W. R. Grace & Co.-Conn. v. Elysium Health, Inc.

W.R. GRACE & Co.-Conn., Plaintiff, v. ELYSIUM HEALTH, Inc., Defendant.

Civil Action No. 20-1098-GBW

United States District Court, D. Delaware

February 10, 2023

MEMORANDUM ORDER

GREGORY B. WILLIAMS, UNITED STATES DISTRICT JUDGE.

Plaintiff W.R. Grace & Co.-Conn. ("Grace") accuses Defendant Elysium Health, Inc. ("Elysium") of infringing U.S. Patent Nos. 10,233,207 (the "'207 Patent," D.I. 1-1), 10,323,058 (the "'058 Patent," D.I. 1-2), and 10,189,872 (the "'872 Patent," D.I. 1-3) (collectively, the "Asserted Patents"). D.I. 1 ¶ 1. On May 5, 2022, Elysium filed an Amended Answer and Counterclaims to Grace's Complaint for Patent Infringement (the "Answer," D.I. 113). Pending now is Grace's Motion to Dismiss Elysium's Inequitable Conduct Counterclaims and Strike Related Affirmative Defense (the "Motion," D.I 136), which asks the Court to dismiss Elysium's Counterclaims Ten, Eleven, and Twelve and to strike Elysium's Twelfth Defense. The Court has reviewed the parties' briefing, D.I. 137; D.I. 152; D.I. 155; D.I 171, and no hearing is necessary. For the reasons below, the Court denies-in-part and grants-in-part the Motion.

I. BACKGROUND^[1]

The Asserted Patents claim crystalline Forms I and II of nicotinamide riboside chloride (''NRCl"). See '207 Patent at Claim 1; '058 Patent at Claim 1; '872 Patent at Claim 1. The Court construed (a) "crystalline Form I of [NRC1] according to formula I" in the '058 Patent and the '207 Patent as “[c]rystalline Form I of [NRC1], according to Formula I, which can be identified by one or more of the analytical methods described in the specification” and (b) “crystalline Form II of [NRC1]” in the '872 Patent as “[c]rystalline Form II of [NRC1], which can be identified by one or more of the analytical methods described in the specification[.]” D.I. 109 at 1.

Elysium's initial answer to the Complaint in this action, filed on December 7, 2020, did not include any allegations of inequitable conduct. D.I. 11. A year later, Elysium asked for leave to amend its initial answer to add counterclaims of inequitable conduct, D.I. 59, and proposed text for the amended pleadings, D.I. 59-1. In an oral ruling on April 14, 2022, the Court denied Elysium's motion. See C. A. No. 20-1098, Oral Order of Apr. 14, 2022. The Court explained that Elysium's proposed pleadings had potentially failed to establish both materiality and intent to deceive the Patent and Trademark Office (“PTO”) and may have failed to adequately tie the inequitable conduct allegations to specific patent claims. D.I. 120 at 73:13-22, 82:19-20. However, the Court permitted Elysium to amend its answer to meet the requirements to prove inequitable conduct. See D.I. 120 at 84:10-12, 85:9-20. The Court expressed concern that allegations of “inequitable conduct... can be taken advantage of' at trial. D.I. 120 at 86:10-14.

Elysium's Answer, as amended, includes three counterclaims and one defense that allege inequitable conduct. D.I. 113 at 25, 32-47. Grace moves to dismiss each of them for failure to state a claim on which relief can be granted under Rule 12(b)(6). D.I. 137 at 1. Grace's firstranked summary judgment motion (not at issue here) also addresses inequitable conduct. D.I. 191.

II. LEGAL STANDARD

a. Motion to Dismiss Under Rule 12(b)(6)

To state a claim on which relief can be granted, a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief....” Fed.R.Civ.P. 8(a)(2).

Such a claim must plausibly suggest “facts sufficient to ‘draw the reasonable inference that the defendant is liable for the misconduct alleged?” Doe v. Princeton Univ., 30 F.4th 335, 342 (3d Cir. 2022) (quoting Ashcroft v. Iqbal, 556 U.S. 662,678 (2009)) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544,557 (2007)). “A claim is facially plausible ‘when the plaintiff pleads factual content that allows the court to draw'” such an inference. Klotz v. Celentano Stadtmauer & Walentowicz LLP, 991 F.3d 458, 462 (3d Cir. 2021) (quoting Iqbal, 556 U.S. at 678). But the Court must “‘disregard legal conclusions and recitals of the elements of a cause of action supported by mere conclusory statements?” Princeton Univ., 30 F.4th at 342 (quoting Davis v. Wells Fargo, 824 F.3d 333,341 (3d Cir. 2016)).

“‘The issue is not whether a [counterclaim] plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims?” In re Avandia Mktg., Sales Pracs. & Prod. Liab. Litig, 804 F.3d 633, 638 (3d Cir. 2015) (citation omitted). “‘A motion to dismiss pursuant to Rule 12(b)(6) may be granted only if, accepting all well pleaded allegations in the complaint as true, and viewing them in the light most favorable to [claimant], [claimant] is not entitled to relief'” Havens v. Mobex Network Servs., LLC, 820 F.3d 80, 87 n.12 (3d Cir. 2016) (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410,1420 (3d Cir. 1997)).

b. Inequitable Conduct

“Inequitable conduct is a defense to patent infringement that, if proven, renders the asserted patent unenforceable. ‘To prevail on an inequitable conduct defense, a defendant must establish both [1] the materiality of the withheld reference and [2] the applicant's intent to deceive the PTO?” Belcher Pharms., LLC v. Hospira, Inc., 11 F.4th 1345, 1352 (Fed. Cir. 2021) (quoting Aventis Pharma S.A. v. Hospira, Inc., 675 F.3d 1324,1334 (Fed. Cir. 2012)).

[P]rior art[, for example,] is but-for material information if the PTO would not have allowed a claim had it been aware of the undisclosed prior art. The standard for establishing but-for materiality in the inequitable conduct context only requires a preponderance of the evidence, giving claims their broadest reasonable construction.

...

To satisfy the intent requirement, the accused infringer must prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it. Inequitable conduct requires clear and convincing evidence of a specific intent to deceive the PTO and that the specific intent to deceive must be the single most reasonable inference able to be drawn from the evidence.

Belcher Pharms., 11 F.4th at 1352-53 (cleaned up). “A finding that the misrepresentation or omission amounts to gross negligence or negligence under a ‘should have known' standard does not satisfy this intent requirement.” Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1290 (Fed. Cir. 2011) (citation omitted). However, “a district court may infer intent from indirect and circumstantial evidence.” Id. at 1290.

“Whether inequitable conduct has been pleaded with particularity under Rule 9(b) is a question governed by Federal Circuit law.” Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312,1318 (Fed. Cir. 2009). “A pleading that simply avers the substantive elements of inequitable conduct, without setting forth the particularized factual bases for the allegation, does not satisfy Rule 9(b).” Id. at 1326-27.

[T]o plead the “circumstances” of inequitable conduct with the requisite “particularity” under Rule 9(b), the pleading must identify the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO. Moreover, although “knowledge” and “intent” may be averred generally, a pleading of inequitable conduct under Rule 9(b) must include sufficient allegations of underlying facts from which a court may reasonably infer that a specific individual (1) knew of the withheld material information or of the falsity of the material misrepresentation, and (2) withheld or misrepresented this information with a specific intent to deceive the PTO.

Id. at 1328-29; see Analog Devices, Inc. v. Xilinx, Inc., 2021 WL 466859, at *1 (D. Del. Feb. 9, 2021) (quoting Exergen, 575 F.3d at 1328-29). “A reasonable inference is one that is plausible and that flows logically from the facts alleged....” Exergen, 575 F.3d at 1329 n.5.

III. DISCUSSION

Grace argues that Elysium fails to plead either but-for materiality or intent. D.I. 137 at 6, 16. Elysium disagrees on both grounds. D.I. 152 at 7, 16. For the reasons explained below, the Court denies-in-part and grants-in-part the Motion. The Court only considers Grace's pleadings and the exhibits attached thereto. See D.I. 155 at 3.

a. Materiality

Grace advances three arguments: First, Elysium failed “to plead facts permitting a reasonable inference that the NRC1 allegedly sold contained crystalline Form I and/or Form II NRC1 satisfying all limitations of at least one claim of each [of the Asserted Patents].” D.I. 137 at 7. Second, the Answer “makes no effort whatsoever to tie its allegations to specific claims and limitations.” D.L 137 at 12. Third, Elysium failed “to plead facts from which the Court could reasonably draw the inference that the patents would not have issued but for the alleged omission, i.e., but-for materiality.” D.I. 137 at 14 (cleaned up). Elysium refutes each argument. First, Elysium argues that its pleading establishes that Grace sold crystalline Form I and IINRC1. See D.I. 152 at 10-13 (citing D.I. 113 ¶¶ 57-58, 60, 62-63^[2]). Second, Elysium argues that its “allegations are tied to the Form I and II limitations of each asserted claim” and, thus, go to all claims. D.I. 152 at 13-15 (citing D.I. 113 ¶¶ 48, 50, 80, 86, 92). Third, Elysium argues that it alleges evidence to support its assertion that “Grace's pre-critical date [NRC1] offers/sales” render the claims of the Asserted Patents invalid. D.I. 152 at 15-16 (citing D.I. 113 ¶¶ 73, 76).

The Court agrees with Elysium that its pleading is sufficient to permit a reasonable inference that the NRC1 sold included crystalline Form I or II according to the claims. First, all claims of the...