Unitherm Food Systems, Inc., v. Swift eckrich, Inc., dba ConAgra Refrigerated Foods, et al. (01/23/2006)

Questions presented: Whether, and to what extent, a court of appeals may review the sufficiency of evidence supporting a civil verdict where the party requesting review made a motion for judgment as a matter of law under Rule 50(a) of the Federal Rules of Civil Procedure before submitting the case to the jury, but neither renewed that motion under Rule 50(b) after the jury's verdict nor moved for a new trial under Rule 59?

BY VAIL ROMEYN, MEDILL NEWS SERVICE

In the fall of 1993, the president of Unitherm, a food processing company, began touting a new browning practice for meats. David Howard called the process the "Unitherm Process." Though Howard never obtained a formal patent for the process, the company began aggressively marketing and selling the idea to meat suppliers.

Five years later, on May 11, 1998, Prem Singh filed a patent application with the U.S. Patent and Trademark Office, for what he described as a "method for Browning Precooked Whole Muscle Meat Products." At the time, Singh worked for ConAgra, another supplier in the pre-cooked meat industry. On Sept.14, 1999, the patent office assigned patent ‘027 to Singh, who then assigned it to his employer.

In July 2000, Jennie-O, one of ConAgra's competitors in the pre-cooked meat business received a letter from the company. In the letter, ConAgra announced it was making Patent ‘027 available for license "to all responsible parties who have not infringed these patents." The letter offered a royalty rate of ten cents per pound, and was accompanied by a copy of the patent and a blank license form.

"What ConAgra was trying to do was to prevent anyone else [from] using the process that Unitherm had invented years before, and that is a no-no," Burck Bailey, attorney for Unitherm said.

At the Jennie-O plant in Montevideo, Minn., workers were using equipment previously purchased from Unitherm to brown millions of pounds of meat per year. Concerned that there may be a conflict, executives at Jennie-O launched an investigation. They determined that in fact the process described in ConAgra's patent ‘027 and the process they bought from Unitherm were one and the same.

Jennie-O executives now feared that unless a court invalidated the patent, they could be in violation of ConAgra's patent ‘027. The letter had "a chilling effect on any further possibility of Unitherm selling its products to Jennie-O," Jennie-O executive, Robert Wood said.

On Feb. 23, 2001 both Jennie-O and Unitherm sued ConAgra, and the case went to jury trial in federal court in Oklahoma.

At trial, Unitherm and Jennie-O claimed that ConAgra, "in securing and enforcing the ‘027 Patent" had violated antitrust laws.

ConAgra countered that Unitherm's claim should be dismissed for "lack of antitrust standing."

The lower court found in favor of Unitherm, citing the U.S. Supreme Court's Walker Process decision, which says in part, "the enforcement of a patent procured by fraud on the Patent Office" may violate federal law. "In such event the treble damage provisions of " 4 of the Clayton Act would be available to an injured party." Walker Process Equip., Inc. v. Food Mach. & Chem. Corp.

The lower court ruled that Unitherm had a valid claim "because first, as ConAgra's direct competitor… [it was] susceptible to the types of injuries that the antitrust laws are supposed to prevent, and second, ConAgra's threats to enforce its patents could cause those injuries."

The lower court asked the jury to decide "on the claim of attempted monopolization" by ConAgra.

The jury returned a verdict for Unitherm and awarded them $18 million in antitrust damages ($6 million, trebled), plus $4 million for two additional claims of misconduct.

ConAgra appealed the jury's verdict regarding antitrust, "claiming that Unitherm did not produce evidence sufficient to support findings" of any antitrust wrongdoing.

Unitherm opposed that position saying, "it provided the jury with ‘substantial evidence,'" but did not cite any evidence specifically.

A 10th Circuit Court of Appeals panel said the appeal raised "a number of questions concerning choice of law and standard of review."

The most pressing question before the appeals court rested "on economic evidence." In its opinion, the 10th Circuit said if Unitherm presented sufficient evidence to the jury to "demonstrate antitrust injury," then ConAgra should not win on appeal. However, if Unitherm was not successful in doing so, "the antitrust claims should never have reached the jury."

The 10th Circuit unanimously affirmed the lower court's ruling that ConAgra's Patent ‘027 was invalid. The judges agreed that between 1993 and May 11, 1997, one year to the day before Singh applied for his patent, Unitherm provided demonstrations in the hopes of selling the Unitherm process to other companies, including ConAgra.

"These demonstrations alone proved Unitherm's prior public use," wrote Judge Arthur Gajarsa for the court.

The appeals court upheld the monetary award to Unitherm of $2 million.

In addition, the court found that ConAgra did not offer at trial compelling evidence that it had been offering the process central to Patent ‘027 for the year prior to the application for a patent.

However, with regard to the antitrust claim, the 10th Circuit ruled in favor of ConAgra, vacating "the [lower] court's judgment of ConAgra's antitrust liability and the award of the consequent damages."

Unitherm appealed to the U.S. Supreme Court, raising a new issue regarding the procedures governing the presentation of evidence during trial under Federal Rules 50A and 50B.

According to the 10th Circuit, under Federal Rule 50A, a defendant who wants judgment as a matter of law is required to move for it at the conclusion of evidence in a trial. Under Federal Rule 50B, the party may make another motion again after the verdict. Though optional in the 10th Circuit, Federal Rule 50B is mandatory in other federal circuits.

On Feb. 28, 2005, the Supreme Court accepted review in the case, limited to the question noted above.

Unitherm argued that when ConAgra failed to make a motion after verdict, it effectively waived the right to argue the sufficient nature of the evidence presented.

ConAgra disagreed, saying it did not fail to make a motion, but simply declined to do so, as is allowable under the guidelines of the 10th Circuit.

"A defendant who wants to appeal under 50A is clearly required to make a motion at the conclusion of evidence, and ask the judge to rule on the claim," ConAgra attorney Robert A. Schroeder explained. "In 50B," he continued, "they may, and that is the key word, renew the motion after the verdict."

The case before the Supreme Court did not even take into consideration the original issue of patent rights.

Instead, the question before the high court hinged on the fact that in some courts, Federal Rule 50B is optional, and in others it is mandatory.

"We say there should be a nationwide standard, and that it should be mandatory to file a 50B motion in order for the losing part in jury trial to contest evidence," Bailey said.

The 10th Circuit had remanded the antitrust portion of the case back to the lower courts.

As a result, resolution by the Supreme Court on the question of whether and to the extent a court of appeals may review the sufficiency of evidence supporting a civil verdict was considered to be very important to both ConAgra and Unitherm, since millions of dollars are at stake.

On Jan. 23, 2006, the Court sided with Unitherm, holding 7-2 that because ConAgra failed to renew its preverdict motion, the appeals court had no basis for reviewing its sufficiency of the evidence challenge. Justice Clarence Thomas wrote the majority opinion; Justice John Paul Stevens wrote a dissent for himself and Justice Anthony Kennedy.