Monsanto Production Supply LLC v. Rosentreter
Filing
81
OPINION AND ORDER: Plaintiff is awarded compensatory damages in the amount of $1,933,968.40. An enhancement of three times the compensatory damages amount is applied, such that Plaintiff is entitled to enhanced damages totaling $5,801,905. 20. Plaintiff is awarded prejudgment interest on the compensatory damages at a rate of 9% beginning on October 1, 2014, and accruing until the Court enters judgment in this case. Plaintiff is also awarded reasonable attorneys' fees and cos ts. Plaintiff's Motion for Entry of Permanent Injunction (d/e 63) is GRANTED. It is hereby ORDERED that Defendant Rick Rosentreter is permanently enjoined from making, using, selling, transferring, offering to sell or transfer, or handling any soybean or other seed (e.g., corn) containing Monsantos patented biotechnologies without Monsanto's express permission. It is further ordered that Plaintiff shall file a statement of attorneys' fees and costs, supported by all necessary a ffidavits and documentation, on or before November 1, 2017. A separate judgment in accordance with this Opinion and Order will be entered following the Courts receipt of Plaintiff's statement of fees and costs. (SEE WRITTEN OPINION AND ORDER.) Entered by Judge Sue E. Myerscough on 9/27/2017. (GL, ilcd)
E-FILED
Wednesday, 27 September, 2017 02:49:04 PM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
MONSANTO PRODUCTION
SUPPLY LLC,
Plaintiff,
v.
RICK ROSENTRETER and
DOUGLAS ROSENTRETER,
Defendants.
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No. 3:16-cv-03038
OPINION AND ORDER
SUE E. MYERSCOUGH, U.S. District Judge:
Before the Court is Plaintiff Monsanto Production Supply
LLC’s Motion for Permanent Injunction (d/e 63). Also before the
Court is the determination of Plaintiff’s damages.
I. BACKGROUND
In February 2016, Plaintiff filed a Complaint against
Defendant Rick Rosentreter (hereinafter Defendant) alleging that
Defendant improperly converted Plaintiff’s proprietary seeds,
interfered with Plaintiff’s contractual relations, and was unjustly
enriched as a result. On March 23, 2016, Plaintiff filed an
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Amended Complaint (d/e 34) to add Defendant’s brother, Douglas
Rosentreter, as a defendant.
During the course of the litigation, Defendant obstructed the
discovery process, misrepresented facts to Plaintiff and to the
Court, and disobeyed this Court’s direct discovery orders. As a
result, the Court granted in part Plaintiff’s Motion for Sanctions
(d/e 45). The Court entered default judgment against Defendant
and temporarily enjoined Defendant and any entity acting on his
behalf or with which he is affiliated from making, using, selling,
transferring, offering to sell or transfer, or handling any soybean or
other seed containing Plaintiff’s patented biotechnology. On March
24, 2017, the Court held an evidentiary hearing on Plaintiff’s
Motion for Permanent Injunction and on the amount of damages.
II. PERMANENT INJUNCTION
A. Legal Standard
Once the Court has entered a default judgment, as it has here,
the Court takes all well-pleaded factual allegations in the Complaint
as true. Yang v. Hardin, 37 F.3d 282, 286 (7th Cir. 1994).
A party seeking a permanent injunction must demonstrate: (1)
that it has suffered an irreparable injury; (2) that no adequate
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remedy at law exists; (3) that, considering the balance of hardships
between the plaintiff and defendant, a remedy in equity is
warranted; and (4) that the public interest would not be disserved
by a permanent injunction. eBay Inc. v. Mercexchange, LLC, 547
U.S. 388, 391 (2006). Whether to grant a permanent injunction is
within this Court’s discretion. Weinberger v. Romero-Barcelo, 456
U.S. 305, 320 (1982).
B. Analysis
1. Plaintiff will suffer irreparable injury without a permanent
injunction.
A court may only issue a permanent injunction to address
irreparable harm. Because a permanent injunction is a final
judgment rather than a provisional remedy, the plaintiff must show
actual success on the merits, as opposed to the likelihood of
success for a preliminary injunction. Plummer v. Am. Institute of
Cert. Public Accountants, 97 F.3d 220, 229 (7th Cir. 1996).
Patent infringement does not lead to a per se finding of
irreparable injury, but the nature of intellectual property shall be a
consideration of the Court in making that determination. eBay Inc.
v. Mercexchange, LLC, 547 U.S. 388, 391 (2006) (vacating
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injunction but finding that patent holder who only intends to
license the patent rather than use it does not preclude a finding of
irreparable injury—court must also consider how the plaintiff will
use the injunction and the nature of the rights protected by the
injunction). The Court shall consider that intellectual property
protects ownership of unique property and whether the plaintiff
intends to monetize the patent or simply charge others to use it. Id.
As a threshold matter, Plaintiff has had success on the merits
by virtue of the default judgment.
Plaintiff argues that any additional infringement by Defendant
would strip Plaintiff of the protection of its patent and the ability to
control the spread of is patented technology. Plaintiff has shown
that it will suffer irreparable injury without a permanent injunction
due to the nature of the seed industry. Because seeds can
proliferate exponentially, infringement could “cause widespread
proliferation of plaintiffs’ technology in a way that is almost
impossible to monitor and redress.” Monsanto Co. v. Hargrove, No.
4:09-cv-1628, 2011 WL 5330674, at *6 (E.D. Mo. Nov. 7, 2011)
(“The ability of plaintiffs’ seed technology to rapidly self-replicate is
the reason that plaintiffs grant only limited, single-use licenses for
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their products.”). The potential for such a circumstance in this case
satisfies the irreparable injury requirement for a permanent
injunction.
2. Plaintiff has established that legal remedies are inadequate.
Next, money damages are inadequate to make Plaintiff whole.
Legal remedies may be inadequate in variety of circumstances,
including where Plaintiff would have to pursue a multiplicity of
lawsuits for damages. See Monsanto Co. v. Parr, 545 F. Supp. 2d
836, 844 (N.D. Ind. 2008) (“Without injunctive relief, Monsanto
would be in the position of having to repeatedly investigate and file
lawsuits seeking damages against [the defendant] . . . .”); Robert
Bosch LLC v. Pylon Nfg. Corp., 659 F.3d 1142, 1155 (Fed. Cir.
2011) (legal remedy inadequate when “[t]here is no reason to believe
that [defendant] will stop infringing, or that the irreparable harms
resulting from its infringement will otherwise cease, absent [a
permanent] injunction.”).
Plaintiff argues that money damages are inadequate because
Defendant is likely to continue to infringe on Plaintiff’s patented
biotechnology absent a permanent injunction. Plaintiff argues that
Defendant’s conduct before and during litigation indicates the
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likelihood that he will continue to infringe upon Plaintiff’s
proprietary seeds. In support of its position, Plaintiff cites to the
facts that Defendant continued to sell and retain Plaintiff’s seeds
even after Plaintiff notified him that his actions violated patent law,
that he willfully destroyed evidence, and that he lied to this Court.
See Hargrove, 2011 WL 5330674, at *6 (“[D]efendants’ willful
infringement and uncooperative conduct during this litigation
demonstrates the likelihood that they will continue to infringe”
absent an injunction.).
The Court finds that Plaintiff’s available legal remedies are
insufficient to make Plaintiff whole. The nature of seed
reproduction suggests that multiple lawsuits could be necessary
each time the seed is wrongfully replanted and resold. Further,
given the ongoing nature of Defendant’s infringement in this case,
including allowing Monsanto seeds to be planted and stored on his
land, refusal to return the seeds, and selling and replanting the
seeds without authorization, Defendant is likely to continue to
infringe on Plaintiff’s property. Defendant’s refusal to cooperate in
discovery during the course of this litigation further supports this
finding.
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3. The balance of the hardships weighs in favor of granting the
permanent injunction.
The third element of a permanent injunction requires the
Court to weigh the hardships to the plaintiff in the absence of an
injunction against the hardships to the defendant if an injunction is
issued. The Court granted the temporary injunction in part to
further develop the record as to whether the ubiquity of Monsanto’s
seeds would force Defendant out of farming. Order d/e 57 at 17.
Plaintiff asserts that numerous varieties of soybean and corn
seeds that do not contain Monsanto’s biotechnology are available to
Defendant such that he can continue to farm without using
Plaintiff’s technology. Plaintiff cites to the University of Illinois’
annual seed trials for corn and soybeans to argue that 27
conventional varieties of soybean, 25 varieties of Liberty Link
soybean, and 8 varieties of non-GMO corn are available to
Defendant, all without Plaintiff’s technology. Plaintiff’s Motion for
Permanent Injunction (d/e [63]) at 10 n.3.
Plaintiff alternatively argues that, even if a permanent
injunction prevented Defendant from farming altogether, that harm
does not outweigh the harm to Plaintiff in the absence of an
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injunction, especially where, as here, Defendant knowingly based
his business on an infringing product. See Broadcom Corp. v.
Qualcomm, Inc., 543 F.3d 683, 704 (Fed. Cir. 2008) (“[O]ne who
elects to build a business on a product found to infringe cannot be
heard to complain if an injunction against continuing infringement
destroys the business so elected.”); Windsurfing Int’l, Inc. v. AMF,
Inc., 782 F.2d 995, 1003. n.12 (Fed. Cir. 1986) (district court
abused its discretion in refusing to enjoin defendant on grounds it
might put defendant out of business).
The Court finds that the balance of the hardships weighs in
favor of granting a permanent injunction. The injunction will not
force Defendant to abandon farming altogether. Plaintiff has
established that over 50 varietals of soybean and corn seeds are
available regionally that do not contain Monsanto’s biotechnology.
Further, at the hearing on this motion, Defendant testified that he
has been engaging in custom-work farming since this Court issued
the temporary injunction, supporting the conclusion that Defendant
will not be shut out from farming altogether if the Court grants the
permanent injunction. The injunction is further justified because
Defendant engaged in the farming at issue in this case knowing
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that it violated Plaintiff’s intellectual property. See United States v.
Diapulse Corp. of Am., 457 F.2d 25, 29 (2nd Cir. 1972) (finding that
one “can have no vested interest in a business activity found to be
illegal.”).
Further, Defendant’s interests are undermined by the fact that
Defendant was prohibited from using Monsanto seeds beginning in
May 2011. If Defendant were a rule-abiding farmer, he would not
have used Monsanto seeds even before Plaintiff filed this lawsuit
and would not have used Monsanto seeds following the conclusion
of this case without Plaintiff’s approval or removal of the
prohibition. Accordingly, although the permanent injunction will
enhance the severity and enforcement of the prohibition, it does not
create a new burden on Defendant. See, e.g., RPA Int’l PTY Ltd. v.
Compact Int’l Inc., No. 06-cv-1147, 2010 WL 3184311, at *10 (S.D.
Cal. Aug. 11, 2010) (balance of hardships weighs in favor of plaintiff
because “[f]ailure to grant an injunction will make it more difficult
for Plaintiffs to prevent further infringement of their patent [and]
[t]he only harm to Defendants will be the loss of income from selling
the infringing chairs.”).
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On the other hand, without an injunction, Plaintiff will be
prevented from fully protecting its intellectual property. See
Monsanto Co. v. Scruggs, 249 F. Supp. 2d 746, 760 (N.D. Mass.
2001) (“Notwithstanding the testimony regarding the deleterious
effect an injunction might have, . . . Monsanto is not obligated to
afford the defendants the opportunity to sell its products.”). The
balance is further weighted in favor of Plaintiff in light of the cost of
the research and development required to produce the infringed
upon biotechnology and the cost and difficulty of protecting the
intellectual property. See Monsanto Co. v. Bowman, 686 F. Supp.
2d 834, 837 (S.D. Ind. 2009) (“[D]espite [the defendant’s] compelling
policy arguments addressing the monopolizing effect of [the
presence of Monsanto’s seed], he has not overcome the patent law
precedent which breaks in favor of Monsanto with regard to its right
to patent protection . . . .”).
4. The public interest will not be disserved by the issuance of a
permanent injunction.
Finally, a permanent injunction must not disserve the public
interest. Plaintiff argues that a permanent injunction would serve
the public interest by enforcing the law and prohibiting a wrongful
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infringer from profiting at the expense of the holder of a lawful
patent. See Scruggs, 249 F. Supp. 2d at 760 (in granting
preliminary injunction, court noted “[t]he public interest is not
served by allowing an infringer to profit at the expense of the holder
of a lawfully issued patent.”).
Plaintiff also argues that Defendant’s actions in taking the
seeds, if continued, would hurt the interests of law-abiding farmers
who use Monsanto seeds by increasing the illegal supply of
patented seeds by hindering their competitive edge.
The Court finds that no public interest will be disserved by the
permanent injunction, which will support the public interest in
enforcing lawful patents and protecting law-abiding farmers.
C. Conclusion
Because Plaintiff has met each of the elements required for a
permanent injunction, Plaintiff’s request for a permanent injunction
(d/e 63) is GRANTED. Defendant Rick Rosentreter is hereby
permanently enjoined from making, using, selling, transferring,
offering to sell or transfer, or handling any soybean or other seed
(e.g., corn) containing Monsanto’s patented biotechnologies without
Monsanto’s express permission.
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III. DAMAGES
A. Legal Standard
In the context of a default judgment, while the Court accepts
as true the facts alleged in the Complaint relating to liability, facts
relating to the amount of damages must be proved. Yang, 37 F.3d
at 286.
B. Analysis
1. Compensatory Damages
The amount of damages in a patent infringement case must be
“adequate to compensate for the infringement, but in no event less
than a reasonable royalty for the use made of the invention by the
infringer.” 35 U.S.C. § 284. A reasonable royalty “may be based
upon an established royalty, if there is one, or if not, upon the
supposed result of hypothetical negotiations between the plaintiff
and defendant.” Rite–Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538,
1554 (Fed.Cir.1995). An established royalty is the royalty the
patentee uniformly receives when it licenses its invention to others
for use comparable to the defendant's infringing use. Monsanto
Company v. McFarling, 488 F.3d 973, 979 (Fed.Cir.2007). The
hypothetical negotiation approach “requires the court to envision
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the terms of a licensing agreement reached as a result of a
supposed meeting between the patentee and the infringer at the
time the infringement began.” Rite–Hite Corp., 56 F.3d at 1554.
In this case, no production contract existed between Plaintiff
and Defendant. Therefore, the Court determines a hypothetical
contractual price, based on Plaintiff’s relevant production contract
with Marty Kirbach.
At the hearing on Plaintiff’s motion, Plaintiff established that,
as of September 1, 2014, the retail price for Asgrow 4632 was
$67.00 per commercial unit (where one unit equals 140,000 seeds).
Plaintiff offered a 12% wholesale discount ($8.04/unit). Plaintiff’s
witness Jason Wildman, a site lead at Monsanto’s production
facility in Centralia, Illinois, testified that Plaintiff paid Kirbach a
contract price of $10.60 per commercial unit for the seed. Mr.
Wildman further testified that Plaintiff paid Kirbach a premium of
46 cents per commercial unit for good quality. Finally, Plaintiff
incurs a processing cost of $1.00 per commercial unit at its
Centralia facility. These figures establish that the value of a
commercial unit of Asgrow 4632 in September 2014 was $46.90.
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Plaintiff also proffered evidence that the Kirbach contract
produced 41,236 commercial units of seed. Therefore, the total
value of which Defendant deprived Plaintiff is $1,933,968.40.
Plaintiff’s compensatory damages, calculated as reasonable royalty
damages, is therefore $1,933,968.40.
2. Enhancement
Upon a finding of willful infringement, the Court may “increase
the damages up to three times the amount found or assessed.” 35
U.S.C. § 284. The Court in Read Corp. v. Portec, Inc., concluded
that the “paramount determination in deciding to grant
enhancement and the amount thereof is the egregiousness of the
defendant’s conduct based on all the facts and circumstances.”
970 F.2d 816, 826 (Fed. Cir. 1992). The court identified nine
factors that must be considered in determining the culpability of a
defendant’s conduct: (1) whether the infringer deliberately copied
the ideas or design of another; (2) whether the infringer, when he
knew of the other’s patent protection, investigated the scope of the
patent and formed a good-faith belief that it was invalid or that it
was not infringed; (3) the infringer’s behavior as a party to the
litigation; (4) defendant’s size and financial condition; (5) closeness
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of the case; (6) duration of the defendant’s misconduct; (7) remedial
action by the defendant; (8) defendant’s motivation for harm; and
(9) whether defendant attempted to conceal its misconduct. Id. at
827.
Here, Defendant both sold and replanted the seed when
Defendant knew of the patent protection and that selling and
replanting was prohibited. Saving and re-using the seed has been
considered to be tantamount to copying plaintiffs’ technology. See
Hargrove, 2011 WL 5330674, at *4 (assessing an enhancement of
three times the total damages amount because defendant saved and
re-used the seed and engaged in misconduct during litigation by
preventing plaintiff’s discovery as to the nature of defendant’s
infringement and defendant’s financial condition). Defendant also
engaged in misconduct during litigation by refusing to comply with
this Court’s discovery orders and by making misstatements to
Plaintiff and to this Court as to the whereabouts of pertinent
evidence. The egregiousness of Defendant’s prolonged infringement
and sanctionable court conduct warrants a damages enhancement
of three times the total compensatory damages amount.
3. Prejudgment Interest
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The Court finds that Plaintiff is entitled to prejudgment
interest on its compensatory damages award. In patent cases,
“[p]rejudgment interest should ordinarily be awarded.” General
Motors Corp. v. Devex Corp., 461 U.S. 648, 656 (1983).
The Court applies a rate of 9%, consistent with the rate used
by other courts and Illinois’s statutory prejudgment interest rate.
735 ILCS 5/2-1303; see, e.g. Hargrove, 2011 WL 5330674, at *5;
Domestic Fabrics Corp. v. Sears, Roebuck & Co., 326 F. Supp. 2d
694, 703 (E.D. N.C. 2004) (noting that courts look to a number of
sources, including state statutes, in determining the rate and
method for calculating prejudgment interest; awarding prejudgment
interest on reasonable royalty damages, but not on enhanced
damages under 35 U.S.C. § 284).
Prejudgment interest accrues from the date on which
Defendant should have made royalty payments to the date the
Court issued the judgment. General Motors Corp., 461 U.S. at 656.
Plaintiff has not specified the date on which the royalty payments
should have begun. However, Plaintiff alleges in the Amended
Complaint that in Fall 2014, Kirbach harvested seeds that he stored
in bins on Defendant’s land. Am. Compl. ¶ 31. Accordingly, the
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Court will fix the starting date for prejudgment interest at October
1, 2014. See Hargrove, 2011 WL 5330674, at *5.
4. Attorneys Fees and Costs
The Court finds that the infringement was willful and that
Defendant engaged in litigation misconduct. Therefore, the Court
finds this case to be exceptional under 35 U.S.C. § 285 and that
Plaintiff is entitled to recover its attorneys’ fees. Similarly, Plaintiff
is entitled to recover its costs expended in this case pursuant to 28
U.S.C. § 1920 and Fed. R. Civ. P. 54(d)(1).
The Court will determine the amount of attorneys’ fees and
costs to be awarded after Plaintiff submits a verified statement
detailing the fees and costs incurred in this matter. See 28 U.S.C. §
1924; Fed. R. Civ. P. 54(d).
C. Conclusion
Plaintiff is awarded compensatory damages in the amount of
$1,933,968.40. An enhancement of three times the compensatory
damages amount is applied, such that Plaintiff is entitled to
enhanced damages totaling $5,801,905.20. Plaintiff is awarded
prejudgment interest on the compensatory damages at a rate of 9%
beginning on October 1, 2014, and accruing until the Court enters
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judgment in this case. Plaintiff is also awarded reasonable
attorneys’ fees and costs.
IV. CONCLUSION
For the foregoing reasons, Plaintiff’s Motion for Entry of
Permanent Injunction (d/e 63) is GRANTED. It is hereby
ORDERED that Defendant Rick Rosentreter is permanently
enjoined from making, using, selling, transferring, offering to sell or
transfer, or handling any soybean or other seed (e.g., corn)
containing Monsanto’s patented biotechnologies without
Monsanto’s express permission.
It is further ordered that Plaintiff shall file a statement of
attorneys’ fees and costs, supported by all necessary affidavits and
documentation, on or before November 1, 2017. A separate
judgment in accordance with this Opinion and Order will be entered
following the Court’s receipt of Plaintiff’s statement of fees and
costs.
ENTERED: September 27, 2017
FOR THE COURT:
s/ Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE
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