Longhorn Vaccines & Diagnostics, LLC v. Spectrum Solutions LLC

• Decision Date: 23 September 2021
• Docket Number: Case No. 2:20-cv-00827-DBB-JCB
• Parties: LONGHORN VACCINES & DIAGNOSTICS, LLC, a Delaware limited liability company, Plaintiff, v. SPECTRUM SOLUTIONS LLC, a Delaware limited liability company, Defendant.
• Court: U.S. District Court — District of Utah

564 F.Supp.3d 1126

LONGHORN VACCINES & DIAGNOSTICS, LLC, a Delaware limited liability company, Plaintiff,

v.SPECTRUM SOLUTIONS LLC, a Delaware limited liability company, Defendant.

Case No. 2:20-cv-00827-DBB-JCB

United States District Court, D. Utah.

Signed September 23, 2021

Elliot J. Williams, Pro Hac Vice, Stoel Rives LLP, Portland, OR, Kenneth B. Black, Wesley F. Harward, Stoel Rives, Salt Lake City, UT, Michelle Safro, Remenick PLLC, Washington, DC, for Plaintiff.

Ali S. Razai, Pro Hac Vice, Joseph F. Jennings, Paul N. Conover, William O. Adams, Knobbe Martens Olsen & Bear LLP, Irvine, CA, D. Craig Parry, Parr Brown Gee & Loveless, Chad S. Pehrson, Kunzler Bean & Adamson, Salt Lake City, UT, David G. Kim, Pro Hac Vice, Knobbe Martens Olson & Bear LLP, Los Angeles, CA, for Defendant.

MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION [27] TO DISMISS

David Barlow, United States District Judge

Plaintiff Longhorn Vaccines and Diagnostics, LLC (Longhorn) alleges that Defendant Spectrum Solutions LLC (Spectrum) has infringed, and continues to infringe, six of its patents.¹ It seeks damages for direct and indirect infringement as well as enhanced damages based on its claim that Spectrum's infringement was, and is, willful.²

Before the court is Spectrum's motion to dismiss.³ Spectrum asks the court to dismiss Longhorn's indirect infringement and willful infringement claims with prejudice under Federal Rule of Civil Procedure 12(b)(6).⁴ Longhorn opposes⁵ the motion, and Spectrum has replied in support.⁶

Having considered the briefing, the pleadings and related exhibits, and relevant law, the court concludes the motion may be resolved without oral argument.⁷ For the following reasons the Motion to Dismiss is GRANTED IN PART and DENIED IN PART.

BACKGROUND

Longhorn is a limited liability company based in Maryland that develops, manufactures, and sells chemicals and solutions used to collect and preserve biological samples for testing.⁸ It owns six patents (the "Asserted Patents") directed to chemical compositions containing various amounts of chaotropes, detergents and/or surfactants, reducing agents, chelators, and buffers as well as methods for using them to collect and preserve biological samples to test for infectious pathogens.⁹ The Asserted Patents include:

• U.S. Patent No. 8,084,443 (filed Dec. 27, 2011) ( ‘443 Patent),

• U.S. Patent No. 8,293,467 (filed Oct. 23, 2012) ( ‘467 Patent),

• U.S. Patent No. 8,415,330 (filed Apr. 9, 2013) ( ‘330 Patent),

• U.S. Patent No. 8,669,240 (filed Mar. 11, 2014) ( ‘240 Patent),

• U.S. Patent No. 9,212,399 (filed Dec. 15, 2015) ( ‘399 Patent), and

• U.S. Patent No. 9,683,256 (filed June 20, 2017) ( ‘256 Patent).¹⁰

Longhorn has developed several sample collection products based on these patents, including its PrimeStore® and PrimeExtract™ products.¹¹ When a biological sample is added to a product containing one of Longhorn's patented chemical compositions, the composition neutralizes possible infectious pathogens in the sample, lyses cells to release RNA and DNA from any biological specimens it contains, protects the released genetic material from degradation, and prolongs the length of time the sample may be stored or transported before its genetic material is destroyed or compromised.¹²

Spectrum is a limited liability company based in Utah that also develops, manufactures, and sells aqueous chemical compositions used to collect, transport, and store genetic and other biological samples for testing.¹³ One of the biological sample collection systems Spectrum produces and sells, the SDNA-1000, contains a chemical composition similar to the compositions disclosed in the Asserted Patents.¹⁴ Spectrum advertises that the SDNA-1000's chemical composition is patented and capable of protecting DNA and viral RNA transcripts for testing.¹⁵ Longhorn asserts that the composition used in the SDNA-1000 is disclosed in one of two patents owned by Spectrum: U.S. Patent No. 10,174,362 (filed Jan. 8, 2019) ( ‘362 Patent) and U.S. Patent No. 10,774,368 (filed Sept. 15, 2020) ( ‘368 Patent).¹⁶

Longhorn filed its First Amended Complaint (FAC) on January 8, 2021, alleging that Spectrum's production and sale of the SDNA-1000 directly and indirectly infringes at least one claim in each of the Asserted Patents.¹⁷ Longhorn alleges that Spectrum has known of the Asserted Patents at least since April 11, 2018, and that it has willfully infringed them.¹⁸ Spectrum moved to dismiss Longhorn's indirect infringement and willful infringement claims for failure to state a claim on January 22, 2021.¹⁹

STANDARD OF REVIEW

Under Rule 12(b)(6), dismissal is required when the complaint, standing alone, is insufficient to state a claim upon which relief may be granted.²⁰ To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain "sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ "²¹ Generally, to be facially plausible, each claim must be supported by well-pleaded facts allowing the court to "draw the reasonable inference that the defendant is liable for the misconduct alleged."²² There must be "more than a sheer possibility that a defendant has acted unlawfully."²³ A claim supported only by "labels and conclusions," "a formulaic recitation of the elements," or "naked assertions devoid of further factual enhancement" is deficient and subject to dismissal.²⁴ In assessing whether a claim is plausible, courts must "draw on [their] judicial experience and common sense."²⁵

ANALYSIS

Longhorn claims that Spectrum is liable for patent infringement in three ways. First, it claims that Spectrum's SDNA-1000 directly infringes the Asserted Patents under 35 U.S.C. § 271(a).²⁶ To state a direct infringement claim, Longhorn must plausibly allege either that the SDNA-1000 infringes the Asserted Patents literally—that it contains elements identical to all the limitations of the allegedly infringed patents’ claims²⁷ —or under the doctrine of equivalents—that it "performs substantially the same function in substantially the same way to obtain the same result."²⁸

Second, Longhorn claims that Spectrum is liable for infringement under § 271(b)²⁹ for actively inducing its customers to infringe the Asserted Patents by instructing them to use the SDNA-1000 in a way that directly infringes the Asserted Patents.³⁰ To state an induced infringement claim, Longhorn must plausibly allege (1) that Spectrum's customers’ use of the SDNA-1000 constitutes direct infringement and (2) that Spectrum knew that it was inducing its customers to infringe the Asserted Patents and specifically intended to do so.³¹ Imbedded in these latter two elements is the requirement of establishing that Spectrum knew of the Asserted Patents when it induced its customers to infringe them.³²

Third, Longhorn claims that Spectrum is liable for contributory infringement under § 271(c)³³ because Spectrum's customers infringe the Asserted Patents when they use the SDNA-1000.³⁴ To state a claim of contributory infringement, Longhorn must plausibly allege that (1) a third party's use of the SDNA-1000 constitutes direct infringement, (2) Spectrum had knowledge of the Asserted Patents, (3) the SDNA-1000 has no substantial non-infringing uses, and (4) the infringing components of the SDNA-1000 constitute a material part of each of the Asserted Patents.³⁵

In addition to claiming direct, induced, and contributory infringement, Longhorn claims that Spectrum's infringement, and role in causing others to infringe, was willful.³⁶ When infringement is willful, the court may "increase damages up to three times the amount found or assessed" for the infringement.³⁷ To state a claim of willfulness, Longhorn must plausibly allege that (1) Spectrum had knowledge of the Asserted Patents at the time of infringement and (2) deliberately infringed them.³⁸

Spectrum asks the court to dismiss Longhorn's indirect infringement—induced and contributory infringement—and willful infringement claims.³⁹ Spectrum first argues that each of those claims fails because Longhorn's allegation that Spectrum had actual knowledge of the Asserted Patents before this lawsuit lacks adequate factual support.⁴⁰ Next, Spectrum argues that Longhorn's contributory infringement claims independently fail because its allegation that the SDNA-1000 has no substantial non-infringing use is conclusory and unsupported.⁴¹ Finally, Spectrum argues that even if Longhorn's direct and indirect infringement claims are plausible, there is no basis for inferring that the infringement was willful because the FAC lacks allegations that Spectrum engaged in egregious conduct.⁴²

I. Longhorn has Plausibly Alleged that Spectrum had Pre-Filing Knowledge of the ‘443 Patent, ‘330 Patent, ‘240 Patent, and ‘399 Patent, but only Post-Filing Knowledge of the ‘467 Patent and ‘256 Patent

In the FAC, Longhorn makes three factual assertions in support of its allegation that Spectrum had knowledge of the Asserted Patents before this lawsuit.⁴³ First, Longhorn alleges that Spectrum knew of the patents by April 11, 2018, when it cited "one or more" of them in an Information Disclosure Statement Form (IDS) filed during the prosecution of its ‘362 Patent.⁴⁴ Longhorn submitted an exhibit containing that IDS, along with three others in which Spectrum cited patents owned by Longhorn, with its response to Spectrum's motion.⁴⁵ Next, Longhorn alleges that Spectrum knew of the Asserted Patents’ existence due to the patent markings on Longhorn's products.⁴⁶ Finally, Longhorn alleges that Spectrum gained knowledge of the Asserted Patents at least by June 30, 2020, when an investment company with connections to Spectrum, DW Healthcare Partners, contacted Longhorn to inquire about its products and the "potential for [a] mutually beneficial partnership" between Longhorn and Spectrum.⁴⁷

Spectrum argues that these allegations, whether considered on their own or together, fail to...