TSI (USA) Inc. et al v. Creative Compounds, LLC
Filing
21
MEMORANDUM AND ORDER..IT IS HEREBY ORDERED that the defendants motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim for relief [Doc. #14] is granted. Signed by District Judge Carol E. Jackson on 10/22/14. (MRS)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
SOUTHEASTERN DIVISION
TSI (USA) INC. and TSI GROUP, LTD.,
)
)
)
)
)
)
)
)
)
Plaintiffs,
vs.
CREATIVE COMPOUNDS, LLC,
Defendant.
No. 1:14-CV-0017 (CEJ)
MEMORANDUM AND ORDER
This matter is before the Court on defendant’s motion to dismiss plaintiffs’
complaint for failure to state a claim for relief, pursuant to Fed. R. Civ. P. 12(b)(6),
or, in the alternative, for a more definite statement pursuant to Fed. R. Civ. P.
12(e). Plaintiff has filed a response in opposition, and the issues are fully briefed.
I.
Background
For purposes of this motion to dismiss, the Court accepts the following
allegations of the complaint as true:
Plaintiffs TSI (USA) Inc. and TSI Group, Ltd. (collectively, “TSI”) develop
and manufacture proprietary ingredients, intermediates, and finished dosage
products for humans and animals. Among TSI’s proprietary products is Adenosine
Triphosphate (ATP), which TSI supplies to others for inclusion in human products.
TSI is the exclusive licensee of U.S. Patent No. 7,671,038 (“the ‘038 Patent”) and
owner of U.S. Patent No. 7,629,329 (“the ‘329 Patent”).
The ‘038 Patent claims
methods of suppressing cachexia, improving skeletal muscle functions, and slowing
cancer progression in humans with HIV or AIDS through the administration of
adenosine triphosphate (ATP).
The ‘329 Patent claims methods of increasing
1
muscle mass and strength in mammals participating in strength training programs
through the administration of ATP. TSI licenses the patents to manufacturers and
distributors to incorporate TSI-sourced ATP (PEAK-ATP™) into dietary supplements
and nutritional products.
The inclusion of non-TSI sourced ATP in supplement
products marketed by TSI licensees for use in strength training programs would
infringe TSI’s patents when used by a consumer.
Defendant Creative Compounds, LLC is a manufacturer that supplies bulk raw
ingredients, including ATP, to companies who incorporate them into a variety of
nutritional products that are then sold to consumers.
Creative Compounds first
contacted TSI on January 5, 2010, seeking a source of ATP for a client.
TSI
informed Creative Compounds of its patent rights in PEAK-ATP™ as a method for
increasing muscle mass and strength and stated that “a license would be required
between TSI and Creative Compounds’ customers to avoid infringing TSI’s patents.”
Complaint, ¶ 25. Creative Compounds responded that it would try to obtain ATP
from an alternative source.
In July 2013, a TSI licensee for PEAK-ATP™ contacted Creative Compounds
to request a price quote on a number of ingredients that Creative Compounds
supplied. In its reply, Creative Compounds offered to sell non-TSI sourced ATP to
the licensee for inclusion in body building supplements at a discount rate. Based on
this incident, TSI believes that Creative Compounds also has sold ATP to other
supplement distributors for inclusion in body building supplements.
TSI brings this action claiming that Creative Compounds’ activities related to
ATP constitute inducement to infringe TSI’s patents pursuant to 35 U.S.C. § 271(b).
Creative Compounds asserts that the complaint fails to state a claim upon which
2
relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6) or, alternatively, that the
complaint is so vague such that a more definite statement is required.
II.
Legal Standard
The purpose of a motion to dismiss under Rule 12(b)(6) of the Federal Rules
of Civil Procedure is to test the legal sufficiency of the complaint.
The factual
allegations of a complaint are assumed true and construed in favor of the plaintiff,
“even if it strikes a savvy judge that actual proof of those facts is improbable.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007) (citing Swierkiewicz v.
Sorema N.A., 534 U.S. 506, 508 n.1 (2002)); Neitzke v. Williams, 490 U.S. 319,
327 (1989) (“Rule 12(b)(6) does not countenance . . . dismissals
based on a
judge’s disbelief of a complaint’s factual allegations”); Scheuer v. Rhodes, 416 U.S.
232, 236 (1974) (a well-pleaded complaint may proceed even if it appears “that a
recovery is very remote and unlikely”). The issue is not whether the plaintiff will
ultimately prevail, but whether the plaintiff is entitled to present evidence in
support of his claim. Id. A viable complaint must include “enough facts to state a
claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; see also id.
at 563 (stating the “no set of facts” language in Conley v. Gibson, 355 U.S. 41, 4546 (1957), “has earned its retirement.”). “Factual allegations must be enough to
raise a right to relief above the speculative level.” Id. at 555.
In the alternative, defendant seeks a more definite statement of the claims
set forth in the complaint.
Rule 12(e) of the Federal Rules of Civil Procedure
permits a party to move for a more definite statement if a pleading is so vague or
ambiguous that the party cannot reasonably prepare a response. Rule 8(a)(2) of
the Federal Rules of Civil Procedure, however, only requires a complaint to contain
3
“a short and plain statement of the claim showing that the pleader is entitled to
relief.”
Because of “liberal notice pleading and the availability of extensive
discovery, motions for a more definite statement are universally disfavored.”
Tinder v. Lewis Cnty. Nursing Home Dist., 207 F.Supp.2d 951, 959 (E.D.Mo.2001)
(collecting cases).
“A motion under Rule 12(e) is designed to strike at
unintelligibilty in a pleading rather than want of detail.”
Patterson v. ABS
Consulting, Inc., No. 4:08-CV-697, 2009 WL 248683, *2 (E.D.Mo. Feb.2, 2009).
The notice pleading standard “relies on liberal discovery rules and summary
judgment motions to define disputed facts and issues and to dispose of
unmeritorious claims.” Swierkiewicz, 534 U.S. at 512. Because a motion for more
definite statement is not a substitute for discovery, one cannot use it to test a case
or require the pleader to allege certain facts or retreat from certain allegations.
Tinder, 207 F.Supp.2d at 960. When, however, a “pleading fails to specify the
allegations in a manner that provides sufficient notice, a defendant can move for a
more definite under Rule 12(e) before responding. Swierkiewicz, 534 U.S. at 514.
III.
Discussion
35 U.S.C. § 271(b) provides that, “[w]hoever actively induces infringement
of a patent shall be liable as an infringer.”
To survive a motion to dismiss, a
complaint alleging induced infringement must contain facts plausibly showing that
the defendant “specifically intended [another] to infringe the [plaintiff's] patent and
knew that [the other's] acts constituted infringement.”
In re Bill of Lading
Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1339 (Fed. Cir. 2012);
see also Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 (2011)
(holding that § 271(b) requires both “knowledge of the existence of the patent that
4
is infringed” and “knowledge that the induced acts constitute patent infringement”).
Liability for inducing infringement under § 271(b) furthermore “must be predicated
on direct infringement . . . . [I]nducement liability may arise if, but only if, there is
direct infringement.” Limelight Networks, Inc. v. Akamai Technologies, Inc., 134 S.
Ct. 2111, 2117 (U.S. 2014) (quoting Aro Mfg. Co. v. Convertible Top Replacement
Co., 365 U.S. 336, 341 (1961)); see also In re Bill of Lading, 681 F.3d at 1333 (“It
is axiomatic that there can be no inducement or contributory infringement without
an underlying act of direct infringement.”) (internal quotation omitted). Therefore,
“[a] finding of inducement requires a threshold finding of direct infringement –
either a finding of specific instances of direct infringement or a finding that the
accused [actions] necessarily infringe.” Lucent Technologies, Inc. v. Gateway, Inc.,
580 F.3d 1301, 1322 (Fed. Cir. 2009) (quoting Ricoh Co., Ltd. v. Quanta Computer
Inc., 550 F.3d 1325, 1341 (Fed. Cir. 2008)).
The patents at issue here are method patents.
A method patent claims a
number of steps, and is not infringed unless all of those steps are carried out.
Limelight Networks, Inc., 134 S. Ct. at 2117; see also Joy Techs, Inc. v. Flakt, Inc.,
6 F.3d 770, 775 (Fed. Cir. 1993) (“A method claim is directly infringed only by one
practicing the patented method.”) (emphasis in original). Performance of all of the
patent’s steps furthermore must be attributable to one person, either directly or
vicariously. Limelight Networks, Inc., 134 S. Ct. at 2117. If performance of all the
claimed steps in the method patent cannot be attributed to a single person, direct
infringement has not been committed.
Id. at 2118.
In the absence of direct
infringement, a defendant “cannot be liable for inducing infringement that never
came to pass.” Id. Thus, to state a claim for indirect infringement, a complaint
5
must plead sufficient facts to enable a court to draw a reasonable inference that
direct infringement of the methods set forth in the patent has occurred. See In re
Bill of Lading, 681 F.3d at 1336-37 (stating that claims of induced infringement are
governed by the plausibility standard of Iqbal and Twombly). 1
Direct infringement may be proven by circumstantial evidence.
Vita-Mix
Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1326 (Fed. Cir. 2009) (finding the
accused product would necessary infringe under the circumstances).
However,
while the complaint “does not need detailed factual allegations, a plaintiff’s
obligation to provide the grounds of his entitlement to relief requires more than
labels and conclusions, and a formulaic recitation of the elements of a cause of
action will not do.” Twombly, 550 U.S. at 555 (internal quotations omitted). Here,
plaintiffs failed to allege sufficient facts to support a reasonable inference of
underlying predicate acts that constitute direct infringement.
The allegations at
most support an inference of an intent to induce infringement. However, “[t]here is
no such thing as attempted patent infringement, so if there is no infringement,
there can be no indirect liability for infringement.”
Akamai Technologies, Inc. v.
Limelight Networks, Inc., 692 F.3d 1301, 1308 (Fed. Cir. 2012), rev'd on other
grounds, 134 S. Ct. 2111 (U.S. 2014).
TSI does not allege an actual sale of ATP to one of its licensees, nor does it
allege that non-TSI sourced ATP was actually used by a licensee or end user thereof
to perform any of the methods described in its patents.
The complaint contains
only a conclusory statement that based on a single instance in which an offer to sell
1
A motion to dismiss for failure to state a claim is reviewed under the law of the regional circuit as a purely
procedural issue not pertaining to patent law. In re Bill of Lading, 681 F.3d at 1331; C&F Packing Co., Inc. v. IBP,
Inc., 224 F.3d 1296, 1306 (Fed. Cir. 2000); McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1355–56 (Fed. Cir. 2007).
6
ATP to a TSI licensee was made, it is reasonable to infer that defendant has sold
ATP to other supplement distributors for inclusion in body building supplements that
when used by an end user would infringe TSI’s patents. This allegation is
insufficient to establish a reasonable inference of direct infringement.
See
Parkhurst v. Tabor, 569 F.3d 861, 865 (8th Cir. 2009) (“To survive a motion to
dismiss, a complaint must contain factual allegations sufficient ‘to raise a right to
relief above the speculative level.’”) (quoting Twombly, 550 U.S. at 555).
Arguing against dismissal, TSI contends that conduct which qualifies as
actionable inducement under § 271(b) is broad.
However, no case cited by TSI
waives the necessity of pleading underlying direct infringement for a § 271(b)
claim. See Akamai Technologies, Inc., 692 F.3d at 1308 (stating that liability arises
under § 271(b) when an inducer “causes, urges, encourages, or aids the infringing
conduct and [] the induced conduct is [in fact] carried out”) (emphasis added)
(internal quotation omitted); In re Bill of Lading, 681 F.3d at 1336 (stating that to
sufficiently state a claim for indirect infringement, “a plaintiff need not identify a
specific direct infringer if it pleads facts sufficient to allow an inference that at least
one direct infringer exists.”) (emphasis added).
TSI fails to create a reasonable
inference that the requisite underlying infringement occurred.
This necessarily
means its claim of induced infringement also fails, because “[a]bsent direct
infringement of the claims of a patent, there can be neither contributory
infringement nor inducement of infringement.”
Met-Coil Sys. Corp. v. Korners
Unlimited, Inc., 803 F.2d 684, 687 (Fed. Cir. 1986).
7
Because the Court concludes that the complaint fails to state a claim for
relief, it is unnecessary to consider the defendant’s alternative request for a more
definite statement.
For the reasons set forth above,
***
IT IS HEREBY ORDERED that the defendant’s motion to dismiss pursuant
to Fed. R. Civ. P. 12(b)(6) for failure to state a claim for relief [Doc. #14] is
granted.
____________________________
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 22nd day of October, 2014.
8
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?