XY, LLC v. Trans Ova Genetics, LC

Filing 500

ORDER ON POST-TRIAL MOTIONS. re 467 , 468 , 471 , 472 , 473 , 477 , 479 , 480 , by Judge William J. Martinez on 4/8/2016.(dhans, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 13-cv-0876-WJM-NYW
XY, LLC,
Plaintiff / Counterclaim Defendant,
v.
TRANS OVA GENETICS, LC,
Defendant / Counterclaim Plaintiff.

ORDER ON POST-TRIAL MOTIONS

Plaintiff and Counterclaim Defendant XY, LLC (“XY”) brought this case against
Defendant and Counterclaim Plaintiff 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. (ECF No. 301.) The Court held a three-week jury trial
commencing on January 25, 2016, and the jury rendered a verdict on February 12,
2016. (ECF Nos. 419, 461.)
The jury found that XY breached the License Agreement (the “Agreement”) and
the duty of good faith and fair dealing because it had not proven it had the right to
terminate the Agreement in November 2007, and awarded Trans Ova $528,000 in
damages for that breach. (ECF No. 461 at 1–2.) The jury also found that Trans Ova
had committed a material, uncured breach of the Agreement prior to April 16, 2009,
such that the Agreement terminated on that date, and awarded XY $1,481,000 in
damages for that breach. (Id.) The jury found that Trans Ova had infringed all claims

of the ten patents in suit, that Trans Ova’s infringement was willful, and that Trans Ova
had not proven that any of the patent claims was invalid or unenforceable. (Id. at 3–9.)
Consequently, the jury awarded XY $4,585,000 in patent infringement damages. (Id. at
9.) The jury also found that XY had unclean hands, barring claims for unjust
enrichment and injunctive relief. (Id.) Finally, the jury rejected Trans Ova’s recoupment
claim under the antitrust laws, finding that Trans Ova had not proven that the semen
sorting technology market was a relevant market or that XY had a specific intent to
monopolize that market. (Id. at 10–12.) The Court has yet to enter Final Judgment.
Before the Court are eight post-trial motions:
(1) Trans Ova’s Renewed Motion for Judgment as a Matter of Law Under Rule 50(b) or,
in the Alternative, Motion for a New Trial Under Rule 59(a) or, in the Alternative, Motion
to Alter or Amend a Judgment Under Rule 59(e) (“Breach Motion”) (ECF No. 473);
(2) Trans Ova’s Motion to Alter or Amend a Judgment Under Rule 59(e) (“Willful
Infringement Motion”) (ECF No. 477);
(3) Trans Ova’s Motion for a New Trial Under Rule 59(a) (“Relevant Market Motion”)
(ECF No. 479);
(4) Trans Ova’s Motion for a New Trial Under Rule 59(a) on the Issue of Invalidity
(“Invalidity Motion”) (ECF No. 480) (together with the Relevant Market Motion, “New
Trial Motions”);
(5) XY’s Motion to Declare this Case Exceptional Pursuant to 35 U.S.C. § 285 and to
Award Attorneys’ Fees (“Fee Motion”) (ECF No. 467);
(6) XY’s Motion for Award of Enhanced Damages for Patent Infringement Under
35 U.S.C. § 284 (“Damages Motion”) (ECF No. 468);
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(7) XY’s Motion to Set an Ongoing Royalty Rate (“Royalty Motion”) (ECF No. 471); and
(8) XY’s Motion for Prejudgment Interest (“Interest Motion”) (ECF No. 472).
For the reasons set forth below, the Willful Infringement Motion is granted, the Royalty
Motion and the Interest Motion are granted in part, and the remaining motions are
denied.
I. TRANS OVA’S BREACH MOTION
Trans Ova’s Breach Motion seeks to reconcile the two breaches of contract
found in the jury’s Verdict with a ruling that XY’s breach rendered Trans Ova’s breach
legally inoperative. (ECF No. 473.) Trans Ova seeks judgment as a matter of law
under Federal Rule of Civil Procedure 50(b), or in the alternative, an amended
judgment or new trial under Rule 59. (Id.)
A.

Legal Standards
In evaluating a motion brought under Rule 50(b), the Court must examine all the

evidence admitted at trial, construe that evidence and the inferences from it in the light
most favorable to the non-moving party, and refrain from making credibility
determinations and weighing the evidence. See Tyler v. RE/MAX Mountain States, 232
F.3d 808, 812 (10th Cir. 2000). Judgment as a matter of law is appropriate “only if the
evidence points but one way and is susceptible to no reasonable inferences which may
support the opposing party’s position.” Finley v. United States, 82 F.3d 966, 968 (10th
Cir. 1996).
Alternatively, Defendant seeks a new trial under Rule 59(a)(1), which permits the
Court to order a new trial “for any of the reasons for which a new trial has heretofore

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been granted in an action at law in federal court.” Fed. R. Civ. P. 59(a)(1). Such a
motion can be granted based on any error so long as “the district court concludes the
‘claimed error substantially and adversely’ affected the party’s rights.” Henning v. Union
Pac. R.R. Co., 530 F.3d 1206, 1217 (10th Cir. 2008) (quoting Sanjuan v. IBP, Inc., 160
F.3d 1291, 1297 (10th Cir. 1998)).
Defendant’s next alternative request to amend the judgment is brought under
Rule 59(e). “Rule [59(e)] 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). Accordingly, the Court may amend the judgment in its
discretion where there has been an intervening change in the controlling law, new
evidence that was previously unavailable has come to light, or the Court sees a need to
correct clear error or prevent manifest injustice. Servants of Paraclete v. Does, 204
F.3d 1005, 1012 (10th Cir. 2000).
Where a jury’s verdict appears internally inconsistent, “[t]rial courts have a duty
to attempt to reconcile juries’ answers to special verdict questions in order to avoid the
need for retrials.” Palmer v. City of Monticello, 31 F.3d 1499, 1505 (10th Cir. 1994)
(citing Gallick v. Baltimore & Ohio R.R. Co., 372 U.S. 108, 119 (1963)). The obligation
to harmonize the jury’s findings if possible arises from the Seventh Amendment. See
Atlantic & Gulf Stevedores, Inc. v. Ellerman Lines, Ltd., 369 U.S. 355, 364 (1962). “If
there is any view of the case which makes the answers consistent, the case must be
resolved in that way.” Palmer, 31 F.3d at 1505. The Court may find fatal inconsistency

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only where the verdict is completely irreconcilable. Diamond Shamrock Corp. v. Zinke
& Trumbo, Ltd., 791 F.2d 1416, 1424–25 (10th Cir. 1986). “In determ ining whether
there is inconsistency in the jury’s findings, the findings are to be construed in the light
of the surrounding circumstances and in connection with the pleadings, instructions,
and issues submitted.” Garcia v. Salt Lake Cnty., 768 F.2d 303, 309 n.7 (10th Cir.
1985) (citing 9 C. Wright & A. Miller, Fed. Prac. & Proc. Civ. § 2510 (1971)); see also A.
Miller, Fed. Prac. & Proc. Civ. §§ 2504.1, 2510 (3d ed., updated Apr. 2015).
B.

Analysis
Trans Ova argues that the jury’s Verdict, which found breaches of contract by

both parties and assessed damages against each party, was inconsistent because
Trans Ova’s duties under the Agreement should have been deemed suspended after
XY’s material breach. (ECF No. 473.) Trans Ova contends that, therefore, the jury’s
finding that Trans Ova materially breached the Agreement is “legally inoperative,” and
that the Court should strike the jury’s award of contract damages to XY and hold that
the Agreement did not terminate, but remained in effect. (Id.) Consequently, Trans
Ova argues that the Court should strike the jury’s award of infringement damages to
XY, because Trans Ova could not have infringed while under a valid license, and that
Trans Ova’s contract damages should be increased due to the jury’s “erroneous
assumption” that the Agreement terminated in 2009. (Id. at 10–13.)
These arguments are all premised on the preliminary question of whether XY’s
breach was material. This is so because, as the jury was instructed, “a material breach
by one party excuses performance by the other party to the contract.” (Jury Instructions

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(ECF Nos. 455, 456, 457) p. 30.) XY disputes whether its breach was material, and, as
both parties recognize, the Verdict Form did not require the jury to make that
determination.1 (See ECF No. 461 at 1, 2.)
Colorado courts have adopted the analysis in the Restatement (Second) of
Contracts in determining whether a breach of contract is material. DBA Enters., Inc. v.
Findlay, 923 P.2d 298, 301 (Colo. App. 1996) (citing Converse v. Zinke, 635 P.2d 882,
887 (Colo. 1981)). The Restatement provides the following factors to be considered in
determining materiality of a breach:
(a)
(b)

(c)
(d)

(e)

the extent to which the injured party will be deprived
of the benefit which he reasonably expected;
the extent to which the injured party can be
adequately compensated for the part of that benefit of
which he will be deprived;
the extent to which the party failing to perform or to
offer to perform will suffer forfeiture;
the likelihood that the party failing to perform or to
offer to perform will cure his failure, taking account of
all the circumstances including any reasonable
assurances;
the extent to which the behavior of the party failing to
perform or to offer to perform comports with
standards of good faith and fair dealing.

Restatement (Second) of Contracts § 241 (1981). “Whether a breach is material is a
question of fact. A material term goes to the root of the matter or essence of the
1

XY also argues that, by failing to object to the absence of the word “material” in Verdict
Form Question 5 regarding XY’s breach, Trans Ova has waived such objection and cannot now
seek relief on this issue. (ECF No. 486 at 8–10.) The Court disagrees for two reasons. First,
while Trans Ova did not explicitly object to the wording of Question 5, Trans Ova did raise the
issue of a potential material breach by XY and consequent suspension of Trans Ova’s duties
under the Agreement, both at the charging conference and after the Verdict was read. (See
Trial Transcript (“Tr.”) at 3343, 3564.) Second, an allegedly inconsistent verdict may be
challenged after trial without prior objection or Rule 50(a) Motion on the issue. See Garcia, 768
F.2d at 309 n.7. Thus, this issue is properly before the Court on Trans Ova’s post-trial Breach
Motion.

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contract.” Coors v. Sec. Life of Denver Ins. Co., 112 P.3d 59, 64 (Colo. 2005) (citations
omitted).
Considering the evidence presented at trial about the Agreement at issue here,
and the jury’s determination that XY breached the Agreement and its duty of good faith
and fair dealing by attempting to terminate the Agreement, the Court finds that a
reasonable jury must have concluded that XY’s breach was necessarily material. By
improperly treating the Agreement as terminated, XY denied Trans Ova its legal
authorization to continue to practice its patents, which the evidence showed was the
essence of the Agreement from Trans Ova’s perspective. XY’s actions thus deprived
Trans Ova of the benefit it reasonably expected from the Agreement, and as the jury
found, thereby breached the duty of good faith and fair dealing. See Restatement
(Second) of Contracts § 241(a), (e). (See also ECF No. 461 at 2.) The Court
concludes that, under Colorado law, XY’s attempted termination of the Agreement
constitutes a material breach.
Trans Ova argues that, if XY’s breach was material, Trans Ova’s duties under
the Agreement were thereafter suspended, invalidating the jury’s finding that Trans Ova
breached the Agreement. However, Trans Ova assumes that XY’s breach must have
occurred first. The Verdict need not be read that way. In Question 1, the jury found
that XY had failed to prove that it had the right to terminate the Agreement in November
2007, and in Question 5, the jury found that XY’s attempt to terminate the Agreement
breached both the Agreement and the duty of good faith and fair dealing. (ECF No.
461 at 1–2.) In Question 2, the jury found that Trans Ova materially breached the
Agreement “at any time before April 16, 2009, and failed to cure the breach by that
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date.” (Id. at 1.) A plain reading of the Verdict permits two readings: Trans Ova’s
breach may have occurred either before or after XY’s breach, as long as it occurred
prior to April 16, 2009.
The Court further notes that the jury was instructed as to the effect of a material
breach on the other party’s contractual duties. (Jury Instructions p. 30.) The Court
must presume that the jury followed its instructions. See Weeks v. Angelone, 528 U.S.
225, 234 (2000). Since the jury awarded XY damages for Trans Ova’s breach, the jury
must have concluded that such breach was not excused by any prior material breach by
XY. Accordingly, the Court concludes that the Verdict can be h armonized by finding
that Trans Ova’s material breach predated XY’s, but it was not cured prior to April 16,
2009. Cf. Palmer, 31 F.3d at 1505.
Trans Ova objects to this interpretation, arguing that “there is zero evidence
supporting any such hypothetical finding. On the contrary, all the evidence of record
points to XY as having breached the License first.” (ECF No. 490 at 6.) The Court
disagrees; the evidence adduced at trial supports this interpretation of the jury’s
findings. For example, XY presented evidence that Trans Ova breached the
Agreement by underpaying royalties for years prior to XY’s breach, due to Trans Ova’s
erroneous belief that the Agreement was modified after an oral agreement with Dr.
Mervyn Jacobson. (See Tr. at 1280–85.) XY also presented evidence that, prior to
November 2007, Trans Ova developed reverse sort protocols which constitued
improvements to XY’s patented technology, but did not disclose them or grant them
back to XY pursuant to the Agreement. (Id. at 571–76.) Moreover, the evidence at trial
showed that XY was not aware of any of these breaches of the Agreement until after it
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began legal proceedings in 2012. As such, these breaches by Trans Ova did not
excuse XY’s breach in 2007, and were within the statute of limitations for XY’s breach
of contract claim. (See ECF No. 267 (holding that XY’s breach of contract claim is
barred to the extent it accrued before March 6, 2009); Jury Instructions p. 29
(instructing the jury as to the discovery rule for accrual).)
Trans Ova also argues that, if the Court interprets the verdict by finding that
Trans Ova breached the Agreement prior to November 2007 and the breach was
curable under the terms of the Agreement § 5.1.2, that breach could not have caused
the Agreement to terminate because the Agreement provides for notice and an
opportunity to cure. (ECF No. 490 at 7–8.) This argument improperly conflates the
Termination provision and Renewal provision of the Agreement. Section 5.1.2 of the
Agreement gives XY the right to terminate the Agreement upon written notice of a
breach and after a thirty-day cure period, without waiting for the natural end of the
Agreement on April 16, 2009; in contrast, § 2.4 of the Agreement provides that the
Agreement will automatically renew for an additional five-year period “[p]rovided that the
Licensee is not in material breach.” (See Trial Ex. 17.) The Court agrees that under
§ 5.1.2, XY would not have been authorized to terminate the Agreement based on
either of the curable breaches cited above without providing notice and an opportunity
to cure. But XY’s inability to terminate the Agreement early does not contractually
preclude Trans Ova’s uncured, material breaches from causing the Agreement to fail to
automatically renew under § 2.4. The Court therefore rejects Trans Ova’s argument
that the lack of prior notice necessarily means that the Agreement must have
automatically renewed.
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The Court finds that the Verdict can be harmonized by interpreting the jury’s
findings as follows: Trans Ova materially breached the Agreement by, inter alia,
underpaying royalties, or failing to disclose and grant back to XY certain technology
improvements, or both, prior to November 2007; XY materially breached the Agreement
by improperly attempting to terminate it in November 2007; and both parties are entitled
to damages for those breaches of contract, as awarded in the Verdict. (See ECF No.
461 at 1–2.) Because the amount of Trans Ova’s damages award was smaller than
XY’s, the Court will treat Trans Ova’s damages as an offset to the damages awarded to
XY, and enter judgment for XY in the amount of $953,000.
As the Court has found that the jury properly determined that the Agreement
terminated on April 16, 2009, the Court rejects Trans Ova’s argument that it is entitled
to additional damages due to any subsequent breaches of the Agreement after that
date. (See ECF No. 473 at 12–13.)
In sum, the Court finds no clear error or fatal inconsistency in the Verdict that
warrants judgment as a matter of law under Rule 50(b) or post-trial relief under Rule 59.
Defendant’s Breach Motion is therefore denied in its entirety.
II. TRANS OVA’S WILLFUL INFRINGEMENT MOTION
Trans Ova’s Willful Infringement Motion seeks relief under Rule 59(e) based on
the jury’s finding, “by clear and convincing evidence[,] that Trans Ova’s infringement
was willful.” (ECF No. 461 at 3.) Rule 59(e) permits the Court to correct manifest or
clear legal error. Servants of Paraclete, 204 F.3d at 1012.
As a preliminary matter, XY contests whether Trans Ova may properly seek this

10

relief under Rule 59(e), because Trans Ova did not seek such relief in its motion under
Rule 50(a) during trial. (ECF No. 488 at 3–4.) The Court disagrees that the relief
sought should have been brought as a Rule 50 motion. As Trans Ova clarifies in its
Reply in support of the Willful Infringement Motion, 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. (ECF No.
495 at 1–2.) As discussed below, the analysis of willful infringement requires an
objective determination of the reasonableness of Trans Ova’s defenses, which could
not have been performed when Trans Ova made its Rule 50(a) Motion after the close of
XY’s case in chief. The Court therefore properly considers Trans Ova’s Willful
Infringement Motion under Rule 59(e).
Willful infringement of a patent requires a two-part showing: (1) “the infringer
acted despite an objectively high likelihood that its actions constitued infringement of a
valid patent,” and (2) that objectively high likelihood of infringement “was either known
or so obvious that it should have been known to the accused infringer.” In re Seagate
Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (referring to first prong as “a showing
of objective recklessness”). The first, “‘objective’ prong of Seagate tends not to be met
where an accused infringer relies on a reasonable defense to a charge of infringement.”
Spine Solutions, Inc. v. Medtronic Sofamor Danek USA, Inc., 620 F.3d 1305, 1319
(Fed. Cir. 2010); see also DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567
F.3d 1314, 1336–37 (Fed. Cir. 2009) (affirming district court’s entry of judgment as a
matter of law of no willfulness where defendant “presented a substantial question” of
noninfringement, despite jury’s finding of infringement).
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In 2015, the Federal Circuit held that, while the factual questions of willful
infringement may properly be sent to the jury, the district court reviews the question of
objective recklessness de novo as a matter of law. Bard Peripheral Vascular, Inc. v.
W.L. Gore & Assocs., Inc., 776 F.3d 837, 844 (Fed. Cir. 2015) (“the judge remains the
final arbiter of whether the defense was reasonable”), cert. denied, 136 S. Ct. 189
(2015); contra Johns Hopkins Univ. v. CellPro, Inc., 152 F.3d 1342, 1354 (Fed. Cir.
1998) (holding previously that “[w]hether infringement was willful is a question of fact,
and we will not reverse a jury determination on this issue unless it was unsupported by
substantial evidence”). Under Bard, on review of Trans Ova’s Willful Infringement
Motion, the Court must determine de novo whether the evidence at trial supports the
jury’s finding that Trans Ova’s invalidity defenses were objectively unreasonable, or
alternatively, whether they presented a “substantial question.” See DePuy Spine, 567
F.3d at 1336.
Trans Ova presents three arguments that it was not objectively reckless:
(1) Trans Ova acted in good faith in believing the Agreement was still in effect;
(2) Trans Ova reasonably relied on the advice of counsel as to the invalidity of the four
nozzle patents; and (3) Trans Ova’s evidence of invalidity as to all ten of the patents-insuit presented a substantial question of invalidity. (ECF No. 477 at 4–8.) Because the
Court is persuaded by Trans Ova’s third argument, it need not discuss the other two.
At trial, Trans Ova presented evidence of invalidity due to obviousness as to all
ten of the patents-in-suit, as well as anticipation evidence as to six of the ten patents.
The Court denied XY’s mid-trial Rule 50(a) Motion as to the majority of Trans Ova’s

12

invalidity defenses, granting it only as to the anticipation of two of the patents. (ECF
No. 447 at 3.) In so ruling, the Court found that Trans Ova had presented sufficient
evidence for a reasonable jury to find in its favor on its claim that each of the patents-insuit was invalid as obvious. Trans Ova’s invalidity arguments, though ultimately found
unpersuasive by the jury, were supported by expert testimony from Dr. John Hasler and
Dr. J. Paul Robinson who opined as to each claim and each patent at issue.
XY argues that Trans Ova’s anticipation arguments were “hopelessly weak,” but
cites only the same evidence on which the Court relied to grant XY’s Rule 50(a) Motion
as to the ’687 and ’921 patents, without discussing Trans Ova’s evidence of anticipation
of the ’425, ’053, ’867, and ’860 patents that actually went to the jury. (See ECF No.
488 at 13.) XY also contends that Trans Ova’s obviousness defense was “objectively
unreasonable,” noting that “[e]xamples abound,” but cites only its argument made in its
Rule 50(a) Motion that Dr. Robinson failed to consider objective considerations of nonobviousness—the same argument the Court rejected in denying XY’s Rule 50(a)
Motion. (Id. at 14.) XY also mentions that the Shrimpton patent was discussed during
prosecution of XY’s freezing patents; but, as the Court held in ruling on the Rule 50(a)
Motion, Trans Ova presented evidence that, while Shrimpton’s sex-sorting technology
was arguably inoperable, it would be obvious to combine the freezing component in
Shrimpton with the sex-sorting technology in the Seidel reference. (See id. at 13.)
Similarly, XY cites the Merton article, which was before the Patent Office on the in vitro
fertilization or “IVF” patents. (Id.) At trial, the parties presented evidence that the ’687
and ’921 patents were initially rejected by the patent examiner based on the Merton
article, which was only reversed based on a subsequent declaration by an XY
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employee, Dr. David Cran. (Tr. at 2281–85.) Dr. Hasler testified that Dr. Cran’s
declaration was biased due to his employment with XY, and the jury could have found
that these patents’ mixed history at least suggested a reasonable possibility of
invalidity. (Id. at 2285.) The Court finds none of these contentions persuasive in
demonstrating that Trans Ova was objectively reckless in relying on its invalidity
defense.
This finding is further supported by the proceedings brought with respect to the
’920 and ’425 patents before the Patent Trial and Appeal Board, which resulted in a
finding of invalidity as to the ’920 patent, and a hearing as to the possible invalidity of
the ’425 patent. (See ECF No. 411.) While this evidence was not before the jury, it
bolsters the Court’s present finding that Trans Ova’s invalidity defenses met the minimal
standard of objective reasonableness, at least as to some of XY’s patents. (Cf. ECF
No. 396 at 4.)
On review of the evidence presented at trial, the Court finds that Trans Ova’s
invalidity defense was not objectively unreasonable, and though the jury ultimately
rejected it, Trans Ova presented a substantial question of invalidity. Consequently,
Seagate’s objective recklessness prong has not been met. See Spine Solutions, 620
F.3d at 1319.
Ordinarily, the Court would be reticent to disturb a jury’s factual findings on a
post-trial motion. However, the Federal Circuit has made clear that the Court’s role in
reviewing willful infringement is to determine de novo whether the infringer was
objectively reckless in relying on its invalidity defense. See Bard, 776 F.3d at 844. The

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Court finds that Trans Ova’s invalidity defense was objectively reasonable, as it
presented a substantial question of invalidity, and therefore Trans Ova cannot have
willfully infringed under the Federal Circuit’s definition of that term. See id.
The Court therefore grants Trans Ova’s Willful Infringement Motion, and must
vacate the jury’s finding that Trans Ova’s infringement was willful. (See ECF No. 461
at 3.)
III. TRANS OVA’S NEW TRIAL MOTIONS
Trans Ova brings two New Trial Motions: (1) the Relevant Market Motion, which
challenges the jury’s finding that the sperm sorting technology market was not a
relevant market; and (2) the Invalidity Motion, which challenges the jury’s rejection of
Trans Ova’s invalidity defense as to all of the claims of each of the patents-in-suit.
(ECF Nos. 479, 480.) Trans Ova contends that these findings were against the weight
of the evidence at trial, and that therefore a new trial is warranted on each of these
issues.
“If ‘a new trial motion asserts that the jury verdict is not supported by the
evidence, the verdict must stand unless it is clearly, decidedly, or overwhelmingly
against the weight of the evidence.’” M.D. Mark, Inc. v. Kerr-McGee Corp., 565 F.3d
753, 762 (10th Cir. 2009) (quoting Anaeme v. Diagnostek, Inc., 164 F.3d 1275, 1284
(10th Cir. 1999)).
Each of Trans Ova’s New Trial Motions painstakingly recites the evidence Trans
Ova presented in its favor and the reasons why the contrary evidence presented by XY
was not credible, in order to support Trans Ova’s argument that no reasonable jury

15

could have found as this jury did in its Verdict. The Court finds that both New Trial
Motions fail to meet the high burden under Rule 59(a) for a new trial, as the Verdict on
both of these issues was not overwhelmingly against the weight of the evidence.
In the Relevant Market Motion, Trans Ova principally argues that XY’s expert, Dr.
Barry Harris, was not credible when he testified that the sorting technology market is
not a separate relevant market, but is part of the overall market for both conventional
and sorted semen. (ECF No. 479 at 6–7.) Dr. Harris testified that cross-elasticity of
demand between conventional and sorted semen, as well as substitution rates and
pricing competition between the two, suggest that there is an overall semen market as
opposed to a separate market for sorted semen, and that the technology market is an
“upstream” component of the “downstream” product market. (See Tr. at 2808–10.)
Trans Ova disputes this testimony, arguing that it is not credible in the face of the
evidence that Inguran sells sorted semen at two to three times the price of conventional
semen, and that the technology market must necessarily have been a relevant market
because no competing semen sorting technology exists. (ECF No. 479 at 4–7.)
As to the Invalidity Motion, Trans Ova reiterates the testimony of its patent
experts, Dr. Hasler and Dr. Robinson, and argues that each of the patents-in-suit is
obvious or anticipated. (ECF No. 480.) Trans Ova then discusses the contrary
testimony of XY’s expert, Dr. James Wood, contending that he lacks relevant expertise
to opine on validity of the patents, and that his analysis was flawed because he misread
many of the prior art references. (Id. at 10–14.) Trans Ova does not explain why it
stipulated to the Court qualifying Dr. Wood as an expert in the areas of flow cytometry
technology, cellular biology, and the subject matter of the asserted patents. (See Tr. at
16

727.) Trans Ova’s arguments point to a classic battle of the experts with respect to
invalidity opinions, rather than an indication that the overwhelming weight of the
evidence leans but one way.
In both New Trial Motions, Trans Ova asks the Court to reweigh the evidence
and reevaluate Dr. Harris’s and Dr. Wood’s credibility. But the jury holds “the exclusive
function of appraising credibility, determining the weight to be given to the testimony,
drawing inferences from the facts established, resolving conflicts in the evidence, and
reaching ultimate conclusions of fact.” United Int’l Holdings, Inc. v. Wharf (Holdings)
Ltd., 210 F.3d 1207, 1227 (10th Cir. 2000) (internal quotation marks omitted). The jury
was presented with competing evidence from both parties on invalidity and the relevant
market, and Trans Ova has failed to show that the evidence that favored XY was
“clearly, decidedly, or overwhelmingly” outweighed by the evidence that favored Trans
Ova. M.D. Mark, 565 F.3d at 762.
The Court concludes that Trans Ova has failed to meet the high burden under
Rule 59(a) to warrant a new trial on the issues of relevant market and patent invalidity.
Accordingly, the Court denies both New Trial Motions.
IV. XY’S FEE MOTION
XY’s Fee Motion requests that the Court declare this case “exceptional” pursuant
to 35 U.S.C. § 285, and award XY attorneys’ fees for the patent portion of the case.
(ECF No. 467.)
Section 285 states that “[t]he court in exceptional cases may award reasonable
attorney fees to the prevailing party.” The Supreme Court has clarified that “an

17

‘exceptional’ case is simply one that stands out from others with respect to the
substantive strength of a party’s litigating position (considering both the governing law
and the facts of the case) or the unreasonable manner in which the case was litigated.”
Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014). The
question of whether a case is exceptional is evaluated case-by-case, “considering the
totality of the circumstances,” and is within the trial court’s discretion. Id.
XY raises three arguments that this case is exceptional: (1) Trans Ova’s willful
infringement supports an award of fees under § 285; (2) Trans Ova’s patent invalidity
and unenforceability arguments were completely meritless; and (3) Trans Ova’s position
that it still had a license to practice XY’s patents because the Agreement was never
terminated was unreasonable given its numerous breaches of the Agreement which
caused it to terminate in 2009. (ECF No 467.) As to the willful infringement argument,
the Court has already discussed this issue above in Part II, and vacated the jury’s
finding that Trans Ova willfully infringed; thus, this finding does not render this case
exceptional.2 As to Trans Ova’s invalidity and unenforceability arguments, the Court
has discussed the objective reasonableness of Trans Ova’s invalidity defense above in
2

Even if the Court had not vacated the willful infringement finding, the Court would still
deny XY’s Fee Motion. While “[a]n express finding of willful infringement is a sufficient basis for
classifying a case as ‘exceptional,’” and the Court would accordingly find this case to be
exceptional if the jury’s willfulness finding remained intact, “even an exceptional case does not
require in all circumstances the award of attorney fees.” Modine Mfg. Co. v. Allen Grp., Inc.,
917 F.2d 538, 543 (Fed. Cir. 1990) (internal quotation marks omitted). In Modine, the district
court denied the plaintiff patentee’s fee motion despite finding that the case was exceptional
due to willful infringement, because the defendant raised a substantial challenge to the patent
and brought its claims in good faith, and because “an award of fees would thwart efforts to
challenge the validity of patents believed in good faith to be invalid.” Modine Mfg. Co. v. Allen
Grp., Inc., 1989 WL 205782, at *16 (N.D. Cal. Nov. 30, 1989). The Federal Circuit affirmed.
917 F.2d at 543. As the Court has found Trans Ova’s invalidity defenses to be both reasonable
and brought in good faith, the same reasoning would apply here.

18

Part II, and finds that its claims of invalidity and unenforceability were brought in good
faith. In addition to the evidence of invalidity discussed above, in support of its
inequitable conduct defense Trans Ova presented the testimony of John Doll and
Nicholas Godici, both of whom testified that the sheer number of references submitted
with XY’s patents in prosecution were well beyond anything they had seen in their long
experience as patent examiners. (Tr. at 2011, 3226.) The Court found Mr. Doll’s and
Mr. Godici’s testimony persuasive and rejects XY’s assertion that the inequitable
conduct defense was completely meritless. As such, this argument is also insufficient
to render this case exceptional.
As to XY’s third argument, the Court disagrees that it was unreasonable of Trans
Ova to believe it continued to have a valid license, at least until April 16, 2009. Indeed,
the jury ultimately found that XY’s attempt to terminate the Agreement was improper,
and the Agreement therefore continued in place until that date. (See ECF No. 461.)
While it may have been less reasonable for Trans Ova to continue to believe the
Agreement persisted after its negotiations with XY for an amended license failed, and
after it began seeking alternative technologies with Owl Biomedical, the Court rejects
XY’s contention that Trans Ova’s belief that the Agreement remained in effect was
completely untenable so as to render this case exceptional under § 285.
The purpose of an award of attorneys’ fees for an exceptional case under § 285
“is to compensate a defendant for attorneys’ fees it should not have been forced to
incur.” Kilopass Technology, Inc. v. Sidense Corp., 738 F.3d 1302, 1313 (Fed. Cir.
2013). That is, where the infringing party litigated in bad faith or willfully infringed, the
Court may award fees as a sanction for such conduct. Here, Trans Ova introduced
19

evidence to support its litigation positions, though it was ultimately insufficient to
persuade the jury. The parties litigated vigorously, but in good faith.
Considering the totality of the circumstances and the law and facts of this case,
see Octane Fitness, 134 S. Ct. at 1756, the Court finds that this is not an exceptional
case under § 285, and therefore concludes that an award of attorneys’ fees under that
statute is not appropriate in this case. XY’s Fee Motion is therefore denied.
V. XY’S DAMAGES MOTION
XY’s Damages Motion seeks treble damages pursuant to 35 U.S.C. § 284 based
on the jury’s finding of willful infringement. (ECF No. 468.) As discussed above in Part
II, the Court has vacated that finding. Because “[a] finding of willful infringement is a
prerequisite to the award of enhanced damages,” i4i Ltd. P’ship v. Microsoft Corp., 598
F.3d 831, 858 (Fed. Cir. 2010), the Court finds no basis on which to award enhanced
damages. See Jurgens v. CBK, Ltd., 80 F.3d 1566, 1570 (Fed. Cir. 1996) (detailing
two-step analysis of first determining “whether an infringer is guilty of conduct upon
which increased damages may be based . . . [which] must include some degree of
culpability,” and then considering whether to increase damages based on the totality of
the circumstances). This is reason sufficient to deny XY’s Damages Motion.
However, even if the Court had not vacated the jury’s willful infringement finding,
the Court would still deny XY’s request for enhanced damages based on the totality of
the circumstances in this case. Indeed, just as a determ ination of willful infringement
does not require an award of attorneys’ fees, neither does it mandate the award of an
enhanced penalty. See Johns Hopkins Univ. v. Cellpro, Inc., 152 F.3d 1342, 1365

20

(Fed. Cir. 1998). Rather, courts must consider several factors, including whether the
infringer had a good faith belief that the patent was invalid, whether the infringer
behaved reasonably as a party to the litigation, whether the infringer attempted to
conceal its infringement, and the closeness of the case. Read Corp. v. Portec, Inc.,
970 F.2d 816, 827 (Fed. Cir. 1992), abrogated on other grounds by Markman v.
Westview Instruments, Inc., 52 F.3d 967 (Fed. Cir. 1995).
In this case, as discussed above in Part II, Trans Ova had a good faith belief in
the patents’ invalidity. The parties each litigated vigorously, but reasonably, and many
issues were close questions throughout the litigation and trial. Trans Ova never
attempted to conceal its use of XY’s technology, but attempted to justify it with defenses
of a valid license and patent invalidity or unenforceability. In considering all the relevant
factors, the Court finds that the punitive increase in damages permitted under § 284
would be inappropriate on these facts, even if the jury’s willful infringement finding
remained intact.
In sum, the Court declines to award enhanced damages here, and denies XY’s
Damages Motion.
VI. XY’S ROYALTY MOTION
XY’s Royalty Motion requests that the Court enter an order assessing an ongoing
royalty for Trans Ova’s continued use of the patents-in-suit. (ECF No. 471.)
Remedies to prevent future infringement may take the form of injunctive relief or
an ongoing royalty. In the instant case, the jury found that XY had unclean hands,
barring any injunctive relief. (ECF No. 461 at 9.) “[A]bsent egregious circumstances,

21

when injunctive relief is inappropriate, the patentee remains entitled to an ongoing
royalty.” SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 807 F.3d
1311, 1332–33 (Fed. Cir. 2015). Entitlement to an ongoing royalty arises from
35 U.S.C. § 284, which provides that damages “adequate to compensate for the
infringement” should be “in no event less than a reasonable royalty for the use made of
the invention.” Thus, where future use of the patents is contemplated, a reasonable
ongoing royalty may be awarded. However, an ongoing royalty need not be awarded
“as a matter of course whenever a permanent injunction is not imposed.” Paice LLC v.
Toyota Motor Corp., 504 F.3d 1293, 1314–15 (Fed. Cir. 2007) (noting that in many
cases where an injunction is not entered, the court m ay direct the parties to negotiate a
license for future use). “When a court orders ongoing relief, the court acts within its
equitable discretion.” SCA Hygiene, 807 F.3d at 1331; cf. Paice, 504 F.3d at 1313 n.13
(“We use the term ongoing royalty to distinguish this equitable remedy from a
compulsory license.”).
Trans Ova first argues that, based on its belief that the Agreement continues in
effect, no ongoing royalty is necessary. (ECF No. 485 at 3.) However, anticipating the
possibility of a finding that the Agreement was terminated in 2009, as the Court found
above in Part I, Trans Ova argues in the alternative that: (1) the Court should permit the
parties to negotiate a reasonable license; or (2) alternatively, the Court should enforce
the royalty rates set forth in the parties’ prior Agreement.3 (Id. at 3–8.) As to the first
argument, XY contends that negotiations would be a futile exercise, as evidenced by

3

The Court notes that Trans Ova effectively admits its intent to continue to practice XY’s
patents, such that some remedy for future infringement is necessary.

22

the fact that the parties negotiated in vain for years before finally filing suit. (ECF No.
492 at 2–3.) The Court agrees with XY, particularly given the likelihood that an appeal
will be filed in this matter that would necessarily affect the parties’ negotiations.
Accordingly, the Court finds that an ongoing royalty is appropriate. However, should the
parties successfully negotiate a future license, the Court’s awarded ongoing royalty may
be supplanted by that license without necessity for an order terminating the ongoing
royalty.
Consequently, the Court must determine a reasonable ongoing royalty rate to
award. XY’s Royalty Motion first notes that the jury’s award of $4,585,000 in damages
for infringement was nearly identical to damages expert Todd Schoettelkotte’s
calculations of XY’s damages from April 2009 through January 2016, which amounted
to $4,584,555. (ECF No. 471 at 2.) At trial, Mr. Schoettelkotte opined that the roy alty
rate should be increased from the 10% of gross sales set forth in the Agreement to 15%
of gross sales, as well as an additional 4% royalty for reverse sorting services (for a
total of 19%), based on a hypothetical negotiation analysis with an infringer. (Tr. at
932–35; ECF No. 470 at 2–3.) Given that amount of the patent damages awarded by
the jury was nearly identical to the amount XY’s expert had calculated, the Court finds it
reasonable to conclude that the jury adopted Mr. Schoettelkotte’s damages analysis. In
so doing, it can be also reasonably assumed that the jury found that the royalty rates
the expert proposed constituted adequate compensation for Trans Ova’s past
infringement. (See Jury Instructions p. 62 (“the amount [of damages] must be at
least as much as the amount of money that XY would have received if Trans Ova had
been paying a reasonable royalty to XY for Trans Ova’s use during the period of
23

infringement”).) XY now argues that the Court’s ongoing royalty award should be
increased further, by between 25% and 50%. 4 (ECF No. 471 at 5–10.)
XY relies on two sources of law to support its contention that the Court should
impose an increased ongoing royalty. First, XY cites a case from the Eastern District of
Texas which states that “[t]he Federal Circuit has instructed that post-verdict
infringement should typically entail a higher royalty rate than the reasonable royalty
found at trial.” Creative Internet Advert. Corp. v. Yahoo! Inc., 674 F. Supp. 2d 847, 861
(E.D. Tex. 2009) (citing Amado v. Microsoft Corp., 517 F.3d 1353, 1362 n.2 (Fed. Cir.
2008)). However, in Amado, the case on which the Texas court relied, the Federal
Circuit in fact stated, “We take no position on the proper amount of the eventual award.
That, of course, is a matter committed to the sound discretion of the district court.” 517
F.3d at 1362 n.2. The Federal Circuit continued by “observ[ing] only that, logically, the
eventual award should fall somewhere between the $0.04 amount the jury found to be
an appropriate pre-verdict reasonabl[e] royalty and the $2.00 amount [the patent holder]
was willing to accept in exchange for a license.” Id. That is, under the facts of Amado,
no prior license existed, and the jury awarded damages in an amount much smaller
than the amount the patentee sought under a proposed license. The Court finds that
Amado is inapplicable here, where a pre-infringement license in fact existed, and where
the jury’s damages award imposed a higher royalty rate than the rate XY agreed to
accept in the license. Consequently, the Court rejects the much broader assertion in

4

XY also argues that the increased ongoing royalty rate should also be trebled as
enhanced damages based on the jury’s finding of willful infringement. (ECF No. 471 at 10–11.)
As the Court has vacated the willfulness finding, see Part II above, the Court rejects this
argument and will not apply any multiplier to the ongoing royalty rate.

24

the Texas case XY cites, and finds that it is not required to award an ongoing royalty at
a rate higher than that in the jury’s damages award.
XY also supports its argument by citing various factors under Georgia-Pacific
Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970), which XY
contends apply to this case to support an increased ongoing royalty rate. (ECF No. 471
at 5–12.) The Georgia-Pacific factors are not “a talisman for royalty rate calculations,
[but] district courts regularly turn to this 15-factor list” to determine reasonable royalties.
Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1230 (Fed. Cir. 2014) (further noting
that, depending on the case, “many of the Georgia-Pacific factors simply are not
relevant” and need not be considered).
Trans Ova counters by arguing that the Georgia-Pacific factors need not be
applied where an actual license for XY’s technology has been issued, both to Trans
Ova and to others, and XY has uniformly established a 10% rate in those existing
licenses. (ECF No. 485 at 6–7.) The Federal Circuit has indeed held, in the context of
the intial assessment of damages for infringement, that “[a]n established royalty is
usually the best measure of a ‘reasonable’ royalty for a given use of an invention.”
Monsanto Co. v. McFarling, 488 F.3d 973, 978 (Fed. Cir. 2007). However, Trans Ova
fails to cite any case in which a court used an established royalty rate for a post-verdict
ongoing royalty award without considering the other Georgia-Pacific factors. As such,
the Court will proceed to that analysis.
XY argues, based on the Georgia-Pacific factors, that the Court should consider
the following in increasing an ongoing royalty rate: (1) the parties’ relationship has

25

changed now that Trans Ova is an adjudged infringer; (2) even in 2016, at the time of
trial, no commercially ready alternatives to XY’s technology currently exist, such that XY
can command a higher rate; and (3) straw prices have declined since the Agreement
was entered into, such that a higher minimum royalty per straw should be assessed.
(ECF No. 471 at 7–10 (citing Mr. Schoettelkotte’s analysis suggesting the new minimum
royalty should be $7.50, an increase from the Agreement’s $5).) XY contends that
these arguments respectively align with Georgia-Pacific factors 5 (“[t]he commercial
relationship between the licensor and licensee”), 9 (“[t]he utility and advantages of the
patent property over the old modes or devices, if any”), and 15 (“[t]he amount that a
licensor (such as the patentee) and a licensee (such as the inf ringer) would have
agreed upon (at the time the infrigement began) if both had been reasonably and
voluntarily trying to reach an agreement”). Georgia-Pacific, 318 F. Supp. at 1120. The
Court disagrees with XY’s application of these factors to reach a $7.50 minimum
royalty, and a rate that begins with the 15% royalty rate adopted by the jury and
increases it by 25% to 50%.
First, XY contends that a higher rate should be imposed now that the parties’
relationship has changed from that of “a willing licensor and a willing licensee” to
patentee and infringer. (ECF No. 471 at 7.) The evidence adduced at trial showed
that, in fact, XY was not a “willing licensor” when the infringement at issue began in
2009; rather, XY had engaged in failed negotiations to enter into an amended license
agreement with Trans Ova at that time, based on XY’s allegations of breach. The jury
found that both parties breached the Agreement and that XY has unclean hands, and
the Court cannot now ignore that conduct in hypothesizing a breachless negotiation in
26

which XY willingly offered a license to Trans Ova—particularly when exercising the
Court’s equitable discretion. See SCA Hygiene, 807 F.3d at 1331. The parties’
changed relationship does not find XY blameless and entitled to an increased royalty
rate on that basis, as XY contends.
Second, Georgia-Pacific factor 9 discusses any benefits or advantages the
patented property has over prior methods in order to determine how high a price it might
command. 318 F. Supp. at 1120. XY’s argument that no commercial alternatives exist
to its technology is the inverse of factor 9; that is, with some minor improvements, XY’s
technology appears to be largely the same as it was when Trans Ova last held a license
for it in 2009, but no competing technology challenges it on a commercial scale. The
Court declines to stretch factor 9 to fit XY’s model. However, the evidence XY cites in
support of this argument can be considered under factor 8, “[t]he established profitability
of the product made under the patent; its commercial success; and its current popularity.”
Id. The evidence at trial showed that the use of sorted semen via XY’s technology has
spread rapidly in recent years, and the success and popularity of XY’s methods suggests
that a higher rate than that in the Agreement may be appropriate.
Third, XY relies on factor 15 to support its argument that declining straw prices
support a higher minimum royalty rate. Factor 15 proposes a hypothetical negotiation;
that is, it asks what the parties would have agreed upon if they had been negotiating in
good faith. Id. But XY does not link this to its argument in favor of a higher minimum
royalty rate. XY argues that the minimum $5 per straw or per service set forth in Exhibit
D to the Agreement was included to protect XY against falling straw prices, but does not
explain why it is insufficient now that those prices have fallen. (ECF No. 471 at 9.)
27

Indeed, XY adjudged the $5 minimum to be sufficient to protect its interests against
falling prices at the time of the Agreement, and the evidence at trial of XY’s licenses
negotiated at a later date with other licensees revealed that the highest minimum
royalty assessed was $6. (Id. (citing Tr. at 896).) The Court finds as a result that the
evidence at trial under this factor does not support increasing the minimum royalty to
$7.50 per straw.
Finally, the Court notes that Georgia-Pacific factor 1 is “[t]he royalties received by
the patentee for the licensing of the patent in suit, proving or tending to prove an
established royalty.” 318 F. Supp. at 1120. As Trans Ova notes, every one of XY’s
prior licenses includes a 10% royalty rate, which tends to prove that 10% is XY’s
established royalty. (ECF No. 485 at 6–7.) The Court may properly consider this factor
in conjunction with the others.
After considering the evidence presented at trial in light of the relevant factors
discussed above, the Court finds that a reasonable ongoing royalty should be awarded
by averaging the reasonable rates assessed by the jury as damages for infringement,
and the rates XY agreed to in the parties’ initial Agreement. Therefore, the Court will
award an ongoing royalty at a rate of 12.5% of gross sales, with an additional royalty of
2% for reverse sorting services. The per-straw or per-service minimum royalty shall
remain unchanged at $5, as the jury did not modify that portion of the Agreement in
awarding infringement damages. XY’s Royalty Motion is therefore granted in part.
VII. XY’S INTEREST MOTION
XY’s Interest Motion seeks prejudgment interest for both its contract damages
and its infringement damages. (ECF No. 472.) XY’s source of entitlement to
28

prejudgment interest differs for each category of damages, as does the applicable law;
therefore, the Court will discuss them separately.
A.

Contract Damages
XY contends that it is entitled to prejudgment interest on its award of contract

damages based on Colorado law, which provides as follows:
(a) When money or property has been wrongfully withheld,
interest shall be an amount which fully recognizes the gain
or benefit realized by the person withholding such money or
property from the date of wrongful withholding to the date of
payment or to the date judgment is entered, whichever first
occurs; or, at the election of the claimant,
(b) Interest shall be at the rate of eight percent per annum
compounded annually for all moneys or the value of all
property after they are wrongfully withheld or after they
become due to the date of payment or to the date judgment
is entered, whichever first occurs.
Colo. Rev. Stat. § 5-12-102(1). The parties dispute the effect of the “wrongfully
withheld” language; Trans Ova argues that § 5-12-102 only provides prejudgment
interest to “non-breaching parties” where the breaching party failed to pay, and here
Trans Ova tried to pay royalties to XY. (ECF No. 6–7.) However, the Court agrees with
XY that Colorado courts interpret the initial clause to ref er to the date of accrual based
on when the circumstances require payment, not a limitation of the party’s entitlement
to interest. Karg v. Mitchek, 983 P.2d 21, 27 (Colo. App. 1998) (“Section
5-12-102(1)(b), C.R.S. 1997, allows interest on money which is due and owing,
regardless of whether it is wrongfully withheld.”). The Court therefore finds that an

29

award of prejudgment interest is appropriate on XY’s contract damages.5
The next question before the Court is the applicable interest rate to apply. XY
proposes one of two rates: 18% or 8%. (ECF No. 472 at 2–5.) The 18% figure comes
from § 3.4 of the Agreement, entitled “Audit Rights,” which permits XY to audit and
examine Trans Ova’s records and premises to ensure compliance with the terms of the
Agreement. (Trial Ex. 17 at 7.) The clause provides that, “[i]n the event of
underpayment of any amount by [Trans Ova], . . . [Trans Ova] shall pay to [XY] the
actual cost of the entire audit, together with any amounts due along with interest on
such amounts at eighteen percent (18%) compounded annually.” (Id.) XY argues that
this contractual provision demonstrates that the parties have already contemplated the
interest rate for underpaid royalties, and mutually agreed to set it at 18%. (ECF No.
472 at 2–3.) Trans Ova objects, arguing that the Audit Rights provision was never
invoked by XY, and it plainly applies to interest on underpayments revealed during an
audit, not prejudgment interest after a jury verdict. (ECF No. 483 at 4–5.)
The Court agrees with Trans Ova, and will not stretch the meaning of § 3.4 of the
Agreement to impose an 18% prejudgment interest rate. XY argues in its Reply that,
“[h]ad XY audited Trans Ova in addition to filing suit, Trans Ova would indisputably owe
XY 18% interest on the royalty shortfall.” (ECF No. 491 at 5.) But XY admits that it never
conducted an audit pursuant to § 3.4 (ECF No. 472 at 4); instead, X Y improperly treated

5

Trans Ova also argues that no prejudgment interest should be awarded because the
jury determined that XY has unclean hands. (ECF No. 483 at 7–8.) The Court rejects this
argument, as Trans Ova has cited no case supporting its argument that an award of
prejudgment interest pursuant to an explicit statute should be construed as an equitable remedy
barred by unclean hands.

30

the Agreement as terminated in November 2007, breaching the Agreement and its duty
of good faith and fair dealing in the process. (See ECF No. 461 at 1–2.) The Court
declines to presume a hypothetical audit in the absence of XY’s breach, and instead
finds that because XY never invoked § 3.4, its 18% interest rate does not apply here.
XY next contends that, even if § 3.4 of the Agreement does not explicitly apply, it
can be considered as a guide of what XY is entitled to under § 5-12-102(1)(a), which
provides for interest in “an amount which fully recognizes the gain or benefit realized”
by Trans Ova. (ECF No. 472 at 3.) XY argues that Trans Ova benefitted by
underpaying royalties, and that XY was required to reject Trans Ova’s proffered royalty
payments after November 2007 in order to avoid waiving its contractual arguments. But
XY’s argument fails to show that Trans Ova’s unpaid royalties resulted in gains to the
tune of 18% interest. The Court will not apply an 18% interest rate, far above the prime
rate or the rate of inflation, to penalize Trans Ova when it attempted to comply with the
Agreement in the face of XY’s breach; the purpose of prejudgment interest is
compensatory, not punitive. Accordingly, the Court finds that an 18% interest rate
would far exceed the “gain or benefit realized” by Trans Ova and is not warranted under
§ 5-12-102(1)(a).
XY alternatively proposes applying the 8% statutory prejudgment interest rate
provided under § 5-12-102(1)(b). (ECF No. 472 at 4–5.) T rans Ova objects to this, too,
arguing that it never breached the Agreement because of XY’s prior breach, and that it
never wrongfully withheld money from XY. (ECF No. 483 at 5–6.) The Court has
already rejected both of these arguments above, and finds that the 8% statutory rate is
appropriate here.
31

The Court therefore grants in part XY’s Interest Motion as to its contract
damages of $1,481,000, and will apply a prejudgment interest rate of 8% compounded
annually, pursuant to Colorado Revised Statute § 5-12-102(1)(b). As of February 29,
2016, XY calculated that amount at $1,302,475. (ECF No. 472-1 ¶ 4(e).)
One additional matter must be resolved prior to proceeding to XY’s request for
prejudgment interest on its infringement damages. The jury also awarded Trans Ova
$528,000 in contract damages, and although the parties’ motions do not discuss it, the
Court finds that the same analysis regarding entitlement to prejudgment interest at a
compounding rate of 8% applies to Trans Ova’s damages. While Trans Ova’s award,
being a smaller amount, will logically offset XY’s damages award, it is reasonable to
calculate the prejudgment interest applicable to each award before performing the
arithmetic to result in the net total amount that will be awarded to XY in the Final
Judgment.
Accordingly, the Court directs the parties to file, on or before April 15, 2016, a
joint notice of their calculation of the prejudgment interest applicable to Trans Ova’s
damages award of $528,000. The Court expects the parties to make every possible
attempt to stipulate to the correct calculation, but if the parties cannot agree, each
party’s position shall be included in the joint notice. In so doing , the parties will not be
deemed to waive any objections they might have to the Court’s rulings on this matter.
B.

Infringement Damages
XY’s Interest Motion seeks prejudgment interest on its award of damages for

infringement based on 35 U.S.C. § 284, which provides that damages should be
“adequate to compensate for the infringement . . . together with interest and costs as
32

fixed by the court.” The Supreme Court has held that “[p]rejudgment interest should
ordinarily be awarded where necessary to afford the plaintiff full compensation for
infringement.” Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 654 (1983) (reasoning
that the patentee should be compensated for the time value of the unpaid royalties).
However, the Supreme Court has “not construe[d] § 284 as requiring the award of
prejudgment interest whenever infringement is found. That provision states that
interest shall be ‘fixed by the court,’ and in our view it leaves the court some discretion
in awarding prejudgment interest.” Id. at 656–57. Where a patent owner was
responsible for “undue delay” in bringing suit, “it may be appropriate to limit
prejudgment interest, or perhaps deny it altogether.” Id. at 657. This is so because a
patentee that creates undue delay need not be compensated for the time value of the
funds it voluntarily delayed in pursuing. See id.
Trans Ova argues that prejudgment interest on the infringement damages should
be denied because XY was responsible for undue delay here. (ECF No. 483 at 8–10.)
The basis for Trans Ova’s argument is that, after XY’s wrongful attempt to terminate the
Agreement, it “proceeded to negotiate in bad faith for years,” proposing amended
licenses with oppressive terms and rejecting Trans Ova’s attempt to arbitrate the matter
in 2008. (Id.) Trans Ova contends that XY also delayed in filing suit in Texas instead of
Colorado, further protracting the litigation, all of which unfairly increased the patent
damages to much more than they otherwise would have been. (Id. at 10.) XY objects
to this argument, contending that it negotiated in good faith, and that its choice of venue
did not delay the case and did not prejudice Trans Ova. (ECF No. 491 at 6–9.) XY

33

further argues that even during the purported delay, Trans Ova has been able to accrue
interest on the unpaid funds in the meantime. (Id.) The Court finds that, while Trans
Ova points to evidence of some delay caused by XY, there is no indication that the
delay was sufficiently undue to justify rejecting XY’s request for prejudgment interest
under § 284. The Court also agrees with XY that Trans Ova was not prejudiced by the
delay because, after XY rejected its attempts to pay royalties, those funds remained in
Trans Ova’s accounts. As such, the Court finds that a fully compensatory award of
damages for infringement in this case should include an award of prejudgment interest.
See 35 U.S.C. § 284.
XY argues that the Court should apply the Colorado statutory interest rate of 8%,
but its rationale for this is simply that “‘courts often use the statutory rate in the state in
which they sit’” due to the absence of any statutory rate in the patent law. (ECF No.
472 at 6 (quoting Bowling v. Hasbro, 582 F. Supp. 2d 192, 208 (D.R.I. 2008)).) T he
Court finds this an insufficient justification to apply an 8% prejudgment interest rate; the
cases XY cites suggest only that the state statutory rate is appropriate because it
serves as a “benchmark” or consistent rate. XY alternatively proposes calculating
prejudgment interest at the average prime rate for the period of infringement, which XY
states was 3.25%. (ECF No. 472 at 7.) Trans Ova does not dispute that this was the
applicable prime rate. The Court finds that applying the prime rate more closely
approximates the lost time value of these funds, which is the reasoning behind an
award of prejudgment interest, and the prime rate serves as a more universal
benchmark than a state statutory rate. Accordingly, the Court will apply the prime rate
of 3.25% to calculate XY’s award of prejudgment interest on its infringement damages.
34

Lastly, Trans Ova contests XY’s request that the prejudgment interest be
compounded annually in order to be fully compensatory, arguing that simple interest is
sufficient to compensate XY because XY voluntarily “chose not to cash the royalty
checks that Trans Ova tendered. [XY] could have used the damages award, but chose
not to.” (ECF No. 483 at 11.) The Court finds this argument unpersuasive. While XY’s
arguments regarding the termination of the Agreement were ultimately unsuccessful, it
should not be denied a fully compensatory award of prejudgment interest merely
because it chose not to waive those arguments by accepting Trans Ova’s proffered
payments. The parties agree that the award of compound or simple interest is within
the Court’s discretion. (See id. (citing Bio-Rad Labs., Inc. v. Nicolet Instrument Corp.,
807 F.2d 964, 969 (Fed. Cir. 1986)).) The Court finds that an award of prejudgment
interest that “afford[s] the plaintiff full compensation for infringement” should be
compounded annually, as such interest calculation comes closer to the value of those
funds had they been accruing in XY’s accounts since the infringement commenced.
The Court therefore grants in part XY’s Interest Motion as to its infringement
damages of $4,585,000, and will apply a prejudgment interest rate of 3.25%
compounded annually, pursuant to 35 U.S.C. § 284. As of February 29, 2016, XY
calculated that amount at $465,849. (ECF No. 472-1 ¶ 4(I).)
VIII. CONCLUSION
For the reasons set forth above, the Court ORDERS as follows:
1.

Trans Ova’s Renewed Motion for Judgment as a Matter of Law Under Rule 50(b)
Or, in the Alternative, Motion for a New Trial Under Rule 59(a) Or, in the
Alternative, Motion to Alter or Amend a Judgment Under Rule 59(e) (ECF No.
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473), Motion for a New Trial Under Rule 59(a) (ECF No. 479), and Motion for a
New Trial Under Rule 59(a) on the Issue of Invalidity (ECF No. 480) are
DENIED;
2.

Trans Ova’s Motion to Alter or Amend a Judgment Under Rule 59(e) (ECF No.
477) is GRANTED, and the jury’s finding of willful infringement is VACATED;

3.

XY’s Motion to Declare this Case Exceptional Pursuant to 35 U.S.C. § 285 and
to Award Attorneys’ Fees (ECF No. 467) and Motion for Award of Enhanced
Damages for Patent Infringement Under 35 U.S.C. § 284 (ECF No. 468) are
DENIED;

4.

XY’s Motion to Set an Ongoing Royalty Rate (ECF No. 471) is GRANTED IN
PART, and Trans Ova shall pay a rate of 12.5% of all gross receipts for the
licensed products set forth in the parties’ prior License Agreement, with an
additional 2% royalty for reverse sorting services, unless the parties reach a
separate license agreement which may supersede this ongoing royalty rate
without further order of the Court;

5.

XY’s Motion for Prejudgment Interest (ECF No. 472) is GRANTED IN PART, and
XY is AWARDED prejudgment interest on its award of contract damages of
$1,481,000 at the rate of 8%, and on its award of infringement damages of
$4,585,000 at the rate of 3.25%, each compounded annually to the date of
judgment;

6.

The Court directs the parties to file, on or before April 15, 2016, a joint notice of
their calculation(s) of the prejudgment interest applicable to Trans Ova’s
damages award of $528,000 at the rate of 8%, compounded annually, as well as
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an updated calculation of XY’s prejudgment interest at the applicable rates to the
date of April 15, 2016; and
7.

Once the Court has received this filing, it will direct the Clerk to enter Final
Judgment in XY’s favor in the net amount reflecting the offset from Trans Ova’s
damages, and to close this case.
Dated this 8th day of April, 2016.
BY THE COURT:

William J. Martínez
United States District Judge

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