the DiVa's sampling rate was a function of “logic, ” ABS did not present clear and convincing evidence that claims 1 and 13 of the ‘092 patent are invalid. ABS effectively concedes that its own expert did not opine that claims 1 and 13 of the ‘092 Patent are invalid because the prior art DiVa disclosed the “detecting waveform pulses” limitation. Thus, to establish that the DiVa did disclose that limitation, ABS is forced to rely on ST's expert, who disavowed that very assertion. This is a strained, convoluted argument at best, which fails to meet the clear and convincing evidence standard of proof, even if it convinced the jury. Therefore, the court grants ST's motion.[9]

         C. Infringement of claim 13 of the ‘092 patent

         ST also moves for judgment as a matter of law that ABS infringed claim 13 of the ‘092 patent on the basis that the jury necessarily rejected ABS's noninfringement argument by finding infringement on claim 1, since the evidence that it performed the additional limitations in claim 13 was unrebutted. Indeed, ABS acknowledges that “both sides' experts testified that the only disputed elements in claim 13 were those in underlying independent claim 1.” (Pl.'s Opp'n Br. (dkt. #751) at 27.) Nevertheless, ABS argues that ST's Rule 50(b) motion fails because it made no Rule 50(a) motion regarding infringement of claim 13 of the ‘092 patent in its written motion regarding its patent claims (dkt. #670), nor orally at the close of ABS's noninfringement and invalidity rebuttal case, even though the court invited ST to describe those grounds in taking notice of any motions that would be filed. (8/9/16 Trial Tr. (dkt. #721) at 66:7-13.)

         For its part, ST acknowledges making no Rule 50(a) motion on its infringement claims, but asserts that it did not do so because the court stated after ST rested its rebuttal case on the patent claims, that “both sides' motions are preserved” in direct response to ABS's counsel advising before the jury was charged that it would be filing Rule 50(a) motions. (Id. at 133:21-22.) Based on this statement, ST claims to have “reasonably understood the Court to be preserving patent-related Rule 50(a) motions, and, therefore, did not make a motion on its infringement claims.” (Def.'s Reply Br. (dkt. #756) at 36.) But, that claimed understanding does not comport with ST's written submission just one day after this exchange that set forth the specific grounds for its Rule 50(a) motions on invalidity, which the court allowed the parties to file to detail their oral “placeholder” motions to avoid delaying the jury trial. Therefore, ST should have raised any grounds for judgment as a matter of law on infringement of claim 13 of the ‘092 patent in that written submission. See Wallace v. McGlothan, 606 F.3d 410, 418 (7th Cir. 2010) (“Because the Rule 50(b) motion is only a renewal of the preverdict motion, it can be granted only on grounds advanced in the preverdict motion.”) (quoting Fed.R.Civ.P. 50(b) committee note (2006 amend.)).

         That said, the Seventh Circuit has recognized an exception to a party's waiver of a challenge to the sufficiency of the evidence supporting a jury's verdict “when the failure to review a sufficiency-of-the-evidence argument would result in ‘manifest injustice.'” SEC v. Yang, 795 F.3d 674, 680 (7th Cir. 2015).[10] Moreover, the Seventh Circuit has instructed district courts to interpret jury verdicts “so as to avoid inconsistency whenever possible.” Freeman v. Chi. Park Dist., 189 F.3d 613, 615 (7th Cir. 1999). Here, the court can avoid any inconsistency between the jury's verdicts that ST infringed claim 1 of the ‘092 patent (as well as claims 40, 41, 42, 44 and 46, for which the jury was instructed that “the sole issue in dispute as to infringement is whether ABS practices the step of ‘detecting waveform pulses'” (Closing Liability Instrs. (dkt. #692) at 20)) and its verdict that ABS did not infringe claim 13, by interpreting the jury's non-infringement verdict on a finding that the GSS system did not perform the additional limitations in claim 13.

         As ST points out, however, ABS presented no evidence to rebut the trial testimony of Robinson, Schilffarth and Nolan that the digital signal processor of the GSS system extracts features from waveform pulses “correspond[ing] to one or more of the following features: pulse area, pulse peak, pulse inner area, pulse width, pulse gaussianity, pulse lagging peak or pulse slope.” (Def.'s Opening Br. (dkt. #742) at 30-31 (quoting Trial Ex. 1626 (‘092 Patent) at 246).) Indeed, ABS admits that “[t]here was no dispute at trial that if the limitations of claim 1 were ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.