Jury Sides With Texas Company in Bull-Semen Technology Feud

MADISON, Wis. (CN) – A federal jury in Wisconsin unanimously ruled in favor of a Texas semen-sexing firm Monday after a five-day trial over patents and contracts related to bovine technology that converts raw bull ejaculate into sex-specific semen for cattle breeding. 

The dispute started in July 2014 when ABS Global, a cattle breeder based in DeForest, Wisconsin, sued Inguran, a Texas-based company that processes bull semen into sexed samples, for allegedly violating antitrust laws by freezing out marketplace competition for chromosomal sorting technologies.

Inguran, doing business with all its subsidiaries as Sexing Technologies, made its mint by taking unprocessed bull ejaculate from breeders and using patented technology to convert the raw ejaculate into sexed semen by separating either X or Y chromosomes into a female or male-dominant sample. The company sells the sexed samples back to either dairy farmers or beef producers.

U.S. District Judge William Conley found in favor of Sexing Technologies after a two-week trial in 2016 over ABS’s 2014 Sherman Act claims and found that ABS had violated a confidentiality agreement and infringed upon Sexing Technologies’ patents outlining the processes for creating sexed semen samples.

ABS appealed, and a three-judge panel in the Seventh Circuit in Jan. 2019 upheld the district court’s ruling but remanded some of the patent infringement claims back to the district court.

Once again presided over by Judge Conley, the latest jury trial ended Monday with a win for Sexing Technologies.

After two hours of deliberation, the eight-person jury found that ABS’s sorting process infringed upon three of Sexing Technologies’ patents: one involving a kill laser process that destroys unwanted chromosomes and two involving microfluidic chips that organize cells so they can be easily identified by chromosome.

The jury did not agree with ABS’s contention that the challenged patents were invalid.

Thomas Rein, a partner at Sidley Austin who appeared on behalf of ABS, reiterated during closing statements Monday that Sexing Technologies’ kill laser patent lacked in enablement and that its two microfluidic chip patents are ultimately obvious and not new, calling the chip patent claims “overly broad” based on prior art.

Rein argued that while the kill laser patent lays out that one can use a laser for semen sorting, ABS had to spend a decade and nearly $40 million in research and development to make its own such sorting technology, stating that Sexing Technologies’ kill laser patent did not meet its duty to “provide more than an invitation for more research.”

Kirt O’Neill, an attorney for Sexing Technologies based in the San Antonio office of Akin Gump, argued Monday that Sexing Technologies and the industry experts that testified on its behalf had brought new technology to the table in the way its sorting process focuses a fluidic stream containing bovine sex cells and then eliminates unwanted chromosomes.

O’Neill accused ABS’s own experts of excluding key portions of relevant data and literature related to the patents and asked the jury to look at the totality of evidence while making its determination.

ABS asserted throughout the case that the Texas company made plainly clear connections between the challenged patents, which Sexing Technologies purchased from Monsanto and Cytonome – which is now a subsidiary of the semen-sexing firm – and failed to meaningfully expand upon the prior art. Rein contended that none of the testimony could show that Sexing Technologies’ technology was not obvious based on that prior art.

In the end, the jury also was not convinced by ABS’s breach of contract counterclaim, which alleged that female chromosomal samples it purchased from Sexing Technologies did not meet purity standards.

Rein argued Monday that real world data and Sexing Technologies’ internal documents prove it knowingly violated the parties’ contract and said that Sexing Technologies’ notion that ABS did not catch impurities but sold the semen samples to its clients anyway was “blaming the victim.”

O’Neill, on the other hand, opined that ABS did not prove it was injured before bringing its claim in the 59th month of the parties’ 60-month contract, that ABS tested the product itself and was able to sell product that passed its tests, and called ABS’s claim that Sexing Technologies fudged purity results “a lot of bunk,” based on the evidence.

Shifting from its liability verdict, the jury completed deliberations on damages late Tuesday, delivering an additional financial blow to ABS. The damages verdict awarded Sexing Technologies $2.60 for each of the more than 3 million frozen sexed semen samples ABS produced and distributed while infringing on its microfluidic chip patents. The total damages clocked in at $8,567,923 in royalties.

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