United States District Court, D. Delaware
LIQWD, INC. and OLAPLEX LLC, Plaintiffs,
L'ORÉAL USA, INC., L'ORÉAL USA PRODUCTS, INC., L'ORÉAL USA S/D, INC., and REDKENS 5TH AVENUE, NYC, L.L.C., Defendants.
MEMORANDUM AND ORDER
F. BATAILLON SENIOR UNITED STATES DISTRICT JUDGE.
matter is before the Court on the following motions for
1. Motion for summary judgment of non-patent issues filed by
Liqwd, Inc. and Olaplex LLC, D.I. 682;
2. Motion for summary judgment as to plaintiffs' claims
for misappropriation of trade secrets and breach of contract
filed by L'Oréal, D.I. 703;
3. Motion for summary judgment of invalidity filed by
L'Oréal, D.I. 710;
4. Motion for summary judgment of non-infringement filed by
L'Oréal, D.I. 712;
5. Motion for summary judgment on patent issues filed by
Liqwd, D.I. 717. Defendants also object, D.I. 803, and
plaintiffs object D.I. 802, to the Report and Recommendation
of the magistrate judge, D.I. 791, denying plaintiffs'
motion to dismiss, D.I. 665.
patent infringement action filed by plaintiffs Liqwd, Inc.
and Olaplex LLC (together, "Olaplex" or
“plaintiffs” or “Liqwd”) against
defendants L'Oréal USA, Inc., L'Oréal
USA Products, Inc., L'Oréal USA S/D, Inc., and
Redken 5th Avenue NYC, LLC (collectively,
"L'Oréal" or “defendants”),
Olaplex alleges infringement of United States Patent Nos. 9,
498, 419 ("the '419 patent") and 9, 668, 954
("the '954 patent"). D.I. 262 at ¶¶
outlined by the plaintiffs:
The ‘419 Patent (D.I. 636-1, Ex. A) and ‘954
Patent (D.I. 636-1, Ex. B) (collectively, the “Asserted
Patents”) are generally directed to methods for
bleaching hair. The common specification explains that harsh
chemicals used during traditional bleaching treatments damage
and break hair bonds. D.I. 636-1, Ex. A at 1:31-2:10.
Bleaching treatments typically include two components: powder
lightener (i.e., bleach powder) and developer (i.e.,
peroxide). Id. at 23:15-18, 49-54. These chemicals
remove color by attacking natural and artificial pigments in
the hair. Id. at 16:48-50. The inventors of the
Asserted Patents discovered that certain active agents (e.g.,
maleic acid or salts thereof) mixed with bleaching treatments
will prevent and repair damage to the hair. Id. at
D.I. 726 at 2.
Further, Olaplex has accused L'Oréal of directly
and indirectly infringing the Asserted Patents through its
own use and the sale with instructions for using
L'Oréal's three-step system accused products
in an infringing manner: the Matrix Bond Ultim8
(“Ultim8”), Redken pH-Bonder
(“pHBonder”), and L'Oréal
Professionnel Smartbond (“Smartbond”) three-step
systems (collectively, the “Accused Products”).
D.I. 636 ¶¶ 60-61. Each of these products has three
treatment steps, including (1) a step 1 product that is used
during in-salon hair bleaching treatments, (2) a step 2
product for use shortly after bleaching treatments, and (3) a
step 3 product for at-home maintenance between chemical
services. D.I. 650 (L'Oréal Answer) ¶¶
61-68. All the Accused Products list maleic acid as an
ingredient and are marketed by L'Oréal for use as
a bond builder in connection with chemical treatments for
hair that involve a bleaching step.
D.I. 726 at 3-4. The ‘419 Patent was issued by the
United States Patent and Trademark Office on November 22,
2016. The ‘954 Patent was issued by the United States
Patent and Trademark Office on June 6, 2017.
stated by the plaintiffs:
83. The ‘419 Patent issued from a patent application
that was assigned Serial No. 15/087, 415 by the U.S. Patent
& Trademark Office (USPTO). A series of anonymous
submissions were made to the USPTO on August 25, 2016, August
29, 2016, September 14, 2016, and September 23, 2016, which
alleged the pending claims could not be allowed.
84. On information and belief, L'Oréal made one or
more of those third-party submissions to USPTO in hopes of
stopping issuance of the ‘419 patent.
85. Those third-party submissions were not successful. After
the independent patent examiner carefully considered each
third-party submission, the ‘419 patent issued.
D.I. 636 at 24.
stated by the magistrate judge,
On November 22, 2016, the United States Patent and Trademark
Office (the "USPTO") issued United States Patent
No. 9, 498, 419 (''the '419 patent"),
entitled "Keratin Treatment Formulations and
Methods." The '419 patent was filed on March 31,
2016 on a fast track, and claims priority to United States
Provisional Application No. 61/994, 709, which was filed on
May 16, 2014. The '419 patent is a continuation of parent
Application No. 14/713, 885, which was filed on May 15, 2015,
published on November 19, 2015, and issued as U.S. Patent No.
9, 326, 926 on May 3, 2016. The '419 patent lists as
inventors Eric D. Pressly and Craig J. Hawker ("the
inventors"), and identifies Liqwd, Inc. as the assignee.
The '419 patent describes "[f]ormulations, kits, and
methods for rebuilding the disulfide bonds in keratin"
to be applied in conjunction with a hair coloring treatment.
(' 419 patent, Abstract)
D.I. 791 at 1-2.
January 13, 2017, L'Oréal filed a petition for
post-grant review ("PGR") challenging the
patentability of all asserted claims of the '419 patent.
D.I. 354 at 4. On June 27, 2018, the PTAB issued a final
written decision finding all asserted claims of the '419
patent unpatentable. D.I. 339, Ex. A. Olaplex appealed the
final written decision to the Federal Circuit. D.I. 373. The
appeal remains pending.
States Patent No. 9, 668, 954 ("the '954
patent") (together with the '419 patent, the
"patents-in-suit") was filed on January 25, 2017
and issued on June 6, 2017. On April 26, 2017, the USPTO
issued a notice of allowance for the claims in the '954
patent. D.I. 143, Ex. B. The '954 patent is a
continuation of United States Patent Application No. 15/290,
593, which is a continuation of the '419 patent. The
'954 patent has the same title, inventors, and
specification as the '419 patent. The active agent
element of claim 1 of the '954 patent requires
application of a bleaching mixture containing an active agent
of maleic acid to the hair. '954 patent, col. 25:58-67
D.I. 186 at 3; D.I. 791 at 3.
late January and early February 2018, L'Oréal
filed three PGR petitions challenging the patentability of
all claims of the '954 patent (D.I. 354 at 5). On August
10, 2018, the PTAB instituted PGR proceedings on one of the
petitions and denied institution on the remaining two PGR
petitions (D.I. 366, Exs. A-C). A final written decision on
the instituted petition regarding the '954 patent is
anticipated in August 2019 (D.I. 385 at 6-13). D.I. 791 at 3.
October of 2016 Liquid assigned exclusive license rights to
the ‘518 patent to Olaplex so they could jointly
enforce the patent rights. In a litigation in the United
Kingdom, representations were allegedly made by plaintiffs
that the products do not include ionically bound reactive
moieties. D.I. 650 ¶¶ 227-40. L'Oréal
contends that the Olaplex products do not fall within the
scope of the ‘518 patent despite the fact that they are
marked. D.I. 650 ¶ 239-40.
to the launching of its three products, defendants contend
that Dean Christal, Olaplex's co-founder, began a media
campaign for the three products, stating they could rebuild
broken disulfide bonds. L'Oréal contends Mr.
Christal created false burner social media accounts to
promote the products and attack the competitors.
L'Oréal also contends Christal offered to pay
industry insiders to make claims about the products while
concealing their affiliation with Olaplex.
says it did its own testing in 2014 and discovered the maleic
in plaintiffs' products. Then in January of 2015, the
parties discussed acquisition of Olaplex. The parties signed
a nondisclosure agreement (“NDA”).
L'Oréal approached plaintiffs about the
possibility of a purchase of the company. The plaintiffs
disclosed secret and confidential information about these
patents. L'Oréal walked away without making an
offer. Thereafter, L'Oréal developed the Accused
Products. In November of 2015 plaintiffs filed an action in
California against L'Oréal for infringement of the
‘419 patent and for false advertising. Defendants
responded arguing that Olaplex publicized the filing of the
lawsuit to news outlets, revealing confidential information.
That lawsuit was dismissed and this one filed.
STANDARD OF REVIEW
court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). The moving party bears the burden of
demonstrating the absence of a genuine issue of material
fact. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 n.10 (1986). A party asserting
that a fact cannot be-or, alternatively, is-genuinely
disputed must support the assertion either by citing to
"particular parts of materials in the record, including
depositions, documents, electronically stored information,
affidavits or declarations, stipulations (including those
made for the purposes of the motion only), admissions,
interrogatory answers, or other materials," or by
"showing that the materials cited do not establish the
absence or presence of a genuine dispute, or that an adverse
party cannot produce admissible evidence to support the
fact." Fed.R.Civ.P. 56(c)(1)(A) & (B). If the moving
party has carried its burden, the nonmovant must then
"come forward with specific facts showing that there is
a genuine issue for trial." Matsushita, 475
U.S. at 587 (internal quotation marks omitted). The court
will "draw all reasonable inferences in favor of the
nonmoving party, and it may not make credibility
determinations or weigh the evidence." Reeves v.
Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150
defeat a motion for summary judgment, the non-moving party
must "do more than simply show that there is some
metaphysical doubt as to the material facts."
Matsushita, 475 U.S. at 586-87. Although the
"mere existence of some alleged factual dispute between
the parties will not defeat an otherwise properly supported
motion for summary judgment," a factual dispute is
genuine where "the evidence is such that a reasonable
jury could return a verdict for the nonmoving party."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). "If the evidence is merely colorable, or is not
significantly probative, summary judgment may be
granted." Id. at 249-50 (internal citations
omitted); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986) (stating entry of
summary judgment is mandated "against a party who fails
to make a showing sufficient to establish the existence of an
element essential to that party's case, and on which that
party will bear the burden of proof at trial").
patent is infringed when a person "without authority
makes, uses, offers to sell, or sells any patented invention,
within the United States ... during the term of the
patent." 35 U.S.C. § 271(a). A two-step analysis is
employed in making an infringement determination.
See Markman v. Westview Instruments, Inc.,
52 F.3d 967, 976 (Fed. Cir. 1995). First, the court must
construe the asserted claims to ascertain their meaning and
scope. See id.Construction of the claims is
a question of law subject to de novo review. See
Cybor Corp. v. FAS Techs., 138 F.3d 1448, 1454 (Fed.
Cir. 1998). The trier of fact must then compare the properly
construed claims with the accused infringing product.
See Markman, 52 F.3d at 976. This second
step is a question of fact. See Bai v. L & L
Wings, Inc., 160 F.3d 1350, 1353 (Fed. Cir. 1998).
infringement requires a party to perform each and every step
or element of a claimed method or product." BMC
Res., Inc. v. Paymentech, L.P., 498 F.3d 1373, 1378
(Fed. Cir. 2007), overruled on other grounds by Akamai
Technologies v. Limelight Networks, Inc., 692 F.3d 1301
(Fed. Cir. 2012). "If any claim limitation is absent
from the accused device, there is no literal infringement as
a matter of law." Bayer AG v. Elan Pharm. Research
Corp., 212 F.3d 1241, 1247 (Fed. Cir. 2000). If an
accused product does not infringe an independent claim, it
also does not infringe any claim depending thereon.
See Wahpeton Canvas Co. v. Frontier, Inc.,
870 F.2d 1546, 1553 n.9 (Fed. Cir. 1989). However,
"[o]ne may infringe an independent claim and not
infringe a claim dependent on that claim." Monsanto
Co. v. Syngenta Seeds, Inc., 503 F.3d 1352, 1359 (Fed.
Cir. 2007) (quoting Wahpeton Canvas, 870 F.2d at
1552) (internal quotations omitted). A product that does not
literally infringe a patent claim may still infringe under
the doctrine of equivalents if the differences between an
individual limitation of the claimed invention and an element
of the accused product are insubstantial. See
Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520
U.S. 17, 24 (1997). The patent owner has the burden of
proving infringement and must meet its burden by a
preponderance of the evidence. See SmithKline
Diagnostics, Inc. v. Helena Lab. Corp., 859 F.2d 878,
889 (Fed. Cir. 1988) (citations omitted).
accused infringer moves for summary judgment of
non-infringement, such relief may be granted only if one or
more limitations of the claim in question does not read on an
element of the accused product, either literally or under the
doctrine of equivalents. See Chimie v. PPG
Indus., Inc., 402 F.3d 1371, 1376 (Fed. Cir. 2005);
see also TechSearch, L.L.C. v. Intel Corp.,
286 F.3d 1360, 1369 (Fed. Cir. 2002) ("Summary judgment
of non-infringement is ... appropriate where the patent
owner's proof is deficient in meeting an essential part
of the legal standard for infringement, because such failure
will render all other facts immaterial"). Thus, summary
judgment of non-infringement can only be granted if, after
viewing the facts in the light most favorable to the
non-movant, there is no genuine issue as to whether the
accused product is covered by the claims (as construed by the
court). See Pitney Bowes, Inc. v.
Hewlett-Packard Co., 182 F.3d 1298, 1304 (Fed. Cir.
method claim is not directly infringed by the sale of an
apparatus even though it is capable of performing only the
patented method. The sale of the apparatus is not a sale of
the method. A method claim is directly infringed only by one
practicing the patented method." Joy Technologies,
Inc. v. Flakt, Inc., 6 F.3d 770, 775 (Fed. Cir. 1993).
Therefore, "the accused infringer must perform all the
steps of the claimed method, either personally or through
another acting under his direction or control."
Akamai Technologies, Inc. v. Limelight Networks,
Inc., 692 F.3d 1301, 1307 (Fed. Cir. 2012).
respect to apparatus claims, "to infringe a claim that
recites capability and not actual operation, an accused
device 'need only be capable of operating' in the
described mode." Finjan, Inc. v. Secure Computing
Corp., 626 F.3d 1197, 1204 (Fed. Cir. 2010) (citing
Intel Corp. v. U.S. Int'l Trade Comm'n, 946
F.2d 821, 832 (Fed. Cir. 1991). However, if an apparatus
claim requires "software [to] be configured in a
particular way to infringe," infringement does not occur
merely because the apparatus could be used in an infringing
fashion. Finjan, 626 F.3d at 1204-05.
Motion to Dismiss
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. Umland v. Planco Fin.
Servs., 542 F.3d 59, 64 (3d Cir. 2008). "[C]ourts
use the same standard in ruling on a motion to dismiss a
counterclaim under Rule 12(b)(6) as they do in assessing a
claim in a complaint." Identix Pharms., Inc. v.
Gilead Sciences, Inc., C.A. No. 13-1987-LPS-CJB, 2014 WL
4222902, at *5 (D. Del. Aug. 25, 2014) (citing Tyco Fire
Prods. LP v. Victaulic Co., 777 F.Supp.2d 893, 898-99
(E.D. Pa. 2011)).
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.
determining whether dismissal is appropriate, the court must
take three steps. See 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)).
court's determination is not whether the non-moving party
"will ultimately prevail," but whether that party
is "entitled to offer evidence to support the
claims." United States ex rel. Wilkins v. United
Health Grp., Inc., 659 F.3d 295, 302 (3d Cir. 2011).
This "does not impose a probability requirement at the
pleading stage," but instead "simply calls for
enough facts to raise a reasonable expectation that discovery
will reveal evidence of [the necessary element]."
Phillips, 515 F.3d at 234 (quoting Twombly,
550 U.S. at 556). The court's analysis is a context
specific task requiring the court "to draw on its
judicial experience and common sense." Iqbal,
556 U.S. at 663-64.
Motion for summary judgment of non-patent
issues filed by Liqwd, Inc. and Olaplex LLC, D.I.
682; Report and Recommendation of the magistrate judge, D.I.
791, regarding plaintiffs' motion to dismiss, D.I.
move for summary judgment on defendants' claims for false
advertising, fraud, breach of contract, and false patent
marking. The magistrate judge recently addressed these
issues, D.I. 791, pursuant to motions to dismiss the
counterclaims of L'Oréal, D.I. 665, filed by the
plaintiffs. Defendants filed a Counterclaim against
Liqwd on January 11, 2019. D.I. 608. The issues in the motion
to dismiss deal with the Counterclaim filed by defendants.
The parties have objected to the report and recommendation.
D.I.'s 802 and 803. Because the issues in each motion are
virtually the same, the Court will address these filings
together. See D.I 636 ¶¶ 139-167.
Plaintiffs filed a motion to dismiss seven of
L'Oréal's eleven counterclaims on February 22,
Court's review of the R&R is governed by 28 U.S.C.
§ 636(b)(1)(C) and Federal Rule of Civil Procedure
72(b). Pursuant thereto, the district court “shall make
a de novo determination of those portions of the report or
specified proposed findings or recommendations to which
objection is made” and “may also receive further
evidence or recommit the matter to the magistrate judge with
instructions.” 28 U.S.C. § 636(b)(1)(C).
Similarly, Rule 72(b) requires de novo review of any
recommendation that is “dispositive of a claim or
defense of a party.” A Report and Recommendation
addressing a Rule 12 Motion to Dismiss is subject to de novo
review. See Fraunhofer-Gesellschaft Zur Forderung Der
Angewantdten Forschung E.V. v. Sirius XM Radio Inc.,
2018 WL 4027028, at *1 (D. Del. Aug. 23, 2018) (Bataillon, J)
(reviewing de novo a Magistrate's Report &
Recommendation addressing a Rule 12(b)(6) motion to dismiss).
important to note that the magistrate judge addressed these
issues from the perspective of a motion dismiss, based ...