Sunoco P'ship Mktg. & Terminals L.P. v. U.S. Venture, Inc.

• Decision Date: 29 January 2020
• Docket Number: No. 15 C 8178,15 C 8178
• Citation: 436 F.Supp.3d 1099
• Court: U.S. District Court — Northern District of Illinois
• Parties: SUNOCO PARTNERSHIP MARKETING & TERMINALS L.P., Plaintiff, v. U.S. VENTURE, INC., U.S. Oil, and Technics, Inc., Defendants.

436 F.Supp.3d 1099

SUNOCO PARTNERSHIP MARKETING & TERMINALS L.P., Plaintiff,

v.U.S. VENTURE, INC., U.S. Oil, and Technics, Inc., Defendants.

No. 15 C 8178

United States District Court, N.D. Illinois, Eastern Division.

Signed January 29, 2020

George Carter Lombardi, Alyssa Elena Ramirez, Winston & Strawn LLP, Chicago, IL, John Richard Keville, Pro Hac Vice, Michael Charles Krill, Pro Hac Vice, Michelle Cherry Replogle, Pro Hac Vice, Winston & Strawn LLP, Houston, TX, for Plaintiff.

Andrew Michael Gross, Foley & Lardner LLP, Chicago, IL, Jeffrey Costakos, Pro Hac Vice, Kimberly Dodd, Pro Hac Vice, Foley & Lardner LLP, Milwaukee, WI, Srikanth Reddy, Pro Hac Vice, Goodwin Procter LLP, Boston, MA, for Defendants.

MEMORANDUM OPINION AND ORDER

REBECCA R. PALLMEYER, United States District Judge Plaintiff Sunoco Partners and Marketing 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 has sued Defendant U.S. Venture, Inc., and its subsidiary, U.S. Oil Co. (together, "Venture"), for infringing four of those patents at seven of Venture's fuel terminals. In several previous opinions, the court has addressed summary judgment motions and claims construction issues. See Sunoco Partners Mktg. & Terminals L.P. v. U.S. Venture, Inc. , No. 15 C 8178, 2017 WL 1550188 (N.D. Ill. Apr. 28, 2017) (" Sunoco Markman Opinion I "); Sunoco Partners Mktg. & Terminals L.P. v. U.S. Venture, Inc. , No. 15 C 8178, 2017 WL 4283946, (N.D. Ill. Sept. 27, 2017) (" Sunoco SJ Opinion I "); Sunoco Partners Mktg. & Terminals L.P. v. U.S. Venture, Inc. , 339 F. Supp. 3d 803 (N.D. Ill. 2018) (" Sunoco SJ Opinion II "); Sunoco Partners Mktg. & Terminals L.P. v. U.S. Venture, Inc. , No. 15 C 8178 (N.D. Ill. Feb. 21, 2019) ("Sunoco Markman Opinion II "). Left for a trial were Sunoco's allegations that Venture infringed several of their patents' claims and that the infringement was willful, Venture's arguments that numerous of the patent claims are invalid, and the extent of any damages. The court held a bench trial over several days in April and July 2019 to consider these issues. Both parties have submitted post-trial memoranda and seek judgment in their favor.

Based on the evidence presented at trial, the court concludes that two of the asserted patent claims are invalid for anticipation. The court also finds that Venture willfully infringed the other asserted claims and awards Sunoco damages of $2 million, trebled to $6 million, plus prejudgment interest. The court also grants Sunoco's request for a permanent injunction.

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 No. 9,606,548 (the " '548 Patent").¹ The court has already described the invention in detail in its previous opinions; the court here presumes the reader's familiarity with those opinions and presents only a brief summary of the background facts.

As previously explained,

[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/gasoline-standards/gasoline-reid-vapor-pressure (last accessed Sept. 20, 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 15.²

... 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 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.)

... The inventors of the patented system, Larry Mattingly and Steve Vanderbur, filed the application that led to the '302 and '629 patents in February 2001. After the patents were issued, Mattingly and Vanderbur assigned them to Texon Terminals Corporation ("Texon").

Sunoco SJ Opinion I , 2017 WL 4283946, at *1–2 (internal citations to record omitted).

Defendant Venture operates twenty-five gasoline terminals that store and ship gasoline and diesel via barges, trucks, trains, and pipelines. (Trial Tr. 928:21–24.) The company began researching automated butane blending in 2008 and learned of the patents in that year. (Id. at 1274:3–23.) Later that year, Texon described its patented systems in a confidential presentation to Venture. (Id. at 1276:7–9; PTX 59.) Venture and Texon entered into negotiations for Texon to provide butane and blending services at Venture's Green Bay, Wisconsin facility (see PTX 73), but a deal between the two parties never materialized. (Trial Tr. at 888:13–15.) Venture's interest in automated butane blending did not end, however. The company continued to research the process of butane blending and exploring the possibility that others in the industry could help it construct a blending system. (See, e.g., id. at 889:21–25.) In 2010, Venture began to recruit former-Defendant Technics, Inc. to design and install such a system. (Id. at 1361:1–13.) Technics is an engineering company that sells butane blenders to gas and liquid processing facilities. (Def. Technics, Inc.'s Answer, Defenses & Countercls. to Pl. Sunoco Partners Mktg. & Terminals L.P. Compl. [29] ¶ 13.)

Though at that time Technics had never built a butane blending system before, it took just two weeks to propose a design for a "blending skid," which holds the blender that combines the butane and gasoline. (Trial Tr. at 1361:10–22.) As a Venture witness acknowledged at trial, the Technics proposal was "very similar" to the Texon system. (Id. at 1361:21–22.) Indeed, like Texon, Technics intended to use a Grabner analyzer to measure RVP as well as a large and small Coriolis flow meter arranged in the same configuration. (Id. at 1361:23–1362:1, 1290:23–1291:2; compare PTX 59 at 3, with PTX 26.) Coriolis meters are a common type of mass flowmeter, but Venture's systems typically used a turbine meter. (Trial Tr. at 1291:16–18.) A Venture witness had difficulty explaining why Coriolis meters were chosen. (See id. at 1291:23–1294:22.) Likewise, though Grabner analyzers had been around a long time (id. at 1363:13–15), other analyzers that measure gasoline volatility were also available (see DTX 586), and yet Technics's initial design still proposed using the same Grabner model as disclosed in Texon's patents (id. 1288:9–13). Notably, Venture was not using any such analyzers at the time. (Id. at 1288:22–25.) Technics installed the blending skid at Venture's Green Bay terminal, and similar systems were installed at the Madison and Milwaukee Central facilities soon thereafter. See Sunoco SJ Opinion I , 2017 WL 4283946, at *5. Over the next several years, Venture added similar butane blending systems at its Milwaukee West, Bettendorf, Fort Worth, and Houston facilities. Id. at *2.

There were some differences between the Texon patented systems and those installed at Venture terminals. For example, the patented systems require that gasoline entering the system come from a gasoline tank. (See, e.g., '302 Patent, col. 13 l. b.) Although Venture's Milwaukee Central and Milwaukee West terminals always blended gasoline from a tank, the facilities in Green Bay, Madison, and Bettendorf sometimes blended from a tank and at other times blended gasoline coming directly from a pipeline. (Proposed Am. J. Pretrial Order, Sch. 2(a) Am. Proposed Findings of Fact & Law § I(A)(1) [453-1] at 4.) Likewise, while in the '302, '629, and '671 patents blended gasoline flows directly to a "rack" where it can be dispensed to trucks (see, e.g., Trial Tr. at 846:10–14), Venture's systems inserted a "rack tank" between the blending unit and the rack (id. at 971:7–10). Venture argued previously in the litigation that this rendered its systems non-infringing. However, the '948 and '548 patents do not recite a truck rack. Upon learning about these later patents on March 31, 2017, when Sunoco filed a motion for leave to amend and supplement its complaint [157]; Venture promptly (on April 17, 2017) modified its systems to require a human operator—as opposed to an automated process—to adjust the amount of butane flowing into the system.³ (See Am. Proposed Findings of Fact & Law [453-1] at 1.) Moreover, in Sunoco Markman Opinion I , 2017 WL 1550188, at *6–12, which was issued just weeks after Sunoco included those later patents in its amended complaint [161], the court rejected Venture's proposed claim construction requiring the blended product to flow "immediately" to the truck rack; that is, the court concluded that the '302 and '629 patents could cover a system that inserted a rack tank between the blending...