Case 1:19-cv-01334-CJB Document 513 Filed 01/12/23 Page 1 of 7 PageID #: 8839
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`Civil Action No. 19-1334-CJB
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`MIDWEST ENERGY EMISSIONS
`CORP. and MES INC.,
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`Plaintiffs,
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`v.
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`ARTHUR J. GALLAGHER & CO., et al.,
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`Defendants.
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`MEMORANDUM ORDER
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`Pending before the Court in this patent infringement action is another in a long
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`1.
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`line of difficult pleading-related disputes between the parties: Defendants’ motion to dismiss the
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`induced infringement claims against them (“motion”), which are contained in the operative
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`Fourth Amended Complaint (“4AC”). (D.I. 418) The Court writes briefly here and for the
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`parties, who are well familiar with the facts and law relating the motion. Having reviewed the
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`motion and the briefing related thereto, (D.I. 419; D.I. 433; D.I. 438), having heard telephonic
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`argument on September 19, 2022, (D.I. 483 (hereinafter, “Tr.”)), and having considered the legal
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`requirements for review of a motion made pursuant to Federal Rule of Civil Procedure 12(b)(6),
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`see Tonal Sys., Inc. v. ICON Health & Fitness, Inc., Civil Action No. 20-1197-LPS, 2021 WL
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`1785072, at *2 (D. Del. May 5, 2021), the Court hereby DENIES the motion for the reasons set
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`out below.
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`2.
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`There are five patents-in-suit in this case, all of which relate to methods for
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`reducing mercury emissions from coal-fired power plants; each of the five patents are alleged to
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`require that the claimed methods use, inter alia, two distinct steps: (1) a “Bromine Step,” which
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`requires the use of bromine-enhanced coal (or “refined coal”); and (2) an “Activated Carbon
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`Case 1:19-cv-01334-CJB Document 513 Filed 01/12/23 Page 2 of 7 PageID #: 8840
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`Step,” which requires adding a sorbent such as activated carbon. (D.I. 419 at 2; see also D.I. 279
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`at 2-3) Defendants, who are at times referred to as the “REFCO Defendants” in the briefing, are
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`alleged to make and sell refined coal to third-party power plants. (See D.I. 406 at ¶¶ 67, 241-
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`358) The power plants are alleged to add activated carbon to the process in which refined coal is
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`combusted, in a manner that (when considered along with other acts taken by the power plants)
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`amounts to direct infringement of the patents. (Id.)
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`3.
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`There are a number of elements to an induced infringement claim, and most of
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`them are not at issue here. For example, with their motion, Defendants do not challenge the
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`plausibility of Plaintiffs Midwest Energy Emissions Corp. and MES Inc.’s (“Plaintiffs”)
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`allegations in the 4AC that the power plants directly infringe the patents-in-suit. Nor do
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`Defendants challenge the plausibility of the 4AC’s allegations that Defendants specifically
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`intend that the power plants directly infringe. 1 Instead, what is at issue here is whether the 4AC
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`plausibly alleges that Defendants took active steps to encourage the power plants’ direct
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`infringement (and, relatedly, that such steps did in fact cause direct infringement to occur). For
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`ease of reference, the Court will refer to this as the “active step” element of induced
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`infringement. 2
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`1
`Earlier in this case, Defendants opposed Plaintiffs’ motion for leave to file the
`4AC (“motion for leave”) on, inter alia, futility grounds; in doing so, Defendants there asserted
`that the 4AC did not sufficiently plead the “specific intent” element of induced infringement.
`(D.I. 376 at 4-5) In granting-in-part the motion for leave, the Court disagreed with Defendants
`on this point, determining that the 4AC did sufficiently allege specific intent. (D.I. 404)
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`In their briefing on the motion for leave, Defendants did not argue that grant of
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`that motion would be futile because the pleading did not sufficiently allege the active step
`element of induced infringement. (D.I. 483 at 8-10) In light of this, Plaintiffs make an argument
`here that Defendants have somehow waived their right to now move to dismiss the 4AC on this
`ground. (D.I. 433 at 3-4) The Court need not address this waiver issue, in light of the fact that it
`is denying the motion on another basis.
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`2
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`4.
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`35 U.S.C. § 271(b) states that “[w]however actively induces infringement of a
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`patent shall be liable as an infringer.” 35 U.S.C. § 271(b) (emphasis added). With regard to the
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`active step element, the United States Court of Appeals for the Federal Circuit has explained that
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`a patentee must plead and prove that the accused inducer “took an affirmative act to encourage
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`[direct] infringement[,]” Microsoft Corp. v. DataTern, Inc., 755 F.3d 899, 904 (Fed. Cir. 2014);
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`see also Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 760 (2011) (“The addition of
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`the adverb ‘actively’ suggests that inducement must involve the taking of affirmative steps to
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`bring about the desired result.”), which in turn “led to [such] infringement[,]” Power
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`Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 843 F.3d 1315, 1331 (Fed. Cir. 2016)
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`(citation omitted). But the Federal Circuit has explained that while this “affirmative act”
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`requirement “has connotations of active steps knowingly taken . . . the term is [otherwise] as
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`broad as the range of actions by which one in fact causes, or urges, or encourages, or aids
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`another to infringe a patent[.]” Tegal Corp. v. Tokyo Electron Co., 248 F.3d 1376, 1378-79 (Fed.
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`Cir. 2001) (citations and emphasis omitted); see also Global-Tech Appliances, Inc., 563 U.S. at
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`760 (noting that the term “‘induce’ means ‘[t]o lead on; to influence; to prevail on; to move by
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`persuasion or influence’”) (citation omitted).
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`5.
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`At times, the Federal Circuit has also described the active step element as
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`requiring that the inducer “successfully communicate with and induce a third-party direct
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`infringer[.]” Power Integrations, Inc., 843 F.3d at 1331 (emphasis added); see also (D.I. 419 at
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`10). Of course, in lots of patent cases where induced infringement is at issue, when attempting to
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`satisfy the active step element, a patentee will demonstrate how the alleged inducer has
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`expressed in words (i.e., via conversations or the provision of instruction manuals) the type of
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`active communication/encouragement required by statute. But as even Defendants acknowledge
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`Case 1:19-cv-01334-CJB Document 513 Filed 01/12/23 Page 4 of 7 PageID #: 8842
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`here, the caselaw does not absolutely require that the active step element be satisfied by a
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`showing that an alleged inducer utilized written or spoken words to encourage infringement. (Tr.
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`at 19-21) Indeed, there are surely plenty of non-word-based acts by which an inducer can
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`encourage (or cause or aid or influence) another’s patent infringement.
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`6.
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`This brings us back to the motion, in that here, the primary active steps that
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`Defendants are alleged to have taken to induce infringement involve their provision of refined
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`coal to the power plants. (See, e.g., D.I. 406 at ¶ 257 (alleging in the counts of infringement that
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`Defendants “provide [bromide-enhanced] coal . . . to coal-fired power plants connected to an
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`Accused [Refined Coal] facility”); D.I. 433 at 5 (Plaintiffs asserting that “Defendants admit that
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`the 4AC alleges that [they] engage in the affirmative act of supplying refined coal and that this
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`act causes infringement [with the requisite intent]. . . . Nothing more is required to allege induced
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`infringement.”)) In light of this, Defendants assert that the inducement allegations are wanting.
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`They argue that even though the 4AC alleges facts plausibly demonstrating that they specifically
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`intend for the power plants to infringe the patents after they provide the refined coal (by the
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`power plants’ use thereafter of activated carbon), the “4AC does not identify any REFCO acts
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`communicating that intent to anyone, let alone to the power plants.” (D.I. 419 at 4 (emphasis
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`added); see also id. at 9; D.I. 438 at 5, 6; Tr. at 15)
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`7.
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`In the Court’s view, however, the 4AC’s allegations are sufficient to plausibly
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`allege that the active step element is satisfied. To be sure, Plaintiffs do not allege that when
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`Defendants provide the refined coal to the power plants, Defendants also include a letter or an
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`instruction manual saying “Please add activated carbon during the combustion process!” or its
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`equivalent. But again, words are not necessarily required. The provision of the coal itself is an
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`affirmative act. And that act is not performed in a vacuum.
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`8.
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`Instead, the 4AC alleges that when Defendants provide this coal, they and the
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`power plants all know that: (a) the power plants have an activated carbon injection system on
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`site for mercury control, which requires an upfront cost and ongoing costs for operation; these
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`systems have been installed in order to allow the plants to comply with state and federal
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`regulations regarding mercury emissions; (b) were the plants to stop operating their activated
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`carbon injection systems, they could face fines that would destroy the economic incentives for
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`dealing with a refined coal provider, or be shut down; (c) were the plants to unilaterally reduce
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`their activated carbon injection rate, or were Defendants to reduce the amount of bromine added
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`to the refined coal that they provide to the plants, this could hinder the plants’ ability to comply
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`with state and federal mercury regulations; (d) one of the benefits of using refined coal at a
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`power plant with an activated carbon injection system is that the bromine enhances the
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`performance of the activated carbon, which results in a reduced need for emission controls (i.e.,
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`it reduces the quantity of activated carbon that is required to be used) and preserves the plant’s
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`ability to sell fly ash; and (e) partly in light of the above, the refined coal that Defendants
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`produce has no substantial non-infringing use at these power plants (such that it cannot
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`reasonably be used for purposes other than to be combusted at a plant where activated carbon
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`will later be injected). (D.I. 406 at ¶¶ 80, 82-83, 85, 87-88, 96; see also Tr. at 23-24, 27) In light
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`of these facts, a Defendant’s affirmative act of providing the refined coal can reasonably be seen
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`as a way of encouraging (or causing or aiding or influencing) the power plants to use activated
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`carbon. It is a way of making it easier for those power plants to infringe (since the plants need
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`the refined coal in the first place for infringement to happen). And it is a way of communicating
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`to those power plants, in a non-word based manner, Defendants’ intent and hope that
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`Case 1:19-cv-01334-CJB Document 513 Filed 01/12/23 Page 6 of 7 PageID #: 8844
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`infringement will thereafter occur. 3 Cf. Amarin Pharma, Inc. v. Hikma Pharms. USA Inc., C.A.
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`No. 20-1630-RGA-JLH, 2021 WL 3396199, at *8 (D. Del. Aug. 3, 2021) (finding that induced
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`infringement allegations against a health insurance provider were sufficiently pleaded, where the
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`complaint alleged, inter alia, that the health insurance provider provided coverage and payment
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`for the generic product even when it knew that a particular beneficiary was using the drug for an
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`unapproved and infringing use, and that the health insurance provider encouraged use of the
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`generic product by requiring a higher copay for the plaintiff’s competing product), report and
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`recommendation adopted in relevant part, 578 F. Supp. 3d 642, 648-49 (D. Del. 2022);
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`Galderma Labs., L.P. v. Medinter US, LLC, Civil Action No. 18-1892-CFC-CJB, 2020 WL
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`12788390, at *3 & n.7 (D. Del. Mar. 11, 2020) (concluding that the act of licensing patents to
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`alleged direct infringers, which in turn enabled those alleged infringers to manufacture the
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`accused product, could amount to the type of aid or encouragement necessary to satisfy the
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`active step element of induced infringement) (citing cases).
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`9.
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`Moreover, the 4AC also includes some additional allegations suggesting that at
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`some point in their interactions with the power plants, Defendants do use words that are meant to
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`encourage infringement. The 4AC includes allegations (though admittedly ones that are a bit
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`vague at times), indicating that: (a) Defendants engage in various discussions with the power
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`plant operators about the provision of refined coal and the plant’s related use of activated carbon,
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`and about the many associated benefits that follow from that process; (b) Defendants market and
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`advertise their refined coal-producing efforts to the power plants; (c) Defendants enter into
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`contracts with the plants that reference the benefits of activated carbon use after combustion of
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`3
`When the Court speaks of Defendants’ “infringement” herein, it is simply
`referring to Plaintiffs’ allegations, which must be taken as true at this stage. The Court expresses
`no opinion as to whether infringement is actually occurring.
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`Case 1:19-cv-01334-CJB Document 513 Filed 01/12/23 Page 7 of 7 PageID #: 8845
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`refined coal; and (d) Defendants and the plants keep each other apprised of the bromine/bromide
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`and activated carbon they use, so as to ensure that they are able to continue to comply with
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`regulatory requirements. (D.I. 406 at ¶¶ 81-82, 86, 92; Tr. at 27-28) It is reasonable to read
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`these allegations as suggesting that Defendants are indeed verbally communicating their desire
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`that the power plants infringe the patents, and are describing the benefits of such infringement to
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`the plant owners and operators. These presence of these allegations further bolsters the
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`conclusion that Plaintiffs have sufficiently pleaded the active step element.
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`10.
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`The Court cannot know whether Plaintiffs’ allegations will bear out, or if they
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`will be enough to win the day at the proof stage. But we are at the pleading stage, and for the
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`reasons set out above, they are sufficient here to allege the active step element of induced
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`____________________________________
`Christopher J. Burke
`UNITED STATES MAGISTRATE JUDGE
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`infringement. As such, the Motion is DENIED.
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`Dated: January 12, 2023
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