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CBA Environmental Services, Inc. v. Toll Brothers Inc.

United States District Court, D. New Jersey

July 31, 2019




         Presently before the Court are two motions in this patent infringement action: (1) Defendants Toll Brothers (“Toll Bros.”), Enterprise Network Resolution Contracting, LLC (“ENRC”), Taylor Wiseman & Taylor (“TWT”), and First Environment, Inc.'s (“First Environment”) Motion to Dismiss, [1] and (2) Plaintiff CBA Environmental Services, Inc.'s (“CBA”) Motion for Leave to Amend the Complaint. The Court has considered the moving, opposition, and reply papers, and for the reasons set forth herein, Defendants' Motion to Dismiss is GRANTED and Plaintiff's Motion for Leave to Amend the Complaint, as set forth in the Proposed Amended Complaint, is DENIED. Plaintiff is given leave to amend its Complaint consistent with this Opinion within 30 days from the date of the Order accompanying this Opinion.

         I. Factual Background and Procedural History

         Plaintiff CBA is a soil remediation services provider that is owner by assignment of United States Patent No. 7, 001, 105 (“the ‘105 patent”). Original Compl. ¶¶ 11-12. The ‘105 patent, issued on February 21, 2006, relates to an in situ method of reducing concentrations of contaminates in soil to environmentally acceptable levels. Id. at ¶¶ 12, 15. Similar to its original Complaint, CBA's Proposed Amended Complaint[2] (“PAC”) alleges that, in or about 2014, Toll Bros., a home construction company that specializes in building luxury homes, purchased the High Mountain Golf Club in Franklin Lakes, New Jersey (“High Mountain”) for the development of luxury homes, and, in or about 2017, purchased property at the Apple Ridge Golf Course, in Mahwah, New Jersey (“Apple Ridge”), also for the development of luxury homes. PAC at ¶¶ 29, 32-33. At the time, the ground soil at both sites was allegedly contaminated with various contaminants. Id. As a result of this contamination, Toll Bros. purportedly hired TWT, a professional engineering services firm, to serve as a Licensed Site Remediation Professional (“LSRP”) to oversee and direct soil remediation activities at Apple Ridge and High Mountain. Id. at ¶¶ 30, 35.

         In early April 2016, Toll Bros. requested that CBA provide it with proposals for soil remediation at Apple Ridge and High Mountain, and, on May 19, 2016, CBA submitted to Toll Bros. formal written proposals for the two sites. Id. at ¶¶ 36, 41. At that point, Plaintiff alleges that, despite knowing that CBA's proposed soil remediation methods were patented, Toll Bros. thereafter solicited and received a competing soil remediation proposal from ENRC. Id. at ¶ 42. Plaintiff also alleges that Toll Bros. and/or TWT at some point retained First Environment, an environmental engineering and consulting firm, to provide services in connection with the allegedly infringing soil remediation at least at High Mountain. Id. at ¶¶ 31, 45. On October 27, 2016, an individual, at the direction of CBA, visited High Mountain to investigate. Id. at ¶ 44. While there, the individual allegedly observed ENRC performing soil remediation and using equipment and methods that allegedly infringed on the ‘105 patent. Id. On December 19, 2016, Toll Bros. modified the original blending plan for Apple Ridge and, on December 19, 2016, a Toll Bros. executive requested by email that CBA provide it with a revised proposal based on the newly revised plan, which CBA did submit on December 21, 2016. Id. at ¶¶ 46-47. Months later, in May 2017, CBA learned that Toll Bros. had awarded ENRC the contract to conduct the soil remediation at Apple Ridge using methods that allegedly infringed on the ‘105 patent. Id. at ¶ 50.

         According to the PAC, Toll Bros., TWT and First Environment worked together to develop remediation and other development plans, to hire subcontractors and other engineering firms to assist with various tasks at Apple Ridge and High Mountain, and directed and/or controlled all soil remediation efforts at Apple Ridge and High Mountain, including directing and/or controlling of ENRC in performing the soil remediation methods that allegedly infringed on the ‘105 patent. Id. at ¶ 57. Based on this theory, the PAC asserts one count of direct infringement against ENRC, one count of joint infringement against ENRC, TWT, First Environment, and Toll Bros., [3] and three individual counts of induced infringement against Toll Bros., TWT, and First Environment, respectively. See generally PAC.

         CBA filed the instant action for patent infringement of the ‘105 patent against Defendants on August 28, 2018. See Dkt. No. 1. On November 30, 2018, Toll Bros. filed a Motion to Dismiss CBA's Complaint. See Dkt. No. 29. Shortly thereafter, Defendants TWT, ENRC, and First Environment, separately moved to join Toll Bros.' pending Motion to Dismiss. See Dkt Nos. 31, 33, 34. In response, on January 28, 2019, CBA filed a Motion for Leave to File a First Amended Complaint and to Deny Defendant Tolls Bros.' Motion to Dismiss as Moot or, in the Alternative, to Reset the Briefing Schedule for the Motion to Dismiss. See Dkt. No. 41. Defendants' Motion to Dismiss and Opposition to Plaintiff's Leave to Amend argue the same two primary defects in CBA's theories of liability: (i) the asserted ‘105 patent claims are invalid for being directed to an abstract idea under 35 U.S.C. § 101, and (ii) the Complaint does not allege sufficient facts setting forth a cause of action for any patent infringement theories under Fed.R.Civ.P. 8.

         II. Standard of Review

         When considering a motion to amend, “[t]he Supreme Court has instructed that although ‘the grant or denial of an opportunity to amend is within the discretion of the District Court, ... outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely an abuse of that discretion and inconsistent with the spirit of the Federal Rules.' ” Shane v. Fouver, 213 F.3d 113, 115 (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). Nonetheless, a court may deny a plaintiff leave to amend for a variety of reasons, including undue delay, bad faith, dilatory motive, prejudice and futility. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997); Alston v. Parker, 363 F.3d 229, 235 (3d Cir.2004). Under Third Circuit precedent, a “futile” amendment is one that fails to state a claim upon which relief could be granted. Burlington, 114 F.3d at 1434; Grayson v. Mayview State Hospital, 293 F.3d 103, 113 (3d Cir.2002). Thus, in determining whether a complaint, as amended, is futile, the District Court must apply the sufficiency standard set forth under Rule 12(b)(6). Shane, 213 F.3d at 115.

         Under Fed.R.Civ.P. 12(b)(6), a complaint may be dismissed for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When reviewing a motion to dismiss on the pleadings, courts “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (quotations omitted). Under such a standard, the factual allegations set forth in a complaint “must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Indeed, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “[A] complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to ‘show' such an entitlement with its facts.” Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009).

         However, Rule 12(b)(6) only requires a “short and plain statement of the claim showing that the pleader is entitled to relief” in order to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555. The complaint must include “enough factual matter (taken as true) to suggest the required element. This does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element.” Phillips, 515 F.3d at 234 (citation and quotations omitted); Covington v. Int'l Ass'n of Approved Basketball Officials, 710 F.3d 114, 118 (3d Cir. 2013) (“[A] claimant does not have to set out in detail the facts upon which he bases his claim. The pleading standard is not akin to a probability requirement; to survive a motion to dismiss, a complaint merely has to state a plausible claim for relief.” (citation and quotations omitted)).

         In sum, under the current pleading regime, when a court considers a dismissal motion, three sequential steps must be taken: first, “it must take note of the elements the plaintiff must plead to state a claim.” Connelly v. Lane Constr. Corp., 809 F.3d 780, 787 (3d Cir. 2016) (quotations omitted). Next, the court “should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id. (quotations omitted). Lastly, “when there are well-pleaded factual allegations, the court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. (quotations and brackets omitted).

         III. Patent-Eligibility

         The PAC alleges infringement of at least Claims 1, 6, and 7 of the ‘105 patent, all of which Defendants contend are not patent eligible. PAC at ¶ 61, 68. As a preliminary issue, Defendants argue that Claim 1 is representative of all claims of the patent for the purposes of their motion to dismiss under § 101. Although the statutory presumption of validity requires proving invalidity of each claim by clear and convincing evidence, see Dana Corp. v. Am. Axle & Mfg., Inc., 279 F.3d 1372, 1376 (Fed. Cir. 2002), “[c]ourts may treat a claim as representative if the patentee does not present any meaningful argument for the distinctive significance of any claim limitations not found in the representative claim or if parties agree to treat a claim as representative.” Berkheimer v. HP Inc., 881 F.3d 1360, 1365 (Fed. Cir. 2018). For the purposes of this motion, I find that Claim 1 is representative of all claims. CBA has not identified sufficient reasons why other claims would not be fairly represented by Claim 1 for the purposes of the § 101 challenge. For instance, although Claims 6 and 7 contain additional claim limitations not found in Claim 1, those limitations are inconsequential since they are not argued as containing additional inventive concepts, or adding any distinguishing feature that could impact the overall § 101 analysis.

         Representative Claim 1 of the ‘105 patent recites:

1. An in situ method of reducing the concentration of a contaminate in soil to or below a target concentration that is deemed environmentally acceptable in an area in which the contaminant concentration in a surface layer of the soil exceeds the target concentration, the method comprising the steps of:
Determining a requisite volume of clean soil in vertical proximity to the surface layer such that blending the soil in the surface layer with the requisite volume of clean soil results in a substantially uniform contaminant concentration in the blended soil that is at or below the target;
Employing a mobile trencher apparatus modified to lift and churn soil in place to a depth of at least four feet to vertically mix the surface layer soil in the area with the requisite volume of clean soil in vertical proximity;
Running the mobile blending apparatus through the area under conditions to provide sufficient time for the mobile blending apparatus to blend the mixed soils so that the contaminate concentration throughout the blended soil is substantially uniform.

‘105 patent at 7:18-38.

         A. Eligibility for Patent Protection

         Section 101 of the Patent Act establishes four categories of subject matter eligible for patent protection. 35 U.S.C. §101. Under that section, “[w]hoever invents or discovers any new or useful process, machine, manufacture, or composition of matter, or any new useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” Id. This provision is subject to longstanding judicial exceptions, which provide that “‘laws of nature, natural phenomena, and abstract ideas' are not patentable.” Mayo Collaborative Servs. v. Prometheus Labs, Inc., 566 U.S. 66, 70 (2012). “Phenomena of nature, . . . mental processes, and abstract intellectual concepts are not patentable, as they are basic tools of scientific and technological work.” Id. at 71 (quoting Gottschalk v. Benson, 409 U.S. 63, 67 (1972). The rationale underlying these exceptions is “one of pre-emption” grounded on the “‘concern that patent law not inhibit further discovery by improperly tying up the future use of' . . . building blocks of human ingenuity.” Alice Corp. Pty. Ltd. v. CLS Bank, Int'l, 573 U.S. 208, 216 (2014) (citing Mayo, 566 U.S. at 85). The Supreme Court, however, has cautioned that “we tread carefully in construing this exclusionary principle, lest it swallow all of patent law” because “[a]t some level, all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Id. at 217.

         The Supreme Court has articulated a two-part test to determine if patent claims are invalid and unpatentable under 35 U.S.C. §101.[4]See Mayo, 566 U.S. at 77-78; see also Alice, 573 U.S. at 217. The first step in the analysis is a determination as to whether claims are directed to a patent-ineligible concept. See Alice, 573 U.S. at 217 (citing Mayo, 566 U.S. at 77-78). If the claims are directed to a patent ineligible concept, like an abstract idea, the second step in the test determines if the claims contain an “inventive concept.” Id. To determine this, a court must “consider the elements of each claim both individual and ‘as an ordered combination' to ...

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