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XY, LLC v. Trans Ova Genetics, LC

United States District Court, D. Colorado

November 10, 2016

XY, LLC, Plaintiff / Counterclaim Defendant,
v.
TRANS OVA GENETICS, LC, Defendant / Counterclaim Plaintiff. No.-NYW

          ORDER ON POST-JUDGMENT MOTIONS

          WILLIAM J. MARTÍNEZ JUDGE

         Before the Court is XY's Motion to Alter or Amend the Judgment Under Rule 59(e) (“Rule 59 Motion, ” ECF No. 505), and XY's Motion for Reconsideration Under Rule 60(b)(6) (“Rule 60 Motion, ” ECF No. 544). Both of these motions challenge portions of this Court's Order on Post-Trial Motions (“Post-Trial Order, ” ECF No. 500). Familiarity with the Post-Trial Order is presumed. For the reasons explained below, the Court denies the Rule 59 Motion. As for the Rule 60 Motion, the Court grants it to the limited extent that the jury's willfulness finding is reinstated. The Rule 60 Motion is otherwise denied.

         I. RULE 59 ANALYSIS

         A. Legal Standard

         XY brings its Rule 59 Motion specifically under Federal Rule of Civil Procedure 59(e): “A motion to alter or amend a judgment must be filed no later than 28 days after the entry of judgment.” This Rule “was adopted to make clear that the district court possesses the power to rectify its own mistakes in the period immediately following the entry of judgment.” White v. N.H. Dep't of Emp't Sec., 455 U.S. 445, 450 (1982) (internal quotation marks omitted; alterations incorporated). Accordingly, the Court may amend the judgment in its discretion on account of “(1) an intervening change in the controlling law, (2) new evidence previously unavailable, and (3) the need to correct clear error or prevent manifest injustice.” Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000). A motion under the clear error prong of this test “is appropriate where the court has misapprehended the facts, a party's position, or the controlling law.” Id. However, motions to alter or amend the judgment pursuant to Rule 59(e) “are regarded with disfavor. . . [and are] ‘not appropriate to revisit issues already addressed or advance arguments that could have been raised in prior briefing.'” Kerber v. Qwest Group Life Ins. Plan, 727 F.Supp.2d 1076, 1076 (D. Colo. 2010) (quoting Servants of the Paraclete, 204 F.3d at 1012).

         B. Analysis

         In the Post-Trial Order, the Court elected to award XY an ongoing royalty in lieu of an injunction or a requirement that XY and Trans Ova negotiate an ongoing royalty amongst themselves. (ECF No. 500 at 21-23.) The Court found that the jury, in fixing damages for past infringing sales, had accepted XY's damages expert's 19% royalty rate. (Id. at 23.) The Court rejected, however, XY's argument that the ongoing royalty rate necessarily must exceed the rate set by the jury for past infringement. (Id. at 24-25.) The Court found that XY's primary support for its position-the Federal Circuit's decision in Amado v. Microsoft Corp., 517 F.3d 1353 (Fed. Cir. 2008)-does not go as far as XY claims. (Id. at 24.) Applying various factors, the Court instead set a royalty rate of 12.5% of gross sales, plus 2% for reverse sorting services, with a minimum per-straw or per-service royalty of $5. (Id. at 25-28.)

         In its Rule 59 Motion, XY vehemently protests this Court's decision to award less than 19%, once again citing Amado. (Compare ECF No. 471 at 3-4 with ECF No. 505 at 3-4.)[1] XY also cites Bianco v. Globus Medical, Inc., 53 F.Supp.3d 929 (E.D. Tex. 2014), in which Federal Circuit Judge William C. Bryson, sitting by designation in the Eastern District of Texas, stated that, “[a]lthough individual considerations may weigh in favor of decreasing the ongoing royalty rate relative to that awarded by the jury, the Court notes that pursuant to Amado the ultimate ongoing royalty rate should not be lower than the rate awarded by the jury for pre-verdict damages.” Id. at 939. XY also cites a forthcoming scholarly article by Gregory Sidak, chairman of an expert economics consulting firm, who concludes that none of the 35 post-Amado district court cases he surveyed “specified an ongoing royalty below the jury-determined a reasonable royalty for past damages.” J. Gregory Sidak, Ongoing Royalties for Patent Infringement 12 (Oct. 21, 2015), available at https://www.criterioneconomics.com/docs/ongoing-royalties-for-patent-infringement.pdf (last accessed Nov. 8, 2016) (24 Texas Intell. Prop. L.J. forthcoming 2016) (hereafter, “Sidak”).[2]

         Amado, of course, was raised and previously rejected, and is therefore not a basis for Rule 59 relief. And although XY did not previously raise Bianco or the Sidak article, neither was unavailable at the time of XY's previous motion to set an ongoing royalty rate, which was filed on February 29, 2016. (ECF No. 471.) Thus, those authorities likewise present no basis for Rule 59 relief. Nonetheless, for clarity, the Court notes the following.

         Amado has certainly been interpreted by later courts as requiring that any ongoing royalty be set no lower than the jury's past-infringement royalty. But this is largely based on two considerations. First, Amado endorsed previous non-precedential statements to the effect that “[o]nce a judgment of validity and infringement has been entered, . . . the [royalty] calculus is markedly different because different economic factors are involved [as compared to a pre-judgment calculus].” 517 F.3d at 1362. Second, Amado stated in a footnote that “logically, the eventual [ongoing royalty] award [in that case] should fall somewhere between the $0.04 amount the jury found to be an appropriate pre-verdict reasonably royalty and the $2.00 amount Amado was willing to accept in exchange for a license.” Id. at 1362 n.2. The first statement is arguably a holding, but it does not specify that a court setting an ongoing royalty rate cannot go below the jury's pre-verdict royalty rate. As for the second (footnoted) statement, it is not a holding, but an observation heavily informed by the facts of that case. In particular, the court does not specify whether the jury's pre-verdict royalty was “logically” the lowest possible ongoing royalty because the law dictates it to be so, because the jury's rate was the lower bound of the parties' arguments, or because of some other consideration. See Id. at 1356.

         Moreover, the Sidak article is partially senseless if Amado amounted to a holding. Sidak, among other things, empirically explores post-Amado district court decisions to see whether those courts have “developed a consistent methodology for determining an ongoing royalty.” Sidak at 3. He finds none, and therefore proposes “a simple yet rigorous economic methodology that courts can apply when determining an ongoing royalty.” Id. Sidak does not ask, “Can a judge award an ongoing royalty rate lower than the jury's royalty rate for past infringement?” His observation that the 35 district court cases surveyed always award at least the same royalty rate fixed by the jury was an observation gleaned from his data and informing his opinions about the proper method of calculating an ongoing royalty. See Id. at 12. When it comes to calculating that royalty, Sidak opines that the post-verdict context “will typically support the award of an ongoing royalty that exceeds the reasonable royalty awarded for past infringement, ” id. at 25-26 (emphasis added), but he nowhere argues that any other option is categorically off-limits.

         Many of these findings and opinions would be misdirected if Amado indeed held that the jury's pre-verdict royalty rate is the lower limit. An observation that 35 courts have adopted that lower limit would have no empirical relevance to Sidak's proposed royalty calculation method, given that the jury's rate would necessarily be the starting point under Amado. Nor would there be any need to discuss whether an ongoing royalty rate can drop below the pre-verdict royalty rate.

         In addition, the Court finds that the current trend in Supreme Court patent cases is to preserve district courts' traditional equitable discretion as much as possible. See, e.g., Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S.Ct. 1923 (2016); eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). Accordingly, the Court reaffirms its previous finding that, notwithstanding other courts' and commentators' interpretations of Amado, district courts retain the equitable discretion to set any adequately reasoned ongoing royalty rate, whether above or below the rate fixed by the jury for pre-verdict infringement. (See ECF No. 500 at 24-28.)

         As for the rate the Court selected here, the Court thoroughly explained its reasoning in the Post-Trial Order. (See id.) To that reasoning, the Court adds only that-to the extent Federal Rule of Evidence 408 prevents the Court from considering the parties' failed license negotiations (see ECF No. 505 at 9)-the Court would nonetheless have concluded that XY was not, in reality, a willing licensor based solely on the jury's finding that both parties breached their agreement (see ECF No. 500 at ...


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