Sunoco Partners Marketing & Terminals L.P. v. U.S. Venture, Inc. et al
Filing
429
MEMORANDUM Opinion and Order Signed by the Honorable Rebecca R. Pallmeyer on 10/9/2018. Mailed notice(lxs, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
SUNOCO PARTNERS MARKETING &
TERMINALS L.P.,
Plaintiff,
v.
U.S. VENTURE, INC., U.S. OIL, and
TECHNICS, INC.,
Defendants.
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No. 15 C 8178
Judge Rebecca R. Pallmeyer
MEMORANDUM OPINION AND ORDER
Plaintiff Sunoco Partners Marketing and Terminals L.P. (“Sunoco”) is the holder of five
patents covering a system and method for blending butane into gasoline immediately before the
mixture is distributed to the tanker trucks that supply retail gas stations. Sunoco sued Defendant
U.S. Venture, Inc. and its subsidiary, U.S. Oil Co. (together, “Venture”), for infringing Sunoco’s
patents at six of Venture’s fuel terminals. (Am. and Supp. Compl. for Patent Infringement [161]
(“Sunoco’s Am. Compl.”), 4.)
Venture filed numerous counterclaims in response, seeking
declaratory judgments of non-infringement, invalidity, and unenforceability based on the
inventors’ allegedly inequitable conduct before the U.S. Patent and Trade Office (“PTO”) during
the patents’ prosecution. (Venture’s Answer, Aff. Defenses, and Countercls. to Pl.’s Am. Compl.
[174] (“Venture’s Am. Answer”), 52–89.) In a previous opinion, this court granted partial summary
judgment in favor of Sunoco on several of its infringement claims. Sunoco Partners Marketing &
Terminals L.P. v. U.S. Venture, Inc., No. 15 C 8178, 2017 WL 4283946, at *1 (N.D. Ill. Sept. 27,
2017) (“Sunoco SJ Opinion I”).
The parties have now filed additional, opposing motions for summary judgment. Venture
seeks summary judgment of non-infringement, a declaration of invalidity of certain claims in
Sunoco’s patents, and a ruling barring an award of lost profits damages. (Venture’s SJ Mot. [363],
1–2.) Sunoco’s cross-motion for summary judgment does not seek further rulings on the question
of infringement, but does ask the court to dismiss certain of Venture’s counterclaims before trial.
To this end, Sunoco moves for an order declaring that (1) three references identified by Venture
are not prior art under 35 U.S.C. § 102; and (2) Sunoco’s patents are not unenforceable due to
inequitable conduct. (Sunoco’s SJ Mot. [354], 1.) For the reasons stated below, Sunoco’s motion
is granted and Venture’s motion is granted in part and denied in part.
BACKGROUND
Sunoco is the holder of five patents on systems that blend butane and gasoline: U.S.
Patent No. 6,679,302 (the “‘302 Patent”); No. 7,032,629 (the “‘629 Patent”); No. 7,631,671 (the
“‘671 Patent”); No. 9,494,948 (the “‘948 Patent”); and Patent 9,606,548 (the “‘548 Patent”). The
court has already described the invention in detail in its claim construction opinion, see Sunoco
Partners Marketing & Terminals L.P. v. U.S. Venture, Inc., No. 15 C 8178, 2017 WL 1550188, at
*1–3 (N.D. Ill. Apr. 28, 2017) (“Sunoco Markman Opinion”), and first summary judgment opinion,
see Sunoco SJ Opinion I, 2017 WL 4283946, at *1–7. The court presumes the reader’s familiarity
with those opinions and provides only a brief summary of the relevant facts here.
The court’s previous summary judgment opinion explained that
[c]ommercial purveyors of gasoline—those that sell gasoline by the tankload to
consumer-facing retail gas stations—add butane because it is more volatile than
gasoline, allowing cars to start consistently in colder weather. Because adding
lower-priced butane to gasoline improves profit margins, commercial sellers are
motivated to blend as much butane as possible into gasoline before selling it to
retail stations.
That goal, however, is complicated by United States Environmental Protection
Agency (“EPA”) regulations. As noted, adding butane to gasoline increases the
volatility of the blended gasoline, but gasoline with higher volatility contributes to
smog, a particular concern in warmer climates and during summer months.
Gasoline Reid Vapor Pressure, EPA.GOV, https://www.epa.gov/gasolinestandards/gasoline-reid-vapor-pressure (last accessed Oct. 6, 2017). The EPA
therefore imposes limits on the allowable volatility of gasoline, measured by “Reid
Vapor Pressure” or RVP, based on the month and the state where the gasoline is
sold. Limits range from an RVP of 7.8 pounds per square inch to 15. . . .
The patented systems allow the patent holder to blend butane into gasoline at the
last point of distribution before the gas is taken by tanker trucks to retail gas
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stations; called “terminals” or “tank farms,” these facilities receive gasoline from
refineries and store it in large tanks for distribution. (See ‘302 Patent col. 4 ll. 38–
60.) In an exemplary embodiment, the system blends butane into gasoline
immediately before it is dispensed into a tanker truck: butane and gasoline are
drawn from a tank of each, blended to the desired RVP in a blending unit, and
dispensed to the truck. (E.g., ‘302 Patent col. 3 ll. 14–27.)
Sunoco SJ Opinion I, 2017 WL 4283946, at *1 (internal citations to record omitted).
Variations on these systems, as described in Sunoco’s later patents, relate to “in-line
processes for blending butane into a gasoline stream, that allow butane to be blended into a
gasoline stream at any point along a petroleum pipeline.” (‘948 Patent, col. 1 ll. 22-25; ‘548
Patent, col. 1 ll. 22-25.)
The invention described in these patents “combin[es] the advantages
of in-line vapor pressure monitoring both upstream and downstream of a butane blending
operation,” thereby allowing users “to blend butane with petroleum products at practically any
point along a petroleum pipeline, regardless of variations in the flow rate of gasoline through the
pipeline, the time of year in which the gasoline is delivered, or the ultimate destination to which
the gasoline is delivered.” (‘948 Patent, col. 3 ll. 18-26; ‘548 Patent, col. 3 ll. 18-26.)
Steven Vanderbur and Larry Mattingly are named as the inventors on all five patents at
issue in this case. For an unidentified period before February 2001, both Vanderbur and Mattingly
worked with a company called Texon Terminals to install and operate gasoline and butane
blending equipment. (Sunoco’s 2016 Statement of Material Facts [132] (hereafter “Sunoco’s 2016
SOF”), at ¶ 11.) On February 9, 2001, Mattingly and Vanderbur filed the provisional application
that resulted in each of the five patents. (Venture’s 2017 Statement of Material Facts [371]
(hereafter “Venture’s SOF”), at ¶ 3; ‘302 Patent.) Mattingly and Vanderbur subsequently assigned
the patents to Texon, and Sunoco became the patents’ sole owner when it purchased Texon’s
butane blending business in 2010. Sunoco SJ Opinion I, 2017 WL 4283946, at *2.
In or around 2012, Defendant Venture retained former-Defendant Technics to install a
butane blending system at three of Venture’s terminals located in Green Bay, Madison, and
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Milwaukee, Wisconsin. Id. Venture also owns at least three other butane blending systems—
one located at a second facility in Milwaukee, the other two in Fort Worth, Texas, and Bettendorf,
Iowa, respectively—that it developed and installed on its own, after the Technics systems were
installed. Id.
Sunoco sued both Venture and Technics in September 2015, claiming that all six of these
systems infringe the butane-blending patents Sunoco acquired from Texon.
Id.
Venture’s
counterclaims seek declaratory judgments that its systems do not infringe any of Sunoco’s
patents; that each of the patents is invalid; and that each of the patents is unenforceable due to
the purported inequitable conduct of Sunoco and/or prior owners of the patents. (See Venture’s
Answer and Counterclaims [174].) Sunoco entered into a settlement agreement with Technics in
June 2016, whereby Sunoco agreed not to sue Technics for infringing activities that took place
before the date of the settlement agreement. Id.
After construing certain terms in the patents, this court granted partial summary judgment
to Sunoco on its claims that Venture infringed certain claims in the ‘302 and ‘629 patents. Sunoco
SJ Opinion I, 2017 WL 4283946. Sunoco has now filed a second motion for summary judgment
[354] on two issues raised in Venture’s counterclaims: (1) whether certain references qualify as
“prior art” under 35 U.S.C. § 102, and (2) whether all five of Sunoco’s patents are unenforceable
due to alleged inequitable conduct during prosecution. Venture, meanwhile, seeks summary
judgment [363] in its favor on certain of its anticipation and non-infringement counterclaims.
Venture also seeks summary judgment on the issue of whether Sunoco is entitled to damages for
lost profits. The parties’ motions do not overlap, so the court considers their motions—and their
additional evidence supporting those motions—in turn.
DISCUSSION
To prevail on a motion for summary judgment, the moving party must show that “there is
no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
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law.” FED. R. CIV. P. 56(a). In ruling on a motion for summary judgment, the court views the
evidence in the light most favorable to the nonmoving party and draws all reasonable inferences
in that party's favor. Sweatt v. Union Pac. R. Co., 796 F.3d 701, 707 (7th Cir. 2015). A genuine
dispute of material fact exists when “the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)). The court must also take into account whether a party faces a heightened burden of
proof when reaching this determination: in this case, Venture has the burden of establishing
invalidity and inequitable conduct by clear and convincing evidence. See Hutchins v. Zoll Medical
Corp., 492 F.3d 1377, 1380 (Fed. Cir. 2007) (citing Anderson, 477 U.S. at 255).
I.
Venture’s Motion
A.
Invalidity
Venture seeks summary judgment of invalidity against numerous claims in Sunoco’s
patents based upon two pieces of prior art. First, Venture claims that the inventors sold a patented
system to Equilon Enterprise LLC more than one year before they filed for the patents. (Brief in
Supp. of Venture’s SJ Mor. [370] (“Venture’s SJ Br.”), 1.) This alleged prior sale, Venture argues,
invalidates the majority of the claims in the ‘302, ‘629, ‘948, and ‘548 Patents under 35 U.S.C.
§ 102(b). 1 (Id. at 2.) Second, Venture claims that select portions of the ‘302 and ‘629 Patents
Sunoco argues that Venture waived any argument as to the invalidity of the ‘948
and ‘548 Patents because it “merely incorporated by reference” its contentions against the other
three patents. (Sunoco’s Opposition to Venture’s SJ Mot. [386] (“Sunoco’s Resp. Br.”), 2 n.2.)
This accusation exemplifies the pattern on the part of both sides of claiming victory on nearly
every issue based on doctrines of waiver, disclaimer, or preclusion. See, e.g., Sunoco SJ Opinion
I, 2017 WL 4283946, at *8–9; (Venture’s SJ Br. 11, 18; Memo. in Supp. of Sunoco’s SJ Mot. [358]
(“Sunoco’s SJ Br.”), 3–6, 10.) In some instances, the parties have gone so far as to argue that
their opponent has waived its ability to accuse the other side of waiver. (See, e.g., Sunoco’s
Resp. Br. 13 n.21.) Sunoco and Venture have filed so many cross-referencing motions and pieces
of evidence that it is nearly impossible to sort out whether an argument was waived. As a result,
the court has deemed it prudent to simply ignore their allegations of waiver whenever possible.
Nearly all of them appear to be based on ambiguous witness testimony, misunderstandings, or
non-prejudicial omissions. (See Venture’s Resp. to Sunoco’s SOAF [409], Resp. to ¶¶ 5–7
(denying that Sunoco is prejudiced by Venture’s act of incorporating its contentions against the
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are invalid for anticipation based on another system that Texon installed at a Kerr-McGee fuel
terminal in the mid-1990s. (Id. at 1, 10–12.)
Patents are presumed valid. See 35 U.S.C. § 282(a). This presumption can only be
overcome by clear and convincing evidence. Eli Lilly & Co. v. Barr Laboratories, Inc., 251 F.3d
955, 962 (Fed. Cir. 2001). “Thus, a moving party seeking to invalidate a patent at summary
judgment must submit such clear and convincing evidence of invalidity so that no reasonable jury
could find otherwise.” Id.
i.
The Equilon Sale
Under 35 U.S.C. § 102(b), a patent is invalid if the invention was on sale in the United
States more than one year prior to the patent’s application date. 2 The on-sale bar arises when
the invention is (1) “the subject of a commercial offer for sale” before the critical date, and (2)
“ready for patenting.” Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 67 (1998).
In addition, the
device sold must “fully anticipate[ ] the claimed invention” or render it obvious. Allen Engineering
Corp. v. Bartell Industries, Inc., 299 F.3d 1336, 1352 (Fed. Cir. 2002). To meet the first prong of
the Pfaff test, courts look to general principles of contract law. Hamilton Beach Brands, Inc. v.
Sunbeam Products, Inc., 726 F.3d 1370, 1375 (Fed. Cir. 2013). An invention is “ready for
patenting” if it has been reduced to practice (i.e., made and working as intended) or “depicted in
drawings or described in writings of sufficient nature to enable a person of ordinary skill in the art
to practice the invention” prior to the critical date. Id.
Courts have long held that sales made “primarily for the purposes of experimentation” are
not considered commercial sales and thus do not trigger the on-sale bar. Allen, 299 F.3d at 1352;
‘958 and ‘548 Patents by reference because both parties’ experts addressed those patents
anyway).)
The patents-in-suit have an original priority date of February 9, 2001, so the preAmerica Invents Act version of Section 102 applies.
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2
see also Pfaff, 525 U.S. at 65–66 (citing City of Elizabeth v. American Nicholson Pavement Co.,
97 U.S. 126, 137 (1887)). Permissible experimentation includes efforts to perfect the claimed
features of the invention as well as features “inherent to” the invention—such as whether it will
work as intended in its intended environment. Electromotive Div. of General Motors Corp. v.
Transp. Systems Div. of General Electric Corp., 417 F.3d 1203, 1211 (Fed. Cir. 2005) (citing EZ
Dock, 276 F.3d at 1352–53). To help courts determine whether a sale is experimental, the
Federal Circuit has outlined a number of objective factors, including:
(1) the necessity for public testing; (2) the amount of control over the experiment
retained by the inventor; (3) the nature of the invention; (4) the length of the test
period; (5) whether payment was made; (6) whether there was a secrecy
obligation; (7) whether records of the experiment were kept; (8) who conducted the
experiment; (9) the degree of commercial exploitation during testing; (10) whether
the invention reasonably requires evaluation under actual conditions of use; (11)
whether testing was systematically performed; (12) whether the inventor
continually monitored the invention during testing; and (13) the nature of the
contacts made with potential customers.
Id. at 1213. Certain of these factors are generally considered dispositive—particularly inventor
control and customer awareness of the experimentation. Id. at 1214–15.
The inventors filed the provisional application underlying all five of Sunoco’s patents on
February 9, 2001. (L.R. 56.1 Statement of Material Facts in Supp. of Venture’s SJ Mot. [371]
(“Venture’s SOF”), ¶ 3; ‘302 Patent.) This places the critical date for Section 102(b)’s purposes
at February 9, 2000. On February 7, 2000—two days before the critical date—MCE Blending, a
company run by the inventors, entered into a contract to sell and install an automated butane
blending system at Equilon’s Detroit terminal. (Venture’s SOF ¶ 3.) In the contract, “MCE
agree[d] to sell and Equilon agree[d] to purchase the Equipment [for automated butane blending]
along with a license to use certain technology and software owned by MCE pertaining to the
computerized blending of Butane and gasoline stocks, in consideration for the purchase and sale
of Butane.” (Equilon Contract § 1.01, Ex. 1 to Dodd. Decl. in Supp. of Venture’s SJ Mot. [372-1]
(“Dodd. Decl.”).) The latter provision regarding the sale of butane involved an agreement by
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Equilon to purchase a minimum of 500,000 barrels of butane from MCE at set prices over roughly
five years. (Id. at §§ 2.02–2.03, 3.02.)
Prior to entering into this contract, the inventors had worked with Equilon to install a
manual tank blending system at the same Detroit terminal sometime in the mid-1990s. (Sunoco’s
Resp. to Venture’s SOF and Additional Statement of Material Facts [387] (“Sunoco’s SOAF”),
Resp. to ¶ 3.) The inventors claim that they first conceived of the patented invention sometime in
or before 1999, and it is not disputed that the system addressed in the February 7, 2000 contract
was the first automated butane blending system the inventors made or sold. (See id. at Resp. to
¶¶ 3–4; Venture’s SOF ¶ 4.) It is also undisputed that the inventors “reduced their invention to
practice in or around September 2000 at Equilon’s terminal in Detroit” while fulfilling their duties
under the contract. (Sunoco’s Resp. to Interrog. No. 3, Ex. 3 to Dodd. Decl. [372-3]; Sunoco’s
SOAF Resp. to ¶ 4.)
According to Venture, the Equilon sale meets all the requirements of the on-sale bar.
Venture insists that the sale was commercial in nature “because any experimentation was
intended to be done—and was actually done—prior to installation at Equilon’s tank farm in Detroit
and did not otherwise involve Equilon.” (Venture’s SJ Br. 2.) Venture further points to the portion
of the contract regarding MCE’s sale of a substantial amount of butane as further evidence that
the transaction was primarily commercial. (Id. at 5.) Sunoco disagrees, asserting that “the
Contract unambiguously reflects that the system design process was incomplete and still ongoing” at the time of the sale, and that the inventors’ primary purpose in executing the sale was
“to experiment at an actual tank farm and determine whether their idea was capable of performing
its intended purpose in its intended environment.” (Sunoco’s Opposition to Venture’s SJ Mot.
[386] (“Sunoco’s Resp. Br.”), 4 (internal citations omitted).)
The court is satisfied that Sunoco has demonstrated the requisite experimental intent to
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defeat application of the on-sale bar. 3 Accordingly, the court can deny summary judgment on this
basis alone, even though the parties also dispute whether the invention was ready for patenting
and whether the Equilon system anticipates the patented invention. (See id. at 10; Venture’s SJ
Br. 6–10.)
As stated, the inventors had not yet reduced the system to practice before executing the
contract. While this is not dispositive evidence of experimentation, it does support the conclusion
that reduction to practice did not occur until a timeframe in which experimentation may occur. Cf.
Allen, 299 F.3d at 1354 (“[O]nce an invention is reduced to practice, there can be no experimental
use”) (quoting EZ Dock, 276 F.3d at 1356–57 (Linn, J., concurring)). Both inventors have testified
that they did not know if their concept of a PLC-controlled blending system would work at the time
and that they desired to “f[i]nd a customer that would give us the opportunity to try it.” (5/10/16
Mattingly Dep. 21:20–22:6, 29:10–18, Ex. 39 to Andrew M. Gross Decl. in Supp of Mot. for Misc.
Relief [278-33] (“Gross Decl.”); see also 5/25/16 Vanderbur Dep. 127:19–23, Ex. 30 to Gross
Decl. [278-26].) Larry Mattingly explained that he and Vanderbur approached Equilon because
of their preexisting relationship with tank blending systems (5/10/16 Mattingly Dep. 31:6–22)—
the essence of MCE’s proposal being “to install the equipment and to sell it to them if the
As a brief aside, the court feels compelled to address Venture’s misleading
statements regarding the parties’ respective burdens of proof. Venture claims that “[t]he burden
is on Sunoco to produce ‘convincing evidence’ of experimental use to counter the application of
the on-sale bar.” (Venture’s SJ Br. 2 (emphasis in Venture’s brief) (quoting Lisle Corp. v. A.J.
Mfg. Co., 398 F.3d 1306, 1316 (Fed. Cir. 2005).) This is not a correct statement of the law, nor
is it an accurate quotation of Lisle Corp. In that case, the Federal Circuit rejected the appellant’s
argument that the district court erred by not requiring the patentee to produce “convincing
evidence” of experimental use. Id. at 1316. The court explained that the “burden does not shift
at any time to the patent owner,” and that, as always, the patentee’s sole responsibility is to
“produce sufficient rebuttal evidence” to prevent the challenger from meeting its own burden of
establishing the on-sale bar by clear and convincing evidence. Id. (emphasis added).
“‘Convincing’ evidence can meet that need.” Id. The Federal Circuit concluded by clarifying that
its potentially confusing use of the word “convincing” in this context “did not set forth a new legal
standard . . . nor did it impose a burden of production comparable to the clear and convincing
evidence required to invalidate a patent.” Id. (citing TP Laboratories, Inc. v. Professional
Positioners, Inc., 724 F.2d 965, 971 (Fed. Cir. 1984)).
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equipment worked.” (Id. at 82:12-20 (emphasis added).) Steven Vanderbur stated plainly:
“Equilon was the test case for our automated butane blending system.” (5/25/16 Vanderbur Dep.
29:6–7.)
Venture argues that “[t]he inventors’ self-serving testimony” on the issue of
experimentation is not sufficient to prevent summary judgment. (Venture’s SJ Br. 4 (citing
Petrolite Corp. v. Baker Hughes Inc., 96 F.3d 1423, 1427 (Fed. Cir. 1996).). Indeed, the inventors’
subjective intent is of minimal importance, see Petrolite, 96 F.3d at 1427, but the objective
evidence also weighs heavily in Sunoco’s favor. The contract discusses several rounds of testing
to be conducted by MCE: pre-installation testing at an unspecified (presumably off-site) location
and post-installation testing at Equilon’s terminal. (Equilon Contract § 1.10(a) (pre-installation)
and § 1.10(b) (post-installation).) If the proposed system failed to meet MCE’s expectations
(tellingly, Equilon’s expectations appear to be irrelevant), MCE had the right to unilaterally
terminate the agreement, and the obligation to remove any then-installed equipment from
Equilon’s terminal at its own expense. (Id.) MCE maintained full ownership and title over the
system until both rounds of testing were completed to MCE’s satisfaction and MCE was able to
train Equilon’s employees in the safe and proper use of the system. (Id. at § 1.04 (“At such time,
MCE shall execute a bill of sale . . . to effectuate the conveyance of ownership of the Equipment
to Equilon.”).) As noted earlier, it is undisputed that MCE’s installation, testing, and training was
not completed until September 2000—well after the critical date. (See Sunoco’s SOAF Resp. to
¶ 4; 5/10/16 Mattingly Dep. 174:4–25 (stating that Mattingly spent three to five days conducting
on-site testing in Detroit in September 2000).)
Notably, the contract did not require Equilon to pay MCE anything in exchange for the
system in the normal course of events. MCE was to bear all expected costs of the system’s
design and installation, up to $450,000. (Id. at § 1.02.) In the event the system cost more than
expected, the parties agreed to reach “a mutually agreeable arrangement for funding any [excess]
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cost[.]” (Id.) Equilon was required to bear the costs relating to any additional requirements it
imposed on the project, but, again, only if those costs surpassed the $450,000 threshold. (Id.)
Even then, however, MCE bore all the risk: if the parties failed to reach a mutually agreeable
funding arrangement for excess costs, either side had the right to terminate the contract, but MCE
would still be required to remove all previously-installed “at its own cost and expense.” (Id.)
These provisions touch upon many of the Federal Circuit’s enumerated factors, and
strongly signal the presence of the two most important objective factors: inventor control and
customer awareness. Electromotive, 417 F.3d at 1214–15. Further contractual provisions simply
underline the point. MCE was responsible for maintaining insurance for itself and Equilon during
the system’s development and installation. (Equilon Contract § 1.09.) MCE also promised to
indemnify Equilon for any claims arising from MCE’s work on the project. (Id. at § 1.12.) Both
parties were under a strict duty of confidentiality for five years. (Id. at § 3.01, Schedule 3.01.)
Finally, MCE warranted that the system would “be fit for the purpose of blending [b]utane into
gasoline products in compliance with all applicable laws” upon transfer of title—which, again,
would occur only after several rounds of testing to determine whether it was capable of operating
as intended. (Id. at § 1.05.)
Venture disagrees with this assessment of the contract and claims that only one round of
off-site testing was contemplated in the contract. (Venture’s SJ Br. 3–5.) This argument is as
irrelevant as it is inaccurate. Venture presents evidence, in the form of an e-mail from Mattingly
to Equilon employee Joe Ahern, to show that MCE conducted pre-installation testing with another
company called Wheatland Systems in Kansas. (E-mail from Larry Mattingly to Joe Ahern of
4/19/00, Ex. 4 to Dodd Decl. [372-4].) Venture believes it is important that Equilon was not
involved with this round of testing, claiming without any legal support that “the [experimental sale]
doctrine has no application as matter of law because the inventors never intended to conduct any
experimentation with Equilon or at Equilon’s terminal in Detroit.” (Venture’s SJ Br. 3.) This same
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e-mail, however, explicitly states that said testing was not completed to MCE’s satisfaction until
April 14, 2000—two months after the critical date. (Id.) It also provides ample evidence of the
inventor’s experimental intent and Equilon’s awareness of that intent as it related to the exact
system Equilon was due to receive. 4 Even if this were the only testing involved with the system’s
design and installation, it would reflect the inventors’ need to experiment with their invention to
determine whether it would work as intended as of the moment they offered the system to Equilon.
The experimental sale doctrine would be worthless if successful experiments occurring after the
critical date retroactively invalidated sales made for the purposes of experimentation before the
critical date. See Robotic Vision Systems, Inc. v. View Engineering, Inc., 112 F.3d 1163, 1167
(Fed. Cir. 1997) (“[S]ubsequent completion of an invention after the critical date does not relate
back to the date of an earlier alleged offer of sale.”); see also In re Ceccarelli, 401 Fed. Appx.
553, 554–55 (Fed. Cir. 2010) (holding that an experimental sale cannot be recategorized as a
commercial sale by a subsequent reduction to practice even if that reduction to practice occurred
before the critical date). For this same reason, the court rejects Venture’s attempts to divide the
invention into component parts that may have been tested in one location, but not another. (See
Venture’s SJ Br. 6.) It does not matter if the inventors tested their system’s ability to communicate
with the Grabner vapor pressure analyzer only at Wheatland and not at Equilon’s terminal. 5 All
of MCE’s testing occurred after the critical date, and all of the testing was aimed at determining
whether the automated butane blending system was capable of performing as intended. See
Electromotive, 417 F.3d at 1211.
As additional evidence of the inventors’ experimental intent, Sunoco points out that
Wheatland Systems was also under a confidentiality agreement for the pre-installation testing it
conducted for the inventors. (Sunoco’s SOAF Resp. to ¶ 3.)
4
In any event, the evidence shows that the inventors did test those elements in both
locations. (See Equilon Contract § 1.10(b), Schedule 1.10.)
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5
Further, the contract explicitly states that pre-installation testing with Wheatland was not
the only experimentation involved with the Equilon sale. Section § 1.10(b) of the contract states
that MCE would conduct post-installation testing at Equilon’s Detroit terminal. Venture, for its
part, attempts to minimize this post-installation testing as mere “[c]onfirming” and “verifying,” not
actual “experimentation.” (Venture’s SJ Br. 5.) These other terms do indeed appear among a
long checklist of MCE’s anticipated post-installation tests (see Equilon Contract Schedule 1.10),
but Venture cites no authority for the notion that these terms are obviously distinguishable from
permissible experimentation.
Nor does Venture make any effort to show how the various
“confirmations” and “verifications” listed would not be integral to MCE’s efforts to build a working
automated butane blending system for the first time. (See id. (stating that MCE’s on-site testing
would include, for example, “[v]erify[ing] that the system is injecting the proper amount of butane”
and “[v]erify[ing] that date-dependent blend parameters and controls change appropriately”).)
Venture attempts to bolster its claim by again citing to the April 2000 e-mail to argue that, though
the contract mentioned post-installation testing, Mattingly admitted that no further experimentation
was required after the Wheatland tests. (E-mail from Larry Mattingly to Joe Ahern of 4/19/00.)
Again, however, Venture misreads the relevant evidence. In his e-mail to Equilon’s Ahern,
Mattingly said that he was satisfied that the pre-installation testing at Wheatland “me[t] the
minimum standards” described in Section 1.10(a) and informed Ahern that he was ready to
progress with the installation rather than cancelling the contract. (Id.) The e-mail said nothing
about the quite separate requirements of Section 1.10(b) and the post-installation testing that
needed to occur before MCE would be willing to transfer ownership of the system to Equilon.
Contrary to Venture’s assertions, the e-mail does not “indicate[ ] that no experimentation was
needed at Equilon.” (Venture’s SJ Br. 5.) Overall, the contract and the tests outlined on the
attached checklist describe the exact the sort of experimentation needed “to bring [an] invention
to perfection, or to ascertain whether it will answer the purpose intended,” Elizabeth, 97 U.S. at
13
137—namely, the automated blending of butane with gasoline at a point immediately prior to
distribution.
As a final effort to paint the Equilon sale as a commercial, rather than experimental,
endeavor, Venture argues that the contractual provisions relating to the sale of 500,000 barrels
of butane makes the sale primarily commercial as a matter of law. (Venture’s SJ Br. 5–6.) Venture
cites to numerous cases for the proposition that “commercial transactions of this volume cannot
give rise to ‘experimental use.’” (Id. (stating that 500,000 barrels equals 21 million gallons:
“enough butane to fill over one million cars even if no gasoline were added”).) This is an attractive
argument, but Venture misses the mark on a critical point: butane is not the invention. See
Helsinn Healthcare S.A. v. Teva Pharm. USA, Inc., 855 F.3d 1356, 1366 (Fed. Cir. 2017) (“. . . the
offer or contract for sale must unambiguously place the invention on sale, as defined by the
patent’s claims”) (emphasis in original). All the cases Venture cites involve high-volume sales of
the invention itself. See, e.g., Merck & Cie v. Watson Labs., Inc., 822 F.3d 1347, 1355 (Fed. Cir.
2016) (stating that an offer to sell 62,500,000 doses of a dietary supplement could not be
considered experimental); Atlanta Attachment Co. v. Leggett & Platt, Inc., 516 F.3d 1361, 1366
(Fed. Cir. 2008) (“An offer to mass produce production models [i.e., the invention] does not square
with experimentation[.]”). MCE sold just one blending system before the critical date. It would
not sell another until May 20, 2002—after the patent application’s filing date. This next sale, to a
company called Buckeye Terminals, LLC, in Hartsdale, Indiana, does not contain any of the
detailed testing, revocation, or transfer of title conditions from the Equilon contract, and, most
notably, calls for the customer to pay MCE for the equipment and installation instead of handing
it over for free. 6 (See generally Buckeye Construction Contract, Ex. I to Krill Decl. in Supp. of
Sunoco’s Resp. to Venture’s SJ Mot. [327-3] (“Krill Decl.”).)
A May 28, 2002 proposal issued in connection with the Buckeye system explicitly
refers to the Equilon system as “the ‘prototype’ system” upon which the Buckeye system would
14
6
The experimental nature of MCE’s sale of the blending system to Equilon survives scrutiny
even if the court rephrases Venture’s objection as being that the volume of butane somehow
“overwhelms” the rest of the agreement. The Equilon contract has two distinct sections: the
installation of the butane blending system, and the butane supply agreement. The contract also
provides the parties with numerous opportunities to cancel the entire agreement depending on
the outcome of the installation. (See Equilon Contract §§ 1.02, 1.04, 1.10.) No such provisions
appear in the butane supply section. The apparent effect of this asymmetry is to render the butane
supply portions of the agreement conditional on the successful design and installation of
inventors’ experimental system. (See Sunoco’s Resp. Br. 6 (“Equilon would purchase butane if,
and only if, the post-critical date testing was successful.”).) Looking to the agreement as a whole,
it is clear that MCE used the offer to supply butane as a means of enticing Equilon to permit MCE
to use one of Equilon’s terminals as a testing ground for a new blending system—something
entirely consistent with a primarily experimental intent. (Equilon Contract § 1.01 (stating that the
purchase and sale of butane is the consideration for the design and installation of the experimental
blending system).)
The Federal Circuit has consistently recognized that multi-stage contracts which anticipate
future business, such as this one, may nevertheless be driven by an experimental purpose. In
Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d 1253 (Fed. Cir. 2001), the Federal Circuit
reversed the district court’s grant of summary judgment of invalidity where a transportation
company purchased one prototype trailer from a patentee “with the intention of purchasing an
additional 300 once the trailer’s durability had been proven in actual, normal use[.]” Id. at 1256.
The district court had viewed the sale as a “marketing ploy” to secure future sales to that same
customer, but the Federal Circuit disagreed, concluding that the evidence disputed the district
be based. (5/28/02 Buckeye Proposal § 2.1, Ex. J to Krill Decl. [327-3].)
15
court’s characterization even though the customer was ultimately required to pay for using the
trailer during the trial period. Id. at 1260–61. The Federal Circuit ruled similarly in Honeywell
International, Inc. v. Universal Avionics Systems Corp., 488 F.3d 982 (Fed. Cir. 2007)—a dispute
over a patented “terrain warning system” for use in airplanes. Id. at 987. There, the court upheld
the district court’s finding of experimental use despite evidence that Honeywell proposed future
commercial sales of its invention conditioned on successful experimentation. Id. at 996–97.
These conditional offers, the court held, did not defeat a finding of experimental intent:
These human factor and cockpit integration tests were a part of Honeywell's
program to determine that the invention worked for its intended purpose. If, and
only if, these tests were successful, Honeywell proposed commercial terms for the
supply of 100 new systems to replace the GPWS systems. If the tests were not
successful, Honeywell proposed to supply its GPWS systems instead. Beyond
these experimental programs, Honeywell did not offer its inventive system to any
other customer until well after the critical date. The record also shows, often in the
form of internal corporate communications, that Honeywell did not refer to the new
system as ready for sale. Thus, the record consistently shows that Honeywell's
negotiations and proposals before the critical date evinced a purpose of
experimentation[.]
Id. (emphasis added). Of course, “[e]ven free distribution of a prototype may raise the on-sale
bar if is done to solicit a sale,” Intel Corp. v. U.S. Intern. Trade Com’n, 946 F.2d 821, 830 (Fed.
Cir. 1991), but the evidence is clear that MCE did not seek to make any future sales of its invention
to Equilon after the testing period. The butane supply agreement does not obviously negate the
objective evidence of experimental intent with respect to the automated butane blending system.
Its inclusion in the Equilon contract does make the inquiry more challenging than if the parties
entered into two separate contracts, but a commercial motivation with respect to the auxiliary
goods or services which accompany an experimental sale do not necessarily taint the transaction
as a whole. See TP Laboratories, Inc. v. Professional Positioners, Inc., 724 F.2d 965, 968–73
(Fed. Cir. 1984) (concluding that an orthodontic device was not on-sale when the orthodontist
tested it on three patients before the critical date, did not charge the patients for the device, but
did “follow its regular practice of setting a fixed total fee for professional services, which included
16
necessary appliances”); Barry v. Medtronic, Inc., 230 F. Supp. 3d 630, 656–67 (E.D. Tex. 2017)
(upholding the jury’s finding that no commercial sale occurred for experimental surgeries when
the patients were billed for hospital overhead and the staffs’ typical wages but not “for the inventive
concept of the surgery”). As has been long established, even benefits arising from the use or
sale of the invention itself are permissible so long as they are “incidental to the primary purpose
of experimentation.” EZ Dock, 276 F.3d at 1357 (Linn, J., concurring); see also Elizabeth, 97 U.S.
at 135 (“Whilst the supposed machine is in such experimental use, the public may be incidentally
deriving a benefit from it”).
Venture’s motion for summary judgment of invalidity based on the Equilon sale is denied.
ii.
The Kerr-McGee Prior Art System
Next, Venture claims that the “inventors sold and installed a [butane] blending system at
Kerr-McGee’s facility in Nashville in the mid-1990s that invalidates many claims”—specifically,
claims 1-3, 12-13, and 36-40 of the ‘302 Patent; and claims 1-2, 5-6, and 10-14 of the ‘629 Patent.
(Venture’s SJ Br. 1; Venture’s SJ Mot. 1.) Venture argues that the Kerr-McGee system is prior
art under 35 U.S.C. § 102(b) (publicly used or on-sale) and § 102(g) (invented by another without
abandonment, suppression, or concealment) because it was sold and publicly used as early as
1994 and was not confidential. (Venture’s SJ Br. 10–11.) Venture does not elaborate on how the
Kerr-McGee system meets the requirements of Sections 102(b) or (g), but Sunoco largely
concedes the point. (See id.; Sunoco’s SJ Resp. 1, 13. But see Sunoco’s SOAF Resp. to ¶¶ 23,
24 (stating that Texon only sold “components for a system,” and generally denying Venture’s
claims for lack of knowledge).) Instead, Sunoco focuses on whether the Kerr-McGee system
actually anticipates the claims in question.
Sunoco argues that summary judgment is
inappropriate with respect to most of the claims mentioned because Sunoco is no longer asserting
those claims against Venture. (Sunoco’s SJ Resp. 1 n.1.) As for the dependent claims that
Venture discusses in detail, Sunoco argues that summary judgment is inappropriate because the
17
undisputed evidence shows that the Kerr-McGee system was a “manual blending system” in
which “a human operator generated the blend ratio” rather than the “process control unit” required
by the patents’ claims. (Id. at 1.)
Before ruling on this issue, however, the court pauses to address Sunoco’s jurisdictional
arguments. On September 11, 2017, in the middle of briefing for the parties’ previous summary
judgment motions, Sunoco filed an amended notice of its asserted claims which dramatically
reduced the number of claims at issue in this case. (See Sunoco’s Notice of Currently Asserted
Claims [251] (“Sunoco’s Claim Notice”), 1 (reducing Sunoco’s asserted claims from 116 to just
33).) Of the nineteen claims Venture asserts are anticipated by the Kerr-McGee system, only
dependent claims 2 and 3 in the ‘302 Patent and 2 and 12 in the ‘629 Patent are still asserted
against Venture. (Sunoco’s SJ Resp. 1, 13.) Venture’s present summary judgment motion
nevertheless seeks to invalidate many of the no-longer-asserted claims. Sunoco argues that the
court must dismiss all of Venture’s counterclaims against non-asserted patent claims for lack of
jurisdiction because “there is no longer a live case or controversy regarding them.” (See id. at 1
n.1; Sunoco’s Claim Notice 6–8.)
The court agrees with Sunoco, but only in part. “It is well-established that, in patent cases,
the existence of a case or controversy must be evaluated on a claim-by-claim basis.” Streck, Inc.
v. Research & Diagnostic Systems, Inc., 665 F.3d 1269, 1281 (Fed. Cir. 2012) (internal citation
and quotation marks omitted). A party seeking a declaratory judgment bears the burden of
establishing that jurisdiction exists “at all stages of review.” Id. at 1282 (quoting MedImmune, Inc.
v. Genentech, Inc., 549 U.S. 118, 127 (2007)). Accordingly, “a counterclaimant must show a
continuing case or controversy with respect to withdrawn or otherwise unasserted claims.” Id. at
1283. The court also recognizes the clear precedent set by the Federal Circuit in Honeywell,
however, which held that an actual case or controversy still exists when a counterclaimant seeks
to invalidate independent claims that were withdrawn by the patentee, but the patentee continues
18
to assert the dependent claims which rely on those independent claims. 488 F.3d at 995–96
(“[I]nfringement of a dependent claim also entails infringement of its associated independent
claim.”); see also Sunoco SJ Opinion I, 2017 WL 4283946, at *2 n.3 (citing Honeywell and stating
that Sunoco’s decision to withdraw the independent claims would not have a material effect on
the case). That is the situation here. The remaining claims are all dependent claims, and Venture
specifically identifies the withdrawn independent claims as appropriate for continued jurisdiction
because of their relationship to the asserted dependent claims. And although Sunoco argues for
a broader dismissal order in its brief opposing summary judgment (see Sunoco’s SJ Br. 13, n.21),
it, too, recognized the relevancy of the underlying independent claims in its notice of asserted
claims: specifically, ‘302 Patent claim 1, and ‘629 Patent claims 1, 10, and 11. 7 (Sunoco’s Claim
Notice 3.)
Conversely, although Venture halfheartedly argues for the inclusion of all the
previously-asserted claims, the only ones discussed in any detail in Venture’s brief supporting
summary judgment are the dependent claims still asserted against Venture and their related
independent claims. Based on the applicable case law, the court concludes that an actual case
or controversy exists for claims 1–3 of the ‘302 Patent, and claims 1, 2, 10–12 of the ‘629 Patent.
Venture’s invalidity counterclaims with respect to the remaining claims in the ‘302 and ‘629 Patent
are dismissed for lack of jurisdiction.
a.
The Independent Claims
The parties again start their arguments by discussing issues of waiver. Venture believes
that summary judgment of invalidity is appropriate with respect to several of the independent
claims in the two patents (‘302 Patent claim 1; ‘629 Patent claims 1 and 10) because “Sunoco’s
technical expert (Norman Goddard) does not dispute that these claims are anticipated.”
Claim 11 in the ‘629 Patent is also a dependent claim, but because it rests in the
middle of a chain linking non-asserted independent claim 10 to asserted dependent claim 12, it
must be considered as well. (See ‘629 Patent col. 13 l. 64–col. 14 l. 15.)
19
7
(Venture’s SJ Br. 11.) Although it is true that Goddard’s validity report does not address these
claims, Sunoco explains that this is because they are among the claims that Sunoco no longer
asserts against Venture. (See Sunoco’s Notice of Currently Asserted Claims [251], 3–4.) Further,
Goddard’s report specifically stated that he was addressing only asserted claims, and that he
“reserve[d] the right to provide an opinion as to the validity of any other claim . . . should such
request be made of me in the future.” (Goddard Rebuttal Report on Validity, Ex. 26 to Gross Decl.
[278-22], ¶¶ 3–7.) Evidently anticipating such a response, Venture argues that, because these
independent claims are the basis for asserted dependent claims, Goddard should have included
them in his validity report “if [he] truly disputed [them].” (Venture’s SJ Br. 11.)
The court declines to hold Goddard’s failure to address the independent claims in his
rebuttal report against Sunoco. As previously stated, this court has little interest in sifting through
the parties’ never-ending stream of arguments based on questionable waivers or defaults, and is
disinclined to grant summary judgment on this basis alone. In addition, the record shows that
Goddard did address whether the independent claims were anticipated during his deposition (see
Sunoco’s Resp. Br. 13 n.21), so the court may look to the substance of his testimony (and the
other evidence cited in Sunoco’s statement of additional material facts) to evaluate the merits of
each side’s argument.
In light of this evidence, the court is satisfied that summary judgment of invalidity is
warranted with respect to the aforementioned independent claims of the ‘302 and ‘649 Patents.
It is clear to the court that no genuine dispute of material fact still exists as to whether the KerrMcGee system anticipates the independent claims—it does. Claim 1 of the ‘302 Patent is
representative of the disputed independent claims, and reads in relevant part: “A system for
blending butane and gasoline at a tank farm comprising: a) a tank of gasoline; b) a tank of butane;
c) a blending unit . . . ; d) a dispensing unit . . . ; and e) a rack, wherein the dispensing unit is
20
located . . . [.]” 8 Of these limitations, the parties only dispute whether the Kerr-McGee system
included a “tank of gasoline.” A schematic of the Kerr-McGee system is shown below:
(Kerr-McGee Operating & Procedures Manual § 5, Ex. 34 to Dodd Decl. [368-7].) As shown in
the schematic, the butane originated in a “butane storage tank” and the gasoline (labeled “Product
A”) started in a “pipeline.” The parties agree that the Kerr-McGee system also sourced its gasoline
from a barge docked somewhere near the terminal. (Sunoco’s SOAF Resp. to ¶¶ 25–29.)
Venture claims that the barge and the required “tank of gasoline” amount to the same thing. (See
Venture’s SOF ¶¶ 28–29; Rys Report on Invalidity ¶ 133, Ex. 10 to Dodd Decl. [372-9].) Indeed,
inventor Vanderbur stated as much at his deposition when he described the barge as containing
The other independent claims in the ‘302 and ‘629 Patents replace the word
“butane” with “volatility modifying agent” (i.e., the broader category of substances that includes
butane), but all require a “tank of gasoline.” See, e.g., ‘629 Patent col. 13 l. 64–col. 14 l. 6 (claim
10).
21
8
several compartments—or “[a] tank of some type”—filled with gasoline that would then be pumped
into the Kerr-McGee system. (76/20/17 Vanderbur Dep. 374:18–25, Ex. 17 to Dodd Decl. [37213].) Sunoco’s own expert, Goddard, testified similarly when asked whether the barge had a tank
on it: “Okay. The barge is—actually is a tank. They’re just metal boxes with covers on them.
Well, you know, sealed covers so you don’t have . . . VOCs [i.e., volatile compounds] coming out
the top of it, and then you have a tug pushing it around.” (9/27/17 Goddard Dep. 296:16–297:2,
Ex. 21 to Gross Decl. [278-20].) Sunoco concedes that Vanderbur and Goddard made these
statements, but denies that either man ever admitted that “a barge with a tank” (of gasoline) was
the same as a “tank of gasoline.” Sunoco points to Goddard’s statement that “you can classify a
barge as a transportation system for moving gasoline” as evidence of his true thoughts on bargesourced gasoline (id. at 297:5–7), but there is no reason that a barge cannot simultaneously be
both a container (or “tank”) and a vehicle for transport. 9
Sunoco also cites to the ‘302 Patent’s specification in an effort to exclude barges with
tanks from the claimed language:
The term “tank farm” is meant to encompass any facility that contains a number of
large storage tanks for petroleum products, from which petroleum tanker trucks
are filled. Such facilities typically contain multiple storage tanks that separately
contain various types and grades of gasoline, including reformulated gasoline as
that term is typically used in the gasoline business, and the various grades of
reformulated gasoline. . . .
The tanks often hold in excess of 500,000 gallons of petroleum product, and are
surrounded by berms to capture any petroleum spills. Such facilities typically
receive their petroleum products from petroleum pipelines that consolidate refined
petroleum products from a number of refinery trunk lines, although tank farms can
also be supplied only from one refinery, or from a coastal or freshwater port that
receives refined petroleum products by boat. As used herein, the term “tank farm”
only includes tank farms that distribute petroleum products to petroleum tanker
trucks.
The court recognizes that Goddard asked for the opportunity to weigh in on the
validity of unaddressed claims, but the court is unable to envision any additional evidence beyond
that already presented, or any serious argument that Sunoco could advance, that could create a
genuine dispute of material fact on this issue.
22
9
‘302 Patent col. 4 l. 58–col. 5 l. 15. Sunoco appears to believe this language establishes that
“barges with tanks” do not fall within the scope of a “tank of gasoline” at tank farm. The court
does not so interpret this language, or any other specification, in this way. The specification itself
mentions that tank farms may be supplied from a “port that receives refined petroleum products
by boat.” Id. Venture’s view also comports with the parties’ agreed construction of “tank farm” as
“[a]ny facility that contains a number of large storage tanks for petroleum products received from
a refinery and distributed to tanker trucks.” Sunoco Markman Opinion, 2017 WL 1550188, at *20.
If a barge docks directly at a tank farm and supplies gasoline to the farm’s blending system from
its onboard tanks, then that simply cuts out the middle step of transferring the gasoline from the
port to the tank farm to be held in yet another holding tank. Common sense would lead any
reasonable juror to conclude that a tank of gasoline is a tank of gasoline, whether afloat or on dry
land. Venture’s motion for summary judgment of invalidity of ‘302 Patent claim 1 and ‘629 Patent
claims 1 and 10 is granted.
b.
The Dependent Claims
Venture claims the “Kerr-McGee system also anticipates the dependent claims of the ‘302
and ‘629 patents that recite generating a ‘blend ratio’ based on a ‘desired vapor pressure’ and the
claims that require a ‘process control unit’ to do so.” (Venture’s SJ Br. 12.) As stated above, the
remaining dependent claims at issue are ‘302 Patent claims 2–3 and ‘629 Patent claims 2, 11–
12. Claim 2 in both patents, as well as claim 11 in the ‘629 Patent, are all roughly identical 10 and
add an additional component to the aforementioned blending system described in the
independent claims (gas tank, butane tank, blending unit, dispensing unit, rack): a “process
control unit” that “generates a ratio input signal that controls the ratio of butane and gasoline
blended by the blending unit.” The other two claims, ‘302 Patent claim 3 and ‘629 Patent claim
Again, the only difference between the claims is that some cover “butane” while
others cover a “volatility modifying agent.” Compare ‘629 Patent claim 2 with claim 11.
23
10
12, are themselves dependent on claims that require a process control unit to generate a ratio
input signal, “wherein the ratio input signal is derived from a calculation of the ratio of butane and
gasoline that will yield a desired vapor pressure.”
It is undisputed that in the Kerr-McGee system, a human operator was responsible for
taking samples of the unblended gasoline using a portable analyzer, using the vapor pressure
reading to look up the appropriate blend ratio in a table of calculations, and then entering that
blend ratio into an operator interface. (Sunoco’s SOAF Resp. to ¶¶ 31–33.) The interface then
sent a signal to a programmable logic controller (or “PLC”, labeled as the “controller” on the KerrMcGee schematic), which controlled the valves in the blending unit to mix the correct amount of
butane and gasoline. (Id. at ¶¶ 33–34.) The parties’ sole area of disagreement is over the extent
to which the PLC “generates” the ratio input signal. Sunoco argues that the human element of
the Kerr-McGee system is enough to deny summary judgment: “a human operator manually
determined the blend ratio and manually inputted the blend ratio into a blend controller . . . which
adjusted a valve to achieve that blend ratio. Hence, the human operator—not a ‘process control
unit’—generated the blend ratio.” (Sunoco’s Resp. Br. 13.) Venture, meanwhile, argues that the
claims “do[ ] not require that the process control unit calculate or create the desired blend ratio;
the claim merely requires that it “generates a ratio input signal.’” (Venture’s SJ Br. 14 (emphasis
in original).)
Venture’s creative underlining aside, this court is not convinced that the case is so clearcut. The word “generates” modifies the entire phrase “ratio input signal,” not just “signal.” As
Sunoco points out, generate means “to bring into existence.” (Sunoco’s Resp. Br. 14 (quoting
Merriam-Webster’s Collegiate Dictionary (10th ed., 1997).) This suggests that the process control
unit must “bring into existence” the entire ratio input signal, not just a signal containing ratio
information received from an external source. See also ‘302 Patent claim 3 (similarly stating that
the radio input signal itself must be “derived from a calculation of the ratio of butane and
24
gasoline”). This battle over content versus transmission is extremely narrow, but important. To
illustrate, imagine a hypothetical patent for software that “generates an e-mail.” This act has two
components: writing the e-mail and sending the e-mail.
Applied to this context, Venture’s
argument would be that software that merely sends an e-mail written by human hands is one that
“generates an e-mail.” Sunoco’s argument is that the patent as a whole clearly requires the
software to both write and send the e-mail.
While a reasonable jury might conclude that it is enough that the Kerr-McGee system’s
PLC generated a “signal” that contained a blend ratio determined and entered by a human,
Sunoco’s contrary interpretation is just as, if not more, reasonable. The patents’ specification, for
example, describes a preferred embodiment of the invention in which:
[A] process control unit [ ] dictates and controls the ratio at which butane and
gasoline are blended based upon the prescribed vapor pressure. The process
control unit receives measurements of the vapor pressure of the butane and
gasoline, and from those measurements calculates the ratio at which the butane
and gasoline should be blended to achieve the prescribed vapor pressure. Based
upon those calculations, the process control unit emits a ratio input signal that
controls the ratio of butane and gasoline blended by the blending unit.
‘302 Patent col. 6 ll. 12–21. In addition, Venture’s efforts to paint Sunoco’s witnesses as having
conceded the point are misplaced: although they all admitted that the Kerr-McGee system’s PLC
generated the signal, they uniformly denied that the PLC generated the calculation as well. (See,
e.g., Benavides Decl. ¶ 10, Ex. 32 to Gross Decl. [278-28] (“The [PLC] signaled a butane control
valve to open or close and thereby adjusted the flow rate of the butane stream to the manually
preset blend ratio.”) (emphasis added).) Finally, this court’s earlier Markman opinion bolsters
Sunoco’s position that the claimed process control unit must be responsible for generating the
ratio input signal from scratch. In constructing the term “blending unit” as used in claim 1 of the
‘302 Patent, the court held that the blending unit did not have to be “capable of performing the
calculation to create a blend ratio” because other claims—the ones at issue here—specifically
“reference[d] an automatically calculated blend ratio” made by a process control unit. Sunoco
25
Markman Opinion, 2017 WL 1550188, at *13. This court also addressed the potential for a human
operator directly:
Many parts of the specification and the claims themselves appear to contemplate
the patented system operating without a processing unit; Sunoco urges that this
must mean that the blending unit is doing the controlling. The alternative, however,
is not a self-regulating blending unit that contradicts the express definition in the
specification, but a human operator. Though this would not be the ideal version of
the invention, it would be a functional version of Claim 1 that is consistent with the
specification.
Id. at *15. Although the court did not need to elaborate on the claims reciting a process control
unit in its claim construction opinion, the inverse of this passage is also likely true: the variants of
Sunoco’s invention that do feature a process control unit do not allow for human-created blend
ratios or “ratio input signals.”
As Venture has failed to show that there are no genuine disputes of material fact with
respect to these claims, summary judgment is denied.
B.
Non-Infringement
Venture next seeks summary judgment of non-infringement on certain claims in the ‘302,
‘629, ‘671, and ‘948 patents. A determination of patent infringement involves a two-step inquiry.
“The court must first interpret the claims to determine their scope and meaning. It must then
compare the properly construed claims to the allegedly infringing device.” Dynacore Holdings
Corp. v. U.S. Phillips Corp., 363 F.3d 1263, 1273 (Fed. Cir. 2004) (citation omitted). The first step
of this inquiry is a legal determination. The second step is primarily factual, though to support a
verdict of infringement the accused device must satisfy every limitation in the asserted claims,
either literally or under the doctrine of equivalents. Freedman Seating Co. v. American Seating
Co., 420 F.3d 1350, 1356 (Fed. Cir. 2005). “[A]lthough equivalence is a factual matter normally
reserved for a factfinder, the trial court should grant summary judgment in any case where no
reasonable factfinder could find equivalence.” TechSearch, LLC v. Intel Corp., 286 F.3d 1360,
1371 (Fed. Cir. 2002).
26
i.
‘302 patent claim 17; ‘629 patent claims 17 and 31; ‘948 patent
claims 1 and 7
U.S. Venture first argues that its systems do not “transmit” or “provide” a signal or
instruction to a programmable logic controller (PLC), and therefore do not infringe claim 17 of the
‘302 patent, claims 17 and 31 of the ‘629 patent, or claims 1 and 7 of the ‘948 patent. (Venture’s
SJ Brief 14.) Each of the relevant claims in the ‘302 and ‘629 patents requires the step of
“transmitting” either a “signal” or “instruction” to a “programmable logic control” or “programmable
logic controller.” 11 The relevant claims in the ‘948 patent require a “processor programmed
to . . . provide a control signal to [a] programmable logic controller[.]” U.S. Venture does not deny
that its systems include the requisite processors, signals or instructions, and programmable logic
controllers. Instead, the company argues that its signals and/or instructions originate (or are
programmed to originate) “within” the programmable logic control(ler) itself, and therefore are not
“transmitted or provided to the PLC.” (Id.)
The Federal Circuit considered a similar argument in NTP, Inc. v. Research in Motion,
Ltd., 418 F.3d 1282 (Fed. Cir. 2005), abrogated on other grounds, Iris Corp. v. Japan Airlines
Corp., 769 F.3d 1359, 1361 n.1 (Fed. Cir. 2014). The patents at issue in that case “relate[d] to
systems for integrating existing electronic mail systems . . . with radio frequency (‘RF’) wireless
communication networks, to enable a mobile user to receive email over a wireless network.” NTP,
418 F.3d at 1287.
Certain claims in the patents required, inter alia, that an “RF
receiver . . . transfer[ ] the originated information to the at least one of the plurality of destination
processors.” Id. at 1310. The defendant argued that the RF receiver and destination processor
would have to be “separately housed” in order for “information” to be “transferred” from one to the
Although not relevant to the disputed issue here, the “signal” in claim 17 of the ‘302
patent must “correspond[ ] to the vapor pressure of the blend[.]” In claims 17 and 31 of the ‘629
patent, the “instruction” must be “for adjusting the butane stream to the calculated blend rate for
blending with the gasoline stream[.]”
27
11
other. Id. The court rejected this argument because neither the patent specifications nor the plain
and ordinary meaning of the claim language required it. “[A] ‘transfer’ of information can equally
occur between two entities that are physically housed together,” the court explained. Id.
Sunoco does not suggest that U.S. Ventures’ signals and/or instructions originate
“outside” the company’s programmable logic controllers. Instead, Sunoco argues that NTP
forecloses U.S. Venture’s argument that this is what the claims require. The court agrees. Neither
party requested a claim construction on the relevant terms, which suggests that they themselves
believe that the plain and ordinary meaning should apply. And the plain and ordinary meanings
of the relevant terms—“processor,” “transmit,” “provide,” “signal,” “instruction,” “to,” and
“programmable logic controller”—do not require that signals or instructions being transmitted from
a processor to a programmable logic controller originate “outside” the programmable logic
controller. A reasonable jury could find that signals or instructions originating from a processor
“within” a programmable logic controller are “transmitted to” that controller, so U.S. Venture’s
motion for summary judgment of non-infringement is denied with regard to claim 17 of the ‘302
patent, claims 17 and 31 of the ‘629 patent, and claims 1 and 7 of the ‘948 patent.
ii.
‘671 patent claim 1
U.S. Venture also argues that its systems do not infringe claim 1 of the ‘671 patent.
(Venture’s SJ Brief 15.) That claim recites, in relevant part:
1. A method for in-line blending of gasoline and butane comprising:
a)
providing a continuously flowing gasoline stream that comprises:
i)
a plurality of batches of different gasoline types . . . ;
b)
providing an allowable vapor pressure;
c)
providing a butane stream that comprises a butane vapor pressure;
d)
periodically determining said gasoline vapor pressure;
e)
periodically determining said gasoline flow rate;
f)
calculating a blend ratio based upon said butane vapor pressure, said
gasoline vapor pressure, and said allowable vapor pressure; and
g)
blending said butane stream and said gasoline stream at a blending unit at
said blend ratio to provide a blended gasoline stream having a blended
vapor pressure less than or equal to said allowable vapor pressure.
28
(‘671 Patent, col. 15 ll. 56-67.) The parties agree that U.S. Venture’s Green Bay, Madison South,
Fort Worth, Bettendorf, and Houston systems are connected to a gasoline pipeline and blend
butane into gasoline received from the pipeline. (Venture’s Resp. to Sunoco’s SOAF ¶ 9.) The
parties also agree that these systems are capable of being operated by at least four different
pieces of “source code,” three of which U.S. Venture obtained from Technics (referred to in this
round of briefs as Technics’ “Original,” “First Pass Only,” and “Not First Pass” code, respectively),
and one of which U.S. Venture wrote itself. (See U.S. Venture’s 2017 SOF [197], at ¶13;
Venture’s Mot. 15-17; Sunoco’s Mot. 16-18.) U.S. Venture now argues that the systems using
the “Original,” “Not First Pass,” and U.S. Venture versions of the source code did not “periodically
determine[] . . . gasoline vapor pressure,” as step (d) of claim 1 requires, and that the systems
using the “Original” and “First Pass Only” versions of the source code did not “provid[e] a
continuously flowing stream of gasoline,” as step (a) requires. (Venture’s Mot. 15-18.)
U.S. Venture first suggests that there is no evidence that systems using the “Original”
Technics source code periodically determined gasoline vapor pressure, because Sunoco’s
technical expert (Norman Goddard) purportedly implied in his expert report that those systems
“would measure the vapor pressure of the unblended gasoline only one time.” (Venture’s Mot. 15
(emphasis in original).) But that is not actually what Goddard said in his report. According to
Goddard, systems operating with the “Original” Technics code “sampled the vapor pressure of
unblended gasoline at the start of each batch of gasoline that is blended with butane.” (Goddard
Rep. [278-4], at ¶ 583, 106.) U.S. Venture does not suggest that the word “periodically” in claim
1 should be construed according to anything other than its plain and ordinary meaning, and a
reasonable jury could conclude that a system that determines gasoline vapor pressure “at the
start of each batch” satisfies step (d) because it is a system that determines gasoline vapor
29
pressure “periodically.” 12
U.S. Venture next argues that there is no evidence that its systems using the “Original” or
“First Pass Only” source code infringe because Goddard’s report states that “after the gasoline
flow stopped for one batch, the blending process ended, and it would start over again by sampling
the unblended gasoline at the start of the new batch.” (Venture’s Mot. 16; Goddard Rep. ¶ 583.)
Because these systems “stop” the “gasoline flow” between batches, U.S. Venture reasons, they
do not “provid[e] a continuously flowing gasoline stream,” as step (a) requires. Although at first
glance this argument appears to have some merit, the court concludes that it too is off base. U.S.
Venture’s literal interpretation of the claim language “continuously flowing” would render certain
dependent claims in the ‘671 patent nonsensical. Claim 13, for example, which is dependent on
claim 1, adds the steps of “recording a start time when a recorded batch begins to flow past said
blending unit,” and “recording an end time when said recorded batch finishes flowing past said
butane blending unit.” (‘671 Patent, col. 17 ll. 1-5 (emphasis added).) These references to the
beginning and end of the flow only make sense if the phrase “continuously flowing” in step (a)
means continuously flowing during the blending process.
U.S. Venture is on stronger ground, however, when it argues that its systems using the
“Not First Pass” and U.S. Venture versions of the source code do not perform step (d). As Sunoco
concedes, these systems do not measure the vapor pressure of gasoline before blending it with
butane. (See Sunoco’s Resp. to Venture’s SOF ¶ 52.) Although the text of step (d) does not
expressly distinguish between blended and unblended gasoline, it is clear from dependent claim 2
(which recites the same steps as claim 1, plus the additional step of “measuring vapor pressure
of the blended gasoline stream”) that step (d) refers to determining the vapor pressure of
12
¶ 578.)
Indeed, this is exactly how Goddard interprets the word. (See Goddard Report
30
unblended gasoline. Construing step (d) to encompass measurements of the vapor pressure of
blended gasoline would make claim 2 entirely redundant.
Sunoco argues that these systems infringe under the doctrine of equivalents, even if they
do not literally infringe. The doctrine of equivalents can support a verdict of infringement where
there are “differences between the claimed invention and the accused product,” but those
differences are “insubstantial.” Brilliant Instruments, Inc. v. GuideTech, LLC, 707 F.3d 1342, 1347
(Fed. Cir. 2013). A party alleging infringement under the doctrine of equivalents can usually
prevail by “show[ing], for each claim limitation, that the accused product ‘performs substantially
the same function in substantially the same way with substantially the same result as each claim
limitation of the patented product.’” Id. (quoting Crown Packaging Tech., Inc. v. Rexam Beverage
Can Co., 559 F.3d 1308, 1312 (Fed. Cir. 2009)).
Sunoco’s argument under the doctrine of equivalents rests on Goddard’s expert report.
According to Goddard, the function of measuring the vapor pressure of blended and unblended
gasoline alike “is to obtain a vapor pressure measurement to be used in determining a calculated
blend ratio to yield a desired vapor pressure of the blend.” (Goddard Rep. ¶¶ 847-48.) The way
in which the measurements of blended and unblended gasoline vapor pressure are used,
Goddard continues, are “as parameters in the blend ratio calculation.” (Id.) And “the result” in
both cases “is a calculated blend ratio that will yield a desired vapor pressure of the blended
gasoline.” (Id.)
As U.S. Venture points out, however, the doctrine of equivalents may not be used to
“vitiate” a claim limitation “by rendering it meaningless.” American Calcar, Inc. v. American Honda
Motor Co., Inc., 651 F.3d 1318, 1339 (Fed. Cir. 2011). In this case, finding that measuring
blended gasoline’s vapor pressure is equivalent to measuring unblended gasoline’s vapor
pressure would render claim 2 of the ‘671 patent entirely meaningless. The court therefore rejects
Sunoco’s equivalence argument as a matter of law.
31
U.S. Venture’s motion for summary judgment of non-infringement on claim 1 of the ‘671
patent is granted with regard to systems using the “Not First Pass” and U.S. Venture source code,
but is otherwise denied.
iii.
‘302 patent claim 16
Finally, U.S. Venture argues that none of its systems infringe method claim 16 of the ‘302
patent because they do not “transmit[ ] . . . the butane vapor pressure to the processing unit,” as
step (c) of that claim requires. (Venture’s SJ Mot. 18.) As with its discussion of the ‘671 patent,
U.S. Venture divides its arguments about this claim according to the various source codes used
by its systems, and the court will follow suit.
The company first suggests that there is “no evidence” that any of its own employees
actually used the “Original” Technics source code to measure the vapor pressure of butane. But
there is clearly a genuine factual dispute about this question. Gary Chambers, a former regional
terminal manager at Defendants’ facilities in Green Bay, Wisconsin, has submitted a declaration
stating that the system Defendants purchased from Technics “contained a sensor for determining
and receiving the RVP for the butane stream,” and that although he and others “used a constant
value for butane RVP,” they did so because “we experienced little, if any, fluctuation in its
measured value.” (Chambers Decl. [367], at ¶ 11.) A reasonable jury could infer from Chambers’
reference to minimal fluctuation in the “measured value” of butane RVP that Defendants’ own
employees or agents used Technics’ Original source code to measure butane vapor pressure.
Even if this were not the case, U.S. Venture is incorrect to assume that it cannot be held
liable for Technics’ infringing use of the “Original” source code. U.S. Venture contends this is true
“because Sunoco has licensed Technics’ past infringing activity under the covenant not to sue in
their settlement agreement.” (Id. at 19.) But this court has already determined that Sunoco’s
agreement not to sue Technics for its past infringing sales did not exhaust Sunoco’s rights in the
patents at issue.
See Sunoco SJ Opinion I, 2017 WL 4283946.
32
That agreement did not
retroactively authorize Technics’ infringing sales, thereby triggering the exhaustion doctrine,
because it did not license future infringing conduct, as the plaintiff did in TransCore, LP v.
Electronic Transaction Consultants Corp., 563 F.3d 1271, 1276 (Fed. Cir. 2009). Rather, Sunoco
covenanted “not to sue Technics regarding Technics’ Exploitation of the Accused system
occurring prior to” June 17, 2016. (Settlement Agreement § 1.4, 2.1 [372-20].) The agreement
is explicit that it “does not confer in any way a license to the Asserted Patents to Technics or to
any Third Parties, including Technics’ customers.” (Id. at § 2.1.) U.S. Venture’s conclusory
assertion that the agreement is an “express license” that precludes any party’s liability for
Technics’ past infringing conduct is belied by the text of the agreement itself.
U.S. Venture next argues that systems using the later versions of Technics’ source code
did not infringe claim 16 because they used only an “assumed” butane vapor pressure rather than
“an actual butane vapor pressure.” (Venture’s SJ Mot. 20.) It is not entirely clear what U.S.
Venture means by “actual” butane vapor pressure, but the court presumes the company is
referring to a figure derived from measuring a sample of the butane stream. Claim 16 does not
expressly require the determination of such an “actual” butane vapor pressure. Indeed, the court
notes that this construction makes little sense in light of claim 15, which recites steps for
determining butane vapor pressure by “drawing a sample of butane from the butane stream” and
“measuring the vapor pressure of the sample of butane.” U.S. Venture’s construction would make
claim 15 redundant, so the court rejects it.
Finally, the company argues that there is insufficient evidence that anyone used any of
the later versions of the source code to “transmit[ ]” even an “assumed” butane vapor pressure to
a processing unit at Defendants’ facilities. Gary Chambers testified that Defendants’ systems in
Green Bay were programmed—by someone—to include a “constant” value for butane vapor
pressure, but he also admitted that he did not know if the system “actually used” this constant
value when it calculated blend ratios.
(Chambers Dep. [368-5], at 122-24.)
33
Goddard’s
infringement report, however, states that it did. According to Goddard, systems using later
versions of Technics’ software “transmit[ted] an assumed butane vapor pressure and the
measured gasoline pressure to the PLC, and then calculated a blend ratio based on those values.”
(Goddard Rep. ¶ 369.) Regarding U.S. Venture’s software, Goddard states that “although a
butane vapor pressure was not directly used in U.S. Venture’s blending algorithm for calculating
the blend percentages . . . the algorithm still uses assumptions about the value of the butane
vapor pressure.” (Id. at ¶ 353.) It does so by “using scaling parameters” that “are based on an
assumption of the vapor pressure of the butane stream.” (Id. at ¶ 349.) A reasonable jury could
find from this evidence that Defendants’ systems used an assumed butane pressure in their
butane blending systems, and that this use is the equivalent of a “transmission” of an assumed
butane vapor pressure. The court therefore denies Defendants’ motion for summary judgment
on claim 16 of the ‘302 patent
C.
Lost Profit Damages
Finally, Venture requests summary judgment that Sunoco is not entitled to lost profit
damages for any of Venture’s conduct that is found to be infringing. To recover lost profits, the
patentee must show a reasonable probability that, but for the infringing activity, it would have
made the sales that were made by the infringer. See Presidio Components, Inc. v. Am. Tech.
Ceramics Corp., 875 F.3d 1369, 1380 (Fed. Cir. 2017); see also, e.g., Standard Havens Prods.,
Inc. v. Gencor Indus., Inc., 953 F.2d 1360, 1372 (Fed. Cir. 1991) (“Evidence that shows a
reasonable probability that the patent owner would have made the infringing sales made by the
infringer will suffice.”). One way to prove but-for causation is to rely on the Panduit test, which
requires the patentee to show “(1) demand for the patented product; (2) an absence of acceptable,
noninfringing substitutes; (3) manufacturing and marketing capability to exploit the demand; and
(4) the amount of profit that would have been made.” Presidio, 875 F.3d at 1380 (citing Panduit
Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir. 1978)); see also, e.g.,
34
Mentor Graphics Corp. v. EVE-USA, Inc., 851 F.3d 1275, 1285 (Fed. Cir. 2017) (same); Standard
Havens, 953 F.2d at 1372-73 (same).
Venture argues that Sunoco cannot recover lost profit damages because it cannot meet
its burden of proof on the second Panduit factor: the absence of acceptable, non-infringing
alternatives. (Venture's SJ Br. at 23.) 13 In assessing the second Panduit factor, a fact-finder
“considers demand for particular limitations or features of the claimed invention.”
Mentor
Graphics, 851 F.3d at 1285. “To prove the absence of acceptable, non-infringing alternatives,
the patentee may prove either that the potential alternative was not acceptable to potential
customers or was not available at the time.” Presidio, 875 F.3d at 1380. If buyers “are motivated
to purchase because of particular features available only from the patented product, products
without such features—even if otherwise competing in the marketplace—would not be acceptable
noninfringing substitutes.” Mentor Graphics, 851 F.3d at 1286 (quoting Standard Havens, 953
F.2d at 1373).
Venture proffers evidence of only one potential substitute for Sunoco’s patented
technology: Venture’s own Modified System, which “require[s] the human operator to manually
enter the blend percentage of butane, rather than have it automatically calculated by the PLC[.]”
(Venture's SJ Br. at 22; see also 1/12/2018 Morrill Decl. ¶ 3.) The parties agree that Venture is
the hypothetical customer for purposes of the Panduit test. (Venture’s SJ Br. at 25; Sunoco’s
Resp. Br. at 23.) Venture emphasizes that after it stopped using the accused systems, it adopted
the Modified System rather than exit the market or “enter into an agreement with Sunoco.”
(Venture's SJ Br. at 24.) Venture also states that it continues to use the Modified System. (Id.)
These actions, Venture contends, demonstrate that Venture would have considered the Modified
System to be an acceptable substitute for Sunoco’s patented technology during the period of
Venture does not challenge Sunoco’s ability to satisfy the other Panduit factors.
(See Venture’s SJ Br. at 21-25.)
35
13
alleged infringement. (Id. at 22-25.) Venture further argues that it would have implemented the
Modified System during that time period even assuming it “does not have all the benefits of the
patented system.” (Id. at 25.) As a result, Venture concludes, Sunoco cannot recover lost profits.
(Id. (citing Mentor Graphics, 851 F.3d at 1286 (recognizing that a “patentee cannot establish
entitlement to lost profits for [a] particular sale” “if the customer would have bought the infringing
product without the patented feature”).)
In response, Sunoco argues that the evidence belies Venture’s assertion that it would
have considered the Modified System to be an acceptable alternative. First, Venture used the
accused systems for approximately five years and switched to the Modified System only after this
litigation commenced—and only after Venture’s attorneys advised Venture to do so. (See 6/6/17
Lamirande Dep. at 30:25-31:9.) Additionally, according to Sunoco, Venture’s own documents
and deposition testimony demonstrate its longstanding preference for automated, rather than
manual, blending technology. Lamirande, for example, testified during his deposition that in 2008,
Venture “really wanted to find an automated solution.” (7/6/2016 Lamirande Dep. at 75:4-7.) An
internal Venture document from 2011 discussed Venture’s desire for an automated system that
can “continuously adjust[] the blend percentage.” (Executive Summary at US-0001970)).
Venture’s director of business development testified during his deposition that Venture would be
able to “blend additional volume” with an automated system and that such a system was best
from a safety, efficiency, and regulatory perspective.
(Koel Dep. at 41:2-12, 42:14-18.)
Conversely, Venture’s technical expert testified during his deposition that human error associated
with manual adjustment could jeopardize Venture’s ability to maximize profits or could result in
production of gasoline that fails regulatory standards.
(Rys Dep. at 261:12-262:10.)
And
according to Venture’s damages expert, Venture expects it might blend some ten percent fewer
butane gallons using the Modified System as compared to the accused systems. (8/29/2017
Malackowski Report at 6-7.)
36
Viewing this evidence in the light most favorable to Sunoco and drawing all reasonable
inferences in its favor, the court concludes that a reasonable jury could find for Sunoco on the
second Panduit factor. More specifically, a reasonable jury could find that Venture was “motivated
to purchase” and develop the accused blending systems “because of particular features”—here,
automated blending capabilities—“available only from the patented” technology.
Mentor
Graphics, 851 F.3d at 1286 (quoting Standard Havens, 953 F.2d at 1373). On this basis, a
reasonable jury could further find that Venture would not have considered the Modified System,
which lacks those features, to be an acceptable substitute for the patented technology. See id.
The court also notes that “[t]he ‘acceptable substitute’ element . . . must be viewed of limited
influence where the [accused] infringer knowingly made and sold the patented product for years
while ignoring the ‘substitute.’” Panduit, 575 F.2d at 1162 n.9; see also, e.g., Stryker Corp. v.
Intermedics Orthopedics, Inc., 96 F.3d 1409, 1418 n.3 (Fed. Cir. 1996); United States Gypsum
Co. v. Lafarge N. Am. Inc., 670 F. Supp. 2d 737, 742-43 (N.D. Ill. 2009). Because Venture (a)
used the accused systems for approximately five years; (b) acknowledges that “[t]he concept of
an operator manually entering a blend ratio into a PLC” has been “known since the early 1990s”
(Venture SJ Br. at 24 (citing the Kerr-McGee system)); and (c) contends that it could have created
the Modified System in just a few hours even in 2012 (id. at 24), a reasonable jury could find that
Venture “ignore[d] the ‘substitute.’” Panduit, 575 F.2d at 1162 n.9.
For all of these reasons, the court finds that there are genuinely disputed issues of material
fact regarding the acceptability of non-infringing alternatives to Sunoco’s patented technology.
Accordingly, the court denies Venture’s motion for summary judgment on Sunoco’s claim for lost
profits. See Anderson, 477 U.S. at 248. 14
Venture also argues that the Modified System was available throughout the
damages period. (See, e.g., Venture’s Mot. at 23-24; 1/12/2018 Morrill Decl. ¶¶ 4-5.) Sunoco
disputes this contention in its Local Rule 56.1(b) statement but does not press this argument in
its opposition to Venture’s motion for summary judgment. (Compare Sunoco’s SOAF Resp.
37
14
II.
Sunoco’s Motion
Plaintiff Sunoco seeks summary judgment on two issues: (a) that certain references that
U.S. Venture identified in its Final Supplemental Unenforceability and Invalidity Contentions do
not qualify as “prior art” for purposes of Venture’s invalidity defenses; and (b) that Sunoco did not
engage in inequitable conduct during the prosecution of its patents.
A.
Alleged Prior Art References
As the court has already explained, 35 U.S.C. § 102 identifies the circumstances in which
a patent can be invalidated based on “prior art” references. “[P]rior knowledge or use [of an
invention] by others may invalidate a patent [on the same invention] . . . if the prior knowledge or
use was accessible to the public.” Woodland Tr. v. Flowertree Nursery, Inc., 148 F.3d 1368, 1370
(Fed. Cir. 1998); 35 U.S.C. § 102(a). A patent also can be invalidated where the invention it
describes was “on sale in this country” more than one year before the filing date of the patent, or
was previously “reduce[d] to practice” by another inventor who did not “abandon[ ], suppress[ ],
or conceal[ ] it.” Z4 Techs., Inc. v. Microsoft Corp., 507 F.3d 1340, 1352 (Fed. Cir. 2004); 35
U.S.C. § 102(b), (g)(2).
In its Final Supplemental Unenforceability and Invalidity Contentions, U.S. Venture
identified numerous alleged “prior art” references that it claims are sufficient to invalidate the
patents at issue in this case. Sunoco now moves for summary judgment with regard to three of
these references, arguing that none of them qualify as “prior art” under section 102. The court
considers the three references in turn. Because patents are presumed valid, see 35 U.S.C. § 282,
to ¶¶ 76, 78 with Sunoco’s Resp. Br. at 22-26.) Even assuming, without deciding, that the
Modified System was available during the period of alleged infringement, Venture is not entitled
to summary judgment on Sunoco’s claim for lost profits. Sunoco can satisfy its burden on the
second Panduit factor by proving “either that the potential alternative was not acceptable to
potential customers or was not available at the time.” Presidio, 875 F.3d at 1380 (emphasis
added). As already discussed, reasonable minds could conclude that the Modified System was
not acceptable to Venture.
38
the relevant question for the court is whether a reasonable jury could conclude that the evidence
in the record clearly and convincingly shows that the references were publicly known and/or used;
were “on sale” at least one year before Sunoco filed for its patents; or were previously reduced to
practice without being abandoned, suppressed, or concealed. See Zenith Electronics Corp. v.
PDI Communication Systems, Inc., 522 F.3d 1348, 1362 (Fed. Cir. 2008) (“[A]ccused infringers
are not free to flout the requirement of proving invalidity by clear and convincing evidence by
asserting a ‘practicing prior art’ defense to literal infringement under the less stringent
preponderance of the evidence standard.”) (quoting Tate Access Floors, Inc. v. Interface
Architectural Resources, Inc., 279 F.3d 1357, 1367 (Fed. Cir. 2002)).
i.
The TransMontaigne System
The first reference on which Sunoco seeks summary judgment is the “[g]asoline blending
system owned and operated by TransMontaigne Terminaling, Inc.”
(Venture’s Invalidity
Contentions [288-1], at 2.) According to U.S. Venture, “TransMontaigne developed, built, and
began using a system for blending gasoline and butane at its tank farm in North Little Rock,
Arkansas in 1997.” (Sunoco’s SOF ¶ 1.) This system qualifies as “prior art” under 35 U.S.C.
§ 102, U.S. Venture argues, because TransMontaigne (1) reduced it to practice without
concealing it; (2) used it in a way that was “publicly available”; and (3) used it in a way that was
“commercial.” (Id.)
“In order to establish an actual reduction to practice,” the party asserting invalidity must
prove that the prior inventor “constructed an embodiment or performed a process that met all the
limitations,” and “determined that the invention would work for its intended practice.” Z4 Techs.,
507 F.3d at 1352. Sunoco argues that there is no evidence that the alleged prior-art system was
ever actually constructed. One of the documents U.S. Venture cited in its Invalidity Contentions,
Sunoco notes, is an “authorization for expenditure” form that refers to “a contemplated system
rather than an actual system.” (Sunoco’s SOF ¶ 11.) This form describes a butane blending
39
system only in the future tense. (Id.) Another document cited by U.S. Venture is titled “Butane
Blending Description” and is marked “DRAFT.” (Id. at ¶ 12.) Like various other documents
relating to TransMontaigne, this document is not dated and does not indicate whether the system
it describes was actually built. (Id. at ¶¶ 12-15.)
U.S. Venture admits that these documents “do not indicate whether any system was
actually built,” but, as the company points out, these documents are not the only evidence
supporting its contention that the TransMontaigne system was, in fact, “reduced to practice.”
(Venture’s Resp. to Sunoco’s SOF [398], at ¶ 13.) TransMontaigne’s former President and COO,
Larry Clynch, attests that construction of a “butane blending system” at TransMontaigne’s facility
in North Little Rock “began in approximately June 1997 and finished in approximately September
1997.” (Clynch Decl. [392], at ¶¶ 10-11.) “Butane blending using the system began very shortly
after construction was completed,” Clynch asserts, “in September or October 1997,” when over
300 people attended “a grand opening at the terminal.” (Id. at ¶¶ 11, 18.) Attendees of the grand
opening “were allowed to roam around the terminal except for designated hazardous areas,”
Clynch says, and “would have been able to observe the gasoline tanks, the butane tanks, the
butane blending skid where the blending occurred, and the truck loading racks.” (Id. at ¶ 18.)
Clynch’s declaration is not, on its own, clear and convincing evidence that the
TransMontaigne system was built, let alone that the system was publicly used or known. The
Federal Circuit requires “[c]orroboration . . . of any witness whose testimony alone is asserted to
invalidate a patent.” Finnigan Corp. v. Int’l Trade Comm’n, 180 F.3d 1354, 1368 (Fed. Cir. 1999).
This requirement is premised on “doubt that testimonial evidence alone in the special context of
proving patent invalidity can meet the clear and convincing evidentiary standard to invalidate a
patent.” Id. See also Medichem, S.A. v. Rolabo, S.L., 437 F.3d 1157, 1172-73 (Fed. Cir. 2006)
(insufficient corroboration of reduction to practice, where only relevant evidence besides
inventor’s own testimony was unauthenticated handwritten notes purportedly belonging to
40
inventor’s employee). U.S. Venture provides documentary evidence that corroborates some of
Clynch’s testimony. It is clear from the document labeled “Construction Book,” for example, that
some form of construction relating to butane blending was underway at TransMontaigne’s North
Little Rock facility in the summer and fall of 1997. (see TPSL 793-883, Ex. 38 to Dodd Decl.
[395].) But it is not clear from these documents exactly what was constructed, or whether it was
ever finished. And there is no evidence whatsoever that corroborates Clynch’s assertions about
a “grand opening” where the facility’s butane blending system would have been available to the
public—an event for which there would likely be ample corroborative evidence.
Notably, U.S. Venture also admits that EPA regulations “require parties who blend butane
and gasoline to submit reports detailing the volumes of butane blended with the gasoline,” and
that the EPA has informed U.S. Venture that the agency is not in possession of any such reports
that relate to the TransMontaigne facility in North Little Rock. (Venture’s Resp. to Sunoco’s SOF
¶¶ 28-29.) As far as the court can tell, U.S. Venture has not offered any explanation why the
agency has no record of these reports.
This is a problem for U.S. Venture—particularly when it is considered alongside the
absence of corroborating evidence to support key parts of Clynch’s declaration.
Under a
“preponderance of the evidence” standard, Clynch’s testimony would probably be enough to avoid
summary judgment. But not under the “clear and convincing” standard. No reasonable jury could
find the evidence that the TransMontaigne system is prior art to be clear and convincing. As a
result, the court grants Sunoco’s motion for summary judgment with respect to that system.
ii.
The Williams Des Moines “Phase II” System
Sunoco next seeks summary judgment that “Phase II” of the “[g]asoline-butane blending
system owned and operated by Williams Pipe Line Company” in Des Moines, Iowa, is not prior
art. According to U.S. Venture, “at least as early as April 1990 . . . Williams Pipe Line Company
(‘Williams’) designed, built, and publicly used a system and method for blending gasoline and
41
butane at a tank farm/terminal” located near Des Moines. (Venture’s Resp. to Sunoco’s SOF
¶ 32.) In support of this contention, Venture relies on a memorandum on Williams stationary,
dated April 18, 1990, describing “costs associated with the proposed butane blending system at
our Des Moines station.” (Venture’s SOAF ¶ 11; MAG-00275-76, Ex. P to Decl. of Michael Krill
[288].) According to the memo, “Phase II” of this proposed system was to involve the installation
of “on-line analysis equipment” that “will monitor and adjust butane injection rates continuously.”
(MAG-00275.)
In a previous round of briefing in this case, U.S. Venture itself conceded that Phase II of
the Williams system “is not ‘public use’ prior art under 35 U.S.C. §§ 102(a) or (b), because there
is no record evidence that it was implemented.” (Memo. in Opp. to Sunoco’s Mot. for Summ. J.
[320], at 10.) The company now argues that Phase II is prior art because it was “known” by
Williams in 1990. (Def.’s Resp. Br. 8.) But this knowledge must have been “accessible to the
public” for it to qualify as prior art. Woodland, 148 F.3d at 1370. The only evidence U.S. Venture
cites showing that “knowledge” of Phase II was “accessible to the public” is a brief passage in the
deposition of Larry Mattingly, who confirmed that “during the 1990s” he “heard that Williams was
working on a system that used an online Grabner analyzer.” (Mattingly Dep. [395-4], at 430.)
Without corroboration, this is not enough to meet the applicable standard of clear and convincing
evidence. Therefore, Sunoco’s motion for summary judgment is granted with respect to the
Williams Des Moines “Phase II” system.
iii.
The Altoona System
The final reference at issue is the “[g]asoline-butane blending system offered for sale by
Linco Electromagnetic, et al. for a terminal in Altoona.” According to U.S. Venture, this system
“was offered for sale for blending gasoline with butane . . . as early as 1995.” (Venture’s Resp.
to Sunoco’s SOF ¶ 36.) In support of this contention, the company cites two documents authored
by Benny Benavides, a consultant on issues relating to the refining and pipeline industry. (Exs.
42
52-53 to Dodd Decl.; Benavides Dep. [278-27], at 8.)
Both documents are labeled “Fax
Transmittal” and contain the subject heading “Butane Blending-Altoona Terminal.” (Id.) One
document is dated June 9, 1995, and the other is dated June 26, 1995. (Id.) The June 9
document, which Benavides addressed to David Ponder of “Linco-Electromatic, Inc.,” refers to a
“recent discussion concerning a proposal from Linco to design and construct a butane blending
and control system.” (Ex. 52 to Dodd Decl.) The June 26 document is addressed to Larry
Mattingly at “Mid-Continent Energy Co.” and refers to “Linco’s alternative proposal dated June
23,” which Benavides describes as “considerably more expensive than what is being proposed
by Gate City Equipment Co.” (Id.) Neither Linco’s proposal(s) nor Gate City’s proposal is in the
record. But U.S. Venture infers from the two documents authored by Benavides that Linco and
Gate City “submitted competing offers to sell a system for blending gasoline and butane in 1995
for a tank farm in Altoona,” thereby triggering the “on-sale bar” in 35 U.S.C. § 102(b). (Venture’s
SOAF ¶ 13.)
As this court has already explained, the on-sale bar applies “when an invention is both the
subject of a commercial offer for sale and ready for patenting” before the challenged patent’s
application date. EZ Dock v. Schafer Sys., Inc., 276 F.3d 1347, 1351 (Fed. Cir. 2002) (citing
Pfaff, 525 U.S. at 67). “Only an offer which rises to the level of a commercial offer for sale, one
which the other party could make into a binding contract by simple acceptance (assuming
consideration), constitutes an offer for sale under § 102(b).” Group One, Ltd. v. Hallmark Cards,
Inc., 254 F.3d 1041, 1948 (Fed. Cir. 2001). “To meet the first, commercial offer, prong, the offer
must be sufficiently definite that another party could make a binding contract by simple
acceptance, assuming consideration.” Atlanta Attachment Co. v. Leggett & Platt, Inc., 516 F.3d
1361, 1365 (Fed. Cir. 2008). To “determine such definiteness,” the court must “review the
language of the proposal in accordance with the principles of general contract law.” Id.
43
No reasonable jury could find, in this record, clear and convincing evidence of an offer to
be bound. The alleged offers are not in the record, so neither a jury nor the court could “review
the[ir] language” to determine the intent of the alleged offerors, id. Benavides’ references to
certain portions and/or characteristics of those alleged offers are insufficient to establish the
alleged offerors’ intent to be bound under a clear and convincing evidence standard.
Even if the two documents in the record were sufficient, the on-sale bar still would not
apply, because the offers were made by someone other than the patentee, and there is no
evidence that these offers publicly disclosed the invention. See ResQNet.com, Inc. v. Lansa, Inc.,
594 F.3d 860, 866 (Fed. Cir. 2010) (“The ‘on sale’ provision of 35 U.S.C. § 102(b) is directed at
precluding an inventor from commercializing his invention for over a year before he files his
application. Sales or offers made by others and disclosing the claimed the invention implicate the
‘public use’ provision of 35 U.S.C. § 102(b).”); Medtronic Inc. v. Edwards Lifesciences Corp., No.
SACV1200327JVS, 2013 WL 12113417, at *22 (C.D. Cal. Sept. 17, 2013) (on-sale bar not
applicable where alleged offer was made by a third party in a way that did not publicly disclose
the invention).
Sunoco’s motion for summary judgment is granted with regard to the Altoona system.
iv.
Relevancy to Obviousness
The TransMontaigne, Williams Phase II, and Altoona systems are the focus of another
argument, as well. Not content with a determination that these systems do not constitute “prior
art” for purposes of 35 U.S.C. § 102, Sunoco also asks the court to declare that those systems
are not relevant at all. Sunoco argues, in short, that evidence of systems that were not reduced
to practice cannot be relevant to an obviousness analysis under 35 U.S.C. § 103. The court
disagrees. See I/P Engine, Inc. v. AOL Inc., 576 Fed. App’x 982, 988-89 (Fed. Cir. 2014)
(evidence of system that was not “fully functional” could still be relevant to obviousness).
44
B.
Inequitable Conduct
Sunoco also seeks summary judgment on U.S. Venture’s counterclaim that Sunoco
engaged in inequitable conduct during the prosecution of the patents-in-suit. Venture claims that
all five patents are unenforceable due to numerous alleged false statements or omissions made
by the inventors and their patent attorneys to the PTO. This alleged inequitable conduct includes:
(a) the failure to disclose the Equilon sale; (b) the failure to disclose seven other blending systems
as prior art (including the TransMontaigne, Williams Phase II, and Altoona systems addressed in
the previous section); (c) false statements in declarations made in support of the ‘671, ‘948, and
‘548 Patents; and (d) the failure to disclose Venture’s invalidity and inequitable conduct
contentions against the three original patents when Sunoco applied for its two final patents after
this litigation began. (Venture’s Am. Answer 57–88.) Unless otherwise stated, Venture asserts
that these alleged lies and omissions occurred during the prosecution of all five patents; but, in
any case, Venture argues that the instances of patent-specific inequitable conduct render the rest
of Sunoco’s family of patents unenforceable as well. (See, e.g., id. at 75–88.)
“Inequitable conduct is an equitable defense to patent infringement that, if proved, bars
enforcement of a patent.” Regeneron Pharmaceuticals, Inc. v. Merus N.V., 864 F.3d 1343, 1350
(Fed. Cir. 2017) (quoting Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276, 1285
(Fed. Cir. 2011)). A finding of inequitable conduct has broad consequences: unlike validity
defenses, which are claim-specific, inequitable conduct renders an entire patent unenforceable,
and can even apply to other patents in the same family. Therasense, 649 F.3d at 1288 (calling
the remedy for inequitable conduct “the ‘atomic bomb’ of patent law.”)
Not surprisingly,
inequitable conduct allegations are frequently leveled by accused patent infringers “on the
slenderest grounds.” Id. at 1289.
As a result, parties seeking to invoke the defense of inequitable conduct face a heavy
burden: “the accused infringer must prove that the applicant misrepresented or omitted material
45
information with the specific intent to deceive the PTO.” Id. at 1287 (citing Star Scientific Inc. v.
RJ Reynolds Tobacco Co., 537 F.3d 1357, 1365 (Fed. Cir. 2008)). Both elements—materiality
and intent to deceive—require clear and convincing evidence. Id.; see also Optium Corp. v.
Emcore Corp., 603 F.3d 1313, 1320 (Fed. Cir. 2010). In Therasense, Inc. v. Becton, Dickinson
and Co., 649 F.3d 1276 (Fed. Cir. 2011), the Federal Circuit emphasized that “intent and
materiality are separate requirements.” Id. at 1290. District courts may not use a “sliding scale”
to compensate for an insufficient showing on either element. Id. Similarly, courts “may not infer
intent solely from materiality. . . . Proving that the applicant knew of a reference, should have
known of its materiality, and decided not to submit it to the PTO does not prove specific intent to
deceive.” Id. (citing Star, 537 F.3d at 1366). Even if an accused infringer meets this burden of
proof, the district court must “weigh the equities to determine whether the applicant's conduct
before the PTO warrants rendering the entire patent unenforceable.” Id. at 1287; see also Star,
537 F.3d at 1365–66 (“[I]t is also inequitable to strike down an entire patent where the patentee
only committed minor missteps or acted with minimal culpability or in good faith.”)
The standard for evaluating the materiality of withheld information is “but-for materiality.”
Regeneron, 864 F.3d at 1350 (citing Therasense, 649 F.3d at 1291). “A prior art reference is butfor material if the PTO would not have allowed a claim had it been aware of the prior art.” Id.
References or information that are merely cumulative to the information already before the patent
examiner, however, are not considered but-for material. Id. (citing Digital Control Inc. v. Charles
Mach. Works, 437 F.3d 1309, 1319 (Fed. Cir. 2006)).
The intent prong of the Therasense test, as stated, requires the specific intent to deceive
the PTO. Therasense, 649 F.3d at 1290; Larson Mfg. Co. of S. Dak. v. Aluminart Prods. Inc., 559
F.3d 1317, 1327 (Fed. Cir. 2009) (“[I]nequitable conduct requires not intent to withhold, but rather
intent to deceive.”). Negligence, even gross negligence, on the part of the patent applicant is not
sufficient to prove deceptive intent. Therasense, 649 F.3d at 1290. Instead, “the accused
46
infringer must prove by clear and convincing evidence that the applicant knew of the reference,
knew that it was material, and made a deliberate decision to withhold it.” Id. Given the rarity of
direct evidence, specific intent may be inferred from circumstantial evidence—such as evidence
that the applicant repeatedly misrepresented facts contrary to known information.
See
Regeneron, 864 F.3d at 1351. But the specific intent to deceive must be “the single most
reasonable inference able to be drawn from the evidence.” Therasense, 649 F.3d at 1290
(quoting Star, 537 F.3d at 1366.) The existence of multiple reasonable inferences precludes a
finding of deceptive intent. Id. at 1290–91.
As a preliminary matter, Sunoco objects to all of Venture’s inequitable conduct
counterclaims as “conclusory” and lacking any “factual basis for a finding of deceptive intent.”
(Sunoco’s SJ Br. 14–15 (quoting Optium, 603 F.3d at 1321).) This court generally agrees with
Sunoco’s assessment. Venture has taken a shotgun-style approach to its accusations in the
apparent hope that quantity will compensate for a lack of quality.
Venture devotes scant
resources into explaining how any omission was material or affirmative statement was false, and
even less to establishing that there was any intent to deceive. In a pattern that will become clear
as the court discusses all of Venture’s claims, Venture appears to believe that anything it
disagrees with is a “lie.” Nearly all of Venture’s allegations include patently unsupported claims
such as “[c]learly Sunoco made this false statement with the intent to deceive the examiner . . .[,]”
(see, e.g., Venture’s SOAF ¶ 31), and treat legitimate grounds for differences of opinion as
evidence of deceit. (See id. at ¶ 34; see also Sunoco’s Resp. to Venture’s SOAF [417], Resp. to
¶¶ 19–40 (repeatedly stating that Venture’s “statements entirely consist of improper legal
arguments, legal conclusions, opinions, speculation, and conjecture, rather than a statement of
facts supported by evidence.”).) Venture relies heavily on the maxim that a court may infer intent
from circumstantial evidence. In nearly every instance, however, Venture ignores numerous
more-reasonable inferences, preferring to engage in what Sunoco calls “defamatory false
47
speculation.” (Sunoco’s Resp. to Venture’s SOAF, Resp. to ¶ 31.) Venture’s counterclaims are
a prime example of why the Federal Circuit has established such a high burden of proof for
inequitable conduct. Nevertheless, the court will address each of Venture’s counterclaims in turn.
i.
Non-disclosure of the Equilon Sale
The court grants Sunoco’s motion for summary judgment of no inequitable contact in
relation to the Equilon Sale because, setting the question of materiality aside, no reasonable jury
could find that Venture can satisfy its burden of proof on the specific intent requirement. Venture
argues that the inventors and their patent attorneys knew of the potential for the Equilon Sale to
invalidate the ’302, ’629, and ’671 patents. (Venture’s Resp. Br. at 22.) Venture also argues that
even if they thought the sale was “experimental”—a position reflected, for example, in the
Goddard report (see Venture’s SOAF ¶ 21)—the “prudent practice” would have been to disclose
it to the PTO. (Venture’s Resp. Br. at 22.) Because they did not, Venture contends, the inventors
and attorneys engaged in inequitable conduct. (Id.) In support of its position, Venture cites the
Equilon Contract in its entirety; deposition testimony suggesting that Carolyn Campbell, an
attorney for the inventors, likely drafted the contract; and Goddard’s expert opinions regarding the
Equilon Sale. (Venture’s SOAF ¶¶ 21, 37.)
At most, this evidence supports the unremarkable proposition that the inventors knew, and
that Campbell likely knew, about the Equilon sale. The evidence does not, however, bear directly
on whether Campbell or the inventors knew the sale was material “and made a deliberate decision
to withhold it.” Therasense, 649 F.3d at 1290. Furthermore, Sunoco has proffered other evidence
tending to undermine this inference. It points to deposition testimony from Campbell’s colleague
that Campbell “does not know patents” and that her legal expertise is in contracts. (Sunoco’s
Resp. to Venture’s SOAF ¶ 37 (quoting 6/22/2017 Sullivan Dep., Ex. 10 to Krill Decl. [360-6], at
64:25-65:20, 71:4-25).) Additionally, Sunoco emphasizes that, when asked during his deposition
why he did not disclose the Equilon Contract to the PTO, Mattingly testified that he did not know
48
without looking at the patent, but that “we didn’t design the system or construct it to see that it
would work until September when we started the system up.” (5/10/16 Mattingly Dep., Ex. 39 to
Gross Decl. [278-33], at 316:5–16.) Finally, as previously discussed, Sunoco has demonstrated
experimental intent sufficient to defeat summary judgment of invalidity due to the on-sale bar.
Weighing the circumstantial evidence that both Venture and Sunoco have provided, no
reasonable jury could conclude that Campbell’s or the inventors’ specific intent to deceive is “the
single most reasonable inference able to be drawn[.]” Therasense, 649 F.3d at 1290.
Venture next argues that Sunoco engaged in inequitable conduct while prosecuting the
’948 and ’548 patents because—although Sunoco disclosed the Equilon Sale to the PTO during
prosecution—Sunoco “did not submit other documents necessary to understand the technical
aspects of the system.” (Venture’s Resp. Br. at 23.) Sunoco, however, has provided direct
evidence that it “specifically invited the Examiner to request more information should the Examiner
find it material.” (Sunoco’s Br. at 25 (citing ’548 Patent Prosecution History, Ex. I to 10/17/2017
Krill Decl. in Supp. of Sunoco’s Mot. for SJ of No Inequitable Conduct [301-03], at SUNUS04022022; ‘948 Patent Prosecution History, Ex. J to 10/17/2017 Krill Decl. in Supp. of Sunoco’s Mot. for
SJ of No Inequitable Conduct [301-04], at SUNUS039559-61).) The Examiner did not do so.
(Sunoco’s SOF ¶ 56.)
Venture also contends that Sunoco’s patent attorney made
representations to the PTO regarding the experimental nature of the Equilon contract without first
speaking with the inventors. (Venture’s Resp. Br. at 23.) But Venture’s cited evidence does not
clearly support this proposition, nor does Venture explain how, if true, it would constitute clear
and convincing evidence of inequitable conduct. Overall, no reasonable jury considering both
Venture’s and Sunoco’s proffered evidence could conclude that specific intent to deceive the PTO
is “the single most reasonable inference able to be drawn[.]” Therasense, 649 F.3d at 1290.
49
ii.
Non-disclosure of alleged prior art references
The court draws the same conclusion concerning Venture’s charge that the inventors
failed to disclose certain alleged prior art references. Regardless of whether those references
are material, no reasonable jury could conclude there is clear and convincing evidence that
Sunoco’s inventors or prosecuting attorneys acted with specific intent to deceive the PTO.
First, regarding the ’948 and ’548 patents, Venture argues that Sunoco’s patent attorneys
engaged in inequitable conduct by failing to disclose the TransMontaigne and Williams systems.
(Venture’s Resp. Br. at 23.) These references appear in Venture’s infringement contentions, and
Venture argues that Sunoco should have sought relief from the protective order governing the
contentions so that it could have disclosed the references to the PTO. (Id.) That Sunoco’s
attorneys did not do so, Venture contends, amounts to inequitable conduct.
(Id.)
These
allegations fall far short of clear and convincing evidence that Sunoco’s attorneys “made a
deliberate decision to withhold a known material reference.” Therasense, 649 F.3d at 1290.
Indeed, because Sunoco argues that these systems do not qualify as prior art—and because the
court has ruled in Sunoco’s favor in that regard—a reasonable jury could draw at least one other
inference: that Sunoco’s attorneys decided not to disclose the reference based on a good-faith
belief that they are not material. Accordingly, “intent to deceive cannot be found.” Id. at 129091. 15
Second, Venture argues that the inventors engaged in inequitable conduct while
prosecuting the ’302, ’629, and ’671 patents by failing to disclose the Kerr-McGee system, the
Altoona system, and a February 1995 letter from Mattingly to the U.S. Department of Labor.
(Venture’s Resp. Br. at 21-22.) In the letter, Mattingly describes blending operations and seeks
Venture also argues that the inventors acted with specific intent to deceive the
PTO in prosecuting the ’948 and ’548 patents by falsely characterizing the Kerr-McGee system in
an IDS. (Venture’s Resp. Br. at 22; Venture’s SOAF ¶¶ 30-31.) The court addresses this
argument in Section 2.B.iii.
50
15
a determination that they do not violate Occupational Safety and Health Administration
requirements. (2/6/1995 Letter from Mattingly to U.S. Dept. of Labor (“OSHA Letter”), Attachment
3 to Joint Appendix to Claim Construction Briefs [184-3], at A286.) According to Venture, the
inventors knew that the systems described in these documents were “more sophisticated” than
those discussed in the background sections of the ’302 and ’629 patents—and therefore were
required to be disclosed—because they “involved blending gasoline and butane inline (in the
piping) rather than pumping butane directly into a gasoline tank.” (Venture’s Resp. Br. at 22.)
Venture similarly argues that the Kerr-McGee system was capable of taking samples inline, and
that in the background sections of the patents, the inventors downplayed the existence of that
feature in the prior art. (Id.; see also Venture’s SOAF ¶ 31 (quoting the Kerr-MecGee “Operating
& Procedures Manual”).)
In arguing that the circumstances compel only one inference—that the inventors acted
with specific intent to deceive the PTO—Venture points to the following evidence: the OSHA
Letter; an excerpt from Vanderbur’s deposition in which he testified that he was involved with the
Kerr-McGee project; a letter regarding the Kerr-McGee system that lists Vanderbur as a recipient;
faxes regarding the Altoona system that list Vanderbur and Mattingly as recipients; and passages
from the Goddard report describing the systems. (See Venture’s Resp. Br. at 22 (citing Venture’s
SOAF ¶ 35).) Venture also cites a deposition excerpt in which Mattingly testified that inline
blending is advantageous because it can keep butane and gasoline well-mixed. (See, e.g.,
5/10/16 Mattingly Dep. at 218:21-25.) Finally, Venture cites passages from the background
section of the ’302 patent that characterize in-tank blending as “labor intensive and imprecise,”
because “several measurements must be taken throughout the tank” and “considerable stirring
must occur to maximize homogeneity.”
(Venture’s Resp. Br. at 21 (quoting ’302 patent,
Attachment 1 to Joint Appendix to Claim Construction Briefs [81-1], at A007, 2:24-44).) Without
much in the way of interpretation, Venture urges that there is only one inference that can be drawn
51
from these seemingly disparate pieces of evidence: the inventors’ specific intent to deceive the
PTO.
Sunoco, on the other hand, cites deposition testimony from Vanderbur, Mattingly, and
others that, according to Sunoco, allows for “multiple reasonable inferences.” (Sunoco’s SJ Br.
at 16.) Vanderbur, for example, testified during his deposition that he considered the Kerr-McGee
system to be a type of “tank blending system” and that it was “similar” to a tank-blending system
discussed in at least one of the patents. (Sunoco’s SJ Br. at 16 (quoting 6/20/2017 Vanderbur
Dep., Ex. O to Krill Decl. [304-06], at 339:2-19).) Vanderbur further testified that he believed his
attorneys did not disclose the Kerr-McGee system to the PTO because the Kerr-McGee system
is “a tank blending operation and we talked about tank blending operations.” (Id. at 379:5-14.)
Benavides testified during his deposition that in his view, the Kerr-McGee system did not have
equipment that would allow for automatic sampling. (7/11/2016 Benavides Dep., Ex. P to Krill
Decl. [304-07], at 88:8-22.) And Sunoco’s prosecuting attorney—who later disclosed the KerrMcGee system in connection with the ’948 and ’548 patents—testified that he had not known
about the Kerr-McGee system during prosecution of Sunoco’s earlier patents. (6/22/2017 Sullivan
Dep., Ex. 10 to Krill Decl. [360-6], at 166:17-24.) Sunoco similarly emphasizes Mattingly’s
deposition testimony that the systems described in the OSHA Letter are tank blending systems,
and that he saw “no reason” to give the letter to his prosecuting attorney because it “ha[d] to do
with process safety management, not with blending gasoline.” (5/10/2016 Mattingly Dep. at
318:16-23.) Finally, although Vanderbur and Mattingly appear to have received communications
about the Altoona system, Vanderbur reviewed documents regarding the system during his
deposition and testified that he recalled nothing about it. (See 5/25/2016 Vanderbur Dep., Ex. N
to 10/16/2017 Krill Decl. [288-2], at 42:9-19, 87:19-93:13.)
Mattingly also reviewed such
documents during his deposition and testified that they did not refresh his recollection of “anyone
using a master controller in a computer system to control the ratio of blending of butane and
52
gasoline at a terminal.” (See 5/10/2016 Mattingly Dep., Ex. O to 10/16/2017 Krill Decl. [288-2], at
194:4-195:7.)
The court agrees with Sunoco that no reasonable jury viewing all of this evidence could
conclude that it compels only the inference of specific intent to deceive. For example, although
Venture’s evidence demonstrates that Vanderbur had some involvement with the Kerr-McGee
system—and although Venture characterizes the system as more sophisticated than other tankblending systems—no reasonable jury could conclude there is clear and convincing evidence
foreclosing the possibility that Vanderbur chose not to disclose the Kerr-McGee system because
he believed it was cumulative of other prior art and therefore immaterial. Relatedly, no reasonable
jury could conclude there is clear and convincing evidence foreclosing the possibility that
Sunoco’s patent attorney did not disclose the Kerr-McGee system because he did not know about
it. Additionally, no reasonable jury could conclude there is clear and convincing foreclosing the
possibility that Mattingly did not disclose the OSHA Letter because he believed the PTO would
deem it irrelevant. Finally, no reasonable jury could conclude there is clear and convincing
evidence foreclosing the possibility that Vanderbur did not disclose the Altoona system because
he did not remember it, and that Mattingly did not disclose the system because it was not
something he associated with the automated technology at issue in the patent applications.
Because a jury could draw multiple, reasonable inferences from the evidence, a finding that the
inventors and/or their prosecuting attorneys made “deliberate decision[s] to withhold . . . known
material reference[s]” is precluded. Therasense, 649 F.3d at 1290.
iii.
Alleged misstatements in the Vanderbur Declaration and IDS
Venture claims that the inventors filed two false declarations during the prosecution of
several of their patents. On July 5, 2013, Sunoco filed a supplemental examination request for
the ‘671 Patent. (Venture’s Am. Answer ¶¶ 178–180.) This request disclosed information relating
to a butane blending system built by Texon in Macungie, Pennsylvania (“the Macungie system”),
53
and now operated by Sunoco. (Id.) Inventor Steven Vanderbur also submitted a declaration (“the
Vanderbur declaration”) discussing the Macungie system, the construction of which he claims he
“supervis[ed]” during his tenure as a Senior Vice President at Texon. (Id.; Vanderbur Decl., Ex. I
to Venture’s Answer, Aff. Defenses, and Countercls. [67-2] (“Venture’s First Answer”), ¶ 4.)
Vanderbur states that his “responsibilities included overseeing the construction of the [Macgunie]
butane blending facility” from roughly March 2002 until its completion in June 2004. (Vanderbur
Decl. ¶¶ 4–5.) Vanderbur then outlines the design and operation of the system in detail. (Id. at
¶¶ 6–18.) Vanderbur signed his declaration and affirmed that it was based on his own knowledge.
Venture claims that this final statement was false. Vanderbur, Venture insists, had no personal
knowledge of the facts in his opinion, did not supervise construction of the Macungie system, and
“admitted that he lacked the expertise to even discern whether the diagram [included with the
declaration] depicts a butane blending system.” (Venture’s Resp. Br. 20.) Sunoco disagrees,
claiming not only that Vanderbur’s statements do not suggest any intent to deceive, but that his
statements are not false at all. (Sunoco’s SJ Br. 21.)
To support its claim that Vanderbur lied, Venture points to a portion of his deposition in
which he answered “no” to questions asking if he “supervise[d]” or “was ever involved in
overseeing the installation [or construction] of a butane blending system?” (5/25/16 Vanderbur
Dep. 170:4–16, Ex. 30 to Gross Decl. [278-26].)
Later in that same deposition, however,
Vanderbur clarifies that “what I meant is that I wasn’t, you know, personally involved onsite with
the project, but, obviously, in my responsibilities . . . that would have fallen under me.” (5/26/16
Vanderbur Dep. 294:20–24, Ex. U to Sunoco’s Statement of Material Facts in Supp. of Sunoco’s
Mot. for SJ of No Inequitable Conduct [304-11].) Although Vanderbur “wasn’t a direct supervisor
[ ] at the project itself,” he testified that he was familiar with the Macungie system’s general
operations and was in frequent contact with Larry Mattingly (the other named inventor on
Sunoco’s patents), who “was very involved” with the project onsite. (Id. at 295:7–16.) This minor
54
misunderstanding hardly amounts to clear and convincing evidence that Vanderbur intentionally
lied to the PTO about his involvement with the Macungie system. His declaration merely stated
that he supervised the system’s construction as a Texon executive. This statement does not
require the conclusion that he had direct personal control over the project. Notably, defense
counsel never referenced the Macungie system by name during this portion of Vanderbur’s
deposition, making his interpretation of the question all the more excusable. (See 5/25/16
Vanderbur Dep. 159:10–170:16 (stating “[w]hose drawing is this?” and “I don’t know if it’s . . . a
system I should be familiar with”).) Contrary to Venture’s argument, it would be clear to any jury
that a specific intent to deceive would be the single most unreasonable inference that could be
drawn from this evidence.
Venture also cites to Vanderbur’s testimony regarding the schematic of the Macungie
system which was attached to his declaration. In Venture’s estimation, this testimony shows that
Vanderbur lied about having personal knowledge of the system. Venture claims that Vanderbur
had trouble discerning the schematic’s contents and quotes the following exchange from his
deposition:
[By Defense Counsel]
Q.
So looking at this system, can you tell what the schematic is for?
MS. REPLOGLE:
Objection.
A.
I—you know, it—yeah, I’m not an engineer so I don’t want to—I can see
there’s butane. I can see that there’s an analyzer.
Q.
Can you tell me whether this is the automated butane blending system?
A.
No.
Q.
Can you tell if this is a butane blending system at all?
MS. REPLOGLE: Objection, form.
A.
That’s not my—not my expertise.
55
(Venture’s Am. Answer ¶ 186 (quoting 5/25/16 Vanderbur Dep. 169:10–22.) But, as stated,
defense counsel never told Vanderbur these questions regarded the Macungie system; he simply
handed Vanderbur a copy of the schematic and started asking questions about the numerous
symbols shown in it. The copy of this schematic included in the court’s record is of such low
quality that it is difficult to discern anything, but it is not clear that there is a title or any other
reference to Macungie on the document. (See Macungie Schematic, Ex. J to Venture’s First
Answer [67-3].) That Vanderbur did not immediately recognize the document is not particularly
surprising, as the document was “broken up into three different partial sections” and Vanderbur
himself admitted that he did not routinely look at schematics in his role at Texon. (Sunoco’s Resp.
to Venture’s SOAF, Resp. to ¶ 32.) 16 And, as with the previous alleged lie, Venture ignores
Vanderbur’s subsequent testimony in which he recalled that the schematic was indeed “a
representation of the Macungie butane blending system.” (5/26/16 Vanderbur Dep. 295:21–
296:11.) None of this evidence suggests in any way that Vanderbur intended to deceive the PTO
about his knowledge of the Macungie system. Venture’s real argument appears to be that it
believes Vanderbur is not an expert on the Macungie system. But Vanderbur’s declaration does
not claim expertise, nor exaggerate his qualifications. Vanderbur may not have been able to
identify every element on the schematic at his deposition, but his testimony as a whole does not
support Venture’s suggestion that he was flatly unqualified to discuss the Macungie system. 17
As a further testament to the challenge of reading these sorts of schematics, the
court notes that the Macungie schematic resembles the drawing provided in Sunoco’s patents,
which the court generously described as “somewhat opaque” in its Markman opinion. See
Sunoco Markman Opinion, 2017 WL 1550188, at *2.
16
Vanderbur tentatively identified various elements as valves, injectors, and
pressure bypasses. He also identified and discussed the online Grabner unit and “micromotion
meter” in detail. Elements he failed to identify include something defense counsel called “a thing
that kind of looks like a hair dryer” and another that left defense counsel at a total loss for words:
“I don’t even know how to describe that shape. But maybe it looks like a flashlight almost?”
(5/25/16 Vanderbur Dep. 159:10–170:3.)
56
17
Because no reasonable jury could conclude that Vanderbur acted with the specific intent
to deceive, summary judgment is appropriate without the need to address the materiality prong
of the Therasense test. Moreover, even if Venture could prove specific intent, there is no serious
case to be made that the alleged misstatements were material. Venture makes no effort to
compare the Macungie system to the claims of the ‘671 Patent. In fact, Venture does not
challenge the Vanderbur declaration’s description of the Macungie system at all; Venture only
contends that Vanderbur was not qualified to present that evidence. The PTO granted the ‘671
Patent in light of this prior art. There is no reason to think that would change if someone else—
Mattingly, for example—had signed the declaration instead. See Symantec Corp. v. Computer
Assocs. Intern., Inc., 522 F.3d 1279, 1297–98 (Fed. Cir. 2008) (concluding that a declarant had
not misrepresented his familiarity with the state of the art, and that “lack of technical expertise
alone was insufficient to establish that his declaration was a misrepresentation”). Rather than
focus on whether Vanderbur’s alleged misstatements are material, Venture sidesteps the
question and calls his declaration “presumptively material.” (Venture’s Resp. Br. 18, 20 (citing
Therasense, 649 F.3d at 1292).) The Federal Circuit has indeed created an exception to the
usual but-for materiality standard in cases of “affirmative egregious misconduct”—which includes
actions “such as the filing of an unmistakably false affidavit.” Therasense, 649 F.3d at 1292.
Vanderbur’s declaration was not false, much less “unmistakably false.” Venture cannot use this
exception to bypass the materiality prong of the Therasense test when it has already failed to
demonstrate intent.
These same issues exist in regard to the other allegedly false declaration identified by
Venture: a “Supplemental Information Disclosure Statement” (“IDS”) that Sunoco submitted in
support of the ‘948 and ‘548 Patents. Even assuming that the statements in the IDS were
material—which Venture does by again invoking the “affirmative egregious misconduct”
exception—there is simply no evidence to suggest the specific intent to deceive. The contested
57
portions of the IDS disclosed information relating to the Kerr-McGee system (discussed above in
the context of the system’s non-disclosure during the prosecution of the original three patents).
Sunoco’s prosecution counsel described the Kerr-McGee system as “a tank blending system of
the type disclosed in the background section” of the patent applications. (Sunoco’s SOF ¶ 53.)
In the corresponding passage present in the specifications of the ‘671, ‘948, and ‘548 Patents,
the inventors insist that such tank blending systems are different from their patented system for
several reasons:
[T]he inventors are aware of an unpatented system that is used to blend butane
and gasoline at several terminal tank farms. These systems continuously monitor
the Reid vapor pressure of gasoline that is introduced to a storage tank, and blend
butane with the gasoline based upon the vapor pressure measurements. These
systems do not continuously monitor the Reid vapor pressure downstream of the
blending operation as an integrity check. Instead, they certify the integrity of the
blending operation by periodically measuring the Reid vapor pressure of the entire
storage tank.
(‘948 Patent col. 2 l. 60–col. 3 l. 2.) According to Venture, this comparison between the KerrMcGee system and the previously-disclosed “unpatented system[s]” is not accurate. (Venture’s
Am. Answer ¶ 239.) Venture claims that Sunoco’s “characterizations of the Kerr-McGee system
in the [IDS] were false,” because “the Kerr-McGee system did continuously monitor the [RVP]
downstream of the blending operation as an integrity check.” (Id. at ¶¶ 240, 44 (emphasis
added).)
To support its argument, Venture cites to the “Operating & Procedures Manual” for the
Kerr-McGee system that Sunoco submitted with the IDS, one section of which instructs the
system’s operator to “sample the blended product downstream of the static mixer.” (Kerr-McGee
Refining Corp. Operating & Procedures Manual § 2.5.14, Application File of the ‘948 Patent [1843], A345.) As Sunoco points out, however, that same portion of the manual specifies that
“[p]eriodic sampling and RVP testing is recommended throughout the blend” and that “[t]he
operator should judge sampling frequency.” (Id. at § 2.5.17 (emphasis added).) This belies any
58
suggestion that the Kerr-McGee system continuously monitored the RVP of blended gasoline.
Furthermore, it is clear from both the manual and the declaration of an engineer who worked on
the system, Benny Benavides, that the RVP testing would be conducted by an individual (the
operator) physically taking samples with a “portable analyzer” from either the blending unit or the
storage tank used to hold the blended product. (Id. at § 2.5.18; Benavides Decl. ¶¶ 5–12.) The
“system” itself was not capable of doing so. (Id.) Overall, the manual is not obviously inconsistent
with Sunoco’s description of the broader category of unpatented tank blending systems in the
‘958 and ‘548 Patents’ specifications, and the court is not convinced that Sunoco’s statements
can be considered false.
In addition to being unable to prove that the statements in the IDS were false, Venture has
presented no evidence to suggest that Sunoco’s prosecuting attorney intended to deceive the
PTO. See Symantec, 522 F.3d at 1298. As stated earlier in regard to Venture’s claim that Sunoco
acted inequitably by failing to disclose the Kerr-McGee system during the prosecution of the first
three patents, inventor Vanderbur testified that he viewed the Kerr-McGee system as a tank
blending system of the type disclosed in the specifications. (Sunoco’s SOF ¶ 59.) Venture even
deposed Sunoco’s prosecuting attorney, Sullivan, but uncovered no evidence of deceit. (Id. at
¶ 60.) There is no reason to think that these individuals did not honestly believe that the KerrMcGee system fell within the already-disclosed prior art. Venture’s unsubstantiated claims that
the inventors “deliberately downplayed the sophistication of the prior art” and did not “credibly
believe” their statements are not enough to create a genuine dispute. (Venture’s SOAF, Resp. to
¶¶ 59–61.)
Because no reasonable jury could conclude that Venture can meet its burden of proof on
the issues of Sunoco’s alleged affirmative misstatements, the court grants summary judgment in
favor of Sunoco on these counterclaims.
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iv.
Non-disclosure of Venture’s attorney arguments
Finally, the court grants summary judgment of no inequitable conduct relating to Sunoco’s
non-disclosure of Venture’s attorney arguments.
First, Venture faults Sunoco for failing to disclose, during prosecution of the ’948 and ’548
patents, Venture’s invalidity contentions relating to the Feld and Miller prior art references.
(Venture’s Resp. Br. at 16-17.) Venture presses this argument despite acknowledging that
Sunoco did disclose the Feld and Miller references. (Id.) According to Venture, the invalidity
contentions are independently material because they “alert” the examiner that Feld and Miller are
more significant than the fifty-plus other references Sunoco submitted, and because they “identify
the pertinent teachings of the Feld and Miller . . . references.” (Id.) But Venture fails to provide
examples of how any specific information in the contentions would have aided the examiner and,
more importantly, how any specific information would have persuaded the examiner to reject the
patent applications. No reasonable jury could find based on Venture’s conclusory arguments that
Venture’s invalidity contentions are material to patentability. Likewise, no reasonable jury could
conclude that Sunoco acted with specific intent to deceive the PTO in failing to disclose the
references. Venture argues otherwise, but its only cited evidence is the nondisclosure itself; the
fact that, in Venture’s view, Sunoco submitted other references “of little relevance;” and the fact
that Venture did not “highlight the significant references . . . pursuant to the MPEP guidelines.”
(Venture’s Resp. Br. at 23.) Even if a jury credited this evidence, it could not reasonably conclude
that the only possible motive underlying Sunoco’s failure to disclose the contentions was intent to
deceive the PTO. For example, because Sunoco disclosed the Feld and Miller references, and
because the MPEP encourages applicants “to avoid the submission of long lists of documents”
(see Venture’s Resp. Br. at 17 (quoting MPEP § 2004)), it would be rational for a jury to conclude
that Sunoco did not disclose the references based on the belief that they are cumulative.
60
Second, Venture faults Sunoco for failing to disclose, during prosecution of the ’948 and
’548 patents, Venture’s allegations of inequitable conduct regarding the ’302, ’629, and ’671
patents. (Venture’s Resp. Br. at 20.) Venture emphasizes that the MPEP lists “allegations
of . . . ‘inequitable conduct’” among examples of “material information” that “must be brought” to
PTO’s attention. (Id. (quoting MPEP § 2001.06(c).) Venture does not dispute, however, that
Sunoco disclosed publicly available documents regarding the prior art references underlying
Venture’s inequitable conduct allegations, such as the Equilon Contract, the Kerr-McGee system,
and the OSHA Letter. (Id. at 20; see also ’548 Patent Prosecution History at SUNUS040220-22;
’948 Patent Prosecution History at SUNUS039559-61; Sunoco’s SJ Br. at 20; Venture’s RSOF
Resp. to ¶ 52.) Nor does Venture dispute that Sunoco notified the examiner that “[s]ome of the
documents listed come from a pending litigation involving related patents,” or that Sunoco offered
to provide the examiner with additional references cited in the documents. (See ’548 Patent
Prosecution History at SUNUS040220-22; ’948 Patent Prosecution History at SUNUS039559-61;
Venture’s RSOF Resp. to ¶ 51.) Rather, Venture argues that the inequitable conduct allegations
“could have aided the examiner by pointing out significant issues, such as the prior art sale to
Equilon.” (Venture’s Resp. Br. at 21.) And Venture points out that Sunoco did not disclose the
TransMontaigne and Williams systems even though, according to Venture, Sunoco could have
disclosed them by seeking relief from the protective order. (See Venture’s Resp. Br. at 23;
Venture’s RSOF Resp. to ¶ 52.)
Even assuming, without deciding, that the inequitable conduct allegations are material (as
provided in MPEP § 2001.06(c)), the court concludes that Sunoco is entitled to summary
judgment on this issue. Again, the record lacks sufficient evidence from which a reasonable jury
could find that Sunoco acted with specific intent to deceive the PTO. Indeed, the only evidence
Venture offers in arguing that Sunoco acted with the requisite intent is (1) the nondisclosure itself
and (2) Sunoco’s failure to request relief from the protective order in relation to the
61
TransMontaigne and Williams systems. (See Venture’s Resp. Br. at 23.) But considering that
Sunoco disclosed the pending litigation, noted that it relates to alleged prior art references, and
offered to provide the PTO with additional information regarding those references, no reasonable
jury could conclude that Sunoco’s specific intent to deceive is “the single most reasonable
inference able to be drawn from the evidence.” Therasense, 649 F.3d at 1290 (quoting Star, 537
F.3d at 1366). Instead, a reasonable jury could conclude that at least one other inference may
be drawn:
that Sunoco did not disclose the allegations based on the belief that they are
cumulative of both the underlying documents and the disclosure of pending litigation.
CONCLUSION
Plaintiff Sunoco’s motion for partial summary judgment [354] is granted. Defendant U.S.
Venture’s motion for partial summary judgment [363] is granted in part as follows: claim 1 of the
‘302 patent and claims 1 and 10 of the ‘629 patent are invalid as anticipated by the Kerr-McGee
system, and claim 1 of the ‘671 patent is not infringed by U.S. Venture’s systems that used
Technics’ “Not First Pass” software or U.S. Venture’s own software. 18 U.S. Venture’s motion for
summary judgment is otherwise denied.
ENTER:
Dated: October 6, 2018
_________________________________________
REBECCA R. PALLMEYER
United States District Judge
Insofar as this court’s Order of September 30, 2018 [425] implied that Venture’s
motion for summary judgment of invalidity was denied, that order is amended to reflect that
Venture’s motion is granted with regard to claim 1 of the ‘302 patent and claims 1 and 10 of the
‘629 patent.
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18
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