`
`
`
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`In re Patent of:
`Stephen Barbour
`U.S. Patent No.:
`11/574,372 Attorney Docket No.: 54598-0001PS1
`Issue Date:
`February 7, 2023
`
`Appl. Serial No.:
`16/484,728
`
`Filing Date:
`January 6, 2020
`
`Title:
`BLOCKCHAIN MINE AT OIL OR GAS FACILITY
`
`
`
`
`DECLARATION OF MICHAEL NIKOLAOU
`
`
`
`
`
`
`
`
`CRUSOE-1003
`
`1
`
`

`

`
`
`I, Michael Nikolaou, declare as follows:
`I.
`ASSIGNMENT
`1.
`I have been retained on behalf of Crusoe Energy Systems, LLC. (“Crusoe” or
`
`“Petitioner”) to offer technical opinions related to U.S. Patent No. 11/574,372 (“The ’372 patent”)
`
`(EX1001). I understand that Crusoe is requesting the Patent Trial and Appeal Board (“PTAB” or
`
`“Board”) to institute a post-grant review (“PGR”) proceeding of the ’372 patent.
`
`2.
`
`I have been asked to provide my independent analysis of the ’372 patent in light of
`
`the prior art cited in this declaration. Crusoe has specifically asked for my analysis from the
`
`perspective of a POSITA in the gas and oil industry. To the extent this declaration provides
`
`opinions on subject matter related to bitcoin mining, I am relying on the opinions of Mr. Vernon
`
`Kasdorf (EX1004). To that end, I am relying on Mr. Kasdorf’s review and analysis of
`
`CryptoKube, Szmigielski, Kheterpal, and Polivka – which are all identified as prior art herein.
`
`3.
`
`I am not and never have been, an employee of Crusoe. I received no compensation
`
`for this declaration beyond my normal hourly compensation based on my time actually spent
`
`analyzing the ’372 patent, the prior art cited below, and issues related thereto, and I will not receive
`
`any added compensation based on the outcome of this PGR or other proceeding involving the ’372
`
`patent.
`
`II.
`
`QUALIFICATIONS
`4.
`I am a Professor and Associate Chair of Chemical and Biomolecular Engineering
`
`in the Cullen College of Engineering at the University of Houston. I also have a joint appointment
`
`in the Petroleum Engineering Department at the University of Houston.
`
`5.
`
`I graduated with a Diploma in Chemical Engineering from the National Technical
`
`University in Athens, Greece in 1984. I then earned a Ph.D. in Chemical Engineering at the
`
`University of California, Los Angeles in 1989. Prior to coming to the University of Houston, I
`
`
`
`2
`
`

`

`
`
`was an Assistant (and then Associate) Professor at Texas A&M University for eight years. After
`
`my promotion to Associate Professor and tenure at Texas A&M, I took a sabbatical leave as a
`
`Visiting Scientist at MIT in 1995. I have taught at the University of Houston for over twenty-five
`
`years, since 1997.
`
`6.
`
`In my role as a Professor at the University of Houston I teach both undergraduate
`
`and graduate courses every year. At the undergraduate level, these courses include Analytical
`
`Methods for Chemical Engineers, Numerical Methods for Chemical Engineers, Plant Economics,
`
`Plant Design, Thermodynamics, Statistical Methods in Chemical Engineering, Statistical Quality
`
`Control Methods, and Chemical Process Control. At the graduate level, I teach Mathematical
`
`Methods in Chemical Engineering, Advanced Process Control, and Natural Gas Engineering. I
`
`also routinely advise both undergraduate and graduate (Master and Ph.D.) students.
`
`7.
`
`I have extensive experience in process systems engineering and mathematical
`
`modeling. My research interests are in computer-aided systems engineering, i.e., development and
`
`use of computer-based methods for the design, optimization, monitoring, and automatic control of
`
`various kinds of systems, in a diverse array of industries.
`
`8.
`
`In my over 30 years of academic and industrial consulting experience I have worked
`
`on problems in several industries, including the oil & gas industry and oil refining &
`
`petrochemicals. Much of my work tackles fundamental research issues and is described in a
`
`number of publications, as discussed below. A substantial portion of my work is directed to
`
`concrete solutions to problems faced by industrial partners and has resulted in specific commercial
`
`products (e.g. for Lam Research, https://www.lamresearch.com/), patents, and the formation (by
`
`the corresponding project’s managers) of a small company that was eventually bought by
`
`Schlumberger, a major global oilfield services company
`
`
`
`3
`
`

`

`
`
`(http://www.slb.com/services/drilling/drilling_services_systems/directional_drilling/slider.aspx).
`
`9.
`
`In addition to teaching, I have also served as a consultant for various oil and gas
`
`companies over the past twenty-seven years, working with both major companies and smaller,
`
`independent companies, both “upstream” (i.e., oil and gas exploration and production) and
`
`“downstream” (oil and gas transportation, oil refining, and chemicals). I have consulted on a
`
`variety of matters for ENI, Schlumberger, WildHorse / RotoSlide, Synergy Fluid Services,
`
`XGas/EPT, IQPC Oil & Gas, Intelligent Agents Corporation, Landmark / Halliburton,
`
`ECOPETROL, Lam Research, Shell Global Solutions, Noble Drilling, AspenTech, General
`
`Electric, Simulation Sciences, Bryan Research & Engineering, Frito-Lay, Shell Development, and
`
`Union Pacific Resources.
`
`10.
`
`I have published over 150 peer-reviewed publications in journals and conference
`
`proceedings in the area of computer-aided systems engineering. My publications focus on
`
`applications to the design, optimization, monitoring, and automatic control of various kinds of
`
`systems, in oil & gas, oil refining & petrochemicals, snack food production, semiconductor
`
`manufacturing, and development and administration of antibiotics against resistant or persistent
`
`infections. Three of my refereed journal publications have been featured on the cover of high-
`
`impact journals (AIChE Journal, 2011; IEEE Control Systems Magazine, 2006; PLoS
`
`Computational Biology, 2011).
`
`11.
`
`I have also presented my work as a speaker at numerous academic conferences,
`
`whether in regular sessions, invited sessions, or as a keynote speaker. As an example, I have been
`
`invited twice (in 1996 and 2011) to give presentations in the flagship conference on Chemical
`
`Process Control, held every five years (CPC-V and CPC-VIII); and was a keynote speaker at the
`
`2017 International Petroleum & Petrochemical Technology Conference (IPPTC) in Beijing, China.
`
`
`
`4
`
`

`

`
`
`I have also published 5 book chapters on various aspects of computer-aided systems engineering.
`
`Finally, I serve regularly as a peer reviewer at several major engineering and scientific journals
`
`(including Automatica, PLoS, AIChE Journal, SPE Journal, Journal of Process Control,
`
`Computers & Chemical Engineering) as well as at federal and international funding agencies,
`
`including National Science Foundation (NSF), Petroleum Research Fund (PRF), National
`
`Institutes of Health (NIH), and the Qatar National Research Fund (QNRF).
`
`12.
`
`I am a member of the American Institute of Chemical Engineers, the Society of
`
`Petroleum Engineers, and Omega Chi Epsilon. I serve as a co-organizer or co-chair of several
`
`major international conferences, including the AIChE Annual Meeting and the AIChE Spring
`
`Meeting.
`
`13.
`
`I have received numerous teaching awards from both Texas A&M and University
`
`of Houston, including the Dow Excellence in Teaching Award, and the Cullen College of
`
`Engineering Teaching Excellence Award. I have also been named a Top Reviewer by Automatica,
`
`and, in 2007, I received the Computing & Systems Technology (CAST) Directors Award from the
`
`American Institute of Chemical Engineering. In 2017, I received the Abraham E. Dukler
`
`Distinguished Engineering Faculty Award at the University of Houston, which is given to faculty
`
`who have made significant contributions to society and whose accomplishments and careers have
`
`brought credit to the University of Houston Cullen College of Engineering. In 2019, I received
`
`the Fluor Corp. Faculty Excellence Award in the Cullen College of Engineering. This award is
`
`the highest distinction bestowed to faculty of this College.
`
`14. My curriculum vitae, which includes a complete list of my publications, is included
`
`as Appendix A.
`
`15.
`
`I am being compensated at a rate of $700 per hour for my work in this case. This
`
`
`
`5
`
`

`

`
`
`compensation is not contingent on the nature of my findings or the outcome of this litigation.
`
`16.
`
`I have previously given testimony in the following cases:
`
`a) Eurecat U.S., Inc. v. Soren Marklund, Douglas Wene, and Chem 32 LLC, Trial Ct.
`Cause No. 2012-5700, Harris Cty. Ct. (Tex).
`b) TDE Petroleum Data Solutions, Inc. v. AKM Enterprise, Inc. DBA Moblize, Inc.,
`Case No. 4:15-cv-01821 (S.D. Tex. 2015).
`c) Arrona et al. v. Bluestone Natural Resources, LLC, Case No. 4:15-cv-02680 (S.D.
`Tex. 2017).
`d) Sunoco Partner Marketing & Terminals L.P. v. Powder Springs Logistics, LLC, et
`al., Case No. 1:17-cv-01390 (D. Del. 2017).
`e) Magellan Midstream Partners L.P. v. Sunoco Partners Marketing & Terminals,
`IPR2019-00024 (U.S. Patent No. 9,494,948).
`f) Magellan Midstream Partners L.P. v. Sunoco Partners Marketing & Terminals,
`IPR2019-00025 (U.S. Patent No. 9,606,548).
`17.
`I am over the age of 18 and am competent to write this declaration. I have personal
`
`knowledge, or have developed knowledge, of the technologies discussed in this declaration based
`
`upon my education, training, or experience with the matters discussed herein.
`
`III.
`
`SUMMARY OF CONCLUSIONS FORMED
`18.
`This Declaration explains the conclusions that I have formed based on my analysis.
`
`To summarize those conclusions:
`
`
`
`Ground 1: Based upon my knowledge and experience and my review of the prior
`
`art in this declaration, and Mr. Kasdorf’s Declaration (EX1004), I believe that
`
`claims 1-4, 8, 16-30, and 34 of the ’372 patent are rendered obvious by Dickerson
`
`and CryptoKube, in view of Szmigielski and Kheterpal.
`
`
`
`Ground 2: Based upon my knowledge and experience and my review of the prior
`
`
`
`6
`
`

`

`
`
`art in this declaration, and Mr. Kasdorf’s Declaration (EX1004), I believe that
`
`claims 1-4, 8, 10-12, 15-30, 34-37, and 40 of the ’372 patent are rendered obvious
`
`by Dickerson, CryptoKube, and Belady-989, in view of Szmigielski and Kheterpal.
`
`
`
`Ground 3: Based upon my knowledge and experience and my review of the prior
`
`art in this declaration, and Mr. Kasdorf’s Declaration (EX1004), I believe that
`
`claims 1-4, 7-12, 15-30, 34-37, and 40 of the ’372 patent are rendered obvious by
`
`Dickerson, CryptoKube, Belady-989, and Boot, in view of Szmigielski and
`
`Kheterpal.
`
`
`
`Ground 4: Based upon my knowledge and experience and my review of the prior
`
`art in this declaration, and Mr. Kasdorf’s Declaration (EX1004), I believe that
`
`claims 1-4, 8, 16-30, and 34 of the ’372 patent are rendered obvious by Pioneer
`
`Energy’s MAGS system and the Polivka miner, in view Szmigielski and Kheterpal.
`
`
`
`Ground 5: Based upon my knowledge and experience and my review of the prior
`
`art in this declaration, and Mr. Kasdorf’s Declaration (EX1004), I believe that
`
`claims 1-4, 8, 10-12, 15-30, 34-37, and 40 are rendered obvious by Pioneer
`
`Energy’s MAGS system, the Polivka miner, and Belady-989, in view of
`
`Szmigielski and Kheterpal.
`
`IV.
`
`PERSON OF ORDINARY SKILL IN THE ART
`19.
`In my opinion, a person of ordinary skill in the art of the ’372 patent In my opinion,
`
`a person of ordinary skill in the art of the ’372 patent would have a degree in chemical engineering,
`
`petroleum engineering, process engineering, mechanical engineering, or a similar field with 1-2
`
`years of experience in designing power generation systems, Bitcoin mining systems, or other
`
`comparable hands-on experience. Alternatively, a person having 3-5 years of experience in the
`
`
`
`7
`
`

`

`
`
`Bitcoin mining industry would also qualify as a POSITA. Additional education could substitute
`
`for professional experience, or vice versa.
`
`V.
`
`LEGAL PRINCIPLES
`20.
`I am not a lawyer and I will not provide any legal opinions in this PGR. Although
`
`I am not a lawyer, I have been advised that certain legal standards are to be applied by technical
`
`experts in forming opinions regarding the meaning and validity of patent claims.
`
`A.
`
`Claim Construction
`
`21.
`
`I understand that claim terms are generally given their plain and ordinary meaning
`
`in light of the patent’s specification and file history as understood by a person of ordinary skill in
`
`the art at the time of the purported invention. In that regard, I understand that the best indicator of
`
`claim meaning is its usage in the context of the patent specification as understood by a POSITA.
`
`I further understand that the words of the claims should be given their plain meaning unless that
`
`meaning is inconsistent with the patent specification or the patent’s history of examination before
`
`the Patent Office. I also understand that the words of the claims should be interpreted as they
`
`would have been interpreted by a POSITA at the time of the invention was made (not today).
`
`B.
`
`Obviousness
`
`22.
`
`I understand that a patent claim is invalid if the claimed invention would have been
`
`obvious to a person of ordinary skill in the field at the time of the purported invention, which is
`
`often considered the time the application was filed. Thus, even if all of the claim limitations are
`
`not found in a single prior art reference that anticipates the claim, the claim can still be invalid. I
`
`also understand that a POSITA is presumed to have been aware of all pertinent prior art at the time
`
`of the alleged invention.
`
`23.
`
`I understand that to obtain a patent, a claimed invention must have, as of the priority
`
`date, been nonobvious in view of the prior art in the field. I understand that an invention is obvious
`
`
`
`8
`
`

`

`
`
`when the differences between the subject matter sought to be patented and the prior art are such
`
`that the subject matter as a whole would have been obvious at the time the invention was made to
`
`a person having ordinary skill in the art.
`
`24.
`
`I understand that, to prove that prior art or a combination of prior art renders a
`
`patent obvious it is necessary to: (1) identify the particular references that, singly or in
`
`combination, make the patent obvious; (2) specifically identify which elements of the patent claim
`
`appear in each of the asserted references; and (3) explain a motivation, teaching, need, market
`
`pressure or other legitimate reason that would have inspired a person of ordinary skill in the art to
`
`combine prior art references to solve a problem.
`
`25.
`
`I also understand that certain objective indicia can be important evidence regarding
`
`whether a patent is obvious or nonobvious. Such indicia include:
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Commercial success of products covered by the patent claims;
`
`A long-felt need for the invention;
`
`Failed attempts by others to make the invention;
`
`Copying of the invention by others in the field;
`
`Unexpected results achieved by the invention as compared to the closest
`
`prior art;
`
`Praise of the invention by the infringer or others in the field;
`
`The taking of licenses under the patent by others;
`
`Expressions of surprise by experts and those skilled in the art at the making
`
`of the invention; and
`
`The patentee proceeded contrary to the accepted wisdom of the prior art.
`
`26.
`
`To the extent these factors have been brought to my attention, if at all, I have taken
`
`
`
`9
`
`

`

`
`
`them into consideration in rendering my opinions and conclusions. As discussed above and
`
`detailed in my curriculum vitae, I was very familiar with power generation systems, equipment,
`
`and technologies, and oil and gas facilities (and the industry in general) and was aware of the state
`
`of the art as of the earliest claimed priority date of the ’372 patent. For the purposes of this
`
`declaration, I have been asked to assume that the earliest priority date of the ’372 patent is February
`
`8, 2017. I believe that I would qualify as understanding the knowledge and skill of a POSITA as
`
`of that date, and I have a sufficient level of knowledge, experience, and expertise to provide an
`
`expert opinion in the field of the ’372 patent.
`
`VI. MATERIALS CONSIDERED
`27.
`In forming my opinion, I considered the following documents:
`
`EX1001
`EX1002
`
`EX1004
`EX1005
`EX1006
`
`EX1007
`
`EX1008
`EX1009
`
`EX1010
`EX1011
`EX1012
`EX1013
`
`EX1014
`EX1015
`
`EX1016
`EX1017
`EX1018
`EX1019
`EX1020
`EX1021
`
`U.S. Patent No. 11,574,372 to Stephen Barbour et al. (“the ’372 Patent”)
`Excerpts from the Prosecution History of the ’372 Patent (“the
`Prosecution History”)
`Declaration and Curriculum Vitae of Vernon Kasdorf.
`WO2015123257A1 (“Dickerson”)
`CryptoKube brochure from the WaybackMachine dated March 5, 2016
`(“CryptoKube brochure”)
`CryptoKube Bitcoin mining Data center tour(CC) (“CryptoKube video-
`Part1”)
`CryptoKube Bitcoin mining Data center tour transcript
`Szmigielski, Albert. Bitcoin Essentials. Packt Publishing Ltd, 2016
`(“Szmigielski”)
`U.S. Patent Publication No. 2016/0125040 (“Kheterpal”)
`PCT Patent Publication No. 2015/072989 (“Belady-989”)
`U.S. Patent No. 9,394,770 (“Boot”)
`Sanders, Gerald, and Johnson Space Center. "Gas Conversion Systems
`Reclaim Fuel for Industry." (“Sanders”)
`US Patent Publication No. 2015/0368566 (“Young”)
`Mining Container ~100kW by Polivka GmbH (“Bitcointalk forum
`post”)
`Mining with free natural gas _ r_Bitcoin (“Reddit”)
`U.S. Patent Publication No. 2014/0096837 (“Belady-837”)
`U.S. Patent Publication No. 2018/0109541 (“Gleifchauf”)
`Polivka Mining Container Setup on Vimeo (“Polivka video”)
`Declaration of June Ann Munford
`U.S. Patent No. 6,161,386 (“Lokhandwala”)
`
`
`
`10
`
`

`

`
`
`EX1022
`
`EX1023
`
`EX1100
`
`“Crypto you can mine from a home computer,” Brave New Coin
`(bravenewcoin.com) (July 18, 2023)
`CryptoKube Bitcoin mining Data center tour(CC) (“CryptoKube video-
`Part2”)
`Complaint for Patent Infringement, Upstream Data Inc. v. Crusoe
`Energy Systems LLC, Case No. 1:23-cv-01252 (D. Colo. May 18, 2023)
`
`
`In addition to the documents and materials cited in this declaration, I also relied on my knowledge,
`education, skills, experience, and training in forming my opinions.
`VII. BACKGROUND – POWER GENERATION USING FLARE GAS
`28.
`The following paragraphs regarding power generation using flare gas are based on
`
`prior art to the ’372 patent. As stated above, for the purposes of this declaration, I have been asked
`
`to assume that the earliest priority date of the ’372 patent is February 8, 2017.
`
`29.
`
`Flare gas is natural gas to be flared, that is burned on a flare stack, because it is
`
`otherwise prohibitively impractical to either use that gas locally (at a hydrocarbon production
`
`location) or transport that gas to another location for profitable consumption. Natural gas flaring
`
`is an imperfect practical solution. On the one hand, flaring mitigates the problem of releasing that
`
`gas into the atmosphere, which would have significant negative impact (e.g., contribute towards
`
`the global atmospheric greenhouse effect a lot more than equivalent amounts of carbon dioxide).
`
`On the other hand, the products of flaring include carbon dioxide, black soot, and some unburned
`
`methane, which pose environmental or health problems. Furthermore, natural gas flaring places a
`
`cost on treating an otherwise valuable commodity.
`
`VIII. OVERVIEW OF THE ’372 PATENT
`30.
`The ’372 patent relates to “operating a blockchain mining device using natural gas
`
`produced at a hydrocarbon production, storage, or processing site/facility.” EX1001, Abstract. By
`
`way of background to its technology, the ’372 Patent explains that “[a]t remote oil and gas
`
`facilities, excess natural gas is often wasted, for example vented to atmosphere or burned via
`
`
`
`11
`
`

`

`
`
`flaring.” EX1001, 1:11-13. Figures 1 and 2 are schematics illustrating systems for “powering a
`
`blockchain [mining device (12)] at a remote oil well [14],” with a generator (28). EX1001, 5:53-
`
`62; 8:35-48.
`
`31.
`
`Figure 1 (shown below) shows “a generator [28] retrofitted to a prime mover [24],
`
`which operates a drivehead to pump oil up from the reservoir.” EX1001, 5:53-56. That is, in this
`
`case, the blockchain mining device (12) is connected to a generator (28), which is retrofitted to a
`
`prime mover.
`
`’372 Patent, EX1001, Fig. 1
`
`
`
`32.
`
`Figure 2 (shown below) is similar to Figure 1, but this embodiment includes two
`
`engines—one that (with a generator) powers the blockchain mining device, and one that operates
`
`the drive head. See EX1001, 5:57-62.
`
`
`
`12
`
`

`

`
`
`’372 Patent, EX1001, Fig. 2
`
`
`
`33.
`
`Figure 3 (shown below) is a schematic illustrating another embodiment of a system
`
`for powering a blockchain mine, in which “a generator and engine are connected to be powered
`
`by combustible gas taken off of an oil storage unit to power the blockchain main.”
`
`
`
`13
`
`

`

`
`
`’372 Patent, EX1001, Fig. 3
`
`
`
`34.
`
`Common among these three embodiments is that, in each case, a blockchain mining
`
`device is connected to a generator that runs on combustible gas – in particular, natural gas at an
`
`oil well or oil storage unit.
`
`35.
`
`I understand that the ’372 patent lists Stephen Barbour as the inventor, Upstream
`
`Data Inc. (“Upstream”) as the applicant and assignee, and has the title: “Blockchain Mine at Oil
`
`or Gas Facility.” For purposes of this declaration, I have been asked to assume that February 8,
`
`2017, the filing date of US provisional application No. 62/456,380, is the earliest possible priority
`
`date for the ’372 patent.
`
`36.
`
`Generally, the ’372 patent discusses systems and methods for using a source
`
`combustible gas to power bitcoin mining. I understand that in the related Complaint, Upstream
`
`
`
`14
`
`

`

`
`
`has relied specifically on claims 1 and 2 of the ’372 patent.
`
`IX. OVERVIEW OF THE PROSECUTION HISTORY
`37.
`The application that led to the ’372 patent was filed as U.S. Patent Application No.
`
`16/484,728 on February 6, 2018. EX1002.
`
`38.
`
`I understand that the ’372 patent was filed with 41 claim, two of which were
`
`independent claims
`
`A system comprising:
`1.
`a source of combustible gas produced from an oil production, storage, or processing
`facility;
`a generator connected to the source of combustible gas; and
`a blockchain mining device connected to the generator.
`
`A method comprising using a source of combustible gas produced at a
`24.
`hydrocarbon production well, storage, or processing facility, to produce electricity
`to operate a blockchain mining device located at the hydrocarbon production well,
`storage, or processing facility, respectively.
`
`EX1002, 686-691. I further understand that before examination, the claims were amended to
`
`“remove all multiple dependencies and reduce excess claim fees.” EX1002, 543-550. Claims 1
`
`and 24 were not amended.
`
`39.
`
`I understand that on August 9, 2021, before any office actions had been mailed, a
`
`third party submission was made to cite a Reddit posting dated July 3, 2016. EX1002, 439-447.
`
`According to the third-party submitter, the Reddit posting “discloses a source of combustible gas,
`
`a generator that generate (sic) electricity from combustion of the gas, and a blockchain mining
`
`device.” EX1002, 440.
`
`40.
`
`I understand that the Examiner initiated and conducted an interview with the
`
`Upstream’s representative on April 15, 2022, “to gain insight and a better understand (sic) the
`
`claimed invention as well as the oil/natural gas industry as it applies to block chain mining.”
`
`
`
`15
`
`

`

`
`
`EX1002, 348. The Examiner concluded that the third-party submission “reads adequately on the
`
`independent claims,” and suggested that “[m]oving forward, [] drafting independent claims that
`
`clearly unite the combustible gas production elements and the block chain mining elements.”
`
`EX1002, 348. With respect to the dependent claims, the Examiner indicated that “[a]llowable
`
`subject matter may reside in dependent claims 12–18,” but that “further searching [would be]
`
`required.” EX1002, 348. The Examiner’s initial search revealed little in the way of qualified prior
`
`art, but did reveal Belady-989-FH (US20140096837A1). EX1002, 348.
`
`41.
`
`I understand that on April 19, 2022, before Upstream amended the claims, the
`
`Examiner mailed an Office Action. EX1002, 329-347. Claims 1 and 24, as well as dependent
`
`claims, were rejected for obviousness over Belady-989-FH and Gleifchauf (US20180109541A1).
`
`EX1002, 336. No anticipation rejections were made, despite the Examiner having indicated in the
`
`April 15 interview that the Reddit Post reads on the independent claims.
`
`42.
`
`I understand that, in making the obviousness rejection, the Examiner took the
`
`position that Belady-989-FH discloses using a gas generator to power a data center (blockchain
`
`mining device), and Gleifchauf discloses using servers for blockchain mining and verification.
`
`EX1002, 336-337. According to the Office, it would have been obvious to combine Belady-989-
`
`FH and Gleifchauf because Belady-989-FH discloses “data centers are being located in areas
`
`where natural resources, from which electrical power can be derived, are abundant and can be
`
`obtained inexpensively. For example, natural gas is a byproduct of oil drilling operations and is
`
`often considered a waste byproduct since it cannot be economically captured and brought to the
`
`market.” EX1002, 336-337 (quoting EX1017, [0004]).
`
`43.
`
`I understand that subsequent to receiving the obviousness rejection, Upstream
`
`amended the independent claims to recite:
`
`
`
`16
`
`

`

`
`
`A system comprising:
`1.
`a source of combustible gas produced from [[an oil]]a facility selected from a group
`consisting of a hydrocarbon production, storage, or processing facility;
`a generator connected to the source of combustible gas to receive a continuous flow
`of combustible gas to power the generator; and
`[[a]] blockchain mining devices connected to the generator;
`in which
`the blockchain mining devices each have a mining processor and are
`connected to a network interface;
`the network interface is connected to receive and transmit data through the
`internet to a network that stores or has access to a blockchain database;
`the mining processors are connected to the network interface and adapted
`to mine transactions associated with the blockchain database and to communicate
`with the blockchain database;
`the network is a peer-to-peer network;
`the blockchain database is a distributed database stored on plural nodes in
`the peer-to-peer network; and
`the blockchain database stores transactional information for a digital
`currency.
`
`24.
`
`A method comprising:
`Producing electricity using a generator and a source of combustible gas
`produced at a facility selected from the group consisting of a hydrocarbon
`production well, storage, or processing facility, to produce electricity to and
`operating[[e a]] blockchain mining devices located at the hydrocarbon production
`well, storage, or processing facility, respectively, using the electricity, in which:
`the generator is connected to the source of combustible gas, in which the
`facility is connected to produce a continuous flow of combustible gas to the
`generator;
`the blockchain mining devices [. . . ].1
`
`I understand that, to overcome the obviousness rejection, Upstream argued that its
`
`44.
`
`system uses “flare gas” as opposed to “sales gas.” EX1002, 222-223. I understand that Upstream
`
`also argued that blockchain mining is different from traditional data-processing because it requires
`
`more energy. EX1002, 222-223. Upstream argued that its “discovery amounts to a new use for
`
`
`1 The remainder of the amendments to claim 24, with respect to the block chain mining devices, are identical to those
`made in claim 1. CRUSOE-1002 209-224.
`
`
`
`17
`
`

`

`
`
`previously known individual components (a common precursor for patentability), and may provide
`
`numerous benefits including the reduction of greenhouse gas emissions and capture of revenue
`
`where gas disposal is otherwise a capital loss (for example paragraphs 33, 34, 48, and 73), EX1002,
`
`223.
`
`45.
`
`I understand that on August 31, 2022, a notice of allowance was mailed. EX1002,
`
`4-9. In the “Reasons for Allowance,” the Examiner indicated that:
`
`
`I understand that the ’372 patent issued shortly after a Rule 312 amendment
`
`46.
`
`(amending claims 15, 16, 18, 31, 37, 38, 40 to recite “hydrocarbon production well, storage, or
`
`
`
`18
`
`

`

`
`
`processing facility”). EX1002, 20-29.
`
`47.
`
`I also understand that neither Dickerson, CryptoKube, Szmigielski, Kheterpal,
`
`Boot, Pioneer’s MAGS system, nor Polivka miner were considered by the examiner. EX1002.
`
`X.
`
`THE CHALLENGED CLAIMS
`48.
`I understand that for purposes of this proceeding, Petitioner is challenging the
`
`validity of claims 1-4, 7-12, 15-30, 34-37, and 40 of the ’372 patent.
`
`49.
`
`Claim 1 of the ’372 patent is representative of the challenged claims and is shown
`
`below:
`
`1. A system comprising:
`a source of combustible gas produced from a facility selected from a group
`consisting of a hydrocarbon production, storage, or processing facility;
`a generator connected to the source of combustible gas to receive a
`continuous flow of combustible gas to power the generator; and
`blockchain mining devices connected to the generator;
`in which:
`the blockchain mining devices each have a mining processor and are
`connected to a network interface;
`the network interface is connected to receive and transmit data
`through the internet to a network that stores or has access to a blockchain
`database;
`the mining processors are connected to the network interface and
`adapted to mine transactions associated with the blockchain database and to
`communicate with the blockchain database;
`the network is a peer-to-peer network;
`the blockchain database is a distributed database stored on plural
`nodes in the peer-to-peer network; and
`the blockchain database stores transactional information for a digital
`currency.
`
`XI. CLAIM CONSTRUCTION
`50.
`I understand that Petitioner reserves the right to assert in litigation that certain claim
`
`constructions are proper and that certain terms are indefinite, and I do not concede, by providing
`
`my opinions herein, that the challenged claims are of definite scope or properly described.
`
`
`
`19
`
`

`

`
`
`51.
`
`For the purposes of this declaration, no formal claim constructions are presently
`
`necessary, besides the specific constructions described below.
`
`52.
`
`The term “blockchain mining device” should be construed as “any computing
`
`device that is capable of performing blockchain mining without regard to processor speed or
`
`power.” For this construction, I relied on Mr. Kasdorf.
`
`53.
`
`The term “mining processor” should be construed as “any processor that is capable
`
`of performing blockchain mining without regard to processor speed or power.” For this
`
`construction, I relied on Mr. Kasdorf.
`
`54.
`
`The term “a continuous flow of combustible gas” should be construed as “a flow
`
`of combustible gas that is continuous for at least a time period (e.g., an hour, a day, a week, a
`
`month, or longer ).” This construction is supported by the ’372 patent specification, which states
`
`that the load may be limited to a power level producible by the generator “for a period of time of
`
`eight, twelve, twenty-four, or more hours.” [EX1001, 18:58-67]. A POSITA would have
`
`understood that the gas supply from any given oil filed is limited, and will eventually dry up.
`
`55.
`
`The term “sales gas line” should be construed as “a pipeline for long-distance
`
`transportation of sales gas meeting sales-gas specifications from a hydrocarbon production,
`
`storage, or processing facility to a customer connected to the pipeline.” This construction is
`
`supported by the ’372 patent specification, which clearly sets out the meaning of this term: “A
`
`sales gas line may be a pipeline of more than ten km of length, in some cases more than fifty, a
`
`hundred, or two hundred, kilometers in length, and connecting between an oil and gas site and
`
`travelling to an end user, a processing site, or a distribution site..” [EX1001, 7:29-33, 7:1-34].
`
`56. Moreover, “[r]aw natural gas may require processing before it can be sold via a
`
`sales gas line.” [EX1001, 7:1-2]. Specifically, “gas treating facilities must be designed to convert
`
`
`
`20
`
`

`

`
`
`a particular raw gas mixture into a sales gas that meets the sales-gas spec