Appeals panel: Sticky questions remain over patent for tech used to produce key ingredient for breeding dairy cows

By Cook County Record | Feb 13, 2019

CHICAGO - A federal appeals panel has weighed in on a sticky case that centers on the question of who can corral the market for "sexed" bull semen, and whether a would-be competitor violated a confidentiality agreement in attempting to use trade secrets to horn in on the game of producing dairy cows.

On Jan. 29, a three-judge panel of the U.S. Seventh Circuit Court of Appeals has ruled there was a confidentiality agreement violation, and a company does hold a valid patent for the technology that guides controlled cow breeding.

In 2014, ABS Global, which runs a large bull-stud bovine breeding operation, filed suit in Wisconsin federal court against Inguran LLC, a company that does business as Sexing Tech, asserting Inguran had violated federal antitrust laws in blocking out competitors from its market by improperly asserting patent claims over technology that enables it to sort chromosones in bull semen to guarantee only milk-producing cows are born. Inguran then countersued, asserting ABS had violated a confidentiality agreement by stealing trade secrets, and then infringing Inguran's patent.

At trial, a jury found ABS had violated the confidentiality agreement, finding a former Inguran employee had brought trade secrets to ABS. ABS had contended its contract with Inguran "covered only information 'provided by Sexing Tech.'"

The jury also found Inguran's patents were "not invalid on obviousness grounds."

A federal district judge upheld the jury's verdicts, and denied ABS' requests for summary judgment following the verdict.

The appeals court upheld the district court's findings on those questions. However, the appellate judges sent the case back to the lower court for more proceedings on two other patent-related questions. The judges said the jury's findings on those questions could not be reconciled under the law with its other verdicts.

Seventh Circuit Chief Judge Diane Wood wrote the decision. Judges Frank Easterbrook and Amy Coney Barrett concurred in the decision.

The innovation at the heart of the present controversy is the development of sperm‐sorting technology. 

"This process enables cattle breeders to determine the sex of calves by separating a sample of bull semen into X‐chromosome bearing and Y‐chromo‐ some bearing sperm cells," Wood wrote. "The resulting product - 'sexed semen' -  is then used to inseminate cows artificially. With this technology, dairy farmers can be sure they will breed only milk‐producing cows."

Even though others had produced similar devices before, Judge Wood said the technology held by Inguran had done more than just slightly improve on existing methods in producing pure and undamaged "sexed" bull semen.

"An inventor who finds a way to make workable an alternative that had been rejected as impracticable has done more than implement an obvious combination," Judge Wood wrote.

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U.S. Court of Appeals for the Seventh Circuit U.S. District Court for the Western District of Wisconsin

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