Thorne Research et al v. Atlantic Pro-Nutrients

Filing 383

MEMORANDUM DECISION AND ORDER denying 368 Motion for Judgment as a Matter of Law and Preclusion of Argument Regarding Damages. Defendant made the Motion in writing at the conclusion of Plaintiffs' case-in-chief on February 19, 2018. See order for further details. Signed by Judge Ted Stewart on 2/28/18. (jlw)

IN THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF UTAH

THORNE RESEARCH, INC. and SOFTGEL
FORMULATORS, INC.,

MEMORANDUM DECISION AND ORDER
DENYING DEFENDANT’S MOTION FOR
JUDGMENT AS A MATTER OF LAW AND
PRECLUSION OF ARGUMENT
REGARDING DAMAGES

Plaintiffs,
vs.

CASE NO. 2:13-CV-784 TS
Judge Ted Stewart

XYMOGEN,
Defendant.

This matter is before the Court on Defendant’s Motion for Judgment as a Matter of Law
and Preclusion of Argument Regarding Damages. Defendant made the Motion in writing at the
conclusion of Plaintiffs’ case-in-chief on February 19, 2018. For the following reasons, the Court
denies the Motion.
I. DISCUSSION
Federal Rule of Civil Procedure 50(a)(1) provides,
If a party has been fully heard on an issue during a jury trial and the court finds
that a reasonable jury would not have a legally sufficient evidentiary basis to find
for the party on that issue, the court may:
(A) resolve the issue against the party; and
(B) grant a motion for judgment as a matter of law against the party on a
claim or defense that, under the controlling law, can be maintained or defeated
only with a favorable finding on that issue.
In reviewing a Rule 50 Motion, the Court should review all of the evidence in the
record. 1 However, all reasonable inferences are drawn in favor of the non-moving party and the

1

Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).
1

Court may “not make credibility determinations or weigh the evidence.” 2 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.” 3 A judgment as a matter of law is
appropriate “if there is no legally sufficient evidentiary basis . . . with respect to a claim or
defense . . . under the controlling law.” 4
A. Infringement
In this matter, Plaintiffs allege that Defendant infringed claims 1 and 5 of the ‘888 patent.
Plaintiffs must prove by a preponderance of the evidence that Defendant sold or offered for sale
a product that meets all the requirements of the claims and did so without the permission of
Plaintiffs during the time the patent was in force. 5
Claim 1 of the ‘888 patent is an independent claim that covers:
A crystal-free coenzyme Q10 composition comprising: non-crystalline coenzyme
Q10 present in an amount of 5.3% by weight to about 12% by weight based on
the total weight of the composition; a solvent selected from the group consisting
of conjugated linoleic acid, ethyl ester marine lipids, citrus oils, and combinations
thereof; and a carrier oil.
Claim 5 of the ‘888 patent is dependent on claim 1 and adds the following requirement: “The
composition in accordance with claim 1 wherein the solvent comprises conjugated linoleic acid.”

2

Id.

3

Finley v. United States, 82 F.3d 966, 968 (10th Cir. 1996) (quoting Q.E.R., Inc. v.
Hickerson, 880 F.2d 1178, 1180 (10th Cir. 1989)).
4

Baty v. Willamette Indus., Inc., 172 F.3d 1232, 1241 (10th Cir. 1999) (quoting Harolds
Stores, Inc. v. Dillard Dep’t Stores, 82 F.3d 1533, 1546–47 (10th Cir. 1996)).
5

See MicroStrategy Inc. v. Bus. Objects, S.A., 429 F.3d 1344, 1352–53 (Fed. Cir. 2005)
(holding that there was no literal infringement where the accused product did not contain every
element of the claim); Cross Med. Prods. v. Medtronic Sofamor Danek, 424 F.3d 1293, 1309–11
(Fed. Cir. 2005) (holding that there was no direct infringement where accused product did not
include each claim limitation); Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261, 1269–73
(Fed. Cir. 1986) (affirming finding of direct infringement based on circumstantial evidence).
2

Drawing all reasonable inferences in favor of Plaintiffs as the non-moving party, the
Court finds that Plaintiffs provided sufficient evidence for a reasonable jury to find that
Defendant infringed both claim 1 and claim 5 of the ‘888 patent. First, Dr. Ed Brothers testified
that he examined the accused products under a light microscope at 640X magnification and was
unable to see anything that he could definitively state was a CoQ10 crystal. This satisfies the
crystal free or, “non-crystalline requirement.”
Regarding other ingredients in the accused products, Dr. Abato testified that
CoQ10 was present in a weight of approximately 6.89%, which fell within the range provided by
claim 1. He also testified that conjugated linoleic acid (“CLA”) was used as a solvent in the
accused products, and the accused products contained avocado oil which acted as a carrier oil.
Defendant argues that Dr. Prestwich’s testimony that he did see crystals using polarized
light provides uncontroverted evidence that crystals are visible and no reasonable jury could
conclude that Xymogen is infringing. This argument fails, however, as the Court must draw all
inferences in favor of the non-moving party, and may not weight the evidence.
Defendant also argues that allowing the jury to consider both the testimony of Dr.
Brothers and Dr. Prestwich will lead to the jury choosing one valid scientific technique over the
other and thus impermissibly overruling claim construction as claim construction allows for
both. However, the jury may weigh the credibility of the two experts and the techniques they
used and find that one is more reliable without finding that one is not a valid technique.
Therefore, in consideration of the evidence provided in Plaintiffs’ case-in-chief, a
reasonable jury could conclude that the accused products meet every requirement listed in claim
1 and claim 5 of the ‘888 patent and are infringing both claims.

3

B. Damages
Plaintiffs also seek a reasonable royalty as damages in this case. In patent cases, there is a
“presumption of damages when infringement is proven” 6 as the statute clearly states that “[u]pon
finding for the claimant the court shall award the claimant damages 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 . . . .” 7 “[S]ection 284 is clear that expert testimony is not necessary to the award
of damages, but rather may be received as an aid,” 8 and, Plaintiffs are not required to put on
evidence in order to be awarded royalty damages. 9
While there is not a comprehensive list of all the factors that can go into determining
what a reasonable royalty may be in each case, the following may be considered:
1. The royalties received by the patentee for the licensing of the patent in suit,
proving or tending to prove an established royalty;
2. The rates paid by the licensee for the use of other patents comparable to the
patent in suit;
6

Dow Chem. Co. v. Mee Indus., Inc., 341 F.3d 1370, 1382 (Fed. Cir. 2003) (“The district
court’s conclusion that no damages could be awarded, in light of the presumption of damages
when infringement is proven, was in error.”); Lindemann Maschinenfabrik GmbH v. Am. Hoist
& Derrick Co., 895 F.2d 1403, 1406 (Fed. Cir. 1990) (“In patent law, the fact of infringement
establishes the fact of damage because the patentee’s right to exclude has been violated.”).
7

35 U.S.C. § 284 (emphasis added).

8

Dow Chem. Co., 341 F.3d at 1381–82 (internal quotation marks omitted); see also 35
U.S.C. § 284 (“The court may receive expert testimony as an aid to the determination of
damages or of what royalty would be reasonable under the circumstances.”).
9

Info-Hold, Inc. v. Muzak LLC, 783 F.3d 1365, 1372 (“35 U.S.C. § 284 requires the
district court to award damages in an amount no less than a reasonable royalty even if the
plaintiff[s have] no evidence to proffer. We explained that, in such a case, the district court
should consider the Georgia–Pacific factors in detail, and award such reasonable royalties as the
record evidence will support.”) (internal quotation marks omitted); see also Dow Chem. Co., 341
F.3d at 1382 (holding that the “court’s obligation to award some amount of damages does not
mean that a patentee who puts on little or no satisfactory evidence of a reasonable royalty can
successfully appeal on the ground that the amount awarded by the court is not ‘reasonable’ and
therefore contravenes section 284”); Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1327 (Fed. Cir.
2014) (“If a patentee’s evidence fails to support its specific royalty estimate, the fact finder is
still required to determine what royalty is supported by the record.”).
4

3. The nature and scope of the license, as exclusive or non-exclusive; or as
restricted or non-restricted in terms of territory or with respect to whom the
manufactured product may be sold;
4. The licensor’s established policy and marketing program to maintain his patent
monopoly by not licensing others to use the invention or by granting licenses
under special conditions designed to preserve that monopoly;
5. The commercial relationship between the licensor and licensee, such as,
whether they are competitors in the same territory in the same line of business; or
whether they are inventor and promoter;
6. The effect of selling the patented specialty in promoting sales of other products
of the licensee; that existing value of the invention to the licensor as a generator
of sales of his non-patented items; and the extent of such derivative or convoyed
sales;
7. The duration of the patent and the term of the license;
8. The established profitability of the product made under the patent; its
commercial success; and its current popularity;
9. The utility and advantages of the patent property over the old modes or devices,
if any, that had been used for working out similar results;
10. The nature of the patented invention; the character of the commercial
embodiment of it as owned and produced by the licensor; and the benefits to those
who have used the invention;
11. The extent to which the infringer has made use of the invention; and any
evidence probative of the value of that use;
12. The portion of the profit or of the selling price that may be customary in the
particular business or in comparable businesses to allow for the use of the
invention or analogous inventions;
13. The portion of the realizable profit that should be credited to the invention as
distinguished from non-patented elements, the manufacturing process, business
risks, or significant features or improvements added by the infringer;
14. The opinion testimony of qualified experts; [and]
15. The amount that a licensor (such as the patentee) and a licensee (such as the
infringer) would have agreed upon (at the time the infringement began) if both
had been reasonably and voluntarily trying to reach an agreement; that is, the
amount which a prudent licensee— who desired, as a business proposition, to
obtain a license to manufacture and sell a particular article embodying the
patented invention— would have been willing to pay as a royalty and yet be able
to make a reasonable profit and which amount would have been acceptable by a
prudent patentee who was willing to grant a license. 10
Plaintiffs provided evidence that is covered by several of these factors. According to
testimony, the products sold by Thorne and Xymogen are superior to all other products in the

10

Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y.

1970).
5

market and the sale of the highly absorbable CoQ10 product is profitable. Due to this “superior”
product, by signing an exclusivity agreement with Best Formulators, Thorne was set to be the
only player in the market and sought to gain clients from Xymogen. There was also testimony
that the initial payment for this seven-year exclusivity agreement was $1,000,000 and included
regular royalty payments with set sales quotas and minimum royalty payments of approximately
six percent. Mr. Steele and Dr. Judy were also receiving royalty payments for being named
inventors on the patent.
Additionally, Mr. McCamy, President of Thorne, testified that a hypothetical sub-license
to Xymogen, at a minimum, would match Thorne’s agreement with Best Formulators. Mr.
McCamy also testified that Thorne missed out on around four to five million dollars from 2013
to present and the sale of the Q-Best product decreased once Xymogen began competing with
Thorne in the marketplace. Finally, Mr. Nelson provided sales data from both Thorne and
Xymogen for the relevant years and testified that Thorne had talked to the Mayo Clinic about
further tests and studies that could increase the product’s profitability.
Despite this evidence, Defendant argues that no evidence on damages was provided. This
argument, however, is unfounded as multiple witnesses touched on a number of the GeorgiaPacific factors that the jury may use in determining a reasonable royalty.
Therefore, even though no evidence is required from Plaintiffs, the Court finds that they
have produced sufficient evidence for a reasonable jury to determine what a reasonable royalty
should be.
II. CONCLUSION
It is therefore

6

ORDERED that Defendant’s Motion for Judgment as a Matter of Law and Preclusion of
Argument Regarding Damages (Docket No. 368) is DENIED.
DATED this 28th day of February, 2018.
BY THE COURT:

Judge Ted Stewart

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