DCT

1:19-cv-01355

Afab Industrial Services Inc v. Apothio LLC

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 1:19-cv-01355, E.D. Cal., 09/25/2019
  • Venue Allegations: Venue is alleged to be proper in the Eastern District of California because a substantial part of the events giving rise to the claims, including the location of the accused equipment and the alleged injury, occurred within the district.
  • Core Dispute: Plaintiffs allege that Defendants are infringing six patents related to hydrodynamic cavitation for extraction and crystallization by possessing, and threatening to use, equipment that embodies the patented technology.
  • Technical Context: The technology concerns using controlled hydrodynamic cavitation—the formation and collapse of vapor bubbles in a liquid—to efficiently extract chemical compounds from plant matter and to control crystallization processes.
  • Key Procedural History: The complaint arises from a business relationship breakdown between Plaintiff NewBridge and Defendant Apothio, who had agreed to form a joint venture, Apothio Bakersfield. Plaintiffs allege they provided proprietary "Equipment" for hemp processing, which Defendants seized and refused to return after locking Plaintiffs out of the shared facility. This federal patent suit was filed after Plaintiffs initiated a state court action to recover the equipment.

Case Timeline

Date Event
2000-12-20 ’784 Patent Priority Date
2003-09-30 U.S. Patent No. 6,627,784 Issues
2006-08-07 ’014 Patent Priority Date
2008-01-22 ’968 Patent Priority Date
2009-03-24 U.S. Patent No. 7,507,014 Issues
2013-04-30 U.S. Patent No. 8,430,968 Issues
2015-02-20 ’548 Patent Priority Date
2015-08-21 ’804 Patent Priority Date
2015-03-31 ’365 Patent Priority Date
2016-10-18 U.S. Patent No. 9,469,548 Issues
2018-07-03 U.S. Patent No. 10,011,804 Issues
2019-03-05 U.S. Patent No. 10,220,365 Issues
2019-05-02 NewBridge and Apothio allegedly enter agreement to form Apothio Bakersfield
2019-08-11 Defendant Jones allegedly changes locks at the Los Osos Facility
2019-09-25 Complaint Filed

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 10,011,804 - “Method of Extracting CBD, THC, and Other Compounds from Cannabis Using Controlled Cavitation,” issued July 3, 2018

The Invention Explained

  • Problem Addressed: The patent addresses the shortcomings of traditional cannabis extraction methods (e.g., using solvents like CO2 or alcohol), which can suffer from low yield, high cost, and potential contamination of the final product (’804 Patent, col. 1:37-43).
  • The Patented Solution: The invention proposes a method where chopped cannabis is mixed with a fluid (preferably water) and circulated through a "controlled cavitation zone." This zone is created by a rapidly spinning rotor within a housing. The rotation induces "highly energetic cavitation events" that generate shock waves, which in turn liberate compounds like CBD and THC from the plant material by forcing fluid into the plant's pores and breaking down cell walls (’804 Patent, col. 2:10-21; col. 3:37-49). This process is depicted in the apparatus shown in Figure 1 of the patent.
  • Technical Importance: This method purports to offer a higher-yield, lower-cost, and safer extraction process that avoids the harsh solvents common in the industry, potentially leading to a purer end product (’804 Patent, col. 2:47-53).

Key Claims at a Glance

  • The complaint asserts infringement of at least one claim of the '804 Patent (Compl. ¶54). Independent claim 1 is a method claim with the following essential elements:
    • (a) drying the cannabis plant;
    • (b) chopping or grinding the dried cannabis plant into pieces;
    • (c) combining the pieces of cannabis plant with a fluid to form a mixture;
    • (d) passing the mixture through a cavitation zone;
    • (e) causing cavitation events in the fluid that produce shock waves and pressure variations by rotating a rotor with "cavitation inducing structures" within a housing;
    • (f) liberating oils from the cannabis pieces as a result of the cavitation; and
    • (g) separating the oils from the fluid.
  • The complaint does not specify any dependent claims.

U.S. Patent No. 9,469,548 - “Continuous Hydrodynamic Cavitation Crystallization,” issued October 18, 2016

The Invention Explained

  • Problem Addressed: Traditional batch crystallization processes can be slow and suffer from quality control issues, while continuous processes often do not provide adequate control over crystal size and distribution, which is critical in the chemical and pharmaceutical industries (’548 Patent, col. 1:21-42).
  • The Patented Solution: The patent describes a method and apparatus for continuous crystallization using hydrodynamic cavitation. A supersaturated feed stock solution is passed through a cavitation zone created between a spinning rotor and a stator. The "intense cavitation events" induced by the rotor's movement cause nucleation, the initial formation of small "seed crystals." By controlling the process parameters (e.g., flow rate, rotor speed) and recycling the solution, these seed crystals can be grown to a desired size and distribution in a continuous, controllable manner (’548 Patent, col. 2:8-29; Fig. 2).
  • Technical Importance: The invention provides a method for high-throughput, continuous crystallization that claims to offer precise control over crystal size and uniformity, a key factor for product quality and efficacy in many industries (’548 Patent, col. 2:36-41).

Key Claims at a Glance

  • The complaint asserts infringement of at least one claim of the '548 Patent (Compl. ¶60). Independent claim 1 is a method claim with the following essential elements:
    • obtaining a cavitation apparatus having an inlet, an outlet, and an internal cavitation zone;
    • causing the solution to flow through the cavitation zone;
    • generating cavitation within the solution to induce nucleation of the compound to form seed crystals;
    • distributing the seed crystals substantially uniformly throughout the solution;
    • promoting crystallization of the compound around the seed crystals; and
    • separating the crystals from the solution.
  • The complaint does not specify any dependent claims.

U.S. Patent No. 8,430,968 - “Method of Extracting Starches and Sugar from Biological Material Using Controlled Cavitation,” issued April 30, 2013

  • Technology Synopsis: This patent discloses a method for extracting sugars and starches from biological materials like corn or grasses. It uses a controlled cavitation reactor to generate shockwaves that open the pores of the feed material, liberating the trapped compounds into a liquid mixture (’968 Patent, col. 1:40-48).
  • Asserted Claims: At least one unspecified claim (Compl. ¶66).
  • Accused Features: The "Equipment" currently in Defendants' possession is alleged to contain the technology outlined in the patent (Compl. ¶65).

U.S. Patent No. 7,507,014 - “Controlled Cavitation Device with Easy Disassembly and Cleaning,” issued March 24, 2009

  • Technology Synopsis: This patent describes a mechanical design for a controlled cavitation device intended for sanitary applications like the food industry. The key feature is a rotor housing mounted on a swing arm, allowing for rapid and easy disassembly, cleaning, and reassembly by relatively unskilled personnel without special tools (’014 Patent, col. 2:3-15).
  • Asserted Claims: At least one unspecified claim (Compl. ¶72).
  • Accused Features: The "Equipment" currently in Defendants' possession is alleged to contain the technology outlined in the patent (Compl. ¶71).

U.S. Patent No. 6,627,784 - “Highly Efficient Method of Mixing Dissimilar Fluids Using Mechanically Induced Cavitation,” issued September 30, 2003

  • Technology Synopsis: This patent discloses a method for efficiently mixing dissimilar fluids (e.g., a gas and a liquid) by inducing cavitation. The energy from collapsing cavitation bubbles breaks one fluid into microscopic units and distributes them uniformly throughout the other fluid, while also overcoming molecular van der Waals attractions that can inhibit mixing (’784 Patent, col. 2:3-18).
  • Asserted Claims: At least one unspecified claim (Compl. ¶78).
  • Accused Features: The "Equipment" currently in Defendants' possession is alleged to contain the technology outlined in the patent (Compl. ¶77).

U.S. Patent No. 10,220,365 - “Method and Apparatus for Hydrogenating Substances Using Controlled Mechanically Induced Cavitation,” issued March 5, 2019

  • Technology Synopsis: This patent describes a method for conducting chemical reactions, such as hydrogenation, in a small-volume controlled cavitation reactor. The technology is presented as a safer and more efficient alternative to large batch reaction tanks, particularly for hazardous materials, and discloses coating internal reactor surfaces with a catalyst to avoid recovery steps (’365 Patent, col. 2:4-18).
  • Asserted Claims: At least one unspecified claim (Compl. ¶84).
  • Accused Features: The "Equipment" currently in Defendants' possession is alleged to contain the technology outlined in the patent (Compl. ¶83).

III. The Accused Instrumentality

  • Product Identification: The primary accused instrumentality is the "Equipment" that Plaintiffs loaned, purchased, or leased for use at the "Los Osos Facility" and which Defendants allegedly seized and refused to return (Compl. ¶¶6, 21-22, 29, 41). The complaint does not provide a specific model name or technical description of this equipment.
  • Functionality and Market Context: The complaint alleges the Equipment embodies the technology of the patents-in-suit and is used for a "continuous oil extraction process using water as a medium" to produce cannabidiol (CBD) oil from hemp (Compl. ¶¶17, 39-40). The complaint further alleges that Defendants are advertising on their website a "proprietary whole plant extraction technology that uses water as the solvent" (Compl. ¶43). A screenshot from the Apothio.net website, attached as Exhibit G, states that "Apothio is developing cutting edge technology that replaces toxic and volatile solvents from the extraction process, and replaces it with water" (Compl., Ex. G, p. 85).

IV. Analysis of Infringement Allegations

The complaint does not provide specific details mapping elements of the asserted claims to the functionality of the accused "Equipment." The infringement theory is primarily based on the allegation that the "Equipment currently within Defendants' possession, custody and control, contains the technology and/or inventions outlined" in the patents (Compl. ¶¶53, 59, 65, 71, 77, 83). The complaint alleges that Defendants' possession and refusal to return the Equipment constitutes an infringing "use" (Compl. ¶¶47-49).

  • ’804 Patent Infringement Allegations
Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
(a) drying the cannabis plant; The complaint does not provide sufficient detail for analysis of this element. ¶53 col. 6:21
(b) chopping or grinding the dried cannabis plant into pieces; The complaint does not provide sufficient detail for analysis of this element. ¶53 col. 6:22-23
(c) combining the pieces of cannabis plant with a fluid to form a mixture; The complaint alleges the Equipment is for processing hemp with water as a medium. ¶17 col. 6:24-25
(d) passing the mixture through a cavitation zone; The complaint alleges the Equipment contains the technology of the '804 Patent but does not detail its specific operation. ¶53 col. 6:26-27
(e) causing cavitation events in the fluid that produce shock waves and pressure variations in the cavitation zone... The complaint alleges the Equipment contains the technology of the '804 Patent but does not detail its specific operation. ¶53 col. 6:28-39
(f) as a result of step (e), liberating oils from the pieces of the cannabis plant... The complaint alleges the Equipment is for extracting CBD oil. ¶17 col. 6:40-43
(g) separating the oils from the fluid; The complaint does not provide sufficient detail for analysis of this element. ¶53 col. 6:44
  • ’548 Patent Infringement Allegations
Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
obtaining a cavitation apparatus having an inlet, an outlet, and an internal cavitation zone; The complaint alleges the Equipment embodies the patented technology but does not provide specific operational details. ¶59 col. 6:1-3
causing the solution to flow through the cavitation apparatus in such a way that the solution moves through the cavitation zone; The complaint does not provide sufficient detail for analysis of this element. ¶59 col. 6:4-6
generating cavitation within the solution in the cavitation zone to induce nucleation of the compound to form seed crystals; The complaint does not provide sufficient detail for analysis of this element. ¶59 col. 6:7-9
distributing the seed crystals substantially uniformly throughout the solution; The complaint does not provide sufficient detail for analysis of this element. ¶59 col. 6:10-11
promoting crystallization of the compound around the seed crystals to produce crystals within the solution; The complaint does not provide sufficient detail for analysis of this element. ¶59 col. 6:12-14
separating the crystals from the solution. The complaint does not provide sufficient detail for analysis of this element. ¶59 col. 6:15-16
  • Identified Points of Contention:
    • Legal Question (Infringing Act): A primary issue will be whether Defendants' alleged possession of the "Equipment" and refusal to return it, absent specific allegations of making, selling, offering for sale, or operating it, constitutes an infringing "use" under 35 U.S.C. § 271(a). The complaint posits that a "claim of right to put it into service... constitutes infringement," which raises a threshold legal question for the court (Compl. ¶47).
    • Evidentiary Question (Technical Proof): The complaint makes conclusory allegations that the "Equipment" practices the asserted patents but provides no technical evidence, schematics, or operational descriptions to support this. A key point of contention will be whether Plaintiffs can produce any evidence demonstrating that the accused Equipment actually performs the specific steps of the asserted method claims.
    • Scope Question: For the asserted method claims (e.g., in the ’804 and ’548 Patents), infringement requires performance of all steps of the claimed method. The complaint does not allege that Defendants have performed any of these multi-step processes, raising the question of whether a claim for direct infringement of a method patent can be sustained based solely on possession of an apparatus capable of performing the method.

V. Key Claim Terms for Construction

  • The Term: "cavitation zone" (’804 Patent, Claim 1; ’548 Patent, Claim 1)
  • Context and Importance: This term is central to all asserted patents, as it defines the physical space where the inventive process occurs. Its construction will determine the structural requirements of an infringing device. Practitioners may focus on this term to determine if the accused Equipment, once its design is known, contains the specific structure defined by the patents.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The patents frequently describe the zone in functional terms, suggesting it is any space where the described cavitation events are induced. For example, the ’548 Patent describes it as the space "between a spinning rotor and the outer wall (or another wall) of a cylindrical cavity or stator" (’548 Patent, col. 2:13-15).
    • Evidence for a Narrower Interpretation: The patents provide specific structural embodiments. The ’804 Patent defines the zone as being "between the outer peripheral surface of a rotor and an interior surface of a housing" where the rotor has "cavitation inducing structures on its outer peripheral surface" (’804 Patent, col. 6:29-36). This could be read to require the specific rotor-within-housing geometry depicted.

VI. Other Allegations

  • Indirect Infringement: The complaint includes a count for inducement, alleging that "each Defendant is collectively and individually, inducing the infringement of Plaintiffs' Patents by the others" (Compl. ¶89). The basis for knowledge is the prior business relationship and Defendants' alleged awareness of Plaintiffs' rights in the patents and the technology contained in the Equipment (Compl. ¶88).
  • Willful Infringement: The complaint alleges that Defendants' infringement is willful and seeks enhanced damages (Compl., Prayer for Relief ¶a). The factual basis appears to be Defendants' knowledge of the patents derived from the planned joint venture and their subsequent actions in allegedly seizing the Equipment and refusing to return it after demands were made (Compl. ¶¶36-38, 88-89).

VII. Analyst’s Conclusion: Key Questions for the Case

This case appears to be more a commercial dispute than a conventional patent infringement action. The analysis will likely focus on two threshold issues before any detailed technical comparison can occur.

  • A core issue will be one of infringing act: Can Plaintiffs' theory—that Defendants' unauthorized possession and asserted "right to use" the Equipment constitutes direct infringement of the asserted patents, particularly the method claims—survive a legal challenge under 35 U.S.C. § 271?
  • A second core issue will be one of evidentiary sufficiency: Assuming the legal theory is viable, what factual evidence can Plaintiffs provide to demonstrate that the unspecified "Equipment" in Defendants' possession is actually configured to practice, and has been used to practice, each and every limitation of at least one asserted claim? The complaint's current lack of technical detail suggests this will be a significant evidentiary hurdle.