C T E Global, Inc. v. Novozymes A/S et al

Filing 41

MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 5/14/2015:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

CTE GLOBAL, INC.,
Plaintiff,

Case No. 15 C 181

v.

Judge Harry D. Leinenweber

NOVOZYMES A/S and NOVOZYMES
NORTH AMERICA, INC.,
Defendants.

MEMORANDUM OPINION AND ORDER
Before the Court is Defendants Novozymes A/S and Novozymes
North

America,

Inc.’s

(collectively,

“Novozymes”)

Motion

to

Dismiss or, in the Alternative, Stay Plaintiff C T E Global Inc.’s
(“CTE”) Declaratory

Judgment

Complaint

[ECF

No.

23].

For

the

reasons stated herein, the Motion is granted to the extent that it
seeks to stay the case.
I.

BACKGROUND

On June 23, 2011, in a separate proceeding before this Court
captioned Novozymes A/S v. Central Trading Enterprises, Inc., No.
11 C 4276 (the “Show Cause Proceeding”), Novozymes filed a twocount Complaint alleging that CTE infringed two of its patents for
glucoamylase products – U.S. Patent Nos. 6,255,084 and 7,060,468
(collectively,

the

“Asserted

Novozymes

CTE

entered

and

Patents”).
into

a

On

August

Settlement

20,

Agreement

2012,
(the

“Settlement

Agreement”)

in

which

CTE

admitted

infringement

waived its invalidity and non-infringement defenses.
Agreement,

Ex.

1-A

to

Novozymes

Mem.

Dismiss, ¶ 3.2.1 (filed under seal).)
Agreement,

the

judgment,

(1)

Court

entered

granting

the

judgment

in

Support

(Settlement
of

Mot.

to

Following the Settlement

parties’

in

and

favor

stipulated

of

Novozymes

consent
on

both

counts of its Complaint, and (2) permanently enjoining CTE from
selling

or

Asserted

offering

Patents

to

in

sell

any

any

way

—

products

that

infringed

specifically,

products

the
that

contained a glucoamylase enzyme with the same amino acid sequence
recited in the Asserted Patents (the “Enjoined Products”).
11 C 4276, ECF No. 48, ¶¶ 3, 8.)

(No.

Novozymes claims that less than

two years later, CTE violated the injunction.

Accordingly, on

December 15, 2014, Novozymes moved for an Order to Show Cause why
CTE should not be held in contempt.
In

support

product

of

its

sample

it

Motion,

(No. 11 C 4276, ECF No. 54.)

Novozymes

obtained

from

a

presented
CTE

evidence

customer

that

(the

a

“L209+

Product”) contained the same amino acid sequence recited in the
Asserted Patents.
Novozymes

subsequently

moved

for

limited

third-party

discovery to confirm that the product sample was, in fact, a CTE
product.
purposes,

(No. 11 C 4276, ECF No. 64, ¶¶ 4–5.)
Novozymes

requested

from

CTE

For testing

“representative

2

liter

samples of all its glucoamylase products in its possession.” (Id.

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¶ 3.)

In early February, Novozymes obtained the discovery it

sought in support of the show cause motion — samples from CTE’s
warehouse “representing CTE’s complete glucoamylase product line.”
(Novozymes Supplemental Mem. in Support of Mot. to Dismiss, at 3
(filed

under

seal).)

Novozymes

states

that

testing

results

obtained at the end of March “showed that at least one sample from
each of the CTE Glucoamylase Products tested contained an enzyme
with an amino acid sequence identical to the prohibited amino acid
sequence” in the Asserted Patents. (Id. at 4.)

With new evidence

to stand on, Novozymes filed a supplemental memorandum in support
of its show cause motion, arguing that CTE’s contempt extended to
its

entire

glucoamylase

product

line.

(Novozymes

Supplemental

Mem. in Support of Mot. for Order to Show Cause, No. 11 C 4276
(filed under seal).)

At present, the parties are in the process

of briefing the show cause motion.
CTE initiated this action on January 9, 2015 when it filed
its

Complaint

seeking

a

declaration

infringement as to the Asserted Patents.

of

invalidity

(ECF No. 1.)

and

non-

According

to CTE, Novozymes’ third-party discovery request created a new
case or controversy “with respect to CTE’s entire glucoamylase
business,” not just those products encompassed by the Settlement
Agreement.

(Id. ¶ 26.)

CTE currently offers for sale three

products containing a glucoamylase enzyme:
GLUCOAMYL

L209,

and

GLUCOAMYL

L561

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the L209+ Product,

(collectively,

the

“CTE

Glucoamylase Products”).

CTE contends that each of these products

is “materially different in composition and function than those
GLUCOAMYL

L706+

and

GLUCOAMYL

LG20

products

that

the

parties

agreed were infringing in the prior settlement” and therefore does
not infringe the Asserted Patents.

(Id. ¶ 19.)

CTE moved for summary judgment on February 9, 2015.
9.)

(ECF No.

On February 13, 2015, Novozymes filed the instant Motion to

Dismiss

CTE’s

Complaint,

pending

resolution

of

or

the

Alternatively,

show

cause

Stay

motion.

this
(ECF

Matter
No. 23.)

Summary judgment briefing was stayed pending resolution of this
Motion.

(ECF No. 28.)
II.

ANALYSIS

Novozymes asserts that dismissal is proper for three reasons:
(1) the Court lacks subject matter jurisdiction to hear the case,
(2)

CTE’s

precluded

claims
from

are

barred

asserting

contractual estoppel.

by

res

judicata,

invalidity

under

and
the

(3)

CTE

doctrine

is
of

Alternatively, Novozymes asks this Court to

stay this action until the show cause motion is resolved.
The Court begins by examining what Novozymes must prove to
enforce its injunction in the Show Cause Proceeding.

Under TiVo,

Novozymes must prove, by clear and convincing evidence, that (1)
the

newly

accused

CTE

“colorably

different”

previously

found

to

Glucoamylase
from

the

infringe,

and

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Products

Enjoined
(2)

are

not

Products

that

the

more
that

newly

than
were

accused

products “actually infringe.”

TiVo Inc. v. EchoStar Corp., 646

F.3d 869, 882 (Fed. Cir. 2011).

Novozymes argues both elements

are met because the amino acid sequences in the CTE Glucoamylase
Products and the Enjoined Products are identical.

(See, Novozymes

Supplemental Mem. in Support of Order to Show Cause, No. 11 C 4276
(filed under seal).)
Proof that there is no colorable difference between the CTE
Glucoamylase Products and the Enjoined Products is critical to
Novozymes’ success in the Show Cause Proceeding.

Here, it is

equally important to all three of Novozymes’ arguments in support
of

dismissal.

First,

the

issue

of

whether

a

“colorable

difference” exists is critical to subject matter jurisdiction. If
the newly accused CTE Glucoamylase Products and Enjoined Products
are effectively the same, there is no new “case or controversy”
apart from the previously filed action.
In

moving

to

dismiss

under

Rule

12(b)(1),

Novozymes

challenges the factual basis for jurisdiction — not the facial
sufficiency of CTE’s Complaint.

When a defendant in a declaratory

judgment action challenges jurisdiction in fact, the Court may
look

beyond

Complaint.

the

jurisdictional

allegations

contained

in

the

Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d

440, 444 (7th Cir. 2009).

“[I]f the facts place the district

court on notice that the jurisdictional allegation probably is

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false, the court is duty-bound to demand proof of its truth.”

Id.

(citation and internal quotations omitted).
CTE argues that the Court is bound by Federal Circuit law
when confronting a jurisdictional challenge in a patent case. (CTE
Opp., ECF No. 33, at 2 n.1.)

However, courts within this district

routinely apply Seventh Circuit law in setting the standard for a
12(b)(1) motion, even in patent cases.

See, e.g., Sloan Valve Co.

v. Zurn Indus., Inc., 712 F.Supp.2d 743, 748 (N.D. Ill. 2010).
Even if this were not the case, the Federal Circuit applies the
same standard.

See, Panavise Prods., Inc., v. Nat’l Prods., Inc.,

306 F.App’x. 570, 572 (Fed. Cir. 2009) (explaining that when a
defendant in a declaratory judgment action challenges jurisdiction
in fact, “the allegations in the complaint are not controlling”)
(citation and internal quotations omitted).
Here,

Novozymes

argues

that

it

has

provided

clear

and

convincing evidence that the CTE Glucoamylase Products are not
colorably different from the Enjoined Products, negating any “new”
case or controversy.

First, Novozymes has provided evidence that

a customer sample of the L209+ Product contained the glucoamylase
enzyme protected in the Asserted Patents. Second, Novozymes has
offered

additional

Glucoamylase

Products

test

results

contain

the

confirming

that

protected

enzyme.

all

CTE

In

its

opposition brief, CTE offers no countervailing evidence that the
CTE

Glucoamylase

Products

are

materially

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different

than

the

Enjoined Products.
there

has

not

Instead of tackling the issue, CTE notes that

yet

been

a

finding

as

to

whether

the

CTE

Glucoamylase Products are or are not colorably different from the
Enjoined

Products.

CTE

seems

to

allude

to

the

Show

Cause

Proceeding, stating that it “intends to show that Novozymes is
unable to carry its heavy burden of proof on this issue.”
Opp. to Mot. to Dismiss, ECF No. 33, at 5.)

(CTE

CTE urges the Court

to allow its Complaint to remain in place pending a decision in
the Show Cause Proceeding.

(Id. at 6.)

Although CTE has not rebutted Novozymes’ factual challenge to
jurisdiction with any evidence of its own, it has given the Court
sufficient reason to stay this action pending resolution of the
Show Cause Proceeding.

The parties are currently in the process

of briefing the Show Cause Motion, which will fully test whether
CTE

meets

the

two-prong

test

set

forth

in

TiVo.

Instead

of

dismissing this action now for lack of jurisdiction, the Court
will stay this action until the Show Cause Motion is resolved, and
both parties have fully addressed the issue of whether there is a
colorable

difference

between

newly

accused

CTE

Glucoamylase

Products and the Enjoined Products.
Novozymes’

res

judicata

and

contractual

estoppel

claims

similarly turn on its proof that there is no colorable difference
between the CTE Glucoamylase Products and the Enjoined Products.
To invoke the doctrine of res judicata, Novozymes must show that

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the CTE Glucoamylase Products are “essentially the same” as the
Enjoined Products.
480

(Fed.

require

Cir.

Novozymes

See, Foster v. Hallco Mfg. Co., 947 F.2d 469,

1991).
to

Likewise,
prove

that

contractual

CTE

violated

estoppel
the

would

Settlement

Agreement by bringing an invalidity challenge in a case involving
“materially identical” infringing products.

(Novozymes Mem. in

Support of Mot. to Dismiss, at 11 (filed under seal); CTE Opp. to
Mot.

to

Dismiss,

ECF

No.

33,

at

6.)

Because

this

issue

is

currently pending resolution in the Show Cause Proceeding, the
Court declines to dismiss the case at this time.
III.

CONCLUSION

The parties agree that whether dismissal is appropriate in
this case hinges on whether a “colorable difference” is or is not
established in the Show Cause Proceeding. Therefore, Novozymes’
Motion [ECF No. 23], is granted to the extent that it seeks to
stay this action until a ruling is issued in that proceeding.

If

Novozymes prevails on its Show Cause Motion, it may renew its
Motion to Dismiss in this action.
IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
Dated:5/14/2015

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