Farm supply, Scruggs ask judge to reconsider seed verdict

By Patsy R. Brumfield / Daily Journal

3:26 P.M. POST
OXFORD – Judge Michael P. Mills will take today’s arguments under advisement and rule as he can on enhanced damages, interest and attorneys fees in Monsanto’s 12-year-old lawsuit against Tupelo’s Mitchell Scruggs, his brother and his farm supply business.
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2:40 P.M.
ROBERTSON – Interesting that Monsanto want to be made whole. That is same argument I made earlier about reasonable. Making patent whole but no more. Our proposal using statutory interest rate would make Monsanto whole, if it had had money at the time. Issue with T-Bills means just that. Recognition that interest rates float. If Monsanto would or had gotten all the damages and invested it, should have invested in T-Bills at one-year maturity, that’s what we had. REason why we proposed it.
JUDGE – Jury had to determine willfulness for compensatory damages part of trial?
ROBERTSON – yes, part that’s changed. Bard case.
JUDGE – Willfulness involves … goes to same factors as intention. Generally have to establish intentional actions before entitled for punitive award. I can’t understand why you’d use willfulness to suppose compensatory damages and then find for treble damages, which I understand statute says?
ROBERTSON – I don’t think you’ll find willfulness in Patent Act. It is a commonlaw doctrine … in Seagate case, was designed to try to bring order out of chaos. To do what your honor said, taking concept not in statute to correlate and enhance damages with law about punitive damages. Bard case June 14 elaborates that same premise. It’s aspect of tax law that’s been in there a long time. Seagate case… had a couple of dissents, saying it’s no longer in statute,but majority said no and try to rein it in and relate it to general law about punitive damages.
JUDGE – I’VE LOOked at Bard case.
ROBERTSON – Several points about Monsanto argument about factors. With respect to deliberate copying, what … about natural process that copying takes place? From Conner, nothing in patents is self-replicating. No reference to seeds in patents. Principal question is inference that Monsanto submits that there has been deliberate misrepresentations on behalf of Mr. SCruggs and by Mr. Scruggs. Have to start with fact that he hasn’t tried to make his views secret. Seed-saving was pretty close to a god-given right. His view was so well known and by Monsanto, that prior to trial, we have motion in limine from Monsanto asking him from saying that he had god-given right to save seeds.
I don’t think anybody doubts his view. It was practice of his family on his farm for many years. Another Monsanto witness in anoither case said, “WE knew we were changing a way of life.” A lot of people didn’t agree, that Monsanto didn’t have a right to do it. Scruggs went with Save-Our-Seeds movement for years. The record reflects …. on matter of inconsistent sayings … I did not remember that I had a role in drafting the jury verdict form – I apologize, I simply did not remember. I didn’t remember regarding … I objected at trial to Conner testimony as expert. I said first time I saw his name was in August 19 disclosure about witnesses. I did not remember that on April 5, 2004, Monsanto made a supplemental witness disclosure for what they thought would be trial soon, disclosing Conner’s name for expert testimony.
I’m pretty sure you could take anybody in this courtroom, go through everything they’ve said over past 10-15 years and do a number on me … I’ve been convicted twice this afternoon. Mr. Scruggs has given depositions after depositions … he’s testified a number of times … he’s been able to martial minutae. There is no contradiction other than with Monsanto that prior to 1996, Mitchell Scruggs did buy bags of seeds to plant soybeans at suggestion of people in Memphis, Seeds Inc., who were interested in marketing this new technology. No contradiction that in the early years … like first couple of year ‘96-98 … as to RoundupReady soybeans, there was considerable yield-drag … less harvest than with conventional seeds. Documented fact. Went on at least three years. The boon for Monsanto on Bolllgard cotton trait was the massive worm problems in 1995. They had way to deal with it.
Boon to soybeans was this area’s sickle-pod problem in late 1990s, yield-drag wasn’t nearly as big a deal and when many people went to RoundupReady technology. The progression from 10 to 12,000 makes sense for wht was going on in practical world – because of yield-drag and desperate need for protection technology to harvest a crop at all. With respect to cotton, Bunch did say at trial that he didn’t recall selling any cotton to Scruggs, but rest of the story … during these years, through Monsanto rep named Mark Brewer … Scruggs lost his dealership. He had capacity to sell a lot of products through Scruggs Supply. Bunch was small operator. Brewer blessed an arrangement for Bunch as authorized dealer would make available to Scruggs to use name and facilities so many bags of Roundup Ready soybeans and cotton were sold under this arrangement. Farmers would pick up seeds from Scruggs Farm Supply and Scruggs would remit to Bunch and Monsanto what they would expect from sales from Bunch. In that context that Scruggs got his first bag of cotton …
Bunch said he wasn’t unpaid through this arrangement.
This case is very different from the Ralph case, came to light before I got involved. It involved … principal facts that led to that result was: Ralph in defiance of a grower burned his saved-seed that were subjected to a restraining order. When I learned about that, I wondered why he didn’t dump it into the dirt. That was number one. Number Two was Ralph had a close friend … who in partners at a gin. And partner had tremendous losses the year before. Some burned, others held back. Ralph sought to help his friend. He made the big mistake of lying about it under oath in federal court. Those two things were his serious undoing. Couldn’t defend either one. Nothing like that has happened here.
In McFarling case, McFarling signed agreement with Monsanto and not to save seed but he did it anyway. It was first federal circuit case to hold about saving seed. At his deposition, McFarling said even tho he had been sued and signed Monsanto agreement, he still planned to plant saved seed for coming crop year. In that context, Monsanto understandably sought to stop him from doing that.
The minute Scruggs got TRO and prelminary injunction, there’s been total compliance. Shouldn’t compare cases. They would not be the same. Suggest Scruggs case is closer to McFarling than Ralph, but in many respects not as egregious as McFarling. Scruggs has neer publicly state he would defy an injunction. Publicly, he tried to encourage citizens to back his seed-saving views but he never defied a court order. So-called discrepancies in his testimony … when you look at then over 12-year period … about like any of us who’ve gotten into politics.
We did make a number of defenses on his behalf. They are not misconduct … but … we hired as strong a team of expert witnesses as I’ve been privileged to work with. They were thorough, submitted to probing depositions. They are not mentioned in a single report about this case. Counterclaims largely crafted by DC Circuit in Microsoft. That was copyright, this was patent. Suggest Monsanto considered itself the Microsoft of agriculture. We made an argument we thought was quite sound about case law … about anti-competitive case. We thought it applied and gave us a short-cut to showing monopolistic practices we thought Monsanto was engaged in.
One other point – has to do with punishment factors – Monsanto has argued that Scruggs’ net worth $37-54 million. Extensive analysis is in the record from us. Three experts analyzed .. including his banker … analyzed facts and circumstances… showing net worth is nowhere near what Monsanto suggests.. assets are land and not liquid. Basically suggesting Mr. Scruggs is telling the truth.
In fact, Mr. Scruggs … in all his troubles over past 12 years, fact that he can still get substantial financial backing shows somebody thinks he’s a truthful man. 3:08
DUKES – Your honor, one point.
Address claims that Scruggs story has changed from depositions and trial testimony. Suggest that any honest reading of two affidavits 2000 and 2001 show no discrepancy betwen the two. Story did not change. 2001 has more details, explains better what he meant by Roundup-resistant. Consistent. He says Roundup-resistance … confusion is he’s referring to conventional seeds that develop a natural resistance. No way he’s saying that all his seeds developed a natural resistance.
If you look at his testimony and compare with 2001 affidavit, he’s asked about acreage and resistance. He says he doesn’t distinguish between RoundupREady and resistant, but with natural developments. Later on, he’s still accurate as not drawing a distinction between the two. But he later agreed difference between resistance and the gene. It’s the first time he’s asked to do that. It illustrates … that Scruggs was confused. But, this statement he said that “many but not most farmers tend to be one-stop shoppers.” He didn’t say all farmers are, not absolute. It was imprecise. But ask him 10 years later, does he agree? He said no. Can’t an honest person change his mind?
In order for Savage analysis to be reliable, it requires that all farmers are one-stop shoppers. He refused to look at other curbside purchases. Important to understand the statements. His analysis does not make sense unless there’s a solid reason to assume these farmers could not have purchased herbicide anywhere else. No other farmers were questioned about this. Their sole point, seems like a pretty small thing to paint someone as dishonest for punitive damages.
Only other things, briefly … to clarify … about willfulness….was presented at that stage, even though word isn’t used, that Willfull infringement is a predicate to enhanced damages. Jury must find it. Bard case recently changed an objective aspect, we’ve mentioned. Other point, all federal circuit and lower courts find … finding of willful infringement “PERMITS” but doesn’t require enhanced damages. 3:19
WAIDE – I’ve known Mr. Scruggs a long time and find it personally offensive to have him called a liar.
ORLET – Issue of appropriate rate of interest, defendant suggests T-Bill rates. In motion for post-verdict relief, we said T-Bill rate during timeframe of infringement – May 2000-2012. Ranged 3.25% to 9/5%. It’s prime rate. They say T-Bill. On issue of credibility, it is not only Monsanto that has said there are credibility issues – stories told on other side. Jury sat there for three weeks and saw the credibility of witnesses. They saw Mr. Scruggs on the stand for hours at a time. He told them he did not sell brown-bag RoundupReady seeds.
Now, that goes to second prong – subjective part of analysis. Point out that … Scruggs was vocal advocate for seed-saving. He concealed his activities until he was caught, then he became a vocal advocate. Not before. That is the subjective part of the analysis. Jury found willfulness. Under new standard under Bard, up to the court to make that analysis. Suggest to you that the finding would be appropriate that the behavior was willful and reckless.
Amount, I agree with counsel – amount is completely within the court’s discretion. We have suggested an appropriate amount.
3:25 p.m.
JUDGE – I WILL take these matters under advisement and will issue my opinion as soon as we can get it done. 3:26 p.m.
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2:25 P.M. POST – (After lunch break)
1:00 – HEARING RESUMES
ORLET – (Talks about other cases Scruggs’ attys cite, says they aren’t applicable.)
Conner and Goldman were disclosed as experts years before the case went to trial.
JUDGE – HOW disclosed?
ORLET – Rule 26 disclosure. At trial, objection made by defendant … they were familiar with what Conner would say … at trial, objection was a lack of a report. They said, look, he will give opinion testimony and should have had a report. Under Rule 26A2C, it was applicable at time of trial, weren’t required to have disclosure. Judge Pepper had just gotten new rule book and it had rule in it – we were arguing, I had old rule book. Finally, we pointed to him, as he looked at his rules … understand what happened.
Their objection, it was opinion testimony. Should have been no surprise to them.
Last thing, a pre-trial order not entered until Sept. 17. These gentlemen testified about two weeks before that. Look at what Pepper said … they hadn’t paid any attention to the pre-trial report anyway. Law supports Pepper’s discretionary ruling anyway. (Judge Pepper died in January 2012, which is why Mills presides over the case now.)
We had properly disclosed expert testimony, had known in one case for 10 years. They objected because knew it was opinion testimony. Pepper’s ruling is discretionary was proper and should not be disturbed.
I’m done (he says to Mills.)
JUDGE – DOES that conclude our arguments on that?
ROBERTSON – Rebuttal? (Judge – you go ahead.)
WAIDE – 1:12 P.M. – Your honor knows, question about whether to grant new trial on damages is within your discretion. At this point, you are not forced to make a decision. I’d like to remind court what Orlet said – he talked about farmers had come up there. WE tried to call that farmer, who bought the lots, to say they weren’t Roundup beans, as far as they knew. They said thought they were conventional beans, sayt they didn’t know they were Roundup beans. They haven’t proved it. They haven’t told us why they didn’t give us notice about Mr. Savage and his 21K bags of seed. Pepper excluded him, then turned around and let it back in. That’s how you come out with $300 a bag.
Want to mention something to the court – In your honor’s exercise of discretion, appropriate to say it is a ruinous judgment against this businessman. Not done until McFarling, could not have known that patents were covered by what he was doing. I was at Bar convention recently, here’s a hand-out that shows Bowman v Monsanto case before U.S> Supreme Court. Fed circuit again says the patent document does not defeat these claims. Even here, whether Monsanto’s enforcement of patents … we can’t say for certainty that Supreme Court won’t grant cert.
Also, we lost … about anti-trust argument. This article just came out about Monsanto’s practices. Lewis & Clark Law REview… talks about enormous price increases in seed sales. Says courts need to look at practices … don’t have competition, they pay off all other seed manufacturers. Sell seeds at inflated prices. Saying, in your discretion, and say this will stand – everybody in America will know not to challenge Monsanto. Believe you can consider those and exercise your discretion … to grant us a new trial.
JUDGE – Make copy of that article for the court. Also to Orlet, make copies of your power point slides.
WILL DUKES – First, like to address … is Orlet characterize that Scruggs has been untruthful, especially about claims “he invented” Roundup resistant seeds before Monsanto. First, Scruggs evidence showed that in early 2000s, he began applying Roundup to fields and natural resistance developed. This doesn’t explain in great detail like affidavit. But in 2001, much greater detail, largely refutes Orlet’s claims. Look at graph 8, you will find Scruggs found resistant-seeds. He said he saw some crops develop a natural resistance, some distinct from RoundupREady patented seeds. Monsanto has gone far to show natural resistance is ridiculous. The Scientific American article we included addresses this very issue – that many weeds are developing natural resistance to Roundup, causing problems for farmers. It’s known to any biologist. All Scruggs claimed was that some of his resistant seed came naturally.
Same 2001 affidavit, resistant-seeds saved for his own purposes. Jury did not believe him on that point. He still insists he didn’t save for brown-bag sales.
Another issue: Whether Savage could rely on testing expert without tester testifying. Issue in Davis case is completely different from what we’re talking about today. That was about report from a team. Expert can rely on something outside his personal knowledge. But issue here is whether he could be merely a mouthpiece for that evidence, so tht evidence didn’t have to be put into evidence.
Per Lucent case, we talked about factors in determining damages. REal issue in Lucent was difference between hypothetical negotiation and a lump sum consideration. Factors that Hoffman considered, this is a license to give Scruggs unrestricted license to plant his seed year after year. From that came the multiplier factor. Problem is that it’s a lump-sum payment. What would you pay up-front to keep seed and use it again and again?
ROBERTSON – With regard to Conner and Goldman and pre-trial order: Call attention to transcript reference, when I objected to Conner testimony. Specific reference to when saw pre-trial order, listed him as a fact witness. Acknowledge he was disclosed in 2004. We were in a new ballgame. His expert testimony turned out to be quite different from before. SAme as Goldman. Sweet made that objection. We had no notice of him. Argument different fro what made with Conner because we were unsuccessful. Scientific American article important to what Mr. Dukes just said. (OLD CASE) Reason I cited because Lucent carried it forward and said it still applies. Candid with court about three prior Monsanto cases – also supply you with about 20 articles… to say Lucent through Unilock is a sea-change … use of technology is what hypothetical negotiation is all about. Focus group studies are closely related to the use made of the invention by the infringer.
I talked this morning about Goldman and 100 bags of seed purchased by Lucas from Scruggs Farm Sply, from which Savage extrapolated up to 8,700. Lucas never testified. We don’t know what his version would be, only Goldman’s opinion about what Lucas was doing. Another witness… uh, another farmer whose records Goldman analyzed… Ronnie Roberts bought 40 bags from Scruggs Farm Sply, we say they were not Roundup seeds.
Roberts did testify. Given every opportunity to confirm or deny the hypthesis by Goldman that 40 bags he bought were brown-bag saved Roundup Ready soybeans. Roberts said absolutely were not. Per herbicide purchases, used to draw this false conclusion… Roberts said he used Roundup for burndown, before crops plants, after harvest. As I recall, he also had two other explanations – getting rid of weeds in ditch and chicken house. He was a farmer we called and testified about these hypotheses advanced by Goldman and Savage – showed they were incorrect.
We also called Mr. Long, who said the same thing. Mere purchase of Roundup herbicide does not prove what Savage and Goldman suggested it did. It’s a successful product. Has many uses that have nothing to do with applying over top of RoundupReady crops. In middle of trial when we had to deal with this. We had to find NEMS farmers over night to come to Greenville, because of lack of notice. WE got several of them over there. Hoped court would take a good close look at what they had to say.
JUDGE – Do you admit that Scruggs may have knowingly sold RoundupReady seeds?
ROBERTSON – No, no evidence to show he did. We have problem with jury verdict, given the standards that applied.
JUDGE – Your participation for amended verdict … jury couldn’t understand first verdict. You particularly helped draw up another one. (Robertson – mine worse or better?) Jduge says he won’t comment.
ORLET – What about Webb testimony?
ROBERTSON – Correct, for knowing about reviewing verdict after it’s returned. A great many of the invoices relied on in Savage reports – maybe Webb in there – will have a number of dates stamped on them. Because Monsanto sued all these farmers. Think that is relevant.
JUDGE – Believe we’ve heard everything we can on JMOL motion. Like to reserve judgment and move ahead on other motions, brought my Monsanto – treble damages, attorneys fees, etc.
ORLET – 1:39 – First, motion for enhanced damages. At trial, bears on this – Typically in these cases, issue of potential enhancement … that not commented on in front of the jury. In this case, defendant emphasized consequences of willfulness finding – started in opening statements. Jury told they were trying to ruin Scruggs, that judge can triple the damages. Improper argument made to the jury. Jury was keenly aware of this. Judge Pepper warns counsel not to make that in closing arguments. Mentioned to Waide that he should not be doing that. And so, in closing arguments, counsel reminded the jury that this was important but didn’t remind them explicitly about what a willfulness finding would do. Toothpaste was out of the tube, in this case.
Nonetheless, the jury found Scruggs of willful infringement. Question is whether jury lessened its award knowing consequences of willfulness.
Nine factors court analyzed: 1. If defendant willfully copied the invention. – This isn’t about being first with an invention, efforts to avoid infringement. Here, Scruggs defendants knew exactly what they were doing. I’ll show you, they were told that they needed a license and couldn’t use technology without it. Couldn’t save and re-plant.
JDUGE – Why couldn’t Scruggs disagree with Monsanto? At that time, there was no ruling on those patents, that I know of.
ORLET – Presumption of patent law.
JUDGE – He was looking at statute. You’re saying that under PVPA, you can harvest your own seeds and give a little bit away? Isn’t that right?
ORLET – Save enough for your own use. Not what he did – he sold thousands of bags of seed. Defense they came up with after they were caught.
JUDGE – UNDER PVPA, couldn’t he use his own seed?
ORLET – Right, but it’s patented technology.
JUDGE – Appears had act, statute, in conflict with patent law half the time. Couldn’t read them together. Right?
ORLET – Two statutory schemes. My point, he was not confused. He didn’t stand up and say he disagreed. He did everything in secret, including selling thousands of bags, even violation of PVPA. Wraps himself in PVPA but sells thousands of bags, no exception for that. Explanation that mere disagreement in two areas of law is belied by fact he violated both aspects of law.
JUDGE – But he didn’t, after 2000?
ORLET – Because we sued him. Pepper enjoined him from using it again. So this is the main point about infringer’s part.
JUDGE – But much later Supreme Court ruled they were patentable. Doesn’t he have an argument that it wasn’t settled law after the restraining order?
ORLET – Words on seed bag says that buying it doesn’t convey license to the technology. When you buy it, the bag it says biotechnology protected. Distinction there. See isn’t the issue, it’s the technology, the gene inside the seed. Looking at McFarling decision.
So, if look at behavior of defendants, back … first they had choice of whether they were going to use the seeds. They decided to cancel it and not sign the license, not play by the rules rest of farmers were. Willful decision. Then, got sued. Make another decision – to provide truthful testimony or lie under oath with a story. Counsel brought up affidavit … example of what I’m talking about … the moving target, why so much like Ralph. Things jury saw and judge credibility on issues just like this.
Affidavit showed earlier … (SCruggs signed)… says never denied has Roundup-resistant cotton and soybeans. It’s affidavit on motion to vacate the TRO – to keep us out of his fields. We want a sample to look for gene in his plants. He says they’re Roundup-resistant. Affidavit – after sampling, he clarifies …now, we know … he’s a moving target. He changes his story, depending on the circumstances. That’s why he changed it there.
Remember, his first story is he’s done resistance, he’s created. At preliminary injunction hearing adn at trial, we had expert to say it’s impossible. So, what does he testify at trial? I asked him if he drew a distinction between Ready and resistant? At trial, he said, no, he thinks it would be the same. That’s exact opposite of what he said earlier.
After field samples showed all 12K acres of soybeans were RoundupReady, he had a defense. He said he bought it without a license at an unrestricted sale from Bunch Farm Supply. What does Bunch say? He’s got no reason to lie. He said he never sold Scruggs any soybeans for use on his own property. Then, I asked him, does he remember any discussion about patents? He said, no. I asked if in 1996 he knew about Monsanto patents? He said no (in 2001). We find all this material in his files. I asked him again about patents, information on the bags? He says he doesn’t question it was on the bag, and he admits he knew the seed was patented.
He changes his story in his deposition.
He also calculated backwards from total acreage so his damages would be minimal – that’s where the story of the 10 bags came from. Jury didn’t buy that either.
In his affidavit, Scruggs says many farmers are “one stop” shoppers for farm supplies – buy seed, other supplies. But at trial, when we showed that farmers were coming in to buy seeds and then Roundup, only Roundup, there. They tried to counter it, maybe bought it somewhere else. I read his affidavit, then asked him about one-stop shoppers? No, he said, I wish that were true. Two different answers.
He also denied under oath that any of this seeds were RoundupReady. Continues to today. When we went to see Judge Pepper, he told me he would go broke if he’s prevented from selling their products. Then, we get his business records and see that he an dhis brother Eddie are worth $37-million to $54-million.
After the verdict, I took his deposition and asked about net worth – he said he didn’t know. I showed him documents he used to secure federal loans. Asked him if that was inaccurate? He said yes. It continues, avoiding being honest with the court. Started long ago. Jury saw that. Didn’t believe his claims.
Next, about financial condition. He could pay trebel damages.
Next, closeness of the case. When we sued him, brother, their businesses, they could have done with McFarland did, instead they launched a full-out assault and filed all kinds of anti-trust claims etc. Alleged every type of issue. Judge Pepper wrote three orders dismissing all their claims. Federal circuit affirmed his rulings. This was never a close case. Just threw every type of theory and lost on every one of them shows it wasn’t close.
Duration of conduct – Infringement began in 1998, likely goes back to 1996. Concealed their conduct for years. Did they take any remedial action? Difference with McFarland, is clear. Scruggs refused to take any remedial action, continues to falsely deny sales, deny his net worth.
Motivation? It’s purely greed. Waide mentioned about issues in articles… those were all addressed. Will say that he mentioned how popular this biotechnology is. It is more than 90 percent of fields.
JUDGE – Asks about bean sales in other places?
ORLET – Monsanto sold in South America but no product protection there. But now, doesn’t because the gene could not be protected. Without safeguards, it will harm innovation and harm farmers who are playing by the rules. This technology is wildly popular. It’s expensive but wildly popular. Ask why farmers willing to spend money on it? Because they make more money by using it. So, if we don’t protect it… this is argument in anti-trust case … long decided … federal circuit said companies have to protect their biotechnology. What Scruggs did, took technology and used it and didn’t pay for it.One of or was one of the largest farmers in state of Mississippi – if anybody could afford this technology, he could. People who have a fraction of his assets were paying the legitimate price. He could buy up more land in Lee County because he wasn’t paying the legitimate price.
Idea that he’s been wronged somehow … only ones wronged are his competitors and MOnsanto, of course. Goes to our point, his only reason was sheer greed.
Did they attempt to conceal it? Of course they did. They came up with all these stories, tried to keep us off the land. He went underground, he hid. Jury thought they repeatedly offered false testimony. 2:16 p.m.
Motion for post-verdict relief:
JUDGE – Also asking for interest percentage, like to hear that.
ORLET – Statute is clear, attorneys fees possible in exceptional cases. Award of prejudgment interest. Monsanto is owed damages for 12 years. What were interest rates at the time? Also, what is rate that plaintiffs used to borrow money during this time? Average was 7-8 percent. That is how Monsanto came up with request for 7 percent. Also asked for compounded annually. Used a conservative rate.
Post-judgment T-Bill rate is what defendants suggest. They say shouldn’t have to pay interest on certain chunks of award. I don’t know of any case law to back that up.
Issue of attorneys fees – case started in 2000. Defendants could have fessed up when they were sued. But they went on offense and sued us under every conceivable claim under anti-trust. Monsanto should not be forced to bear the burden of this litigation caused by the defendant’s strategic maneuvering. Deposed many top executives, asked for more than 500,000 documents. Asked about practices in China and Romania – every conceivable topic, not their business. Filed multiple state law counterclaims.
We’ve also asked for our costs across the course of this litigation. Under statute we are entitled to that and a 7% annual interest. 2:24 p.m.
JUDGE – SHORT RECESS
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NOON POST:
OXFORD – A federal judge today considers whether an $8.9 million jury award or increased penalties are correct against Tupelo’s Scruggs Farm Supply.
In 2011, a Greenville federal jury agreed on the award in ag giant Monsanto’s 2000 lawsuit against the business and its owners, Mitchell and Eddie Scruggs.
Monsanto claimed the business and/or the men intentionally sold its patented cotton and soybean seeds without paying the required license fee.
Today, Chief U.S. District Judge Michael P. Mills considers whether the Scruggses and their business were reckless enough with this behavior that the penalties should be tripled at Monsanto’s request.
This morning, Scruggs attorneys James Robertson of Jackson and Jim Waide of Tupelo argued that Mills should order a new trial. They say sufficient errors occurred in the 2010 trial to merit it.
They also insist that the money award is ridiculously high and that their clients do not deserve it or additional penalties.
Monsanto attorney John Orlet of St. Louis, Mo., argues the opposite.
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Monsanto has the patent on soybean seeds genetically altered with Roundup weed killer, which it claimed Scruggs and others across the nation re-sold without its authority or the payment of royalties.
Below is a running account of the hearing in Oxford federal court: (Please forgive the typos and other glitches likely as I type very fast.)
MILLS – Before court, motions for new trial, additional relief and others.
Best way to proceed would be to motion for new trial. All issues at once?
ROBERTSON – Would court prefer opening statements as overview?
MILLS – I’ve read everything.
ROBERTSON – Cites legislation affecting intellectual property in plants. Supreme Court allows patents in living organisms, not necessarily plants. In this case ‘92-94 patents issued in this case. Not before did court recognize patents on plants. In 1994, Congress amended The Plant Variety Protection Act, first statute that formally addressed question of whether farmers could save seed. It affirmatively provided that farmers could save seed. Important because, at time, no Congressional enactment about patents of seeds or saving seeds at all. Act protects … no records as to seeds. In 1994, first and most expressed congressional enactment on seed savings, only to Plant Act.
In 1996, Monsanto commercialized RoundupReady seeds, soybean then cotton. In the years in question, the law was unsettled as to whether these patents were enforceable. In Feb. 2001, Supreme Court granted cert (to consider issue) not on seed saving but on patentability at all of seed traits. In Dec. 2001, case decided that seeds were patentable, if met criteria of Plant Act. Two dissents. Scalia in concurring, said this could be difficult. Fed Court of Appeals, first time it addressed saving at all was in 2002, two years after Monsanto sued Scruggs and TRO shut him down from any activities with regard to seeds bearing Monsanto’s traits.
Case filed by Monsanto in Sept. 2000. Long, long course. When we came to trial in August 2010, we suggest that a number of serious errors were committed. Would like to address our issues for new trial and other motions.
ORLET – Agree that understanding of timeline is important on issues before the court today. Prior to patent coming to market, Monsanto spent hundreds of millions of dollars in research. Came to market in 1995. Scruggs was a Monsanto dealer than, familiar with product. He attended some training sessions. He was way ahead of almost any businessman or farmer in U.S. as far as his knowledge of these issues. In fact, Scruggs made a fateful choice in 1995-6, to not to license and use the technology as did many area growers. He elected to use it without obtaining a license.
In 2000, preliminary injunction. Summary judgment on his actions in 2004. Went to federal circuit, went to court of appeals, Judge Pepper affirmed.
Issues in case about human-made genes, not seeds. RoundupReady comes from bacteria and combined into DNA of seeds for traits … that soybean plant with gene permits farmer to use Roundup on field and it kills weed without hurting plant. Other at issue is a gene that puts insecticide into plant … cotton plants with it aren’t subject to damage by certain worms like untreated plants are. Other patents about biotechnology. Nothing about seeds in those claims.
Progeny of these seeds have these traits. Monsanto says can only sell for a year. In license agreement. He elected not to sign agreement but had his customers do so. On every single bag. Scruggs went to meetings where all this was explained to him. He signed up but then cancelled his order. We found he was saving and selling Monsanto seeds like this since 2000.
(Case began with Judge Neal Biggers, then went to Judge Allen Pepper, who died last January. Now Mills has it.)
MILLS – I will hear motion for new trial and they can respond. Present it how you wish. Then we’ll take up their issue for treble damages.
ROBERTSON – 9:50 a.m. – Most relevent of Orlet slides were 2002 decision. Fact of infringement is established, we’re not contesting it. We’re contesting extent of damages for the defendant. What want to address is – two witnesses that MOnsanto presented as experts that should not have been allowed to do so – Dr. Dwayne Goldman and Dr. Tim Conner.
Context is this: As court knows, getting pre-trial order was difficult. Versions … each side’s aspects were circulated. EVery version we received from Monsanto … not casting any stones. We were all working very hard to get it done. But fact is, every version listed in the witness section Dr. Conner and Dr. Goldman as fact witnesses. Conner was in-house geneticist, worked with science at Monsanto.Goldman was agronomist working with Monsanto employees. Trial was set for August 2004, prior to summary judgment at end of June or early July. I did not recall in August 2010 what Orlet reminded me that in April of 2004, Monsanto filed supplemental discovery production showing Conner and Goldman as persons who would present expert testimony, Didn’t say what would be.
Problem we’re concerned with is that in every version of pre-trial order we saw leading up to August 2010, these men were listed as fact-witnesses only. (Judge – I’ve read your briefs.) I’m referring to …. (Judge – rule change din 2010?) No what we’re talking about. We accept what’s called Thaxton rule … rule changed 3 months after trial. Here, every disclosure of Conner and Goldman’s participation identified them as fact witnesses. Important to show documents I’m talking about. (Puts it on overhead projector.)
This is final version of pre-trial order before trial began. (Judge – was this signed by judge before?) No, but after with same wording. Question is what did we know before we went to trial. This was last version before we went to trial. Designates others are experts. My point, we had every reason to believe based on this, that Conner and Goldman … would be as fact witness, not as expert. Shows first submission by Monsanto of Aug. 19, same thing. Conner, PhD – fact. Goldman, doesn’t say doctor, but as fact.
This is what we knew then. Issues that held up pre-trial order weren’t about witnesses. When Conner was called, and this was first day of trial. Presented by (attorney Ed) Blackmon. Began to offer opinion testimony, we objected. That’s when we got into content of rule and relevance of what Conner said. But primarily here, we were led to believe by versions of pre-trial order that anything from Conner would be facts, only. Before Pepper, discussion had to do with wording of the rule, as it did pre-Dec. 2010, I confess Pepper was correct. But not correct that this witness had never been identified for this trial as an expert. Had been told by versions otherwise.
I made statement to court that I was aware that sometimes MOnsanto produced witnesses like what we thought Conner would say. But fact that his testimony was considerably different by other Monsanto witnesses in other cases. WE objected to his expert status. Error to let him testify as expert. Same problem came up next day with Dr. Goldman. He was company representative sitting at trial. With him, we objected. Stated same grounds, didn’t know he was going to be an expert witness. After, he was allowed as such. Suggest it was error, coupled with Conner error – grounds for new trial.
But after that, far more prejudicial to Scruggs defendants. Permeated entire trial and substantially infected the verdict.
Once Goldman was allowed to testify, Goldman reviewed purchase invoices for 4-5 farmers who did business with Scruggs Farm Supply. Reviewed invoices and essentially matched up purchases of brown-bag seed … nothing on labels said they were RoundupReady seed. He lined them up with purchases of Roundup., He inferred the seeds must have been saved brownbag RoundupREady seeds. Circumstantial evidence case Goldman said. We had no notice that he would say anything like that, even going back to 2004. When we see him listed as fact witness, no hint we needed to be prepared to cross-examine him about these farmers.
What happened, example… Farmer Lucas purchased 100 bags of brown-bag soybean from Scruggs. That seed bore a lot number NCSF88. Sure court will hear plenty about these lot numbers. Goldman inference was that number must signal that this was saved RoundupReady. But what Goldman took Lucas’ purchase and his purchase of chemicals and concluded and opined, over our objections, that these 100 bags were saved RoundupREady soybeans. At end of day, this document … nothing new … shows NCSF88 … two versions of the number of bags seed with that lot number. Transcript shows 8,751. Exhibit later shows 8,416.
Point is this: From 100 bags by Lucas, he’s the only one with testimony in record of having purchased this lot seed. From that brown-bag 100 … with chemicals … leaving aside all sorts of other questions … Monsanto extrapolated to jury that there were 8,700 or 8,500 SF88 bags that must have been brown-bag saved RoundupReady seeds. Stretch of speculation that takes your breath away. BEcause nothing is known in record about these purchases of 8,600 bags of these seeds over Lucas’ 100.
What have at end of day, Goldman listed as fact witness. He was allowed to testify as expert, even though we had no notice as such. He goes into subject we had no notice that he would speak about in any context since beginning of case. Testifies about Lucas’ 100 bags. By time it goes ti jury, that 100 becomes 8,751 or 8,516. Not fair to subject Scruggs Farm Sply, seller, to what is basically about 45% of $6.3-million damage verdict returned based on that thin reed of non-disclosed expert. My first point.
Ask Waide to take on related issue.
WAIDE – Second half of 1-2 punch …we had no notice about this. But second part is Dr. Savage. Difference is that he is retained expert. Monsanto’s expert for 25 years. He said paid about $1.25M to do so over the years. His bottom line, most devastating, this man’s opinion … he took 4-5 farmers, (other farmers sued in Missouri). In this case, Savage took these farmers .. in the report… said I have studied their records and I can tell from their records and also about testing … I can tell it was brown-bag seed from Scruggs. In his report. Says can tell…. here, he never said in those reports, in evidence, you can take those numbers such as F88 or other numbers on bags I found Roundup REady, and say any other farmer with that number knows it’s RoundupREady. Said that at trial. Never in his expert report. That’s where much of damage comes from.
Telling court it was serious issue, Pepper knew it was on thin ground. At start of testimony, Pepper allowed it… about bags and … over 21K bags. Then Pepper sustained objection and told jury to disregard it. But then Thaxton started back on it again, went thorugh every farmer and asked same questions…. did this code with code mean everybody has these seeds? We objected. Result was that not in reports, but Savage said I can tell they were RoundupReady bought by Scruggs. How can you reach such a conclusion – he never says how he did it, just said he was an agronomist …because he studied seed records.
So, your honor, we’re asking court to rule that Pepper was right on second ruling about evidence to be disregarded. Should have been done: About 2000, over 95% seeds in MS were RoundupReady. If Monsanto can do this to Scruggs, can go to anybody selling brown-bag seed and say You’re violating our patent… they’re RoundupREady. If that’s proof, that’s it… dominate so much of market, but just no proof of it. If so, every farmer is violating their patent. What I’m alking about.
Whole verdict should be thrown out on brown-bag seed.
Judge – any otehr witnesses who identified origin of the bronw-bag seeds?
WAIDE – No, just opinion that it came from Scruggs. FArmers didn’t testify.
JUDGE – Only two witnesses who identified brown bags as RoundupREady were Goldman and Savage?
WAIDE – Also Conner. No, he did not. All based on … Savage is retained expert. Goldman is an in-house employee. Crucial about Savage, he is required to make a report, but he never said … TS88 is RoundupREady, never said in his report. If he had said it … general rule is have to disclose witnesses and summary reports 30 days before trial. We modified it with local rules with pre-trial orders. Robertson filed motion for continuance after turned out they had 1,500 exhibits from thousands of farmers. WE said no way we can deal with all this. They said we ought to be able to take these invoices and figure out if they are buying brown-bag seeds. Even impossible if parties had followed 30-day deadline. Not saying we could have figured it out, but certainly not in middle of trial.
JUDGE – Does Monsanto own Roundup?
WAIDE – They invented it. Sale of brown-bag seeds, asking your honor to find that we should get a JMOL or new trial.
Let me go back to seed saving. We’re saying, this expert was allowed … part of his opinion… you may say major part was his studies and could figure out seed saving. But another part of presentation was that he relied on testing by Monsanto, they testified Scruggs field and found 100 percent seeds were RoundupREady. They didn’t call an expert to that. WE said, to give opinion, you have to call the testing expert. WE think that’s clearly hearsay under the rules.
JUDGE – Which witness?
WAIDE – Savage. Strenously objected to his testimony. Experts can’t get up here and say someone else said something … and found it was 100% RoundupREady. We also did testing. Scruggs’ test disclosed about 2/3 beans were conventional. Pepper ruled you can’t ask expert about that. Orlet said we never told him about that. We were hit with another double-whammy – he said Monsanto tests showed 100% but you can’t ask him about that.
Judge Pepper … two kinds of experts. One went out and gathered information. Lab did testing. Lab’s deposition was taken, didn’t put witness on. Pepper said we couldn’t put on tester because we didn’t file deposition from him, although we took it. My point, not to call him as witness but to show Savage there’s contradictory report. WE should ahve been ablt to do that.
Bottom line, Savage figures that over 21K bags RoundUpREady seeds sold. Total verdict was $6.5M on seed saving. To show court … these are beans that Scruggs said were conventional for $9 a bag. New beans in 2000 RoundupREady, pay $25 per bag but only $6.50 goes to MOnsanto. Rest went to inflated price for seeds. Price Monsanto was about $6.50 and this guy said amount of damages was over $300 a bag.
A few other things… we put on an expert who studied cost of growing RoundupReady and conventional. Miniscule difference. To have verdict with $300 per bag, when MSU says maybe $10 a bag difference. Damages… preposterous. One thing harmful: Monsanto studied, outside company, asked farmers what would pay for the Monsanto trait and save/replant beans? Pepper said it wasn’t relevant. But it was about $10 a bag, also. Saying to court… understand Monsanto can hire expert to do anything. But objective things … $6.50 a bag, damage figure is preposterous.
Talking to Robertson about formula for jury. But Blackmon in opening statement told them it was $10 million, it came close. 10:34 a.m.
ROBERTSON – On point that Waide concluded with about the focus group. True that were disallowed in an earlier trial. In 2009, federal circuit case, focus group studies are recognized as legitimate source of information about what’s reasonable or not. Questions go to credibility, not admissibility. No way Monsanto can credibly show that reasonable farmer would agree to pay anything like level of damages their expert said and jury awarded.
As aspect …s ays it all… their expert Hoffman has exuberant approach to Monsanto’s losses as to seed-saving aspect of case. Sales Monsanto complains about Scruggs to various farmers… even to 8 that Savage made disclosures on. Scruggs sold seeds $9.50 per bag. A few $7.50, one $9, one $10.50 – actual in market sales prices. over our objection, Hoffman allowed to say that reasonable royalty value of those was $450 a bag. One way he gets to that, how speculative nature of case was for jury … in seed saving aspect of case, Hoffman came up with basic value of what was appropriated in infringement of $15-16… but he said because of nature of technology, because it can be multiplied … we’re going to add mulitplier of 5. Statute we’re dealing with … talks of damages adequate to compensate patent holders “for the use made by the infringement.” Not use that might hae been made, not use someobyd else might make in future. But “use by the infringer.”
In this case, Scruggs Farm Joint Venture, was planting those saved seeds with Monsanto’s traits in several years. But look at the soybeans. Not only is 5 times multiplier absurd on face. But look at this, substantial showing of infringing acres of saved RoundupREady soybeans for ‘98-2000… let’s take 1998, come up with royalty suggested by Hoffman and multiply it by 5. Saying, because of self-replicating nature of the invention … it doesn’t self-replicate, just germ plasma … seeds infringing. Infringement for 98-2000.
For 1998, verdict … Hoffman testimony …1998 includes five years. But in 1999 includes 5 times factor, but you take it separately and tack on five more years. Getting double compensation for 99-2002, they’ve already been compensated for first. For 2001-02, Monstanto is getting 5 times, they’re getting it 3 times. Doesn’t make sense. Suggest this, standing alone, shows incredibly speculative nature of the damages returned by jury for seed-saving compared to actual sale price.
Case law in this area: 3 cases involving MOnsanto that are hurtful to our position. I lost the first one. Waide lost the second. One involving a Mr. David, don’t know who represneted him. Those cases… law reviews full of articles criticizing those cases for allowing grossly excessive damages. New cases rein in excesses of the Monsanto case – talking about punitive damages. They make the point to limit it to actual damages reasonable to compensate for the infringement. Facts of cases – argument was a 12% royalty too high compared to 8%? No hint of anybody saying it should be more than the high teens, no more than 20% max. Here, depending on how you apply it, no way it can be less than a percentage into the thousands.
In some of our briefs, I use the number 3100% royalty. May have been a mistake. These are in the vicinity of 2000% … these other cases question whether 14% is too much. We’re talking about 2000% per Scruggs Joint Venture. 3000% if look at Savage numbers. Gross excessive damages without regard to reason.
Number of other motions from us: Highlight briefly – One goes through the history of patent damages. Asks, what would patent holder have made if infinger had not infringed? I tried to ask this of Hoffman on stand. Monsanto’s objection sustained. A related version comes from a U.S. Supreme Court case, 60 years ago. Says question is “what would be the patent holder condition if infringement had not taken place?” Lucent case says these are the core issues about compensatory damages. I sought to ask these and objection sustained. Must be reversible error. Central questions we were not allowed to explore with Hoffman.
Cases I mentioned about Monsanto – I lost, Waide lost … should given Orlet credit for winning. They have not been overruled. I suggest, no way to apply credible principals of reasoning and square those cases with four that followed (he lists, including Lucent). In our JOL point, motion … patent argument issue … statute says can’t recover damages without proving that you put notice giving patent number on the bag. Statute says must include patent or abbreviation with number of patent. Says in event of failure to so mark, no damages to be recovered unless infringer was notified and continue to do so. Damages could be recovered after the notice. Issue here – RoundupREady trait in cotton. Monsanto produced bags to show court and jury what they looked like about soybeans and cotton seeds. Bags introduced showed all the patents correctly as to the trait in them. But with respect to RoundupREady trait in cotton, it listed two patents – does not list any in the suit. Suggest, they failed to meet that criteria… they can’t recover any infringement of cotton trait. More practical construction was this – of course the bags sold in 1996 and 1998 could no longer be found, so Monsanto presented representative bags from that era. Those showed RoundupREady in cotton could be covered by reference patents, never mentioned in this case. They list about 50. But just because Scruggs Farm Joint Venture, through his admission, they bought trait cotton, they saved and replanted twice… because he admits that, no way an admission that RoundupReady trait in cotton wasone protected bythe patents ensued. This bag shows Monsanto shows a whole bunch of other patents to cover same trait. Purely speculation as to what actual bag said that Scruggs bought in 1998. We suggest under statute, at the very least, a JMOL should be granted about infringing use in cotton.
Somethig I noticed about 4 a.m. yesterday: It’s the verdict form and Question 3 – Do you find SCruggs made sales of brown bag seeds? Says Mitchell Scruggs OR Scruggs Farm Supply. If infringement, evidence shows Farm Supply. Looking at this verdict, you can’t tell what jury meant. VEry imporant.
JUDGE – Who prepared verdict form?
ROBERTSON – Don’t know, we didn’t suggest, Maybe Orlet can say. Judgment has not be entered, so this is a critical point.
Also, willfulness. It was discussed in our motion for JMOL. Substantially supplanted by the new circuit case, came to my attention 10 days ago. In same sense, in line of cases of Lucent et al tried to establish compensatory damages law under patent act … Bard case and Seagate take strong position that enhanced or punitive damages … that law … should be brought in line with general jurisprudence in that field. Foremost, US Supreme Court cases deal with circumstances for punitive damage awards. But what Bard does … as practical effect … breaks down two prongs of Seagate – objective recklessness criteria … Bard says, leaving aside subjective element in Mitchell Scruggs’ mind. First question is whether there was objective recklessness? Bard says not talking about what was in his mind, talking about objective circumstances available to anybody informed onthe subject. Makes it clear, this threshold question of objective reckless, almost always involve looking at circumstances beyond alleged infringement. Much easier than what Judge Perry did in McFarland …refused to award enhanced damages and atty fees. She had to get around willfulness finding.
Bard says you never get to that point…. willfulness … is simply not there. Doesn’t matter that Scruggs went to meetings in 1995 and 1996 having to do with testing trait technology. Doesn’t matter what he may or may not have thought and in fact advocated in his Save Our Seed organization to muster public campaign for farmers to save seeds. It goes to what was out there. Objective record is that question of whether or not traits in seeds were subject to patents at all… certified in 2001, an open question or importance to be decided by Supreme Court. That question was months after Scruggs ceased infringing as result of TRO and prelminary injuneciton. It’s about time of infringement, not some later date.
Leading up to 2000, however much Monsanto might wish it otherwise, a very open question about whether patents on seeds would be upheld. Scalia said it was difficult case. No case ever said seed saving is an infringement before 2002. In second case in 2004, federal circuit still making statements about questions implicated here. Given that … 2012 federal circuit case, willfulness findings should be set aside.
JUDGE – It’s 11:10 – how much time do you need to respond? I’m going to lunch about noon.
ORLET – I can start now or we can break.
JUDGE – Well, whatever you’d rather do.
ORLET – I can address damages issue.
First, issue is about damages. Essentially we’ve heard that jury damages are simply too high and that defendant did not agree with Hoffman’s methodology. Higher than defendant would like to pay.
Has been long history with Robertson, Waide and me on these issues. Law has been very clear on this – awards much higher than the defendants have offered … have been awarded in these case. In McFarland, it was $40 a bag. Hoffman suggested $53, another slightly higher, jury said $53. In Rouse, jury said $1,113 which court upheld on cotton seed that was sold. Makes sense, if you take one bag of soybeans on one acre, at end of year, farmer has made 50 bushels per acre, he now has 50 times as many seeds as he did before – that’s why these numbers get big. Then numbers multiply as years pass on number of seeds available – why Hoffman’s methodology is the same.
Award of $172 per bag seeds in this case is not so monstrous to shock the conscience when understand. In fact, Scruggs … if you believe his version of events … he testified … landed on I ought 10 bags in 1996, next year I saved 20, then 40 acres, then 400 acres and year we sampled it … we found he had 12,000 acres. His own story you can take 10 bags of seeds and turn it into 10,000 bags over a matter of years. That’s why Hoffman talked about such larger numbers … they can sell to others, which is what Scruggs did. Took 10 bags and turned it into 12,000 acres. Why damages are so out of whack.
Arguments made in defendants’ brief about damages… if you look at the Rouse decision, that Robertson and I tried… they made same argument on appeal. Same he’s making here. Rejected by the federal circuit. Saying $6.50 is established royalty has been rejected. Other issues rejected. In any event, Hoffman showed that defendant could make a profit, benefits greater than per-bag royalty Hoffman opined about.
Issue of unfair surprise is raised …what happened …Scruggs supply sold brown-bag seeds… plain bags, stamped with a code on back. TT001, is example. Scruggs denied they were RoundupREady. Problem is in other cases. McFarland was a customer of Scruggs. We sampled his field, all RoundupReady. He said seeds came from Scruggs. Savage said he analyzed the farmers buying brown-bag seeds and they were almost exclusively RoundupReady. If you buy conventional, you have to have herbicides. Scruggs was selling seeds, all buying Roundup, which tells Savage that they knew they were buying Roundup because it would kill entire crop, which no farmer would do.
In Savage’s five separate reports, he saw seed purchases and herbicide purchases. He said he knew it was RoundupReady because they only bought Roundup. McFarland couldn’t explain why he sprayed Roundup over his field with Scruggs seeds.
JUDGE – Which witnesses did you use?
ORLET- Savage used information from McFarland. Reviewed their purchase records. He concluded it was RoundupREady, disclosed. His reports … opined TP01 is RoundupReady seed. Robertson brought up point that report did not say, therefore all TP01 are all RoundupREady. Did not say that. Pepper said to jury, not to consider that part. In report was…
JUDGE – Did any farmers buy TP01 that didn’t buy Roundup?
ORLET – Yes, disclosed to jury. Gentleman, came out at trial … don’t have his name … they put him on stand. Asked him if he bought bronw-bag from Scruggs, Yes. He said he sprayed conventional herbicide, not Roundup. We sampled his field, I met with him. He showed me his receipt, only conventional herbicide. We let him go, we didn’t sue him. After, he bought seeds from Scruggs and sprayed with conventional herbicides … so he treated as conventional. He testified, not a case study because his use was consistent with thinking it was conventional.
But Savage opinions were that various codes in these cases were RoundupREady because they only sprayed with Roundup. So, how did we get to final numbers? Pepper said no, can’t say all 800 TP01 are Roundup REady. I put Scruggs on stand and went through how many bags of various categories. Those went back to jury – reasonable inference that jury can reach from fact that TP01 were known to be RoundupReady. That’s what jury did. A proper inference. So, Savage did not testify …. jury got info from Scruggs and invoices.
Another issue they brought up: Issue of sampling. Waide said they were not permitted to … we didn’t bring in expert that did testing. He said they showed 2/3 of seeds were not Roundup REady. That’s wrong. They had samples, tests done that showed that cotton sample.. not all positive for the gene. Their expert’s test … a very simple test that use to see if something has the gene. Tht testimony was not permitted because we did not call our expert … our other experts were allowed to use that testing. Upheld by federal circuit… says don’t have to call int he people who do the testing, just need somebody to report results.
Another issue raised: Patent marking issue… refer court to Pepper’s order on patent infringement. He resolved that issue, already decided. Went to federal circuit on appeal, was affirmed. Resolved.
As to willfulness issue: Robertson correctly stated new law under Bard. Your duty to make the finding on first prong under Seagate – must show that infringer did it, state of mind is not relevant. So, defendants say… well no decision until 2001. JBM case is important because issues … claims traditional breeding practices. That case has nothing to do with biotechnology. IN this case humans made genes not found in nature. Existing law … 1980 … says humans made genetically changed organisms are patentable. In this case, the patents go to biotechnology. Monsanto’s patents go to DNA … human made gene. Had Scruggs asked about infringement, he would see patent and known it was patentable subject matter and couldn’t use it without appropriate license.
Then go to subjective prong: What did Scruggs know when he began infringing? He was a Monsanto dealer. In late Dec. 1995, about to bring new technology to growers in spring, Scruggs attended dealer/grower meetings. Gave presentations to dealers and growers. Monsanto explained about patent out there. Technology is patented and protected under utility patents. He had the whole explanation given to him… in 1995. If a restriction on use, you can’t use it without license, he was told. He had all this explained to him. He was well aware of what could and could not do before infringement.
As we look at facts … in federal circuit decision … this case is more similar to Rouse(Ralph?) case related to willful infringement. Ralph had extended damages – he repeatedly lied, systematically efforts to hide infringement. Not like McFarling, who said I did it. No obfuscation. Some goes back to very beginning of this case. When this case started, Scruggs claimed to invent Roudup resistant seeds to avoid sampling. Judge Pepper didn’t buy it. It wasn’t resistant, it was the patented gene. Like Ralph, Scruggs came up with a story of buying 10 bags … but at trial, seller said he never sold seeds to Scruggs. Jury didn’t believe he didn’t make infringing sales. VEry similar to Ralph – false affidavits, lies, changing the story.
11:45 p.m. break
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