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Kyowa Hakka Bio, Co., Ltd v. Ajinomoto Co.

United States District Court, D. Delaware

February 12, 2018

KYOWA HAKKA BIO, CO., LTD, BIOKYOWA, INC., KYOWA HAKKA BIO U.S. HOLDINGS, INC., and KYOWA HAKKO U.S.A., INC., Plaintiffs,
v.
AJINOMOTO CO., INC., AJINOMOTO ANIMAL NUTRITION GROUP, INC., AJINOMOTO NORTH AMERICA, INC. AJINOMOTO HEARTLAND, INC. and AJINOMOTO WINDSOR, INC., Defendants.

          MEMORANDUM OPINION

          Goldberg, J.

         Plaintiffs Kyowa Hakko Bio Co., Ltd, BioKyowa, Inc., Kyowa Hakko Bio U.S. Holdings, Inc., and Kyowa Hakko U.S.A., Inc. (collectively, “Plaintiffs”) allege infringement of their U.S. Patent No. RE 45, 723, entitled “Process for Producing Amino Acids” by Defendants Ajinomoto Co., Inc., Ajinomoto Animal Nutrition Group, Inc., Ajinomoto North America, Inc., Ajinomoto Heartland, Inc., and Ajinomoto Windsor, Inc. (collectively, “Defendants”). Presently before me is Defendants' Motion to Dismiss the Complaint. For the following reasons, the Motion will be denied.

         I. FACTUAL ALLEGATIONS IN THE COMPLAINT

         A. The Parties

         Plaintiffs Kyowa Hakko Bio, Co., Ltd. (“KHB”) and BioKyowa (“BioKyowa”) are biochemical companies that provide amino acids and other high value-added functional materials for inclusion in pharmaceutical, medical treatment, healthcare, dietary supplement, and cosmetic products. Plaintiff Kyowa Hakko U.S.A., Inc. (“KHU”) markets and sells the products of KHB and BioKyowa in the United States. BioKyowa and KHU are wholly owned subsidiaries of Plaintiff Kyowa Hakko Bio U.S. Holdings, Inc. (“KHH”). In turn, KHH is a wholly owned subsidiary of KHB. (Id. ¶¶ 8, 9, 11.)

         Defendant Ajinomoto Heartland, Inc. (“AH”) principally imports, manufactures, and sells animal nutrition products under the general direction of Defendants Ajinomoto Co., Ltd. (“AJ”) and Ajinomoto Animal Nutrition Group, Inc. (“AANG”). Defendant Ajinomoto North America, Inc. (“ANA”) is a wholly owned subsidiary of AJ and principally imports, manufactures, and sells cosmetic, human food, human nutritional, or pharmaceutical product applications under the general direction and control of AJ. Defendant Anjinomoto Windsor, Inc. (“AW”) principally imports, manufactures, and sells food products. Defendants are all members of the Ajinomoto Group and are controlled and managed by AJ. (Id. ¶¶ 16-27.)

         B. The Patent-In-Suit

         The patent-in-suit, U.S. Patent No. RE 45, 723 (the “‘723 patent”) was issued by the United States Patent and Trademark Office on October 6, 2015. Plaintiff Kyowa Hakka Bio Co., Ltd. (“KHB”) is the owner, by valid assignment of the entire right, title, and interest in and to the ‘723 patent. KHB has authorized BioKwoya, Inc. (“BioKwoya”) and KHU to use the inventions claimed in the ‘723 patent. (Id. ¶¶ 42-43, 46-47.)

         Claim one of the ‘723 patent (as amended during reissue proceedings) sets forth a process for making amino acids, as follows:

1. A process for producing an amino acid, which comprises:
[a] culturing a microorganism having an ability to produce the amino acid in a medium,
[b] adding crystals of the amino acid having an average particle size of 7 to 50 μm to the medium at some time after the amino acid concentration in the medium reaches the saturation solubility and before crystals of the amino acid deposit in the medium so that the concentration of the crystals of the amino acid becomes 0.5 g/l or more,
[c] culturing the microorganism having the ability to produce the amino acid in the medium, [d] allowing the crystals of the amino acid to grow to crystals of the amino acid having an average particle size of 30 μm or more and accumulate in the medium, and [e] recovering the crystals of the amino acid from the culture by separating the microorganism producing the amino acid and the accumulated crystals of the amino acid based on the difference in particle size or specific gravity between them.

(Id. ¶ 48.)

         Claim 2 is the same as claim 1 except that, in claim 1, the “adding crystals” step [b] concludes “so that the concentration of the crystals of the amino acid becomes 0.5 g/l or more, ” while, in claim 2, the “adding crystals” step [b] concludes “so that the total surface area of the crystals of the amino acid in the medium becomes 0.02 m2/1 or more.” (Id. ¶ 49.) Steps [b] - [e] of Claims 1 and 2 define a particular type of Direct Crystal Precipitation (“DCP”) process. (Id. ¶ 50.)

         C. Infringement Allegations and Procedural History

         Plaintiffs filed their patent infringement suit on March 23, 2017. The Amended Complaint alleges that Defendants, acting as a single business enterprise, are liable for various acts of infringement through the sale of the “Accused Products, ” which are defined as

the amino acids L-glutamine, L-glutamic acid, L-tryptophan, and L-valine, and monosodium glutamate (which is a sodium salt of L-glutamic acid) and other products incorporating one of those amino acids, which (a) were offered for sale, sold, made or used in the United States by one or more of the Defendants or entities under the control of a Defendant, and (b) . . . were made using a method as claimed or in equivalent to any of claims 1, 2, 7, and 8 of the ‘723 patent, either in the United States, or outside the United States and imported into the United States.

(Id. ¶ 2.) The Amended Complaint sets forth claims of direct infringement, vicarious infringement, inducement of infringement, and infringement by importing or selling the Accused Product into the United States. (Id. ¶¶ 64-67.)

         Defendants moved to dismiss the Amended Complaint on August 21, 2017. Plaintiffs filed a response on September 5, 2017, Defendants submitted a reply brief on October 11, 2017, and Plaintiffs filed a notice of subsequent authority on October 31, 2017.

         II. STANDARD OF REVIEW

         Under Federal Rule of Civil Procedure 12(b)(6), a defendant bears the burden of demonstrating that the plaintiff has not stated a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6); see also Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). The United States Supreme Court has recognized that “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quotations omitted). “[T]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice” and “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A complaint does not show an entitlement to relief when the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct. Id.

         The United States Court of Appeals for the Third Circuit has detailed a three-step process to determine whether a complaint meets the pleadings standard. Bistrian v. Levi, 696 F.3d 352 (3d Cir. 2014). First, the court outlines the elements a plaintiff must plead to state a claim for relief. Id. at 365. Next, the court must “peel away those allegations that are no more than conclusions and thus not entitled to the assumption of truth.” Id. Finally, the court “look[s] for well-pled factual allegations, assume[s] their veracity, and then ‘determine[s] whether they plausibly give rise to an entitlement to relief.'” Id. (quoting Iqbal, 556 U.S. at 679). The last step is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. (quoting Iqbal, 556 U.S. at 679).

         Although the sufficiency of complaints involving claims of direct infringement were previously analyzed under Federal Rule of Civil Procedure 84 and the Appendix of Forms, those rules were abrogated effective December 1, 2015. Raindance Techs., Inc. v. 10x Genomics, Inc., No. 15-150, 2016 WL 927143, at *2 (D. Del. Mar. 4, 2016). It is now well established that both direct and indirect infringement claims are subject to the Twombly/Iqbal standard. IP Commc'n Solutions, LLC v. Viber Media (USA) Inc., No. 16-134, 2017 WL 1312942, at *2 (D. Del. Apr. 5, 2017); RAH Color Techs. LLC v. Ricoh USA Inc., 194 F.Supp.3d 346, 350-51 (E.D. Pa. 2016).

         III. DISCUSSION

         A. Infringement Under the Doctrine of Equivalents

         Defendants first move to dismiss Plaintiffs' cause of action for direct infringement. Upon review, I find that the Amended Complaint adequately states a claim upon which relief may be granted.

         The direct infringement of a patent occurs when a party, without authority, “makes, uses, offers to sell, or sells any patented invention, within the United States. . . .” 35 U.S.C. § 271(a). A patentee may prove direct infringement under § 271(a) either by (1) demonstrating specific instances of direct infringement; or (2) showing that an accused device necessarily infringes on the patent. ACCO Brands, Inc. v. ABA Locks Mfrs. Co., 501 F.3d 1307, 1313 (Fed. Cir. 2007).

         In order to plead a cause of action for direct infringement of a method claim, the complaint must allege that the accused infringer “perform[ed] all the steps of the claimed method, either personally or through another acting under his direction or control.” Courtesy Prods, LLC v. Hamilton Beach Brands, Inc., 73 F.Supp.3d 435, 439 (D. Del. 2014). In other words “[d]irect infringement requires a single party to perform every step of a claimed method.” Forest Labs. Holdings Ltd. v. Mylan, Inc., 206 F.Supp.3d 957, 973 (D. Del. 2016).

         When literal infringement is not present, however, a Plaintiff may prove direct infringement via the doctrine of equivalents, i.e., where the accused product is the substantial equivalent of the patented invention. See Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 24 (1997). “Application of the doctrine of equivalents may allow a patentee to recover for infringement even though the accused device falls outside of the literal scope of the claims, but only where the differences between the innovation and the accused products are insubstantial.” Highland Tank & Mfg. Co. v. PS Int'l, Inc., 742 F.Supp.2d 722, 728 (W.D. Pa. 2010).

         To determine whether an accused device infringes under the doctrine of equivalents, a court examines the differences between the claimed invention and the accused device. Dawn Equip. Co. v. Kentucky Farms, Inc., 140 F.3d 1009, 1015-16 (Fed. Cir. 1998). This inquiry generally involves determining whether “the element of the accused device at issue performs substantially the same function in substantially the same way, to achieve substantially the same result, as the limitation at issue in the claim.” Id. at 1016 (describing the “function/way/result” inquiry). Each element contained in a patent claim is deemed material to defining the scope of patented invention. Thus, the doctrine of equivalents must be applied to individual elements of claim, not to the invention as a whole. Warner-Jenkinson, 520 U.S. at 29.

         The Amended Complaint here sets forth a direct infringement claim by alleging that:

65. Upon information and belief, the process used by ANA to produce glutamic acid at its plant in Eddyville, Iowa includes steps literally corresponding to each of steps [a] and [c]-[e] of claims 1 and 2 of the ‘723 patent . . . .
66. Upon information and belief, the process used by ANA to produce glutamic acid at its plant in Eddyville, Iowa includes a step literally corresponding to or the equivalent of adding seed crystals of glutamic acid to cause precipitation of glutamic acid crystals as ...

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