DCT

4:23-cv-00765

Capna IP Capital LLC v. Cedarstone Industry LLC

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 4:23-cv-00765, S.D. Tex., 03/01/2023
  • Venue Allegations: Venue is alleged to be proper based on Defendant's regular and established places of business in the Southern District of Texas, including a specific address in Houston, and the commission of infringing acts within the district.
  • Core Dispute: Plaintiff alleges that Defendant’s cold ethanol extraction systems infringe patents related to methods for extracting cannabinoids and essential oils from plant matter while reducing the co-extraction of undesirable compounds like chlorophyll.
  • Technical Context: The technology involves methods for producing purified cannabis and hemp extracts, a process critical for the manufacturing of various consumer and therapeutic products in the legalized cannabis market.
  • Key Procedural History: The asserted patents share a common priority date and are part of a patent family. U.S. Patent No. 10,814,248 is a continuation-in-part of the application that led to U.S. Patent No. 10,507,407. A Certificate of Correction for the ’407 Patent was issued on March 28, 2023, to correct a typographical error in the language of claim 1.

Case Timeline

Date Event
2016-04-14 Earliest Priority Date for ’407 and ’248 Patents
2019-12-17 ’407 Patent Issued
2020-10-27 ’248 Patent Issued
2020-10-31 Alleged Date of Defendant’s Knowledge of Infringement
2023-03-01 Complaint Filing Date
2023-03-28 Certificate of Correction for ’407 Patent Issued

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

U.S. Patent No. 10,507,407 - "Methods to reduce chlorophyll co-extraction through extraction of select moieties essential oils and aromatic isolates," issued Dec. 17, 2019

  • The Invention Explained:
    • Problem Addressed: The patent addresses drawbacks in prior art methods for extracting cannabinoids and terpenes from plant matter like cannabis and hemp. These methods, such as those using hydrocarbons or supercritical CO2, are described as either unsafe, expensive, or resulting in impure extracts containing undesirable constituents like plant lipids and chlorophyll, which then require difficult post-extraction purification steps (’407 Patent, col. 1:15-56).
    • The Patented Solution: The invention proposes a method using a super-cooled solvent (specifically, grain ethanol) to extract the desired compounds. By chilling both the solvent and the plant substrate to a specific low-temperature range (e.g., -30°C to -50°C), the process selectively extracts cannabinoids and terpenes while leaving behind the less soluble lipids and chlorophyll, resulting in a cleaner initial extract (’407 Patent, col. 2:5-15; col. 6:29-34). The process is illustrated in system schematics, such as FIG. 1, which shows solvent storage (1.A), an extraction tank (1.H), and a collection vessel (1.I) arranged to perform the claimed steps (’407 Patent, col. 2:48-62).
    • Technical Importance: This approach aims to simplify the overall extraction and purification workflow by preventing the initial extraction of unwanted compounds, potentially reducing manufacturing costs and improving the final product's quality (’407 Patent, col. 2:60-63).
  • Key Claims at a Glance:
    • The complaint asserts at least independent claim 1 (Compl. ¶18).
    • Claim 1 (as corrected) includes the following essential elements:
      • A pre-processing step of lowering a solvent’s temperature to a range of -30°C and -50°C.
      • A contacting step at -30°C to -50°C between the plant substrate and the solvent to create an emulsion.
      • An evaporating step for reduction of the emulsion via atmospheric evaporation.
      • A solvent recovery step.
      • A purging step, resulting in an extract that is "substantially free of any lipids and chlorophyll."
    • The complaint reserves the right to assert additional claims (Compl. ¶18).

U.S. Patent No. 10,814,248 - "Methods to reduce chlorophyll co-extraction through extraction of select moieties essential oils and aromatic isolates," issued Oct. 27, 2020

  • The Invention Explained:
    • Problem Addressed: Similar to its parent, the ’248 Patent addresses the need for a safer, more reliable extraction process that avoids co-extracting lipids and chlorophyll from cannabis or hemp (’248 Patent, col. 2:7-12). It further distinguishes its method from those using liquid carbon dioxide (’248 Patent, col. 24:5-6).
    • The Patented Solution: The ’248 Patent discloses a similar super-cooled solvent extraction method but provides more specific alternative solvent compositions. The core concept remains chilling the plant material and solvent to a range of -30°C to -50°C to achieve selective extraction (’248 Patent, col. 2:20-23, 40-44). The patent claims methods using specific solvent mixtures, such as 95% ethanol with 5% of another non-ethanol solvent, or solvents like heptane or hexane, to achieve the desired purity (’248 Patent, col. 24:21-29).
    • Technical Importance: By explicitly defining alternative solvent compositions and excluding CO2-based methods, the patent appears to carve out a specific niche within the field of cryogenic botanical extraction (’248 Patent, col. 24:5-6, 21-29).
  • Key Claims at a Glance:
    • The complaint asserts at least independent claim 1 (Compl. ¶27).
    • Claim 1 includes the following essential elements:
      • An extraction process that excludes the use of liquid carbon dioxide.
      • The same five core steps as the ’407 patent: pre-processing (chilling solvent), contacting, evaporating, recovering, and purging to yield a resultory extract substantially free of lipids and chlorophyll.
      • An optional limitation on the solvent composition, stating the solvent is either (a) 95% ethanol and 5% of a non-ethanol solvent, or (b) a solvent-like material "consisting essentially of heptane, hexane, isopropyl alcohol, and menthanol" (sic).
    • The complaint reserves the right to assert additional claims (Compl. ¶27).

III. The Accused Instrumentality

  • Product Identification: The accused products are identified as "Cedarstone's cold Ethanol Extraction system(s)" (Compl. ¶16).
  • Functionality and Market Context: The complaint alleges that the Accused Products are used to perform a method of extracting compounds from plant material (Compl. ¶7, ¶18). It provides a URL to Defendant’s "Extraction Equipment" product category, which contains systems for this purpose (Compl. ¶16). The complaint alleges these products are made, used, sold, and advertised throughout the United States, including within the Southern District of Texas (Compl. ¶7, ¶23). No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint references claim chart exhibits (Exhibit C for the ’407 Patent and Exhibit D for the ’248 Patent) that are not attached to the publicly filed document (Compl. ¶25, ¶34). Therefore, a detailed element-by-element analysis is not possible. The infringement theory is summarized below in prose.

  • ’407 Patent Infringement Allegations:
    The complaint alleges that Defendant directly infringes at least claim 1 of the ’407 Patent by making, using, testing, and selling its Accused Products (Compl. ¶18). The complaint states that Exhibit C provides details on how the Accused Products infringe the elements of claim 1, but this exhibit is not available for review (Compl. ¶25). The core of the allegation is that Defendant's cold ethanol extraction systems are used to perform the patented method of chilling a solvent and plant substrate to the claimed temperature range to selectively extract desired compounds.
  • ’248 Patent Infringement Allegations:
    The complaint makes a parallel allegation for the ’248 Patent, asserting that Defendant's Accused Products directly infringe at least claim 1 (Compl. ¶27). The unavailable Exhibit D is said to contain the details of this infringement (Compl. ¶34). The infringement theory for this patent would similarly turn on the use of Defendant’s systems to perform a cryogenic extraction method using the types of solvents described in the claims of the ’248 Patent.

V. Key Claim Terms for Construction

For the ’407 Patent:

  • The Term: "substantially free of any lipids and chlorophyll" (claim 1)
  • Context and Importance: This term defines the required outcome and purity of the final product. The entire purpose of the invention is to avoid co-extracting these compounds. The definition of "substantially free" will therefore be critical to determining whether an accused process that yields any amount of lipids or chlorophyll infringes.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The use of the word "substantially" suggests the patentee did not intend to require complete, 100% elimination of these compounds. The specification describes prior art extracts as having "undesired plant lipids" without quantifying the amount, suggesting the invention is an improvement over a baseline level of impurity (’407 Patent, col. 1:29-30).
    • Evidence for a Narrower Interpretation: The abstract states that the method provides an extract with a chlorophyll concentration that is "below 1%," which may be argued to define the upper limit of "substantially free" (’407 Patent, Abstract). The repeated emphasis on creating a "clean cannabinoid/terpene extract devoid of plant lipids and chlorophyll" could also support a very low threshold for this term (’407 Patent, col. 2:60-61).

For the ’248 Patent:

  • The Term: "another solvent that does not comprise ethanol" (claim 1)
  • Context and Importance: This term appears in one of two options defining the solvent composition in claim 1. Its scope will determine what solvent mixtures fall within this part of the claim. Practitioners may focus on this term because its construction will define the universe of solvent mixtures that can infringe this claim limitation.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: Dependent claim 7 lists "water, methanol, isopropyl alcohol, or acetonitrile" as examples of the "non-ethanol solvent," suggesting the term is not limited to just these examples but includes them (’248 Patent, col. 26:6-8). The specification also provides a long list of "Non-Ethanol Solvents" that could be argued to fall within the scope of this term (’248 Patent, col. 5:6-30).
    • Evidence for a Narrower Interpretation: A defendant might argue that the term should be limited by the examples given in the specification or that it must be a solvent capable of functioning in the cryogenic process. The patent's focus on specific alcohols and related compounds could be used to argue against the inclusion of dissimilar solvent types not explicitly listed as compatible with the process.

VI. Other Allegations

  • Willful Infringement: The complaint alleges that Defendant’s infringement of both the ’407 and ’248 Patents has been willful. This allegation is based on the claim that Defendant has known of its infringing activities "since at least October 31, 2020," a date four days after the issuance of the ’248 Patent (Compl. ¶19-20, ¶28-29). The complaint further alleges that Defendant made no attempt to design around the patents and lacked a reasonable basis for believing the patents were invalid (Compl. ¶21-22, ¶30-31).

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

  1. A primary evidentiary question will be one of technical proof: Given the lack of detailed factual allegations in the complaint, a central issue will be whether Plaintiff can produce evidence showing that Defendant's "cold Ethanol Extraction system(s)," when operated as intended, necessarily perform each step of the asserted method claims, including meeting the specific temperature and contact time requirements.
  2. A key question of claim scope will be definitional: The case will likely turn on the construction of the term "substantially free of any lipids and chlorophyll." The court's interpretation of this term of degree—and whether it is defined by a specific quantitative threshold like the "below 1%" language in the abstract—will be critical to the infringement analysis.
  3. A question of willfulness will depend on knowledge: The basis for the willfulness allegation rests on knowledge allegedly obtained "since at least October 31, 2020." A key factual dispute will be what notice or knowledge, if any, Defendant received on or around that date to support the claim of pre-suit knowledge and deliberate infringement.