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AgroFresh Inc. v. Essentiv LLC

United States District Court, D. Delaware

January 29, 2019

AGROFRESH INC., Plaintiff,
v.
ESSENTIV LLC, DECCO U.S. POST-HARVEST, INC., CEREZAGRI, INC. d/b/a DECCO POST-HARVEST, and UPL, LTD., Defendants.

          MEMORANDUM ORDER

          THE HONORABLE MARYELLEN NOREIKA UNITED STATES DISTRICT JUDGE

         On December 27, 2018, Magistrate Judge Fallon issued a Report & Recommendation (D.I. 370, “the Report”) granting-in-part and denying-in-part the motion (D.I. 131) filed by defendants UPL, Ltd., Decco U.S. Post Harvest, Inc., Cerexagri, Inc., and Essentiv, LLC (collectively, “Defendants”), which seeks to dismiss counts of the First Amended Complaint (D.I. 106) pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. On January 10, 2019, Plaintiff AgroFresh Inc. (“Plaintiff”) objected to the Report to the extent it recommended dismissing the indirect patent infringement claims on the grounds that (1) Plaintiff did not adequately plead an act of direct infringement by a third-party customer necessary to support induced and contributory infringement claims; and (2) Plaintiff failed to sufficiently allege that the accused product (TruPick) has no substantial non-infringing use necessary to support a claim of contributory infringement. (See D.I. 388 at 1). On January 24, 2019, Defendants responded to Plaintiff's objections. (D.I. 403).

         The Court has reviewed the Report, Plaintiff's objections and Defendants' responses thereto, and the Court has considered de novo the objected-to portions of Defendants' motion to dismiss and materials submitted with the motion. For the reasons set forth below, Plaintiff's objections are OVERRULED, the Report is ADOPTED and Defendants' motion to dismiss is GRANTED-IN-PART and DENIED-IN-PART.

         I. Legal Standards

         A. Motion to Dismiss Pursuant to Rule 12(b)(6)

         In ruling on a motion to dismiss under Rule 12(b)(6), the Court must accept all well-pleaded factual allegations in the complaint as true and view them in the light most favorable to the plaintiff. See Mayer v. Belichick, 605 F.3d 223, 229 (3d Cir. 2010); see also Phillips v. Cnty. of Allegheny, 515 F.3d 224, 232-33 (3d Cir. 2008). “[A] court need not ‘accept as true allegations that contradict matters properly subject to judicial notice or by exhibit,' such as the claims and the patent specification.” Secured Mail Sols. LLC v. Universal Wilde, Inc., 873 F.3d 905, 913 (Fed. Cir. 2017) (quoting Anderson v. Kimberly-Clark Corp., 570 Fed.Appx. 927, 931 (Fed. Cir. 2014)). Nor is the Court required to accept as true bald assertions, unsupported conclusions or unwarranted inferences. See TriPlay, Inc. v. WhatsApp Inc., C.A. No. 13-1703-LPS-CJB, 2018 WL 1479027, at *3 (D. Del. Mar. 27, 2018). Dismissal under Rule 12(b)(6) is only appropriate if a complaint does not contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). This plausibility standard obligates a plaintiff to provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. Instead, the pleadings must provide sufficient factual allegations to allow the Court to “draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 506 U.S. at 678.

         B. Induced Infringement

         Induced infringement under § 271(b) requires that “the alleged inducer knew of the patent, knowingly induced the infringing acts, and possessed a specific intent to encourage another's infringement of the patent.” Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1328 (Fed. Cir. 2009). To give rise to inducement liability, the accused infringer must know that the induced acts constitute infringement of another's patent. Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766 (2011). Therefore, to state a claim of inducement sufficient to withstand a motion to dismiss, a plaintiff must plead facts that plausibly support an inference that the accused inducer “specifically intended [another] to infringe the [patent] and knew that the [induced] acts constituted infringement.” In re Bill of Lading Transmission and Processing Sys. Patent Litigation, 681 F.3d 1323, 1339 (Fed. Cir. 2012). A plaintiff must also plead facts that support an inference that an underlying act of direct infringement has occurred. See Id. at 1336; see also Linear Tech. Corp. v. Impala Linear Corp., 379 F.3d 1311, 1326 (Fed. Cir. 2004) (“There can be no inducement or contributory infringement without an underlying act of direct infringement.”).

         C. Contributory Infringement

         “Contributory infringement imposes liability on one who embodies in a non-staple device the heart of a patented process and supplies the device to others to complete the process and appropriate the benefit of the patented invention.” Vita-Mix, 581 F.3d at 1327. To state a claim for contributory infringement, a plaintiff must plausibly allege that an infringer sells, offers to sell or imports into the United States a component of an infringing product “knowing [the component] to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use.” 35 U.S.C. § 271(c); see also Bill of Lading, 681 F.3d at 1337. As with induced infringement, a claim for contributory infringement must also include facts that support an inference that an underlying act of direct infringement has occurred, and there must be allegations of the requisite knowledge of the patent-in-suit at the time of infringement. See Linear Tech. Corp. 379 F.3d at 1326; Mallinckrodt, Inc. v. E-Z-Em Inc., 670 F.Supp.2d 349, 355 (D. Del. 2009).

         II. DISCUSSION

         A. Plaintiff's Allegations of Inducing Infringement

         The Report found that the First Amended Complaint “adequately pleads specific intent by [Defendants] to induce infringement” but recommended dismissing the inducement claims because of “insufficient allegations of direct infringement by [Defendants'] customers.” (D.I. 370 at 11-12).[1] The Report also recommended dismissing the claims of contributory infringement because of the insufficient allegations of direct infringement, and it also recommended dismissing the contributory infringement claims because the First Amended Complaint “fails to sufficiently allege that TruPick has no substantial non-infringing use.” (Id. at 12).

         As to inducement, Plaintiff objects, asserting that its First Amended Complaint “is full of allegations of underlying direct infringement. The counts themselves state that the Decco Defendants ‘have actively and specifically intended to induce third party customers to infringe.'” (D.I. 388 at 2 (quoting D.I. 106 ...


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