ASA wins overturn of Leachman patents
A two-year battle between the American Simmental Association (ASA) and Leachman Cattle of Colorado (LCC) has finally come to a close as the ASA has succeeded in overturning two U.S. patents (8,660,888 and 8,725,557) that were originally granted to LLC.
The patents allowed LLC to have exclusive rights of an index that provided a benchmark to evaluate the economic value of an animal based on genetics.
In February 2014, LCC secured patent protection for this technology, which they, alongside Verified Beef, the licensee for the patented calculator, used to assess the value of feeder calves,
“The patent we filed for and were granted was on the use of genetic predictions to estimate the value of feeder calves,” said Lee Leachman, owner of LCC based out of Fort Collins, Colo. “We were initially granted those patents — two in particular — and we filed for those because we didn’t think that anyone had ever used that type of material on a set of calves like we had before. It was very much misconstrued that some of the breed associations thought we were trying to patent indexes for breeding cattle, which was not the case. We wanted to patent the technology to evaluate the economic value of a set of feeder calves.”
Verified Beef had its Reputation Feeder Cattle program, which was developed around the same time that the ASA unveiled its Feeder Calf Profit Calculator. Both programs relied heavily on using the economic index technology to evaluate a set of calves and add value in the marketplace.
As a result, on April 11, ASA faced a lawsuit when LCC claimed the ASA had committed patent infringement by continuing to use this technology when they introduced their Feeder Calf Profit Calculator. LCC and Verified Beef alleged that ASA’s use of the economic index inappropriately revealed trade secrets and hurt potential business opportunities.
In June, the U.S. Beef Breeds Council and the National Association of Animal Breeders both showed strong support of ASA in the face of the lawsuit, agreeing with ASA’s position that the economic index was the result of publicly-funded research, dating back to 1943, which was developed in the public domain at universities and government research agencies.
On Aug. 29, the suit was dismissed without prejudice by R. Brooke Jackson, a federal district judge in Colorado, who wrote in a statement about the case, “Few if any factual allegations have been made that would support a finding that ASA’s actions took place in or were purposefully aimed at the state of Colorado. The court cannot therefore assert personal jurisdiction over ASA in connection to these federal claims.”
Once the dust had settled over the LCC lawsuit, ASA wanted to protect the U.S. beef industry’s ability to use these economic benchmarks to evaluate calves, so in June of 2015, ASA challenged LLC’s patents and exclusive rights to the technology.
“It was not our desire to spend time and resources on something as unproductive as a lawsuit or patent challenge,” said ASA’s Executive Vice President, Wade Shafer. “However, the ASA felt obligated to protect our industry’s right to continue to perform genetic evaluation functions in an open and public manner. We felt that settling for anything less would be a dereliction of duty to our members and our industry.”
The ASA Board of Trustees worked on behalf of the organization’s members and the industry for the continued use of this technology with a petition to assert that LCC’s patents were neither a new and novel concept nor patentable. Meanwhile, LCC argued that the patented benchmark included “sufficient limitations on a specific implementation of animal valuations” and it “does not preempt all animal valuations and are not generic, routine, or conventional,” according to the National Law Review.
“The Board of Trustees thought that if we allowed people to start patenting certain aspects of animal evaluations then it might negatively impact breed associations’ ability to evaluate cattle in the future,” said Jim Butcher, chairman of the Board and owner of Gateway Simmental located in Lewiston, Mont. “We also didn’t want to take the chance that one day our members would have to pay someone other than the association in order to access EPDs or calculators in the future.”
In a post-grant review, it was determined that the patents, “relate generally to genetic quality and relative market value of livestock” and in order for something to be patent-eligible it must be a “new and useful process, machine, manufacture, or composition of matter,” as defined by what’s known as the “Alice Ruling.”
“In October 2013, the Alice Ruling determined what constitutes a patentable idea,” said Leachman. “Basically, what they said is someone can’t patent a fundamental process to something that people do every day like driving a car. What this means is you can’t patent that idea unless you completely transform how it’s done. The ASA challenged the patent, stating that the technology is not a novel idea to the beef industry, but it hasn’t really been done before, so we believe our method is new. However, with the new Alice Rule, it’s not considered a new technology.”
By June 16, 2016, the patents were overturned, and ASA is now allowed to reintroduce the Feeder Calf Profit Calculator, which had been put on hold during the ongoing lawsuit and patent challenge, to the industry. The decision to overturn the patents also allows the entire beef industry to continue to use profit-driven benchmarks to place an economic value on a set of calves.
“Yes, I’m disappointed at the time and costs ASA had to spend in order to fight this, but it’s something we as an organization felt very strongly about,” said Butcher. “The patent never should have been granted in the first place, and now that it’s settled, the entire industry can continue to use this technology without any conflict of interest.”
“The patent issue doesn’t have any impact on the business,” said Leachman. “We have a very good model that evaluates feeder calf values. Since the patent issue, we’ve modified and improved the model to make it even better. We think valuing feeder calves as close to the true value as possible is a really important thing. From my vantage point, Verified Beef has had tremendous success at getting producers to evaluate their feeder calves, score them and get paid for their true value. It’s a really cool thing to use this benchmark that adds value to the commercial producer.”
“LCC certainly has a right use this technology, but we wanted the entire industry to have the same right” said Shafer. “ASA was not trying to gain exclusivity ourselves, and we don’t begrudge LCC’s system—in fact, we appreciate their desire to increase the integration of technology in the beef business. We will continue to move forward with our Feeder Calf Profit Calculator, with plans to introduce it to the industry in the near future.”