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ABS Global, Inc. v. Inguran, LLC

This case is about the birds and the bees—in particular, about human efforts to control the reproductive outcomes otherwise determined by Mother Nature. Our specific interest is the cattle industry. People have been raising cattle since the early Neolithic Age, some 10,000 years ago, when members of the Bovidae family were first domesticated. See Mario Melletti, Cattle Domestication: from Aurochs to Cow, CAMBRIDGE UNIVERSITY PRESS: FIFTEENEIGHTYFOUR (Feb. 18, 2018),‐do‐ mestication‐from‐aurochs‐to‐cow/. Not surprisingly, production techniques have evolved over the millennia. 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. 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.

Until recently, Inguran, LLC, which does business as Sexing Technologies (“Sexing Tech”), held a monopoly on the market for sexed cattle semen in the United States. ABS Global, Inc., which runs a large bull‐stud operation, hoped to change that. Believing that its efforts had been thwarted in ways that violated the antitrust laws, ABS sued Sexing Tech in the Western District of Wisconsin in 2014. It alleged, among other things, that Sexing Tech had unlawfully monopolized the domestic sexed‐semen market in violation of section 2 of the Sherman Act by using its market power to impose coercive contract terms. ABS sought a declaratory judgment pro‐ claiming those contracts invalid, hoping to clear the way for its own entry into that market. Sexing Tech, along with its subsidiary, XY, LLC, (we use “Sexing Tech” to describe them collectively unless the distinction matters) counterclaimed that ABS infringed its patents and breached the contract between them by misappropriating trade secrets in developing ABS’s competing technology. Both sides also added state‐law theories to the mix.

In the end, only three claims went to trial: ABS’s antitrust claim and Sexing Tech’s patent infringement and breach of contract counterclaims. After a nearly two‐week trial, the jury returned a mixed—and somewhat puzzling—verdict, which the court ratified in post‐trial rulings. We conclude, as did the district court, that ABS violated a confidentiality agreement it had with Sexing Tech, and that Sexing Tech’s patent was not invalid on obviousness grounds. The jury’s assessments of two of the three patent claims still at issue, however, cannot be reconciled under the rules governing dependent claims and enablement, and so a new trial is necessary on them.

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