Nalco Co. v. Chem-Mod, LLC
| Decision Date | 27 February 2018 |
| Docket Number | 2017-1036 |
| Citation | 883 F.3d 1337 |
| Parties | NALCO COMPANY, Plaintiff–Appellant v. CHEM–MOD, LLC, Arthur J. Gallagher & Co., Gallagher Clean Energy, LLC., AJG Coal, Inc., AJG Iowa Refined Coal, LLC, Mansfield Refined Coal LLC, Cope Refined Coal LLC, Cross Refined Coal LLC, Jefferies Refined Coal, LLC, Joppa Refined Coal, LLC, Thomas Hill Refined Coal LLC, Wagner Coaltech LLC, Walter Scott Refined Coal LLC, Winyah Refined Coal LLC, Bedford Mix LLC, Brandon Shores Coaltech LLC, Canadys Refined Coal, LLC, Coronado Refined Coal LLC, FRM Trona Fuels LLC, FRM Virginia Fuels LLC, George Neal North Refined Coal LLC, George Neal Refined Coal LLC, Louisa Refined Coal, LLC, Refined Fuels of Illinois, LLC, Belle River Fuels Company, LLC, Defendants–Appellees |
| Court | U.S. Court of Appeals — Federal Circuit |
William Bryan Farney, Farney Daniels, PC, Georgetown, TX, argued for plaintiff-appellant. Also represented by Cassandra Klingman.
Richard Mark, Gibson, Dunn & Crutcher LLP, New York, NY, argued for defendants-appellees. Also represented by Joseph Evall, Paul J. Kremer ; Steven Eric Feldman, Sherry Lee Rollo, Hahn Loeser & Parks, LLP, Chicago, IL.
Before Moore, Schall, and O'Malley, Circuit Judges.
Nalco Company ("Nalco") appeals from the district court's decision dismissing its Fourth Amended Complaint ("4AC") with prejudice for failure to state a claim upon which relief can be granted. The 4AC alleged infringement of U.S. Patent No. 6,808,692 ("the '692 patent") by Appellees Chem–Mod, LLC, Arthur J. Gallagher & Co., Gallagher Clean Energy, LLC, AJG Coal, Inc., and various Refined Coal LLCs (collectively, "Defendants"). Nalco Co. v. Chem–Mod, LLC (Nalco 4AC Order ), No. 14-cv-2510, 2016 WL 1594966 (N.D. Ill. Apr. 20, 2016), reconsideration denied , Nalco Co. v. Chem–Mod, LLC (Nalco 4AC Reconsideration Order ), No. 14-cv-2510, 2016 WL 4798950 (N.D. Ill. Sept. 14, 2016). We conclude that the district court erred in dismissing Nalco's direct infringement claims and, thus, reverse the district court's order as to those claims. We also reverse the district court's dismissal of Nalco's doctrine of equivalents, indirect, and willful infringement claims. We remand for further proceedings in this matter.
Nalco is the exclusive licensee of the '692 patent, titled "Enhanced Mercury Control in Coal–Fired Power Plants," which describes a method for the removal of elemental mercury, a toxic pollutant, from the flue gas created by combustion in coal-fired power plants. '692 patent, Abstract. Previous attempts to filter mercury from coal combustion flue gas failed due to lack of commercial viability or excessive expense. Id. , col. 1, l. 29–col. 3, l. 51.
The methods claimed in the '692 patent solve this problem by reacting halogens, such as molecular chlorine (Cl2) or molecular bromine (Br2), with elemental mercury (Hg) in flue gas to form mercuric halides (HgCl2or HgBr2), which precipitate into solid particles that can be filtered from the flue gas more easily. Molecular halides, however, cannot be injected into the flue gas on their own due to their corrosive properties. The '692 patent thus claims the injection of a halide precursor—a molecule that reacts to create an elemental halide—into the flue gas. The halide precursor is thermolabile, meaning that it reacts in the heat of the flue gas to create a molecular halide. The '692 patent explains that the preferred location to inject the halide precursor is in the combustion zone of the furnace. Id. , col. 4, l. 66–col. 5, l. 27.
Independent claim 1 recites:
J.A 27, col. 2, ll. 42–51. In a preferred embodiment described in the '692 patent, a source of molecular halide (such as a bromine precursor) is injected directly into a region of the flow path of the flue gas downstream from the combustion zone. '692 patent, col. 3, l. 66–col. 4, l. 11.
Alstom Power, a non-party to this action, requested inter partes reexamination of the '692 patent ; the Patent and Trademark Office ("PTO") initiated a proceeding in 2009. The Patent Trial and Appeal Board ("the Board") affirmed the validity of the asserted claims of the '692 patent, as amended, and the PTO issued a reexamination certificate on April 7, 2014.
Nalco filed five successive complaints against various Defendants1 in this proceeding, claiming that Defendants' Chem–Mod process operates in the same manner as the process encompassed by claim 1 of the '692 patent. The district court dismissed Nalco's complaints on three separate occasions. Nalco Co. v. Chem–Mod, LLC (Nalco 1AC Order ), No. 14-cv-2510, 2015 WL 507921 (N.D. Ill. Feb. 4, 2015) ( First Amended Complaint ("1AC") without prejudice); Nalco Co. v. Chem–Mod, LLC (Nalco 3AC Order ), No. 14-cv-2510, 2015 WL 6122811 (N.D. Ill. Oct. 15, 2015) ( Third Amended Complaint ("3AC") without prejudice); Nalco 4AC Order , 2016 WL 1594966 ( 4AC with prejudice), reconsideration denied , Nalco 4AC Reconsideration Order , 2016 WL 4798950. In these orders, the district court concluded that each of Nalco's complaints suffered from factual deficiencies that precluded relief, as detailed further below.
Nalco filed its first complaint against Chem–Mod on April 8, 2014, one day after the PTO issued the reexamination certificate for the '692 patent. Nalco's Compl. for Patent Infringement, Nalco Co. v. Chem–Mod, LLC , No. 14-cv-2510 (N.D. Ill. Apr. 8, 2014), ECF No. 1. Nalco amended its complaint to add A.J. Gallagher and Gallagher Clean Energy, LLC as Defendants. Nalco's First Am. Compl. for Patent Infringement at 1, Nalco Co. v. Chem–Mod, LLC , No. 14-cv-2510 (N.D. Ill. July 25, 2014), ECF No. 14.
The 1AC alleged that these Defendants directly and indirectly infringed the '692 patent through the use and licensing of the Chem–Mod Solution in the United States.
Id. at 3–6. According to the 1AC, the Chem–Mod Solution "comprise[d] dual injection of two additives [molecular bromine precursors MerSorb and S–Sorb] on the coal feed belts of coal burning power generation stations before the coal is fed into a coal combustion process." Id. at 3. The 1AC alleged that use of the Chem–Mod Solution practices all steps of at least claim 1 of the '692 patent because it "is a method of treating coal combustion flue gas containing mercury, which requires injecting a bromide compound that is a thermolabile molecular bromine precursor into a flue gas to effect oxidation of elemental mercury to a mercuric bromide." Id. Nalco asserted that the only difference between its patented method and Defendants' Chem–Mod Process is that the Chem–Mod Process injects MerSorb or S–Sorb in a different area of the plant than described in a preferred embodiment of the '692 patent.
The district court granted Defendants' motion to dismiss the 1AC under Federal Rule of Civil Procedure 12(b)(6), concluding that the 1AC could not support a finding of direct infringement because the '692 patent"differs from the Chem–Mod™ Solution in both when it is applied (after the coal is burned vs. before the coal is burned) and how it is applied (injected into the flue gas vs. mixed with cold coal)." Nalco 1AC Order , at *3. The district court also dismissed Nalco's indirect infringement claims based on failure to state a claim for direct infringement. Id.
In its Second Amended Complaint ("2AC"), Nalco attempted to address what it believed was the district court's misunderstanding of what the '692 patent claimed. Nalco pled that Defendants infringed the '692 patent based on use of the Chem–Mod Solution, by mixing MerSorb or S–Sorb with coal and then injecting this mixture (the "Chem–Mod Solution Mixture") into flue gas to form the mercuric bromide compound. Nalco's Second Am. Compl. for Patent Infringement at 7–8, Nalco Co. v. Chem–Mod, LLC , No. 14-cv-2510 (N.D. Ill. Mar. 3, 2015), ECF No. 64. Nalco asserted that the claims of the '692 patent do not restrict when, where, or how the "injecting" step is performed. Id. at 5–6. Nalco explicitly incorporated infringement contentions into this pleading. Id. at 10.
The 2AC includes as Defendants AJG Coal, Inc. and 34 John Doe limited liability company parties, unnamed coal refinery facilities that allegedly made coal using the Chem–Mod Solution and sold it to power plant operators. Id. at 11. Nalco also added allegations that Defendants acted in concert, under the direction and control of A.J. Gallagher, to earn Section 45 tax credits from the sale of refined coal. Id. at 10–16. Section 45 tax credits are offered for the sale of refined coal to an unrelated person for the production of steam in a coal-fired power plant. Id. at 11, 13. Nalco alleged that Defendant A.J. Gallagher formed wholly-owned subsidiary Defendants Gallagher Clean Energy and AJG Coal, controlled and directed the actions of Defendant Chem–Mod, and formed each of the Defendant Refined Coal LLCs solely to use the Chem–Mod Solution and to induce operators of coal-fired power plants to use the Chem–Mod Solution to obtain Section 45 tax credits. Id. at 11.
Defendants moved to dismiss the 2AC. In response, Nalco amended its complaint to replace the John Doe coal refineries with the 21 Refined Coal LLCs that allegedly operate them. Nalco's Third Am. Compl. for Patent Infringement at 2, 4–11, Nalco Co. v. Chem–Mod, LLC , No. 14-cv-2510 (N.D. Ill. Apr. 24, 2015), ECF No. 75. Nalco did not alter its allegations as to the relationships between the Defendant entities or their allegedly infringing actions. The...
To continue reading
Request your trial
-
Ocado Innovation, Ltd. v. AutoStore AS
...on an element-by-element basis." Bot M8 LLC v. Sony Corp. of Am., 4 F.4th 1342, 1352 (Fed. Cir. 2021) (citing Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337, 1350 (Fed. Cir. 2018)) ("[T]he Federal Rules of Civil Procedure do not require a plaintiff to plead facts establishing that each element o......
- United States v. St. Hubert
-
Grp. One v. GTE GmbH
...purposes of contributory infringement, the inquiry focuses on whether the accused products can be used for purposes other than infringement.” Id. (quoting In re Bill of Lading, 681 F.3d at With respect to direct infringement, Plaintiff alleges that it owns all rights to the '307 and '341 Pa......
-
Bos. Scientific Corp. v. Nevro Corp.
...complaint must place the potential infringer on notice of what activity is being accused of infringement." Nalco Co. v. Chem–Mod, LLC , 883 F.3d 1337, 1350 (Fed. Cir. 2018) (internal quotation marks, alterations, and citation omitted). To provide notice, a plaintiff must generally do more t......
-
An Unacceptable Threat to Startups and Innovators from Our Patent System
...January 16, 2012 (the 30-month date), because January 16, 2012, was a federal holiday. Pleading Requirement Nalco Co. v. Chem-Mod, LLC , 883 F.3d 1337, 125 U.S.P.Q.2d 1832 (Fed. Cir. 2018). The Federal Circuit reversed the dismissal of Nalco’s fourth amended complaint alleging direct infrin......
-
An Interview with Rob Law
...January 16, 2012 (the 30-month date), because January 16, 2012, was a federal holiday. Pleading Requirement Nalco Co. v. Chem-Mod, LLC , 883 F.3d 1337, 125 U.S.P.Q.2d 1832 (Fed. Cir. 2018). The Federal Circuit reversed the dismissal of Nalco’s fourth amended complaint alleging direct infrin......
-
Chapter §17.02 Inducing Infringement Under §271(b)
...past the line 'between possibility and plausibility.' " Bill of Lading, 681 F.3d at 1341–1342 (quoting Twombly, 550 U.S. at 557).[279] 883 F.3d 1337 (Fed. Cir. Feb. 27, 2018) (O'Malley, J.). Nalco is also detailed supra §14.05[E][2].[280] The Iqbal/Twombly pleading standard is analyzed in g......
-
Starting Up Right: Common Pitfalls Startups Can Avoid in Copyright Law
...January 16, 2012 (the 30-month date), because January 16, 2012, was a federal holiday. Pleading Requirement Nalco Co. v. Chem-Mod, LLC , 883 F.3d 1337, 125 U.S.P.Q.2d 1832 (Fed. Cir. 2018). The Federal Circuit reversed the dismissal of Nalco’s fourth amended complaint alleging direct infrin......