United States District Court, D. Delaware
REPORT AND RECOMMENDATION
R. Fallon United States Magistrate Judge.
before the court in this patent infringement action is the
motion to dismiss for failure to state a claim pursuant to
Federal Rule of Civil Procedure 12(b)(6), filed by defendants
UPL, Ltd., Decco U.S. Post Harvest, Inc., Cerexagri, Inc.,
and Essentiv, LLC, (collectively, "Decco"). (D.I.
For the following reasons, I recommend that the court
grant-in-part Decco's motion to dismiss.
is an Illinois corporation having a principal place of
business in Philadelphia, Pennsylvania. (D.I. 106 at ¶
9) AgroFresh researches, develops, and sells technology for
pre-and post-harvest freshness preservation of fruits,
vegetables, and other produce using a synthetic, volatile gas
called 1-methylcyclopropene ("1-MCP").
(Id. at ¶ 2) AgroFresh owns patents on
technologies used by growers to control the ripening of
fruits and vegetables to reduce waste and improve product
quality. (Id.) These patents include the asserted
U.S. Patent Nos. 6, 017, 849 ("the '849
patent") and 6, 313, 068 ("the '068
patent"). (Id. at ¶ 22) AgroFresh's
products include SmartFresh, Harvista, and RipeLock.
(Id. at ¶ 2)
is an inventor and expert in the field of post-harvest
technology who has developed technologies relating to
1-methylcyclopropene ("1-MCP"), including an
invention that combines 1-MCP with an engineered film known
as a modified atmospheric package ("MAP").
(Id. at ¶ 34) Mir Tech is a New Jersey
corporation maintaining its principal place of business in
Somerset, New Jersey, which is solely owned by Dr. Mir.
(Id. at ¶¶ 10-11)
U.S. Post-Harvest is a Delaware corporation with a principal
place of business in California. (Id. at ¶ 12)
Cerexagri d/b/a Decco Post-Harvest is a Pennsylvania
corporation with a principal place of business in
Pennsylvania. (Id. at ¶ 13) Essentiv LLC is a
Delaware limited liability company formed in accordance with
a joint venture of MirTech and Decco. (Id. at ¶
14) UPL is incorporated in India, with its principal place of
business in Mumbai, India. (Id. at ¶ 15)
2010 and 2016, AgroFresh and Dr. Mir operated under a
Consulting Agreement and a Commercial Agreement (together,
the "Agreements") to develop technology combining
AgroFresh's 1-MCP expertise and Dr. Mir's modified
atmosphere package ("MAP") technology.
(Id. at ¶¶ 35-44) Pursuant to the
Agreements, Dr. Mir agreed to provide services related to
combining his MAP technology and 1 -MCP, MirTech agreed to
assign its proprietary interests and rights in any patent
application or issued patent related to Dr. Mir's
products. (Id.) The Agreements obligated the MirTech
defendants not to compete with AgroFresh, and they contained
confidentiality and automatic assignment clauses.
(Id. at ¶ 40)
2013, the MirTech defendants began working on other
technology related to encapsulating 1-MCP, which they did not
disclose to AgroFresh. (Id. at ¶ 47) Instead,
Dr. Mir independently pursued a provisional patent
application on the new technology and signed a letter of
intent ("Letter of Intent") with Decco in 2014 to
develop and market the new technology. (Id. at
¶¶ 48, 54) In 2015 and 2016, Decco and the MirTech
defendants prosecuted the application resulting in U.S.
Patent No. 9, 394, 216 ("the '216 patent"), ran
trials, and developed the product ultimately registered as
TruPick™. (Id. at ¶¶ 56, 61, 76)
2016, Decco and the MirTech defendants issued a press release
announcing the EPA registration of TruPick. (Id. at
¶ 76) The press release was AgroFresh's first notice
of the research and development efforts between Decco and the
MirTech defendants. (Id. at ¶ 78) AgroFresh
subsequently sent a letter to the MirTech defendants asking
them to cure their breaches of the Agreements and indicating
its intention to terminate the Agreements absent a cure of
the breaches. (Id. at ¶ 80)
August 3, 2016, AgroFresh filed its original complaint. (D.I.
2) The complaint included claims of ownership of certain
intellectual property, breach of contract, tortious conduct,
and patent infringement. More specifically, Count I of the
complaint revolves around the agreements between AgroFresh
and MirTech, and whether MirTech was obligated to disclose
and automatically assign to AgroFresh the rights to U.S.
Patent No. 9, 394, 216 ("the '216 patent"),
which was developed and filed by MirTech. Count IV of the
complaint includes allegations that Mir and MirTech
fraudulently induced AgroFresh to sign an extension to the
parties' agreements in October 2015.
October 2016, the parties filed a joint motion to bifurcate
Counts I and IV of the complaint on the grounds that
prioritizing the claim of ownership of the '216 patent
and the fraudulent inducement claim would simplify and
clarify the disputed issues in the case, likely facilitate
resolution, and result in economies for the court and the
parties. (D.I. 18) The court granted the motion, and held a
bench trial on Counts I and IV from March 20 to March 22,
2017. In its Findings of Fact and Conclusions of Law, entered
on June 30, 2017, the court entered judgment in favor of
AgroFresh and against Mir and MirTech on Counts I and IV.
(D.I. 97 at 33-34) Specifically, the court concluded that the
'216 patent was an improvement related to the product
which was automatically assigned to AgroFresh, and Mir
fraudulently induced AgroFresh into executing an extension to
various agreements by not disclosing the '216 patent
disclosure or Mir's business relationship with Decco.
the court's decision, AgroFresh filed its first amended
complaint ("FAC") against the same original parties
and added UPL Ltd. as a defendant. (D.I. 106) The FAC added
causes of action under the Trade Secrets Act, the
Pennsylvania Trade Secrets Act, and related tort theories.
(Id. at ¶¶ 224-269) On September 15, 2017,
MirTech, Mir, and AgroFresh executed a private settlement
agreement (the "Settlement Agreement"). (D.I. 178,
Ex. A) On September 18, 2017, Mir and MirTech entered into a
final consent judgment with AgroFresh, pursuant to which Mir
and MirTech "consent[ed] to a judgment establishing
liability" for all counts alleged against them and
"agree[d] to remit payment... to compensate
AgroFresh," including $340, 000 in damages. (D.I. 115)
On September 29, 2017, a scheduling order was entered on the
remaining counts of the FAC. (D.I. 122)
12(b)(6) permits a party to move to dismiss a complaint for
failure to state a claim upon which relief can be granted.
Fed.R.Civ.P. 12(b)(6). When considering a Rule 12(b)(6)
motion to dismiss, the court must accept as true all factual
allegations in the complaint and view them in the light most
favorable to the plaintiff. Connelly v. Lane Const.
Corp., 809 F.3d 780, 790-91 (3d Cir. 2016).
state a claim upon which relief can be granted pursuant to
Rule 12(b)(6), a complaint must contain a "short and
plain statement of the claim showing that the pleader is
entitled to relief." Fed.R.Civ.P. 8(a)(2). Although
detailed factual allegations are not required, the complaint
must set forth sufficient factual matter, accepted as true,
to "state a claim to relief that is plausible on its
face." Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007); see also Ashcroft v. Iqbal, 556
U.S. 662, 663 (2009). A claim is facially plausible when the
factual allegations allow the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged. Iqbal, 556 U.S. at 663; Twombly,
550 U.S. at 555-56. While the plausibility standard
"does not impose a probability requirement, it does
require a pleading to show more than a sheer possibility that
a defendant has acted unlawfully." Connelly,
809 F.3d at 786 (internal quotations and citations omitted).
determining whether dismissal is appropriate, the court must
take three steps. Id. at 787; Santiago v.
Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010).
First, the court must identify the elements of the claim.
Iqbal, 556 U.S. at 675. Second, the court must
identify and reject conclusory allegations. Id. at
678. Third, the court should assume the veracity of the
well-pleaded factual allegations identified under the first
prong of the analysis, and determine whether they are
sufficiently alleged to state a claim for relief. Id; see
also Malleus v. George, 641 F.3d 560, 563 (3d Cir.
2011). The third prong presents a context-specific inquiry
that "draw[s] on [the court's] experience and common
sense." Id. at 663-64; see also Fowler v.
UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). As the
Supreme Court instructed in Iqbal, "where the
well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has alleged
- but it has not 'show[n]' - 'that the pleader is
entitled to relief.'" Iqbal, 556 U.S. at
679 (quoting Fed.R.Civ.P. 8(a)(2)).
Claims against Mir and MirTech (Counts II-IV, VI, and
support of the motion to dismiss, Decco contends that
AgroFresh's claims for breach of contract, fraud,
fraudulent inducement, constructive fraud, and breach of the
duty of loyalty should be dismissed because they were only
asserted against Mir and MirTech, and they fail to state a
claim against Decco. (D.I. 132 at 4) In response, AgroFresh
does not dispute that the causes of action were raised only
against Mir and MirTech, and challenges Decco's standing
to seek dismissal on that basis. (D.I. 139 at 4) According to
AgroFresh, the entry of a final judgment on the counts
indicates that the counts meet the 12(b)(6) standard and have
been conclusively established. (Id.)
recommend that the court deny Decco's motion to dismiss
as moot with respect to Counts II-IV, VI, and VIII. The
parties agree that these counts were brought only against Mir
and MirTech, and do not state a claim against Decco.
Consequently, Decco has no obligation to defend against these
causes of action. The parties also agree that the court
entered final judgment on these counts in AgroFresh's
favor. (D.I. 97) Decco cites no authority in
support of ...