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Frac Shack Inc. v. Fuel Automation Station, LLC

United States District Court, D. Colorado

March 9, 2018

FRAC SHACK INC., Plaintiff,
v.
FUEL AUTOMATION STATION, LLC, and ATLAS OIL COMPANY, Defendants.

          ORDER

          Scott T. Varholak United States Magistrate Judge.

         This matter is before the Court on the parties' request for construction of certain disputed claim terms contained in United States Patent No. 9, 346, 662 (the “‘662 Patent”). The parties have consented to proceed before the undersigned United States Magistrate Judge for all proceedings, including entry of a final judgment. [## 20, 34] The matter is now ripe for consideration. This Court has carefully considered the briefing, the evidentiary hearing and argument presented on January 12, 2018, and the applicable case law. The Court construes certain claims in the ‘662 Patent as set forth below.

         I. BACKGROUND

         According to the Amended Complaint, Frac Shack, Inc. (“Frac Shack”) “provides modular solutions for fuel delivery that reduce significantly the health, safety and environmental risks associated with fueling operations during hydraulic fracturing.” [#30 at ¶ 10] Frac Shack is the owner of the ‘662 Patent, which was issued on May 24, 2016. [Id. at ¶ 9] The Preamble describes the ‘662 Patent as “[a] fuel delivery system for fuel delivery to multiple pieces of equipment at a work site.” [#1-1 at 10] The Summary of the ‘662 Patent states that “[a] fuel delivery system and method is presented for reducing the likelihood that a fuel tank of equipment at a well site during fracturing of a well will run out of fuel.” [Id. at 7]

         Frac Shack alleges that Defendant Atlas Oil Company (“Atlas”) has been using modular solutions for refueling during hydraulic fracturing operations in the United States. [#30 at ¶ 12] Frac Shack alleges that one of these solutions, the Atlas Fuel Automation Station, infringes Claims 1-4 and 7-12 of the ‘662 Patent. [Id. at ¶¶ 12-13] Defendant Fuel Automation Station, LLC (“Fuel Automation”) allegedly leases the Atlas Fuel Automation Station to Atlas. [Id. at ¶ 12]

         On June 2, 2017, following completion of the parties' claim construction briefs [## 40, 44, 46, 59, 63], the parties filed a Joint Motion for Determination, requesting the Court conduct a claim construction hearing and rule on disputed terms [#47]. This Court set a claim construction hearing for September 18, 2017. [## 55-57] Prior to that hearing, Frac Shack filed a Motion to Exclude Amended Invalidity Contentions (the “Motion to Exclude”), arguing that such contentions were improperly served and should be excluded. [#45]

         At the September 18 hearing, the Court denied the Motion to Exclude. [#64] Because Frac Shack asserted that the Amended Invalidity Contentions required the construction of additional claim terms, however, the Court continued the claims construction hearing and allowed the parties to designate additional terms for construction. [Id.] Briefing was submitted on these additional terms [## 70, 75, 78, 79, 82], and on January 12, 2018, the Court conducted a claims construction hearing [#86]. At that hearing, both sides presented expert testimony and argument. [Id.] Following the hearing, each side submitted additional briefing. [## 90, 91]

         II. STANDARD OF REVIEW

         In construing patent claims, courts are guided by the precedent of the Federal Circuit. See Sun Tiger, Inc. v. Sci. Research Funding Grp., 189 F.3d 1327, 1333 (Fed. Cir. 1999). A patent infringement claim involves a two-step analysis. First, the Court “must determine as a matter of law the correct scope and meaning of a disputed claim term.” CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1365 (Fed. Cir. 2002). Second, the properly construed patent claims must be compared to the accused device to determine whether the accused device contains all of the limitations of the claimed invention. Id.

         The first step, claim construction, is a matter of law for the Court. Markman v. Westview Instruments, Inc., 517 U.S. 370, 391 (1996). “It is a ‘bedrock principle' of patent law that ‘the claims of a patent define the invention to which the patentee is entitled the right to exclude.'” Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (quoting Innova/Pure Water, Inc. v. Safari Water Filtration Sys., Inc., 381 F.3d 1111, 1115 (Fed. Cir. 2004)). “When construing claim terms, [courts] first look to, and primarily rely on, the intrinsic evidence, including the claims themselves, the specification, and the prosecution history of the patent, which is usually dispositive.” Sunovion Pharm., Inc. v. Teva Pharm. USA, Inc., 731 F.3d 1271, 1276 (Fed. Cir. 2013). “[T]he words of a claim ‘are generally given their ordinary and customary meaning.'” Phillips, 415 F.3d at 1312 (quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996)). “[T]he ordinary and customary meaning of a claim term is the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention, i.e., as of the effective filing date of the patent application.” Id. at 1313.

         “The inquiry into how a person of ordinary skill in the art understands a claim term provides an objective baseline from which to begin claim interpretation.” Id. “Importantly, the person of ordinary skill in the art is deemed to read the claim term not only in the context of the particular claim in which the disputed term appears, but in the context of the entire patent, including the specification.” Id. While “the claims themselves provide substantial guidance as to the meaning of particular claim terms, ” the claims do not stand alone. Id. at 1314-15. “Rather, they are part of a fully integrated written instrument, consisting principally of a specification that concludes with the claims.” Id. at 1315 (quotation omitted). As a result, “the specification ‘is always highly relevant to the claim construction analysis. Usually, it is dispositive; it is the single best guide to the meaning of a disputed term.'” Id. (quoting Vitronics, 90 F.3d at 1582). Nevertheless, “there is a fine line between reading a claim in light of the written description and reading a limitation into the claim from the written description.” Howmedica Osteonics Corp. v. Zimmer, Inc., 822 F.3d 1312, 1321 (Fed. Cir. 2016).

         In addition to the claims and the specification, courts should also consider the patent's prosecution history, if it is in evidence. Phillips, 415 F.3d at 1317. The prosecution history is part of the “intrinsic evidence, ” and it “consists of the complete record of the proceedings before the [Patent and Trademark Office (“PTO”)] and includes the prior art cited during the examination of the patent.” Id. “Like the specification, the prosecution history provides evidence of how the PTO and the inventor understood the patent.” Id. Nonetheless, the prosecution history “often lacks the clarity of the specification and thus is less useful for claim construction purposes.” Id.

         In addition to this intrinsic evidence, courts may also rely on “extrinsic evidence, ” consisting “of all evidence external to the patent and prosecution history, including expert and inventor testimony, dictionaries, and learned treatises.” Id. (quoting Markman, 52 F.3d at 980). But, “while extrinsic evidence can shed useful light on the relevant art, . . . it is less significant than the intrinsic record in determining the legally operative meaning of claim language.” Id. (quotations omitted). As a result, “extrinsic evidence may be useful to the court, but it is unlikely to result in a reliable interpretation of patent claim scope unless considered in the context of the intrinsic evidence.” Id. at 1319.

         III. ANALYSIS

         As set forth below, the parties dispute fifteen distinct terms, as well as the definition of a person of ordinary skill in the art. The Court will address each dispute in turn.

         A. Definition of Person of Ordinary Skill in the Art

         Plaintiff contends that a person of ordinary skill in the art is a person with:

a Bachelor of Science degree in chemical, oil & gas, or industrial engineering, or comparable degree, and at least two years' experience working in the field of fueling hydraulic fracturing equipment. This description is approximate, and a higher level of training or skill might make up for less education, and vice-versa.

[#91 at 4 (emphasis omitted)] In contrast, Defendants maintain that a person of ordinary skill in the art is a person with:

a Bachelor of Science degree in mechanical engineering and at least two years' experience working in a field related to fluid handling; alternatively, a [person of ordinary skill in the art] would be a person without a formal degree but with at least four years' practical design and operational experience in fluid handling systems.

[Id. (emphasis omitted)] Thus, the main area of disagreement is whether the person of ordinary skill in the art has sufficient skill in the field of fueling hydraulic fracturing equipment (as Plaintiff contends), or has sufficient skill in the broader area of fluid handling (as Defendant contends). Put another way, the point of contention concerns the pertinent field of art.

         The pertinent field of art is determined by the nature of the problem confronting the inventor. Orthopedic Equip. Co. v. United States, 702 F.2d 1005, 1009 (Fed. Cir. 1983). “The claims in suit provide a convenient starting place for determining the relevant art.” Id. at 1008. But, other factors may illuminate the inquiry. These factors include an examination of the type of skills needed to understand the patent disclosure, the type of art applied to the application in the PTO, and the areas of expertise of witnesses who are recruited to testify concerning the obviousness of the invention.[1] Id. at 1008-09.

         Beginning with the claims themselves, the focus of the ‘662 Patent is the delivery of fuel. Claim One describes “a fuel source” connectable to a “fuel supply.” [#1-1 at 10] Manifolds and hoses have “multiple fuel outlets” and fuel is delivered to multiple pieces of equipment. [Id.] Claims Two through Four, and Six through Twelve, all describe the “fuel delivery system of claim 1.” [Id. at 11] Claim Five describes the “fuel delivery system of claim 4.” [Id.] The claims of the ‘662 Patent make clear that it is a system for delivering fuel. Defendants' definition of the pertinent field of art as fluid delivery is overly broad.

         The type of skills needed to understand the patent disclosure supports a conclusion that the pertinent field of art is fueling hydraulic fracturing equipment. As Plaintiff aptly notes, the terminology and language used in the patent is specific to hydraulic fracturing. These terms include “fracturing jobs, ” “pumpers and blenders, ” Visi-Flo “sight glass, ” “head pressure as well as deadhead pressure from the pumps, ” “fill risers 59 such as a FreightlinerTM lock top, and also a PeterbiltTM draw tight design, ” “twin flap systems commonly used in underground storage tanks, ” and many other terms that are specific to either fuel delivery or fracturing. [#91 at 8-9 (listing terms with citations to the ‘662 Patent)]

         While the Court has yet to hear testimony concerning the obviousness of the invention, the experts called to testify at the claims construction hearing further support a conclusion that the pertinent field of art is fueling hydraulic fracturing equipment. Defendants' expert, James Blanton, worked for 45 years in the oil and gas industry. [#89 at 8] Similarly, Plaintiff's expert, Randy Tolman, is a consultant in the upstream oil and gas industry, with hydraulic fracturing experience. [Id. at 39, 43-47] The fact that both parties relied on experts in the field of oil and gas for their claims construction supports a conclusion that the pertinent field of art is hydraulic fracturing.[2]

         Thus, the claims themselves, the type of skills needed to understand the patent, and the experts called to testify during the claims construction hearing, all support Plaintiff's definition of a person of ordinary skill in the art. See Orthopedic Equip. Co., 702 F.2d at 1008-09. With respect to the type of art considered by the PTO, on the other hand, the Court agrees with the Defendants that the PTO considered art beyond refueling equipment during fracturing. [#90-2 at 2-3; #90-4] Indeed, some of the prior art considered did not even involve fuel delivery, let alone fuel delivery during fracturing. [Id.] Nonetheless, this factor does not outweigh the other factors discussed above, all of which suggest that the pertinent field of art is fueling hydraulic fracturing equipment.

         The Court's conclusion is bolstered by the description of the problem confronting the inventor set forth in the ‘662 Patent itself. The Background section of the ‘662 Patent describes the problem as follows:

Equipment at a well being fractured requires large amounts of fuel. Conventionally, if the equipment needs to be at a well site during a very large fracturing job, the fuel tanks of the equipment may need to be filled up several times, and this is done by the well known method of manually discharging fluid from a fuel source into each fuel tank one after the other. If one of the fuel tanks runs out of fuel during the fracturing job, the fracturing job may need to be repeated, or possibly the well may be damaged. The larger the fracturing job, the more likely equipment is to run out of fuel. Dangers to the existing way of proceeding include: extreme operating temperatures and pressures, extreme noise levels, and fire hazard from fuel and fuel vapours.

[#1-1 at 7] Thus, the problem confronting the inventor of the ‘662 Patent was refueling equipment at a fracturing site. The ‘662 Patent attempts to solve this problem by providing a “fuel delivery system and method . . . for reducing the likelihood that a fuel tank of equipment at a well site during fracturing of a well will run out of fuel.” [Id.] The fact that the problem confronting the inventor was the refueling of equipment at a fracturing site further supports the Court's conclusion that the pertinent field of art is fueling hydraulic fracturing equipment. Accordingly, the Court adopts Plaintiff's definition of a person of ordinary skill in the art.

         B. Disputed Terms

         1. Detect, Detection

         Claim One describes “a sensor associated with each combination of fuel outlet, hose and fuel delivery connection, each sensor being configured to detect a low fuel condition associated with each of the multiple pieces of equipment to which fuel is being delivered.” [#1-1 at 11] Later, Claim One states that a “controller is responsive to the detection of the low fuel condition.” [Id.] Atlas proposes that “detect” means “determine the existence of.” [#40 at 9] Frac Shack maintains that no construction is necessary. [Id.]

         The Court agrees with Atlas' construction of the phrase “detect.” Claim One states that the sensor must be “configured to detect a low fuel condition.” The clear implication of this phrase is that the sensor is determining the existence of the low fuel condition. Similarly, the controller responds “to the detection of the low fuel condition.” This language implies that a determination is made that the fuel level is low, and the controller responds to that determination. Atlas' proposed construction is therefore consistent with the language of the claims.

         Frac Shack has argued that no construction is necessary for this term. [#44 at 34-35] But, Frac Shack has failed to identify what “detect” could mean other than making some determination. The Court therefore agrees with Atlas and will construe “detect” to mean “determine the existence of.”[3]

         2. A low fuel condition

         As noted earlier, Claim One describes a “sensor being configured to detect a low fuel condition associated with each of the multiple pieces of equipment to which fuel is being delivered.” [#1-1 at 11] Atlas maintains that the term “low fuel condition” is indefinite. [#40 at 10] Alternatively, Atlas proposes a definition of “low fuel condition” as “a state in which the fuel level is empty or nearly empty.” [Id.] Frac Shack maintains that no construction is necessary or, in the alternative, a definition of “empty or almost empty.” [Id.]

         a. Indefiniteness

         Patent laws require a patent's claims to “particularly point[] out and distinctly claim[] the subject matter, ” which the applicant “regards as the invention.” 35 U.S.C. § 112(b). “Because claims delineate the patentee's right to exclude, the patent statute requires that the scope of the claims be sufficiently definite to inform the public of the bounds of the protected invention, i.e., what subject matter is covered by the exclusive rights of the patent.” Halliburton Energy Servs., Inc. v. M-I LLC, 514 F.3d 1244, 1249 (Fed. Cir. 2008). Absent sufficiently clear definition, “competitors cannot avoid infringement, defeating the public notice function of patent claims.” Id. As a result, “a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.” Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120, 2124 (2014).

         Atlas argues that the term “a low fuel condition” is indefinite because “‘low' is left up to the person of ordinary skill in the art to interpret when the fuel is low, leaving it unclear to the person reading the patent as to what constitutes infringement.” [#40 at 11] But, the patentee provided a narrowed definition of the term in the specification. The specification defines “low fuel condition” to mean “tank empty or nearly empty.” [#1-1 at 8] The Court finds that the term “empty or nearly empty” sufficiently informs a person of ordinary skill in the art about the scope of the invention to avoid the patent being invalid for indefiniteness.

         The Court's conclusion is bolstered by the purposes behind the definiteness requirement. As the Supreme Court recently explained, “a patent must be precise enough to afford clear notice of what is claimed, thereby appris[ing] the public of what is still open to them.” Nautilus, Inc., 134 S.Ct. at 2129 (quotations omitted). “Otherwise there would be [a] zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement of claims.” Id. (quotation omitted). In other words, and as conceded by Atlas during the claims construction hearing, “the purpose of [the definiteness requirement] is to give fair notice as to what is off limits in the field and what is available for exploration.” [#89 at 182]

         Here, the term “low fuel condition, ” which is defined as “empty or nearly empty, ” gives sufficient notice of what is claimed and provides fair notice of what is off limits in the field. Any lack of definition in the term “low fuel condition” is unlikely to deter future inventors from designing fuel delivery systems. Accordingly, the Court finds that the term “low fuel condition” does not render the ‘662 Patent invalid for indefiniteness.

         b. ...


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