XY, LLC v. Trans Ova Genetics, LC
ORDER granting in part and denying in part 322 Trans Ovas Motion to Exclude Portions of the Expert Reports and to Limit Testimony of XY, LLCs Expert Dr. James C.S. Wood; granting in part and denying in part 326 Trans Ovas Motion to Exclude and Limit the Testimony and Report of XY, LLCs Damage Expert Todd Schoettelkotte; denying 330 XYs Motion to Exclude, by Judge William J. Martinez on 01/08/2016.(cthom, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 13-cv-0876-WJM-NYW
Plaintiff / Counterclaim Defendant,
TRANS OVA GENETICS, LC,
Defendant / Counterclaim Plaintiff.
ORDER ON MOTIONS TO EXCLUDE EXPERT TESTIMONY
Plaintiff XY, LLC (“XY”) brings this case against Defendant Trans Ova Genetics,
LC (“Trans Ova”) arising out of disputes over a License Agreement which had permitted
Trans Ova to use XY’s patented technology. XY brings claims for breach of contract
and patent infringement, and Trans Ova counterclaims for breach of contract and
breach of the covenant of good faith and fair dealing, as well as asserting various
defenses. (See ECF No. 301.) This case is set for a three-week jury trial commencing
on Monday, January 25, 2016, with the Final Trial Preparation Conference set for
January 8, 2016. (ECF No. 314.)
This matter is before the Court on three motions seeking to exclude expert
testimony. For the reasons set forth below, XY’s Motion to Exclude Expert Testimony
of Dr. David DeRamus (ECF No. 330) is denied in its entirety, and Trans Ova’s Motions
to Exclude Testimony of XY’s Expert Dr. James C.S. Wood (ECF No. 322) and XY’s
Expert Todd Schoettelkotte (ECF No. 326) are granted in part and denied in part.
I. LEGAL STANDARD
A district court must act as a “gatekeeper” in admitting or excluding expert
testimony. Bitler v. A.O. Smith Corp., 400 F.3d 1227, 1232 (10th Cir. 2004). Adm ission
of expert testimony is governed by Rule 702, which provides:
If scientific, technical, or other specialized knowledge will
assist the trier of fact to understand the evidence or to
determine a fact in issue, a witness qualified as an expert by
knowledge, skill, experience, training, or education, may
testify thereto in the form of an opinion or otherwise, if
(1) the testimony is based upon sufficient facts or data,
(2) the testimony is the product of reliable principles and
methods, and (3) the witness has applied the principles and
methods reliably to the facts of the case.
Fed. R. Evid. 702. The proponent of the expert testimony bears the burden of proving
the foundational requirements of Rule 702 by a preponderance of the evidence. United
States v. Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009).
To qualify as an expert, the witness must possess such “knowledge, skill,
experience, training, or education” in the particular field as to make it appear that his or
her opinion would rest on a substantial foundation and would tend to aid the trier of fact
in its search for the truth. LifeWise Master Funding v. Telebank, 374 F.3d 917, 928
(10th Cir. 2004). To establish that the proffered testimony is reliable, the reasoning or
methodology underlying the testimony must be valid and must be properly applied to
the facts in issue. See Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 592–94
(1993) (listing four factors relevant to assessing reliability: (1) whether the theory has
been tested; (2) whether the theory has been subject to peer review and publication;
(3) the known or potential rate of error associated with the theory; and (4) whether the
theory has attained widespread or general acceptance).
While an expert witness’s testimony must assist the jury to be deemed
admissible, Fed. R. Evid. 702(a), it may not usurp the jury’s fact-finding function. See
Specht v. Jensen, 853 F.2d 805, 808 (10th Cir. 1988). The line between what is helpful
to the jury and what intrudes on the jury’s role as the finder of fact is not always clear,
but it is well-settled that “[a]n opinion is not objectionable just because it em braces an
ultimate issue.” Fed. R. Evid. 704.
Ultimately, “the rejection of expert testimony is the exception rather than the
rule.” Fed. R. Evid. 702 advisory committee’s note. “[T]he trial court’s role as
gatekeeper is not intended to serve as a replacement for the adversary system. . . .
Vigorous cross-examination, presentation of contrary evidence, and careful instruction
on the burden of proof are the traditional and appropriate means of attacking shaky but
admissible evidence.” Id.
II. XY’S MOTION TO EXCLUDE OPINIONS OF DR. DAVID DERAMUS
XY1 moves to exclude Dr. DeRamus’s opinions to the extent they are based on
alleged anticompetitive conduct, as a result of the Court’s Order Granting Summary
Judgment on Trans Ova’s Sherman Act counterclaims. (ECF No. 330.)
However, since XY’s Motion was filed, the Court has permitted Trans Ova to
reassert its substantive antitrust claims via a recoupment defense against XY, which—if
successful—would allow Trans Ova to offset any damages XY might win on its claims.
XY’s Motion was brought by both XY and then-Third Party Defendant Inguran. (ECF
No. 330 at 5.) However, all claims against Inguran have since been dismissed, and Inguran is
no longer a party to this action. (ECF No. 393.) As such, the Court will discuss the motion as if
brought solely by XY.
(ECF No. 376.) This ruling precludes XY’s argument that the challenged opinions
relating to XY’s alleged anticompetitive conduct are no longer relevant, because the
Sherman Act claims have been revived against XY and may still be argued to the jury.
(Id.) The Court concludes that these opinions may be introduced in support of Trans
Ova’s recoupment defense. Accordingly, XY’s Motion is denied.
However, the Court cautions Trans Ova that Dr. DeRamus’s testimony must still
comport with the current status of this case with respect to Inguran. The Court’s recent
Order on Motions in Limine indicated that evidence of Inguran’s market power is
admissible to provide context for an understanding of the relevant industry and XY’s
market power in that industry (ECF No. 396 at 7–8), but it is not independently relevant
for purposes of demonstrating Inguran’s own anticompetitive conduct because Inguran
is no longer a third-party defendant in this case. (See ECF No. 393.) As such, Dr.
DeRamus must limit his testimony accordingly.
III. TRANS OVA’S MOTION TO EXCLUDE OPINIONS OF DR. JAMES C.S. WOOD
Trans Ova moves to exclude portions of the expert report of Dr. Wood, XY’s flow
cytometry and cell structure expert, and to limit his testimony regarding interpretation of
the License Agreement, willful infringement, and secondary considerations of nonobviousness. (ECF No. 322.)
Interpretation of the License Agreement
Trans Ova argues that Dr. Wood impermissibly renders legal conclusions by
interpreting the contract and opining that Trans Ova breached the License Agreement,
and that he is unqualified to so opine because he is not a legal expert. (Id. at 6–8.)
Among others, Dr. Wood’s expert reports contain the following opinions:
I have evaluated the facts discussed below and it is
my opinion that Trans Ova has committed at least the
following breaches of the License Agreement.
Failure to Disclose and Assign Improvements
Trans Ova has breached the License Agreement by
failing to inform XY of Improvements that Trans Ova
made to XY’s technology and by failing to assign such
Improvements to XY.
It is my opinion that Trans Ova has also developed an
Improvement in the use of sexed semen in embryo transfer
procedures that it was required to disclose and assign to XY.
Trans Ova’s failure to do so constitutes a breach of the License
Trans Ova has also breached the License Agreement
to the extent that they have failed to pay royalties on
revenues from the on the use or sale of certain
Using Non-Approved Sorters
Trans Ova has also breached the License Agreement
by failing to purchase its sperm sorting MoFlo flow
cytometers from an authorized supplier. The first
such breach occurred toward the end of 2008 and
occurred repeatedly thereafter.
Third-Party Research with Owl Biomedical
Trans Ova has also breached the License Agreement
by attempting to develop alternative sperm sorting
technology by using XY’s patents and know-how to
develop that alternative sperm sorting technology.
Trans Ova therefore breached the License
Agreement by failing to disclose this research and
development activity related to XY’s Technology. I
discuss the research and development activities in
more detail below.
Trans Ova’s [sic] breached this confidentiality
provision by demonstrating the MoFlo SX to Owl
Biomedical and by conveying to Owl Biomedical
information about the operation of the MoFlo SX and
the results it would achieve. . . . This information is
related to XY’s Technology under the License
Agreement and should not have been disclosed.
Moreover, Trans Ova breached the confidentiality
provision of the License Agreement by publishing its
sexed semen insemination schedule.
(ECF No. 321 at 4, 10, 12, 16–20.) Many of these cited paragraphs, and occasionally
the sentences adjacent to them, also make references to particular terms of the
License Agreement, interpreting those terms in order to support the opinion that a
breach occurred. (Id.) Trans Ova argues that these opinions all exceed the scope of
Dr. Wood’s expertise, as well as impermissibly offering legal conclusions and invading
the province of the jury. (ECF No. 322.)
XY does not deny that Dr. Wood is not a legal expert and may not present expert
testimony in contract interpretation. Instead, XY argues that Dr. Wood’s opinions
expressing particular interpretations of terms in the License Agreement merely provide
context for his technical opinions by reading and reiterating the License Agreement’s
express language. (See ECF No. 348 at 4–5, 7–8.)
“An opinion is not objectionable just because it em braces an ultimate issue.”
Fed. R. Evid. 704. Nevertheless, an expert witness’s testimony may not usurp the jury’s
fact-finding function. See Specht, 853 F.2d at 808. W hen adopting Rule 704, the
drafters of the Federal Rules of Evidence provided guidance as to what is permissible
The abolition of the ultimate issue rule does not lower the
bars so as to admit all opinions. Under Rules 701 and 702,
opinions must be helpful to the trier of fact, and Rule 403
provides for exclusion of evidence which wastes time.
These provisions afford ample assurances against the
admission of opinions which would merely tell the jury what
result to reach, somewhat in the manner of the oath-helpers
of an earlier day. They also stand ready to exclude opinions
phrased in terms of inadequately explored legal criteria.
Thus the question, “Did T have capacity to make a will?”
would be excluded, while the question, “Did T have sufficient
mental capacity to know the nature and extent of his
property and the natural object of his bounty to formulate a
rational scheme of distribution?” would be allowed.
Fed. R. Evid. 704 advisory committee’s note (emphasis added). As exemplified by the
advisory committee’s sample question, there is a fine line between a technical opinion
that touches on the essential elements of a legal analysis, which is admissible, and an
opinion that applies the law to the facts and reaches a legal conclusion, which is not.
The Court finds that Dr. Wood’s opinions frequently cross that line.
Take, for example, one of Dr. Wood’s opinions cited by XY in its Response:
“In my opinion, Trans Ova’s reverse sort and reverse sort
media protocols constitute an Improvement under the terms
of the License Agreement because they were created—in
whole or in part—with reference to sorting methods for
which XY holds patents and to the semen preparation
processes that XY has described in its own protocols.”
(ECF No. 348 at 5–6 (quoting ECF No. 321 ¶ 33) (emphasis XY’s).) XY argues that this
opinion is not impermissible because Dr. Wood has merely read the plain language of
the License Agreement, which states that “Improvements” includes “all know-how,
processes, . . . or other information . . . based upon or derived from the Technology,”
which itself is defined as including XY’s patents. (Id. at 5 (quoting ECF No. 348-1
§§ 1.1, 1.7).) XY ignores the fact that Dr. Wood has not only used his own
understanding of how to read these definitions, but has also applied this “plain
language” understanding of the legal terminology in the License Agreement to the facts,
in effect making a legal determination.
Notably, XY makes no attempt to defend Dr. Wood’s numerous opinions, cited
above, that Trans Ova breached the License Agreement by failing to comply with
various provisions. (See generally ECF No. 348.) These are not only indisputably legal
conclusions, but are also precisely the conclusions XY asks the jury to reach; as such,
Dr. Wood’s opinion that the contract was breached is the very definition of invasion of
the province of the jury. See Specht, 853 F.2d at 808.
Therefore, the Court will not permit Dr. Wood to testify that Trans Ova breached
the License Agreement, nor will he be permitted to testify that, for example, “Trans
Ova’s reverse sort and reverse sort media protocols constitute an Improvement under
the terms of the License Agreement.” (ECF No. 321 ¶ 33.) However, Dr. Wood may
testify to the italicized portion of the same paragraph, namely that Trans Ova’s reverse
sort and reverse sort media protocols “were created—in whole or in part—with
reference to sorting methods for which XY holds patents and to the semen preparation
processes that XY has described in its own protocols.” (Id.) Furthermore, Dr. Wood
may testify that, in his understanding rather than under the terms of the License
Agreement, those protocols are an improvement on XY’s technology. (See id.)
Similarly, Dr. Wood may testify that “[t]he IVF Cycle involves multiple elements or
components of XY’s patents, protocols, and know-how,” (ECF No. 348-2 ¶ 51), but he
may not continue on to the rest of the sentence and opine that the IVF Cycle “thus
constitutes a Licensed Product” under the License Ag reement. (Id.) The distinction is
narrow, but essential to preserving the jury’s autonomy. See Specht, 853 F.2d at 808.
In sum, the Court will not altogether exclude Dr. Wood’s opinions regarding the
provisions of the License Agreement, but he may not interpret the License Agreement
or opine that it was breached.
Trans Ova raises an additional issue with respect to its arguments that Dr. Wood
improperly interprets the License Agreement. Trans Ova’s Motion asserts that Dr.
Wood improperly relied on parol evidence in interpreting the royalty terms in the
License Agreement. (ECF No. 322 at 10.) XY responds that the challenged portion of
Dr. Wood’s opinion, which details certain communications between Trans Ova and XY
personnel regarding royalties, “is merely background information . . . and nowhere in his
technical analysis does Dr. Wood reference or draw upon this background information
to arrive at his technical conclusions.” (ECF No. 348 at 9.) As XY argues that the
challenged subsection of Dr. Wood’s report is merely “background information” that
provides no basis for his opinions, XY implicitly agrees that this portion of the report will
not comprise a portion of Dr. Wood’s expert testimony at trial. As such, the Court need
not enter an order excluding this portion of the report, and will hold XY to its
representations that this subsection is not part of his technical opinion.
Trans Ova seeks to preclude Dr. Wood from testifying that it willfully infringed the
patents-in-suit, and also seeks to strike the portion of his report entitled “Willful
Infringement.” (ECF No. 322 at 12–14.) W illful infringement requires a two-step
analysis, entailing an objective inquiry (whether an objectively high likelihood of
infringement existed), and a subjective inquiry (whether the infringer knew or should
have known of the high likelihood that it was infringing). In re Seagate Tech., LLC, 497
F.3d 1360, 1371 (Fed. Cir. 2007). Trans Ova argues that the objective inquiry is a legal
question for the Court, and the subjective inquiry is a question for the jury. (ECF No.
322 at 12 (citing Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 682 F.3d
1003, 1007 (Fed. Cir. 2012)).)
Dr. Wood’s expert report offers opinions on both prongs of the willful
infringement analysis. He states that “there was an objectively high risk that Trans
Ova’s continued practice of the asserted patents constituted infringement of a valid
patent,” and that “Trans Ova was also aware of, or should have been aware of,” that
objectively high risk. (ECF No. 321 ¶¶ 157, 159.) XY argues that Dr. Wood’s opinion is
supported by a technical analysis of the patents-in-suit covered by the License
Agreement and the acts Trans Ova took that infringed each of XY’s patents. (ECF No.
348 at 14.) This argument does not salvage the willful infringement opinion. Despite
Dr. Wood’s technical analysis, he may not invade either the Court’s role or the jury’s.
As discussed above, Dr. Wood may not testify to legal conclusions, and thus may not
opine as to the objectively high risk of infringement. Nor may Dr. Wood opine that
Trans Ova was aware, or should have been aware, of anything; he is not qualified to
testify to Trans Ova’s knowledge or intent, and would invade the jury’s role in making
Because Dr. Wood’s “Willful Infringement” analysis is improper expert testimony
in multiple ways, the Court will preclude him from testifying as to any portion of it that
applies the legal analysis for willful infringment. Trans Ova’s Motion is therefore
granted in this respect. This ruling does not, however, prevent Dr. Wood from testifying
regarding the particular patents that are covered by the License Agreement, which is a
non-legal analysis contained within that section of his report. (ECF No. 321 ¶ 158.) As
such, the Court declines to strike this portion of the report.
Secondary Considerations of Non-Obviousness
Trans Ova moves to preclude Dr. Wood from testifying regarding “Secondary
Considerations of Non-Obviousness,” a section of his rebuttal report. (ECF No. 322 at
14–15.) Trans Ova argues that an obviousness analysis requires establishing a nexus
between the factor allegedly indicating non-obviousness and a claimed feature of a
particular patent. (Id.) According to Trans Ova, Dr. Wood’s opinion discusses the
patents only generally, and thus fails to establish the necessary nexus. (Id.)
The Court has reviewed the relevant portion of the report and concludes that
these opinions need not be excluded. Dr. Wood’s non-obviousness opinion makes
reference to particular patents and their features, tying them to claims in the patents-in11
suit. (ECF No. 321-1 ¶¶ 185–87.) To the extent that Dr. Wood’s opinion insufficiently
specifies the relevant claims to establish the required nexus, Trans Ova is free to crossexamine him. See Fed. R. Evid. 702 advisory committee’s note (“Vigorous crossexamination, presentation of contrary evidence, and careful instruction on the burden of
proof are the traditional and appropriate means of attacking shaky but admissible
evidence.”); see also Lovato v. Burlington N. & Santa Fe Ry. Co., 2002 WL 1424599, at
*4 (D. Colo. June 24, 2002) (“Whatever shortcomings [the defendant] may perceive in
[the expert’s] academic or professional background are more properly addressed in
cross-examination. [The defendant’s] challenge to [his] qualifications go to the weight
of the witness’s testimony, and not to its admissibility.”).
As such, the Court denies this aspect of Trans Ova’s Motion.
IV. TRANS OVA’S MOTION TO EXCLUDE OPINIONS OF TODD SCHOETTELKOTTE
Trans Ova argues that Mr. Schoettelkotte, XY’s damages and valuation expert,
impermissibly renders legal conclusions by interpreting the contract and opining that
Trans Ova breached the License Agreement, and further argues that he is unqualified
to so opine because he is not a legal expert. (ECF No. 326 at 4–7.)
XY responds that Mr. Schoettelkotte’s opinions as to breach w ere merely
assumptions he made for the purposes of articulating his understanding of the scope
and resulting damages from the breaches XY has alleged. (ECF No. 344 at 10.) Trans
Ova does not dispute that Mr. Schoettelkotte’s report contains the statem ent, “For
purposes of this report, I have been asked to assume that the Defendant breached its
Commercial License Agreement with XY and that the asserted claims of the patents at
issue are infringed by the Defendant, not unenforceable, and not invalid.” (ECF No.
325-1 ¶ 3). Trans Ova also agrees that an expert analysis that merely assumes breach
is permissible, as “‘it is necessarily the role of a damages expert to offer an opinion
based only on assumptions because . . . [u]ntil a jury has found facts to resolve the
factual issues presented to them, an expert has nothing other than assumptions on
which economic analysis may be based.’” (ECF No. 326 at 5 n.4 (quoting Rowe v. DPI
Specialty Foods, Inc., 2015 WL 4949097, at *5 (D. Utah Aug. 19, 2015)).) However,
Trans Ova argues that “Schoettelkotte’s single statement in his Report that he assumed
breach was superficial,” and that Mr. Schoettelkotte in fact opines repeatedly that Trans
Ova did breach the License Agreement. (ECF No. 361 at 6.)
The Court disagrees that Mr. Schoettelkotte’s reference to his assumption of
breach was merely “superficial.” His expert report contains references to the “alleged
breach” (ECF No. 325-1 ¶ 33) and to his “understand[ing]” that a breach occurred
based on XY’s allegations (id. ¶ 31). However, the report also contains the statement,
“based on my understanding of the Agreement, it is my opinion that Trans Ova was in
breach of Section 2.l(a) as early as 2006.” (Id. ¶ 35.) Here, Mr. Schoettelkotte directly
opines that a breach occurred, which (for the same reasons discussed above with
respect to Dr. Wood’s opinions) invades the province of the jury and expresses an
impermissible legal opinion. Mr. Schoettelkotte will therefore be precluded from
expressing this opinion, or any other opinion—as opposed to his understanding or
assumption—that a breach occurred. 2
XY appears to agree to this result, to the extent that the Court is concerned about Mr.
Schoettelkotte’s impermissible legal opinions, in a footnote in its Response. (ECF No. 344 at
The Court is further troubled by a statement Mr. Schoettelkotte made in his
As part of my review, I have identified certain components of
my analysis that may assist the trier of fact in determining
whether the contract was, in fact, breached. In addition, I’ve
also calculated damages based upon that breach if the trier
of fact determines that there has been a breach of contract
in this case.
(Schoettelkotte Dep. (ECF No. 325) p. 32.) XY has apparently relied on the second
sentence of this quotation rather than the first, which contradicts XY’s assertions in its
Response to Trans Ova’s Motion that Mr. Schoettelkotte “merely discusses his
understandings of the terms of the Agreement and the parties’ conduct in order to
testify about the scope and resulting damages from the breaches XY has alleged.”
(ECF No. 344 at 10.) To the extent that Mr. Schoettelkotte’s testimony remains within
the bounds delineated by XY in its brief, that testimony is admissible. However, Mr.
Schoettelkotte may not opine as to “whether the contract was, in fact, breached,” nor
may he interpret the meaning of the contract’s terms.
Trans Ova’s Motion argues that Mr. Schoettelkotte improperly interprets the
License Agreement when he states that it is his understanding that “Trans Ova is
prohibited [under the sublicensing clause] from allowing end users to sell or offer for
sale Licensed Products without further consent of XY,” or that “then existing customers”
means “the customer who brought Trans Ova the bull,” or that the “standard size” for
straws of sorted sperm was 2 million cells per straw. (ECF No. 326 at 8–11.) The
Court reads these opinions as stating assumptions or data on which Mr. Schoettelkotte
relied in calculating the scope of damages, not as his own claim to definitive
interpretations of the License Agreement. XY argues as much in its Response. (ECF
No. 344 at 10–12.) The Court will hold XY to this representation of Mr. Schoettelkotte’s
opinions, and as such, they will not be excluded. Mr. Schoettelkotte will be subject to
cross-examination by Trans Ova as to the basis, or lack thereof, for his understanding
of these terms.
Similarly, the Court rejects Trans Ova’s argument that Mr. Schoettelkotte should
not testify as to other alleged breaches, because these are once again assumed
breaches that Mr. Schoettelkotte must articulate in order to describe the basis for his
damages calculations. (See ECF No. 326 at 12–15.) Nevertheless, as with his other
opinions regarding breach, Mr. Schoettelkotte will not be permitted to testify that any
particular act constituted a breach of the License Agreement, but instead that he
assumed such a breach in formulating his opinions.
For the reasons set forth above, the Court ORDERS as follows:
XY’s Motion to Exclude Expert Testimony (ECF No. 330) is DENIED;
Trans Ova’s Motion to Exclude Portions of the Expert Reports and to Limit
Testimony of XY, LLC’s Expert Dr. James C.S. Wood (ECF No. 322) is
GRANTED IN PART and DENIED IN PART;
Trans Ova’s Motion to Exclude and Limit the Testimony and Report of XY, LLC’s
Damage Expert Todd Schoettelkotte (ECF No. 326) is GRANTED IN PART and
DENIED IN PART; and
Dr. David DeRamus, Dr. James C.S. Wood, and Todd Schoettelkotte may testify
at trial as outlined in and consistent with this Order.
Dated this 8th day of January, 2016.
BY THE COURT:
William J. Martínez
United States District Judge
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