“Defendants’ arguments boil down to objections to Nalco’s proposed claim construction for “flue gas,” a dispute not suitable for resolution on a motion to dismiss,” Judge O’Malley explained.
Nalco Co. v. Chem-Mod, LLC, No. 17-1036, 2018 (Fed Cir. Feb. 27, 2018) (Before Moore, Schall, and O’Malley, Circuit Judges) (Opinion for the court, O’Malley, Circuit Judge).
Nalco Company (“Nalco”) is the exclusive licensee of the ‘692 patent which claims a method for the removal of elemental mercury, a toxic pollutant, from the flue gas created by combustion in coal-fired power plants. More specifically, the ‘692 patent claims the injection of a halide precursor into the flue gas which reacts in the heat of the flue gas to create a molecular halide, which is filtered from the flue gas more easily. The preferred location of the injection is the combustion zone of the furnace.
After the PTAB affirmed the validity of the asserted claims following an IPR, the PTO issued a reexamination certificate. Nalco next filed five successive complaints against various Defendants, claiming they directly and indirectly infringed the ‘692 patent through their use and licensing of Chem-Mod Solution. Nalco asserted that the only difference between its patented method and the Chem-Mod Process was the location of the injection. The district court dismissed Nalco’s complaints for failure to state a claim, including its Fourth Amended Complaint (“4AC”) at issue in the present appeal.
In the 4AC, Nalco alleged: (1) two theories of direct infringement each explaining how use of the Chem-Mod Solution involved injecting a thermolabile bromine precursor into coal combustion flue gas; (2) various ways in which Defendants control or direct the performance of the claimed method steps through commercial applications and testing; (3) infringement under the doctrine of equivalents; and (4) induced, contributory, and willful infringement.
The Federal Circuit reversed the dismissal of Nalco’s 4AC and remanded for further proceedings.
Nalco sufficiently alleged both of its direct infringement theories: (1) that Defendants infringed by “injecting” the Chem-Mod Solution Mixture, MerSorb mixed with coal, into coal combustion flue gas via coal injectors in the furnace; and (2) that “injection” occurred when a thermolabile bromine precursor flowed under pressure through the furnace until it reached flue gas. Nalco further sufficiently pled that the ‘692 claims did not restrict the timing, location or method of the injection, or whether the injection could occur through injecting the bromine precursor alone or mixed with other compounds.
The Federal Circuit, in an opinion authored by Judge O’Malley, rejected Defendants’ argument that Nalco’s direct infringement claims were implausible and instead agreed with Nalco that the resolution of its claims depended on the construction of the terms “flue gas” and “injecting.” Resolution of this claim construction dispute was inappropriate at the Rule 12(b)(6) stage of the proceedings.
Liability under § 271(a) can be found when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance. The 4AC plausibly stated a claim that Defendants directed or controlled use of the Chem-Mod Solution in connection with the pilot-scale and full-scale testing of the solution by controlling and directing operation of a test facility that carried out all steps of the claim. The complaint included allegations which adequately plead attribution of the testing activities to Defendants, including: (1) that Defendants directly performed pilot scale testing involving the Chem-Mod Solution; (2) images from a presentation given by Defendants describing full-scale burn tests conducted at coal-fired power plants during which Defendants either performed each step of the method claimed or a power plant operator did so at the Defendants’ direction; and (3) a paper detailing the full scale testing procedures. Furthermore, the performance of the tests was conditioned on obtaining a monetary benefit from Defendants.
Nalco sufficiently plead divided infringement by alleging that testing can be attributed to Defendants’ actions because Defendants directed the facility that allegedly performed each step of the method claimed in the ‘692 patent as part of the testing. Importantly, for attribution analysis, it did not matter whether the facility conducting the test was an educational facility, a non-Defendant coal-fired power plant, or a named Defendant.
Doctrine of Equivalents
Nalco’s sufficiently alleged that defendant’s use of the Chem-Mod solution method achieved the function of the ‘692 method claim in substantially same manner as the literal claim element. Even if the claims required that “injection” occur at a particular time or location, or if the claims required that “injecting” be limited to a thermolabile molecular bromine precursor rather than a mixture of a thermolabile molecular bromine precursor mixed with other additives, the Chem-Mod Solution would still infringe the ‘692 patent under the doctrine of equivalents. Nalco’s doctrine of equivalents claim thus adequately stated a claim for infringement.
Induced, Contributory, and Willful Infringement
First, the Court reversed the dismissal of Nalco’s indirect infringement claims insofar as it was based on Nalco’s failure to plead a direct infringement claim. The Court next reversed the dismissal of Nalco’s induced infringement claim. By alleging that Defendants specifically intended Refined Coal LLCs and other customers of the Chem-Mod Solution to infringe the ‘692 patent and knew that the customers’ actions would constitute infringement, Nalco sufficiently alleged a claim for induced infringement. Nalco further sufficiently alleged that Defendants contributorily infringed the ‘692 patent by selling and offering to sell MerSorb and S-Sorb with knowledge of the ‘692 patent, knowing that MerSorb and S-Sorb were especially made or adapted for infringing the ‘692 patent. The Court thus reversed the dismissal of Nalco’s induced contributory claim. Finally, because Nalco adequately stated a direct infringement claim for at least some of the methods of infringement allegedly used by Defendants, the Court reversed the dismissal of its willfulness claim.
When the resolution of an infringement dispute hinges on claim construction, dismissal for failure to state a claim is inappropriate. In analyzing attribution as part of divided infringement, courts look to whether the defendant directed the third party to perform the infringing activity. Receipt of a benefit, including monetary benefit, for performing the infringing activity at Defendant’s request, may be sufficient to establish attribution. Whether the infringing activity was part of an educational facility, a commercial non-defendant entity, or the defendant is irrelevant for attribution analysis.