Sunoco Partners Marketing & Terminals L.P. v. Powder Springs Logistics, LLC et al

Filing 523

MEMORANDUM ORDER: The following Reports and Recommendations are ADOPTED -- D.I. 322, 354, and 453. Motion to Dismiss (D.I. 138) is DENIED. Motion for Summary Judgment (D.I. 381) is GRANTED in part. Signed by Judge Leonard P. Stark on 3/31/20. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
______________________________________________________________________________
SUNOCO PARTNERS MARKETING &
TERMINALS L.P.,
Plaintiff,
v.
POWDER SPRINGS LOGISTICS, LLC, and
MAGELLAN MIDSTREAM PARTNERS, L.P.,
Defendants.

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C.A. No. 17-1390-LPS-CJB

MEMORANDUM ORDER
WHEREAS, Magistrate Judge Burke issued a Report and Recommendation on
August 7, 2019 (“August Report”) (D.I. 322) recommending that the Court deny
Defendants Powder Stream Logistics, LLC (“Powder Stream”) and Magellan
Midstream Partners, L.P.’s (“Magellan”) (collectively, “Defendants”) motion to dismiss
(“MTD”) (D.I. 138) as it related to Plaintiff Sunoco Partners Marketing & Terminals L.P.’s
(“Sunoco” or “Plaintiff”) willful infringement claims;
WHEREAS, any objection to the August 7 Report was to be filed by August 21,
2019;
WHEREAS, neither party filed an objection to the August 7 Report;
WHEREAS, Judge Burke issued a Report and Recommendation on September 18,
2019 (“September Report”) (D.I. 354) recommending that the Court deny the MTD as it
related to Defendants’ argument that certain claims of the patents-in-suit directed to
nonpatentable subject matter under 35 USC § 101;
WHEREAS, on October 2, 2019, Defendants filed objections to the September
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Report (D.I. 368) (“September Objections” or “Sept. Objs.”), specifically objecting that
Judge Burke erred in finding that claims 23, 24, 27, and 30 of U.S. Patent No. 6,679,302
(“’032 patent”) were not directed to an abstract idea and in not conducting the Alice step
2 analysis;
WHEREAS, on October 16, 2019, Sunoco filed a response to Defendants’
objections (D.I. 386) (“September Response” or “Sept. Resp.”);
WHEREAS, Judge Burke issued a Report and Recommendation on January 22,
2020 (“January Report”) (D.I. 453) recommending that the Court grant the portion of
Defendants’ motion for summary judgment (“MSJ”) that relates to Section 101 and,
specifically, recommending that the Court find that claims 23, 24, and 30 of the ’302
patent are ineligible;
WHEREAS, on January 30, 2020, Sunoco filed objections to the January Report
(D.I. 463) (“January Objections” or “Jan. Objs.”), specifically objecting that the
challenged patent claims are not directed to an abstract idea and that there is at least a
genuine dispute of material fact as to whether they contain an inventive concept;
WHEREAS, on February 7, 2020, Defendants filed a response to Sunoco’s
objections (D.I. 483) (“January Response” or “Jan. Resp.”);
WHEREAS, the Court reviews a Magistrate Judge’s recommendation with
respect to a case-dispositive matter, such as a motion to dismiss or a motion for
summary judgment, de novo, see 28 U.S.C. § 636(b)(1)(C); Brown v. Astrue, 649 F.3d 193,
195 (3d Cir. 2011);
NOW, THEREFORE, IT IS HEREBY ORDERED that the August Report is
ADOPTED, the September Report is ADOPTED, and the January Report is ADOPTED;

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Defendants’ motion to dismiss (D.I. 138) is DENIED; and Defendants’ motion for summary
judgment (D.I. 381) is GRANTED with respect to the patent eligibility of claims 23, 24, and
30 of the ’032 patent and REMAINS PENDING in all other respects. 1
1.

In their September Objections, Defendants explained that they “continue to

believe all challenged claims [of all of the patents-in-suit] are unpatentable as abstract ideas
and preserve all objections on those claims,” but they specifically objected only to Judge
Burke’s recommendation regarding the patent-eligibility of claims 23, 24, 27, and 30 of the
’302 patent. 2 (D.I. 368 at 2) Thus, the Court has no occasion to address the eligibility of the
representative claims of United States Patent Nos. 9,494,948 (the “’948 patent”), 9,606,548
(the “’548 patent”), 9,207,686 (the “’686 patent”), and 7,032,629 (the “’629 patent”).
2.

In the September Report, Judge Burke recommended denying the MTD relating to

the eligibility of the above-listed claims of the ’032 patent because Defendants had failed to
fairly articulate an abstract idea to which those claims were directed to. (See September Report
at 22-23) Concluding that Defendants had not met their burden at Alice step 1, the September
Report did not address step 2. The Court agrees with the September Report that the MTD should
be denied due to Defendants’ failing at step 1. As Judge Burke correctly found, the claims relate
to blending butane and gasoline, so any fair articulation of what the claims are directed to must

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The Court adopts the September Report’s thorough statement of Section 101 law. (See
September Report at 11, 17-20)
2

While Sunoco no longer asserts claim 27 of the ’302 patent against Defendants, Sunoco
still asserts claim 30 of the ’302 patent – which depends from claim 27 – so the Court, like Judge
Burke, will need to consider the patent eligibility of claim 27. (See D.I. 440 at 1) Defendants’
motion to dismiss Sunoco’s claim that they infringe claim 18 of the ’302 patent, which Judge
Burke addressed (see September Report at 12), is moot, as Sunoco no longer asserts this claim
against Defendants (see D.I. 440 at 1).
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account for that fact. That is, “the claims’ focus has to at least include reference to the process or
mechanics of blending butane with gasoline.” (September Report at 10; see also id. at 11 (“[I]t
just seems fundamentally wrong to conclude that the purportedly-representative claims are
directed to nothing more than ‘data gathering and processing.’”)) The abstract idea Defendants
proposed at the MTD stage – “data gathering and processing” – did not. (See id. at 10) Thus,
the MTD is properly denied. (See id. at 22) (“Because Defendants brought this [MTD], it is their
burden to show at step one that the claims they chose to challenge are directed to an abstract
idea; they have not sufficiently done that here.”)
3.

Nonetheless, in his September Report, Judge Burke observed “there are indicators

that at least some of the challenged claims might be patent ineligible,” calling out specifically
claim 27 of the ’032 patent. (Id. at 11, 21) Unsurprisingly, then, Defendants pursued their
Section 101 defense again at the summary judgment stage. This time, Defendants characterized
the abstract idea to which claims 23 and 24 are directed as “gathering and monitoring blending
data and using it to generate reports with a computer” and the abstract idea to which the claim 30
is directed as “receiving data and calculating a butane blend rate.” (January Report at 4, 11, 15)
Judge Burke agreed and also found clear and convincing evidence that none of the three
challenged claims contains an inventive concept sufficient to make them patent eligible. (See id.
at 8, 11, 15-16)
4.

Having reviewed Sunoco’s Objections to the January Report de novo, the Court

has reached the same conclusion as Judge Burke. Claims 23, 24, and 30 of the ’032 patent are
directed to nonpatentable subject matter and are invalid.
5.

With respect to claims 23 and 24, Defendants’ articulation of the abstract idea to

which the claims are directed, “gathering and monitoring blending data and using it to generate

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reports with a computer,” is, in fact, an abstract idea, and is fair to the claims. As Judge Burke
correctly states, while the claimed method “relates to blending butane and gasoline . . . the words
of the claims suggest that their focus is on the aspect of report generation based on monitored
and gathered data.” (January Report at 5) The Court also agrees with Judge Burke’s
comparisons to the claims found to be abstract in Electric Power Group, LLC v. Alstom S.A., 830
F.3d 1350, 1353 (Fed. Cir. 2016), and TDE Petroleum Data Solutions, Inc. v. AKM Enterprises,
Inc., 657 Fed. App’x 991, 993 (Fed. Cir. 2016). The focus of claim 23, as its preamble states, is
“a method for simplifying record keeping requirements for butane use at a petroleum products
tank farm.” ’302 patent at 15:31-33. This method consists of assembling information about
gasoline and butane streams, transmitting this data to a generic “information processing unit,”
and generating a report summarizing the data – in other words, “gathering and analyzing
information of a specified content, then displaying the results.” ’302 patent at 15:39-47.
Defendants have also met their burden at step 2, as the claims “surely are written using
expansive, functional language” and the specification “admits that blending butane with gasoline
was commonplace” before the patent issued. (January Report at 9; see also ’302 patent at 4:812, 8:7-21, 9:28-46, 11:23-27, Fig. 2) Judge Burke properly considered the claims as a whole,
including the combination of individual elements. (See Jan. Resp. at 9-10)
6.

With respect to claim 30, the Court agrees with Judge Burke that the claim is

directed to the abstract idea of “receiving data and calculating a butane blend rate,” which is both
abstract and fair to the claim, for the reasons stated by Judge Burke. (See January Report at 1115) Judge Burke properly considered the character of the claim as a whole, including as a
purportedly inventive ordered combination of elements. (See Jan. Resp. at 2-3, 8-9) Nor did he
ignore any claim limitations, including the “injector,” for reasons well explained by Defendants.

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(See id. at 4-5) At step 2, the Court agrees with Judge Burke that Defendants have pointed to
clear and convincing evidence “showing that the claimed steps of receiving volatility
measurements, calculating a blend rate, and blending butane with gasoline were all conventional
processes that were previously conducted manually.” (Id. at 15) (citing evidence) Even
assuming (without deciding) that claim 30 is not invalid as anticipated, it does not follow that
Defendants have necessarily failed to meet their burden of clear and convincing evidence at step
2 of Alice, which presents a different question than anticipation.
7.

That the claims contain limitations relating to tangible, physical elements, and are

limited to the particular technological environment of blending butane and gasoline, do not save
the eligibility of the claims, again for reasons persuasively stated in the January Report. See
Bilski v. Kappos, 561 U.S. 593, 612 (2010) (“[L]imiting an abstract idea to one field of use or
adding token postsolution components [does] not make the concept patentable.”); Elec. Power,
830 F.3d at 1354-55.

______________________________
March 31, 2020
Wilmington, Delaware

HONORABLE LEONARD P. STARK
UNITED STATES DISTRICT JUDGE

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