Appeals from the United States District Court for the
District of Colorado in No. 1:13-cv-00876-WJM-NYW, Judge
William J. Martinez.
A. Shah, Akin, Gump, Strauss, Hauer & Feld, LLP,
Washington, DC, argued for plaintiff-cross-appellant. Also
represented by Ze-wen Julius Chen; Daniel Lynn Moffett, Kirt
S. O'Neill, San Antonio, TX.
Charles Daniel Ossola, Hunton & Williams LLP, Washington,
DC, argued for defendant-appellant. Also represented by David
A. Kelly, Atlanta, GA; Donald Earl Lake, III, George Guy
Matava, Samantha Kay Picans, Lewis Brisbois Bisgaard &
Smith, Denver, CO.
Newman, Dyk and Chen, Circuit Judges.
XY, LLC (XY) sued Defendant-Appellant Trans Ova Genetics,
L.C. (Trans Ova) for patent infringement and breach of
contract. Trans Ova counterclaimed, alleging patent
invalidity, breach of contract, and antitrust violations. The
district court granted summary judgment in favor of XY on
Trans Ova's antitrust counterclaims. A jury found
breaches of contract by both parties and awarded damages. The
jury also found that (i) Trans Ova failed to prove that the
asserted patent claims were invalid, (ii) Trans Ova willfully
infringed the asserted claims, and (iii) XY was entitled to
damages for patent infringement. The parties filed various
post-trial motions. The district court denied all of Trans
Ova's requested relief on the antitrust, breach of
contract, invalidity, and willfulness issues and granted
XY's request for an ongoing royalty. Trans Ova appeals
the district court's antitrust, breach of contract,
invalidity, and willfulness rulings. XY appeals the ongoing
royalty rate adopted by the district court.
affirm in part, vacate in part, and remand. Two issues
presented on appeal are moot. With respect to the remaining
issues, we affirm on all issues except the district
court's ongoing royalty rate, which we vacate. We remand
for the district court to recalculate an ongoing royalty rate
in accordance with this opinion.
patents relate to the sorting of X- and Y-chromosome-bearing
sperm cells, which can be used for selective breeding
purposes. Some of the asserted patent claims require the use
of "flow cytometry, " a process by which cells flow
through a flow cytometer at a high rate of speed in a fluid
stream and "are evaluated at several thousands of
[cells] per second." J.A. 8346-47.
Lawrence Johnson developed a technique for sorting animal
semen using flow cytometry in the 1980s as part of research
sponsored by the United States Department of Agriculture
(USDA). Dr. Johnson's technique is patented in U.S.
Patent No. 5, 135, 759 (the Johnson Patent), which issued in
1992. The Johnson Patent was initially licensed to XY under a
USDA partnership program. The Johnson method involves
staining DNA in sperm cells with a dye; using a laser beam to
activate the fluorescence of the dye (with X-chromosome cells
being brighter because they contain more DNA than
Y-chromosome cells); detecting the amount of fluorescence in
the cells; and sorting the cells into separate containers for
X and Y cells.
XY's patents are at issue in this appeal. They can be
grouped into four categories: (1) the "Fluid
Patents" (U.S. Patent Nos. 6, 149, 867 and 6, 524, 860);
(2) the "Freezing Patent" (U.S. Patent No. 7, 820,
425); (3) the "In-Vitro Fertilization Patent" (U.S.
Patent No. 8, 569, 053); and (4) the "Reverse Sort
Patents" (U.S. Patent Nos. 7, 713, 687 and 7, 771,
Fluid Patents claim flow cytometry devices and methods that
use "sheath fluids" to provide optimum pre-and
post-sorting fluid environments for the cells to
"achieve as unaffected a sorted result as
possible." '867 patent, J.A. 13485 col. 4 ll. 40-55,
J.A. 13493 col. 20 ll. 1- 4; '860 patent, J.A. 13516 col.
18 ll. 47-50, J.A. 13509 col. 4 ll. 27-43. The claimed fluids
are introduced in a "coordinated" fashion such that
the cells' fluid environment changes at various stages of
the sorting process to minimize stress on the cells and keep
as many of the cells alive as possible. See, e.g.,
'867 patent, J.A. 13490 col. 13 ll. 1-65, J.A. 13493 col.
20 l. 1.
Freezing Patent claims methods for "cryopreserving sperm
that have been selected for a specific characteristic."
J.A. 13300 col. 2 ll. 9-10, 16-17; J.A. 13315 col. 31 l. 64 -
col. 32 l. 11. The claimed methods purport to
"facilitat[e] storage and/or shipment of selected sperm
samples to sites distant from the collection site." J.A.
13300 col. 2 ll. 44-46. According to the patent, thawing the
samples "yields viable sperm that can be used in
procedures such as artificial insemination . . . and in vitro
fertilization." Id. col. 2 ll. 46-48.
Reverse Sort Patents claim methods of first freezing, then
thawing, and finally sorting sperm cells. See, e.g.,
'687 patent, J.A. 13434 col. 30 ll. 9-42. The parties
agree that a principal difference between the claimed methods
in the Reverse Sort Patents and prior art methods is the use
of a relatively high concentration of dye for staining the
sperm cells in the Reverse Sort Patents- greater than 40
micromolar. See, e.g., id. col. 30 ll.
In-Vitro Fertilization Patent claims methods of in-vitro
fertilization using sorted and reverse sorted sperm. See
generally J.A. 14930-31 col. 10 l. 14 - col. 12 l. 26.
Ova provides services related to embryo transfer and in-vitro
fertilization for cattle. Before the events giving rise to
this lawsuit, Trans Ova purchased sorted semen from Inguran,
LLC (Inguran), which was a licensee of XY's patents.
Trans Ova became dissatisfied with the quality of
Inguran's product, however, and sought to license
XY's technology to produce its own sorted semen.
Trans Ova entered into a five-year licensing agreement (the
Agreement) in April 2004 under which Trans Ova was authorized
to use XY's technology in animal breeding. The Agreement
was subject to automatic renewal in April 2009, unless,
inter alia, Trans Ova was in material breach of the
Agreement. XY retained the right to terminate the Agreement
in the event of certain breaches by Trans Ova, upon written
notice to Trans Ova.
November 2007, Inguran acquired XY and, in the same month, XY
sent a letter purporting to terminate the Agreement
(Termination Letter) because of alleged breaches by Trans
Ova. Trans Ova disagreed with XY's allegations of breach
and argued that the Agreement had not been terminated. Over
the course of several years, the parties negotiated but
failed to resolve their disputes. Trans Ova continued to make
royalty payments to XY pursuant to the Agreement, in
accordance with its position that the Agreement had not been
terminated, but XY declined all payments except one (which XY
alleges it accepted in error). During the period of
negotiations, XY alleges that it became aware of further
breaches by Trans Ova (in addition to those alleged in the
Termination Letter), including underpayment of royalties and
development of improvements to XY's technology without
disclosure of such improvements to XY.
March 2012, XY sued Trans Ova for patent infringement in the
United States District Court for the Western District of
Texas. Trans Ova moved to dismiss or transfer for improper
venue. On March 28, 2013, the district judge granted Trans
Ova's motion and transferred the case to the District of
Colorado. XY filed an amended complaint, adding claims for
breach of contract and unjust enrichment. Trans Ova, in turn,
asserted (1) patent invalidity, (2) monopolization and
attempted monopolization under the Sherman Act, and (3)
breach of contract by XY and Inguran.
moved for summary judgment that Trans Ova's antitrust
claims were barred by the applicable four-year statute of
limitations. Trans Ova argued in response that the
"continuing conspiracy" exception, per Tenth
Circuit case law, effectively restarted the limitations
period with each "new and independent act" that
inflicted "new and accumulating injury" on Trans
Ova after XY sent the Termination Letter. J.A. 41 (quoting
Champagne Metals v. Ken-Mac Metals, Inc., 458 F.3d
1073, 1088 (10th Cir. 2006)). The district court determined
that Trans Ova had not identified any new injury resulting
from XY's post-termination actions in its brief in
opposition to XY's motion. Therefore, the district court
held that the continuing conspiracy exception did not apply
and Trans Ova's antitrust claims were barred by the
statute of limitations. Id. at 43-44.
Ova filed a motion for reconsideration, which the district
court denied. The district court reaffirmed its ruling that
Trans Ova had failed to show a triable issue of new and
accumulating injury resulting from any of XY's
post-termination actions. The district court clarified that,
in granting summary judgment, it had assumed that the
Termination Letter was not a "final act" that
permanently excluded Trans Ova from the market, but
"nevertheless found that Trans Ova did not meet the
threshold requirement to show that any subsequent acts caused
new injuries." J.A. 50. "It was Trans Ova's
burden, in opposing summary judgment, to present evidence
that the continuing conspiracy exception applied" and
"Trans Ova's failure to address the new injury prong
of the analysis fell short of meeting that burden."
Id. (citing Celotex Corp. v. Catrett, 477
U.S. 317 (1986)). Trans Ova's identification of two
allegedly new categories of injuries in its briefing on the
motion for reconsideration "should have been included in
its prior briefing" and thus came too late. J.A. 51.
case proceeded to a jury trial. The jury found that both
parties had breached the Agreement. Specifically, the jury
found that Trans Ova materially breached and failed to cure
prior to the April 2009 renewal date set out in the
Agreement. As a result, under the jury's finding, the
Agreement terminated in April 2009, and Trans Ova's
post-termination use of XY's patented technology was
unlicensed and infringing. The jury also found, however, that
XY violated the Agreement and its duty of good faith and fair
dealing by attempting to terminate the license in November
2007. As compensation for the respective breaches, the jury
awarded XY $1, 481, 000 and Trans Ova $528, 000 in damages.
jury also found that none of the asserted patent claims were
invalid and that Trans Ova willfully infringed. The jury
awarded XY $4, 585, 000 for Trans Ova's patent
infringement. In addition, the jury found that XY had unclean
hands from its purported termination of the Agreement in
trial, Trans Ova filed motions on the breach of contract,
willfulness, and invalidity issues. XY filed motions seeking
an award of an ongoing royalty and enhanced damages.
the breach of contract issues, Trans Ova moved for judgment
as a matter of law under Rule 50(b) or, in the alternative, a
new trial under Rule 59(a) or an amended judgment under Rule
59(e). Trans Ova argued that XY's attempt to terminate
the Agreement was a material breach that excused Trans
Ova's obligations under the Agreement and that the
jury's findings that both parties breached and were
entitled to damages were irreconcilable. Trans Ova also
argued that the jury verdict form was structured in such a
way that the jury was not able to determine whether Trans
Ova's obligations under the Agreement had been suspended
due to XY's breach. At trial, the district court
overruled an objection by Trans Ova to the verdict form that
was based on similar arguments. The district court denied
Trans Ova's motion, inferring that the jury found a
material breach by Trans Ova before XY sent the Termination
Letter. The district court also determined that a reasonable
jury could have reached the conclusions reflected in the
verdict form based on the evidence presented at trial.
respect to willfulness, Trans Ova moved under Rule 59(e) for
a ruling of no willful infringement. XY opposed the motion,
arguing, inter alia, that Trans Ova could not seek
its requested relief because Trans Ova had not challenged the
sufficiency of XY's evidence on willful- ness by moving
under Rule 50(a) at trial. The district court rejected this
argument, stating that "Trans Ova's argument is not
a challenge to the sufficiency of XY's evidence at trial,
but rather an argument that the jury's willful
infringement finding was clearly erroneous as a matter of
law." J.A. 11. More particularly, the district court
understood Trans Ova to be arguing that certain of its
invalidity defenses were objectively reasonable under the
test for willfulness set out in In re Seagate Technology,
LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc). The
district court determined that the invalidity defenses were
objectively reasonable and granted Trans Ova's motion,
finding no willful infringement as a matter of law. However,
as explained, infra, the district court later
revisited this decision after the Supreme Court issued its
opinion in Halo Electronics, Inc. v. Pulse Electronics,
Inc., 136 S.Ct. 1923 (2016).
invalidity, Trans Ova moved under Rule 59(a) for a new trial.
The district court denied the motion, holding that Trans
Ova's arguments in support of the motion were merely a
critique of XY's expert's opinions and amounted to
nothing more than a rehash of arguments presented to the jury
at trial. Trans Ova had stipulated to the qualification of
XY's expert to testify regarding "the subject matter
of the asserted patents" under Federal Rule of Evidence
702. The district court held that Trans Ova was not entitled
to a new trial because "Trans Ova's arguments point
to a classic battle of the experts . . . rather than an
indication that the overwhelming weight of the evidence leans
but one way." J.A. 16-17.
filed a motion requesting that the district court set an
ongoing royalty as an equitable remedy for Trans Ova's
future infringement. The district court noted Trans Ova's
admission that it intended to continue to practice XY's
patents and determined that an ongoing royalty would be
appropriate. The district court then observed that the jury
effectively adopted the 15% royalty rate on gross sales and
the 4% royalty rate for reverse sorting services proposed by
XY's damages expert at trial. The district court also
noted that "every one of XY's prior licenses
include[d] a 10% royalty rate, which tend[ed] to prove that
10% [was] XY's established royalty." J.A. 28. After
considering the relevant evidence and the parties'
various arguments under certain of the factors set out in
Georgia-Pacific Corp. v. U.S. Plywood Corp., 318
F.Supp. 1116, 1120 (S.D.N.Y. 1970), the district court
calculated an ongoing royalty rate for gross sales by
averaging the jury's 15% rate with the 10% rate in
XY's prior licenses to arrive at a rate of 12.5%. For
reverse sorting services, the district court awarded an
ongoing royalty rate of 2%, half of the jury's rate for
moved for an award of enhanced damages, which the district
on the jury's unclean hands finding, the district court
denied XY's unjust enrichment claim and XY's request
for injunctive relief.
the Supreme Court issued its decision in Halo, XY
moved under Rule 59(e) to alter or amend the judgment with
respect to the ongoing royalty rate and under Rule 60(b)(6)
to reconsider the district court's finding of no willful
infringement and denial of enhanced damages. The district
court denied XY's motion with respect to the ongoing
royalty rate. Regarding willfulness, the district court
granted XY's motion in part by reinstating the jury's
finding of willfulness-in view of Halo's
abrogation of the objective prong of Seagate's
test for willfulness, under which the district court had
granted judgment as a matter of law of no willful
infringement-but denied XY's motion for reconsideration
of the district court's denial of enhanced damages.
Ova appeals the district court's rulings on the
antitrust, breach of contract, invalidity, and willfulness
issues. XY appeals the district court's calculation of
the ongoing royalty rate. ...