PGR2023-00039
`Patent Owner’s Response
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`CRUSOE ENERGY SYSTEMS, LLC
`Petitioner
`
`v.
`
`UPSTREAM DATA INC.
`Patent Owner
`
`Case PGR2023-00039
`Patent No. 11,574,372
`
`PATENT OWNER’S RESPONSE
`POST GRANT REVIEW
`U.S. PATENT NO. 11,574,372
`
`Mail Stop Patent Board
`Patent Trial and Appeal Board
`United States Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`

`

`Page
`INTRODUCTION ........................................................................................... 1
`I.
`OVERVIEW OF ’372 PATENT ..................................................................... 1
`II.
`III. CLAIM CONSTRUCTION ............................................................................ 4
`A.
`Petitioner’s Construction Of “Blockchain Mining Devices” And
`“Mining Processor” Is Not Supported By The Intrinsic Record ........... 4
`Petitioner’s Construction Of A “A Continuous Flow Of
`Combustible Gas” Is Inconsistent With The Intrinsic
`Record ................................................................................................... 6
`Level of Ordinary Skill in the Art ..................................................... 8
`C.
`IV. NON-OBVIOUSNESS .................................................................................... 9
`A.
`Ground 1. ............................................................................................... 9
`1.
`Petition Based on Impermissible Hindsight................................ 9
`2.
`Secondary Considerations of Non-Obviousness ...................... 11
`a.
`Patent Owner’s systems embody the claimed
`invention ......................................................................... 13
`b.
`Commercial success ....................................................... 19
`c.
`Long-felt unmet need ...................................................... 22
`d.
`Industry skepticism ......................................................... 25
`e.
`Industry praise ................................................................ 28
`Szhmigielski Cannot Supply Missing Motivation to
`Combine .................................................................................... 30
`No Reasonable Expectation of Success .................................... 39
`Ground 1 Does Not Disclose Challenged Claims ..................... 41
`a.
`Claim 1 ............................................................................ 41
`b.
`Claim 24 .......................................................................... 50
`Ground 2 .............................................................................................. 50
`1.
`No Motivation to Combine or Reasonable Expectation of
`Success ...................................................................................... 50
`
`4.
`5.
`
`B.
`
`B.
`
`TABLE OF CONTENTS
`
`i
`
`3.
`
`

`

`IPR2023-00039
`Petition for Inter Partes Review
`Ground 2 Combination Does Not Disclose Challenged
`Claims ....................................................................................... 50
`a.
`Claims 1, 24 .................................................................... 51
`b.
`Claims 10-13 ................................................................... 51
`c.
`Claims 35-37 ................................................................... 55
`Ground 3 .............................................................................................. 55
`1.
`Ground 3 Does Not Meet Particularity Requirement ............... 55
`2.
`No Motivation to Combine or Reasonable Expectation of
`Success ...................................................................................... 56
`Ground 4 .............................................................................................. 58
`1.
`No Motivation to Combine or Reasonable Expectation of
`Success ...................................................................................... 58
`Ground 4 Combination Does Not Disclose Challenged
`Claims ....................................................................................... 62
`a.
`Claims 1, 24 .................................................................... 62
`Ground 5 .............................................................................................. 65
`1.
`No Motivation to Combine or Reasonable Expectation of
`Success ...................................................................................... 65
`Ground 5 Combination Does Not Disclose Challenged
`Claims ....................................................................................... 67
`a.
`Claims 1, 24 .................................................................... 67
`b.
`Claims 10-13 ................................................................... 68
`c.
`Claims 35-37 ................................................................... 70
`GROUND 6: THE CLAIMS RECITE PATENT ELIGIBLE
`SUBJECT MATTER ..................................................................................... 70
`A.
`Step 2A, Prong One: The ’372 Patent Claims Are Not Directed
`To An Abstract Idea ............................................................................ 73
`Step 2A, Prong Two: The ’372 Patent Claims Recite A
`Practical Application ........................................................................... 76
`Step 2B: The Claims of The ’372 Patent Include Inventive
`Concepts Beyond Using Natural Gas To Power A Blockchain
`Mine ..................................................................................................... 77
`
`C.
`
`C.
`
`D.
`
`E.
`
`B.
`
`2.
`
`2.
`
`2.
`
`ii
`
`V.
`
`

`

`IPR2023-00039
`Petition for Inter Partes Review
`The Petition Failed to Adequately Address the Patent Eligibility
`of Challenged Claims 2-4, 7-12, 15-23, 25-30, 34-37 and 40 ............ 83
`VI. CONCLUSION .............................................................................................. 88
`
`D.
`
`iii
`
`

`

`TABLE OF AUTHORITIES
`
` Page(s)
`
`Cases
`Alice Corp. v. CLS Bank Int’l,
`573 U.S. 208 (2014) ...................................................................................... 71, 73
`Brown & Williamson Tobacco Corp. v. Philip Morris Inc.,
`229 F.3d 1120 (Fed. Cir. 2000) .......................................................................... 51
`Cambrios Film Solutions Corporation v. C3Nano Inc.,
`IPR2019-00655, Paper 17 (Aug. 9, 2019) .......................................................... 54
`Elekta Ltd. v. ZAP Surgical Sys., Inc.,
`81 F.4th 1368 (Fed. Cir. 2023) ........................................................................... 40
`Eli Lilly & Co. v. Teva Pharms. Int’l GmbH,
`8 F.4th 1331 (Fed. Cir. 2021) ............................................................................. 39
`In re GPAC Inc.,
`57 F.3d 1573 (Fed. Cir. 1995) ............................................................................ 12
`Graham v. John Deere Co.,
`383 U.S. 1 (1966) ................................................................................................ 11
`Henny Penny Corp. v. Frymaster LLC,
`938 F.3d 1324 (Fed. Cir. 2019) .......................................................................... 12
`Intelligent Bio-Systems, Inc. v. Illumina Cambridge Ltd.,
`821 F.3d 1359 (Fed. Cir. 2016) .............................................................. 42, 63, 64
`Juniper Networks, Inc., v. Correct Transmission, LLC,
`IPR2021-000682, Paper 26 (PTAB Oct. 3, 2022) ........................................ 39, 40
`Mayo Collaborative Servs. v. Prometheus Labs., Inc.,
`566 U.S. 66 (2012) .................................................................................. 71, 73, 74
`Microsoft Corp. v. FG SRC, LLC,
`860 Fed. App’x 708 (Fed. Cir. 2021) ........................................................... 42, 64
`In re Piasecki,
`745 F.2d 1468 (Fed. Cir. 1984) .......................................................................... 12
`
`iv
`
`

`

`IPR2023-00039
`Petition for Inter Partes Review
`
`Polaris Indus, Inc. v. Arctic Cat, Inc.,
`882 F.3d 1056 (Fed. Cir. 2018) .......................................................................... 12
`Procter & Gamble Co. v. Teva Pharms. USA, Inc.,
`566 F.3d 989 (Fed.Cir.2009) .............................................................................. 22
`Telemac Cellular Corp. v. Topp Telecom, Inc.,
`247 F.3d 1316 (Fed. Cir. 2001) .......................................................................... 43
`VIZIO, Inc. v. Polaris PowerLED Technologies, LLC,
`IPR2020-00043, Paper 32 ................................................................................... 43
`WBIP, LLC v. Kohler Co.,
`829 F.3d 1317 (Fed. Cir. 2016) ........................................................ 25, 27, 28, 29
`WMS Gaming Inc. v. Int'l Game Tech.,
`184 F.3d 1339 (Fed. Cir. 1999) .......................................................................... 12
`Statutes
`35 U.S.C. § 101 .................................................................................................passim
`35 U.S.C. § 312(a)(3) ........................................................................................passim
`Other Authorities
`37 C.F.R. § 42.104(b)(5) .................................................................................... 42, 64
`84 Fed. Reg. 50 (Jan. 7, 2019) ................................................................................. 74
`MPEP § 2106 ....................................................................................................passim
`
`v
`
`

`

`PGR2023-00039
`Patent Owner’s Response
`PATENT OWNER’S EXHIBIT LIST
`
`Description
`Second Declaration of Fengqi You, Ph.D.
`Declaration of Stephen Barbour
`Second Declaration of Sylvia Hall-Ellis Ph.D.
`Stephen G. Barbour Curriculum Vitae
`Video: “Off-Grid Bitcoin Mine Walkthrough with Steve
`Barbour” (parts 1 and 2)
`AntMiner S9 Installation Guide, Document Version 0.1, June
`2016
`CNBC, Crypto Decoded, “These 23-year-old Texans made $4
`million last year mining bitcoin off flare gas from oil drilling,”
`Feb. 12, 2022
`Stephanie Yang “Bitcoin in the Wilderness,” March 29, 2019
`CCN, “Pipe Dream: Analysts Mull Natural Gas-Powered
`Bitcoin Mining Operation,” March 4, 2021
`Video: “Turning Fireballs into Bits and Bitcoins _ Cully
`Cavness” (parts 1 and 2)
`Jaran Mellerud, et al., “Bitcoin Mining using Stranded Natural
`gas in the Most Cost-Effective Way to Reduce Emissions,”
`Sept. 5, 2022
`Second Declaration of Vernon Kasdorf (filed as Ex. 1024 in
`PGR2023-00052)
`Deposition Transcript of Vernon Kasdorf taken in PGR2023-
`00039, March 29, 2024
`Plaintiff Crusoe Energy Systems LLC’s Complaint and
`Demand for Jury Trial and Injunctive Relief, Case No. 1:22-cv-
`2142, Crusoe Energy Systems LLC v. Alkane Midstrem LLC
`
`Exhibit No.
`Exhibit 2010
`Exhibit 2011
`Exhibit 2012
`Exhibit 2013
`Exhibit 2014
`
`Exhibit 2015
`
`Exhibit 2016
`
`Exhibit 2017
`Exhibit 2018
`
`Exhibit 2019
`
`Exhibit 2020
`
`Exhibit 2021
`
`Exhibit 2022
`
`Exhibit 2023
`
`Unless indicated otherwise, all emphasis and annotations herein are added by
`Patent Owner.
`
`vi
`
`

`

`PGR2023-00039
`Patent Owner’s Response
`
`I.
`
`INTRODUCTION
`Petitioner Crusoe Energy System, Inc (“Crusoe”) asks the Board to
`
`invalidate claims of Patent Owner Upstream Data’s pioneering patent that predates
`
`Crusoe’s own products and patents directed to the same subject matter. Thus,
`
`Crusoe in its Petition dismisses as obvious the same technology that it trumpets as
`
`novel elsewhere. Unsurprisingly, the Petition’s grounds are based on impermissible
`
`hindsight and are replete with conclusory and contradictory allegations. When the
`
`evidence is fairly considered, the Board should find that secondary considerations
`
`such as commercial success and industry skepticism strongly support validity; that
`
`there is no motivation to combine; and that the proposed combinations do not teach
`
`a number of claim elements. Accordingly, the Board should find all of the
`
`challenged claims patentable over the prior art in the Petition. Finally, Crusoe’s
`
`challenge to the claims under 35 U.S.C. § 101 is facially inadequate because it
`
`depends on a misreading of the claims and does not apply the correct legal test.
`
`II. OVERVIEW OF ’372 PATENT
`The ’372 patent claims priority to provisional application 62/456,380, filed
`
`on February 8, 2017. EX1001. The patent “relates to blockchain mining at an oil or
`
`gas facility.” Id., 1:6-7. The ’372 patent explains that “[i]n upstream production of
`
`oil and gas, natural gas may be produced … as a by-product of oil production, for
`
`example from an oil well.” Id., 6:51-54. This form of natural gas is referred to as
`
`1
`
`

`

`PGR2023-00039
`Patent Owner’s Response
`undesirable casinghead gas, casing gas or simply raw gas. Id., 4:62-63, 8:66-9:3.
`
`The prior art knew some ways to utilize casinghead gas. For example, it was
`
`known to consume it as “on-site fuel for equipment or for instrumentation
`
`pressure.” EX1001, 6:56-58. If there was a significant gas volume beyond what
`
`could be consumed onsite, gas could be sold to market through a connection to a
`
`pipeline network or liquified for transportation to a counterparty. Id., 6:59-64. If a
`
`grid connection was available, casinghead gas could be used to generate electricity
`
`for sale to the power grid. Id., 6:63-67.
`
`However, gas “may be located at a remote oil and gas site” that lacks
`
`“accessible infrastructure such as an external pipeline network (sales line) or
`
`external power grid to sell into” and may be “hundreds of kilometers outside of the
`
`nearest town.” Id., 7:46-49, 8:20-23. In such cases “it may not be economically
`
`feasible” to take the gas or electricity to market, “for example due to significant
`
`capital expense required or when the volume of gas is insufficient to pay out the
`
`investment.” Id., 7:49-54, 8:11-23. As is known in the art, the gas is “stranded.”
`
`Id., 7:54-56; EX2010, ¶32.
`
`In such cases, a common solution is to vent or flare (burn) the stranded gas.
`
`EX1001, 1:11-13, 7:61-8:10. However, this solution creates greenhouse gas
`
`emissions, wastes the potential energy of the gas, requires capital expenditure, and
`
`may pose health risks. Id.
`
`2
`
`

`

`PGR2023-00039
`Patent Owner’s Response
`The novel solution taught by the ’372 patent avoided the flaring of stranded
`
`gas at a hydrocarbon facility by providing the continuous flow of stranded gas to a
`
`generator used to power a portable blockchain mining device. Id., 2:18-24.
`
`“A blockchain is a form of database, which may be saved as a distributed
`
`ledger in a network of nodes that maintains a continuously-growing list of records
`
`called blocks.” Id., 11:45-47.
`
`Blockchain mining (also referred to as crypto mining) differs from many
`
`other types of computing as it is “intentionally designed to be resource-intensive
`
`and difficult so that the number of blocks found each day by miners remains
`
`steady.” Id., 13:29-33, 13:44-48. This intentionally energy-intensive problem
`
`comprises “a cryptographic hashing algorithm.” Id., 13:49-52. Since the energy
`
`cost of crypto mining is the primary operating cost, the prior art mines were
`
`located primarily in places with low-cost hydroelectric power such as China or the
`
`Pacific Northwest in the United States. Id., 14:4-20; EX1009, 105; EX2010, ¶¶36-
`
`37.
`
`Decentralizing crypto mining away from hydroelectric power to make use of
`
`stranded gas at remote hydrocarbon production facilities required innovative
`
`solutions disclosed in the ’372 patent. For example, unlike existing crypto mines
`
`which could depend on reliable power sources (e.g., a hydroelectric power plant),
`
`the ’372 patent’s bitcoin mine in some cases had to solve the problem of variable,
`
`3
`
`

`

`PGR2023-00039
`Patent Owner’s Response
`albeit continuous, casehead gas production. EX2010, ¶38. The ’372 patent
`
`discloses solving this problem by, for example, the mining controller modulating
`
`the mining power load (also referred to as the hashrate) in real time to respond “to
`
`variations in a supply or production rate of natural gas.” EX1001, 17:61-18:15. In
`
`addition, crypto mining power levels may be adjusted to a daily minimum or
`
`maximum gas production rate as different strategies to mitigate the variable
`
`production. EX1001, 18:34-19:13; EX2010, ¶38.
`
`III. CLAIM CONSTRUCTION
`A.
`Petitioner’s Construction Of “Blockchain Mining Devices” And
`“Mining Processor” Is Not Supported By The Intrinsic Record
`The intrinsic evidence of the ’372 patent does not support Petitioner’s
`
`constructions. First, Petitioner nearly equates the meaning of a “blockchain mining
`
`devices” with a “mining processor.” Petition, 4-6. But, the specification makes
`
`clear (including with reference to Figure 4) that the “mining device 12” is made of
`
`up of many components, including “a controller 86, network equipment 88 such
`
`as a modem and a network switch, … and one or more mining processors 92
`
`such as processors 92A-E.” EX1001, 16:32-39 (emphasis added); see also see also
`
`15:21-25; 17:23-29; 19:59-62; EX2010, ¶40. The specification tracks the plain
`
`language of the claims that confirm that the term “blockchain mining devices”
`
`refers to, for example, one or more mining processors and a specialized network
`
`interface that communicates with a blockchain database. EX1001, 15:21-25;
`
`4
`
`

`

`PGR2023-00039
`Patent Owner’s Response
`17:23-29; 19:59-62; EX2010, ¶40. Thus, no construction of the term “blockchain
`
`mining devices” is necessary.
`
`With respect to the mining processors 92, the ’372 patent details that “[e]ach
`
`mining processor 92 may have a variety of configurations, but generally may
`
`include at least a power supply, a controller board and mining circuity, such an
`
`ASIC circuit. EX1001, 17:9-12. The specification again tracks the plain language
`
`of the independent claims that recite that “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.” EX1001,
`
`19:66-20:2. A POSITA, therefore, would understand that at a minimum, a mining
`
`processor is “a processor with blockchain mining circuitry.” EX2010, ¶41.
`
`Petitioner’s faulty constructions derive in part from Petitioner’s reliance on
`
`disclosure pertaining to a “network of nodes” to reach its conclusion regarding the
`
`terms “blockchain mining devices” and “mining processor.” But, the specification
`
`teaches that nodes simply “maintain … records” (EX1001, 14:22-43) versus
`
`mining processors that “perform data mining operations, for example verifying
`
`cryptocurrency transactions.” EX1001, 14:62-63. As the specification makes plain,
`
`a simple node may be “desktop computers, laptop computers, tablet computers,
`
`cellular telephones, servers, or other suitable devices” used for storing already
`
`computed blocks within a blockchain. EX1001,14:30-33. But, the mining
`
`5
`
`

`

`PGR2023-00039
`Patent Owner’s Response
`processor provides the “require[d] computational effort” measured by the
`
`“hashrate.” EX1001,13:49-58; EX2010, ¶42.
`
`Finally, Petitioner offers no support whatsoever for its proposal to attach the
`
`negative limitation “without regard to processor speed or power” to either
`
`identified claim term. There is simply no claim language in the ’372 patent, no
`
`specification support within the ’372 patent, and no reason to be gleaned from the
`
`prosecution history to graft the notion of “any processor … without regard to
`
`processor speed or power” into the claims. Id., ¶42. To the contrary, the
`
`specification repeatedly teaches that the “computation effort” is important, so
`
`much so that the ’372 patent teaches optimizing the hashrate by, for example,
`
`“changing … the clock rate of the processor.” EX1001, 13:49-54; EX2010, ¶43. A
`
`POSITA would find no support for a requirement that the “blockchain mining
`
`devices” or “mining processors” exist “without regard to processor speed or
`
`power.” Id.
`
`B.
`
`Petitioner’s Construction Of A “A Continuous Flow Of
`Combustible Gas” Is Inconsistent With The Intrinsic Record
`Petitioner’s construction of “continuous flow of combustible gas” similarly
`
`divorces the claim term from the surrounding claim language, the specification’s
`
`description of the source of combustible gas, and ignores the prosecution history.
`
`Petition, 6. Petitioner’s proposal renders superfluous the word “continuous” in the
`
`claim because it suggests that any “time period” where “a flow” is momentarily
`
`6
`
`

`

`PGR2023-00039
`Patent Owner’s Response
`present, no matter how small the time period may be, is “continuous.” EX2010,
`
`¶44. Under a literal reading of Petitioner’s proposal, a flow of combustible gas that
`
`occurred for a few minutes and then disappeared would meet the limits of “a flow
`
`of combustible gas that is continuous for at least a time period.” Id. Thus,
`
`Petitioner’s proposal is inconsistent with the plain meaning of the claim language
`
`requiring a continuous flow. Id.
`
`The ’372 patent specification confirms that the “continuous” character of the
`
`flare gas in the ’372 patent derives from the fact it is a by-product of hydrocarbon
`
`(oil) production, storage, or processing, and cannot be avoided during production.
`
`EX1001, 6:35-39 (“Natural gas may naturally separate from the oil stream as it is
`
`produced up the well …”); id., 6:48-51 (“Natural gas may also be liberated out of
`
`solution from the oil as it is treated …”); EX2010, ¶45. In remote areas, where an
`
`oil field operator is confronted with this continuous source of natural gas, “the
`
`operator is forced to do something with the excess or stranded gas and is left with
`
`few options” such as “venting … flar[ing], … or ceasing production….” EX1001,
`
`7:54-60. The recitation of a “continuous flow of combustible gas” reflects that the
`
`combustible gas is continuous (albeit at varying production rates) as a byproduct of
`
`“hydrocarbon production, storage, or processing.” Id.
`
`Petitioner identifies a portion of the ’372 patent specification describing an
`
`embodiment of the invention that uses a controller to modulate the blockchain
`
`7
`
`

`

`PGR2023-00039
`Patent Owner’s Response
`mine load in relationship to a varying gas supply. EX1001, 17:47-60. The portion
`
`of the specification identified by Petitioner teaches the advantageous use of
`
`controller settings to deliver a stable and consistent load from the mining
`
`processors throughout the day, even during periods of time where the production
`
`rate of combustible gas exceeds the minimum production rate. EX1001, 18:16-27;
`
`EX2010, ¶46. Contrary to Petitioner’s proposed construction, the implementation
`
`of these controller settings does not disclose a supply of combustible gas present
`
`for merely “a time period,” but instead describes a varying production rate between
`
`a minimum and maximum production rate. EX2010, ¶46.
`
`Finally, Petitioner and its expert opine that “the gas supply from any given
`
`oil field is limited and will eventually dry up” to support the proposal that requires
`
`a supply of combustible gas during “any time period.” Petition, 6. Petitioner’s
`
`expert’s opinion is not only disputable, it does not find support in the specification
`
`and is not pertinent to the problem of flare gas that is a byproduct of hydrocarbon
`
`production described in the ’372 patent. EX2010, ¶47. That a well may at some
`
`point stop producing hydrocarbons does not justify the “any time period” language
`
`because the ’372 patent is directed to a problem that exists while flare gas is
`
`produced. Id. Thus, a POSITA would not accept Petitioner’s proposed construction
`
`for the “continuous flow of combustible gas.” Id.
`
`C.
`
`Level of Ordinary Skill in the Art
`
`8
`
`

`

`PGR2023-00039
`Patent Owner’s Response
`The Petition and related declarations propose two alternative levels of
`
`ordinary skill in the art, where the second alternative does not require any formal
`
`education or any experience in the field of oil or gas production. The Patent
`
`Owner and Dr. You applied Petitioner’s articulation and confirmed the prior art
`
`analysis detailed below would not change based on disagreements over the level of
`
`ordinary skill in the art. EX2010, ¶17. Similarly, Patent Owner applied
`
`Petitioner’s proposed claim constructions when analyzing the prior art and
`
`confirmed that the analysis would not change regardless of which proposed
`
`constructions are applied.
`
`IV. NON-OBVIOUSNESS
`A.
`Ground 1.
`1.
`Petition Based on Impermissible Hindsight
`Petitioner asserts that the claimed invention had “been done before,”
`
`(Petition, 1), but Ground 1 relies on four references even for the independent
`
`claims. Petitioner ignores the pioneering nature of the ’372 invention which
`
`materially advanced the knowledge in the art and engages in hindsight
`
`reconstruction of the claims using references that a POSITA would not have
`
`combined.
`
`The CryptoKube system purportedly discloses “a commercialized industrial
`
`Bitcoin mining system.” EX1004, ¶63. The CryptoKube Brochure discloses that
`
`“CryptoKube can run inside a large warehouse, outside in a parking lot or in a
`
`9
`
`

`

`PGR2023-00039
`Patent Owner’s Response
`server pod farm where the power is cheapest.” EX1006, 4. Yet there is no
`
`indication in the CryptoKube references of any actual or even hypothetical use of
`
`CryptoKube with a generator at an oil or gas production facility which “are
`
`typically located in remote areas where no utility power is available” as explained
`
`by Dickerson. EX1005, ¶24. Nor does Petitioner’s declarant Mr. Kasdorf –
`
`identified as “the owner and partner in KubeData Systems Inc.” – provide even a
`
`single instance of CryptoKube powered by flare gas at a remote oil or gas
`
`production facility.
`
`At his recent deposition Mr. Kasdorf confirmed that he is not aware of any
`
`CryptoKube systems ever being used with a flare gas powered generator. EX2022,
`
`20:14-20. Nor is Petitioner’s expert aware of any examples of a cryptocurrency
`
`miner powered with a flare gas generator before the ’372 patent’s priority date.
`
`EX2022, 20:23-21:7.
`
`As discussed in more detail below, before the pioneering invention of the
`
`’372 patent, persons of ordinary skill in the blockchain or cryptocurrency mining
`
`field had limited awareness of oil and gas industry generally and certainly did not
`
`consider flare gas as a suitable energy source for mining. EX2010, ¶52. Thus, Mr.
`
`Kasdorf admitted that “I don’t consider myself a POSITA in the gas and oil
`
`industry,” nor was he aware of any persons of ordinary skill in the Bitcoin mining
`
`industry who were also a POSITA in the oil and gas industry. EX2022, 16:17-17:3.
`
`10
`
`

`

`PGR2023-00039
`Patent Owner’s Response
`Likewise, those in the oil and gas industry did not consider bitcoin mining as
`
`a suitable way to manage stranded gas. For example, a CNBC article (EX2016,
`
`further discussed below in connection with secondary considerations of validity)
`
`quotes Adam Ortolf, Patent Owner’s current sales manager: “In 2018, I got
`
`laughed out of the room when I talked about mining bitcoin on flared gas.”
`
`EX2016, 7; EX2010, ¶53.
`
`Thus, objective evidence shows that as of the February 8, 2017 filing date of
`
`the ’372 patent’s provisional application those of ordinary skill did not consider
`
`obvious a combination of flare gas powered generator and a bitcoin miner.
`
`EX2010, ¶54.
`
`Secondary Considerations of Non-Obviousness
`2.
`Before making an obviousness determination, the Board must consider the
`
`evidence of obviousness in light of any evidence of secondary considerations of
`
`nonobviousness presented by Patent Owner. See Graham v. John Deere Co., 383
`
`U.S. 1, 17–18 (1966) (“Such secondary considerations as commercial success, long
`
`felt but unsolved needs, failure of others, etc., might be utilized to give light to the
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`circumstances surrounding the origin of the subject matter sought to be patented.
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`As indicia of obviousness or nonobviousness, these inquiries may have
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`relevancy.”) Thus, notwithstanding what the teachings of the prior art would have
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`suggested to one skilled in the art, secondary considerations (objective evidence of
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`PGR2023-00039
`Patent Owner’s Response
`nonobviousness) may lead to a conclusion that the challenged claims would not
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`have been obvious. In re Piasecki, 745 F.2d 1468, 1471–72 (Fed. Cir. 1984).
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`In order to accord substantial weight to secondary considerations in an
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`obviousness analysis, “the evidence of secondary considerations must have a
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`‘nexus’ to the claims, i.e., there must be ‘a legally and factually sufficient
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`connection’ between the evidence and the patented invention.” Henny Penny Corp.
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`v. Frymaster LLC, 938 F.3d 1324, 1332 (Fed. Cir. 2019). Although the patent
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`owner bears the initial burden of proving a nexus (WMS Gaming Inc. v. Int'l Game
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`Tech., 184 F.3d 1339, 1359 (Fed. Cir. 1999)), a presumption of nexus may be
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`appropriate if the patent owner shows “the asserted objective evidence is tied to a
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`specific product and that product ‘embodies the claimed features, and is
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`coextensive with them.’” Polaris Indus, Inc. v. Arctic Cat, Inc., 882 F.3d 1056,
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`1072 (Fed. Cir. 2018). A prima facie nexus is established when the patent owner
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`shows significant sales in a relevant market and that the product sold is the
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`invention claimed in the patent. In re GPAC Inc., 57 F.3d 1573, 1580 (Fed. Cir.
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`1995). As shown below, Patent Owner’s systems are the invention disclosed and
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`claimed in the ’372 Patent, and have achieved commercial success and praise in
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`the industry.
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`PGR2023-00039
`Patent Owner’s Response
`Patent Owner’s systems embody the claimed
`invention
`Patent Owner’s systems, such as Upstream Data Hash Hut, Hash Generator
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`a.
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`and similar products embody claims 1 and 24 of the ’372 patent. EX2010, ¶¶74-76.
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`For example, as illustrated in the following annotated diagram using a screenshot
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`from an Upstream Data promotional video available on YouTube,1 Hash Hut and
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`Hash Generator systems are installed with a source of combustible gas such as gas
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`produced at an oil wellhead (limitations [1 pre], [1a]). EX2011 (Barbour
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`Declaration), ¶¶7, 9-10; EX2010, ¶76. A continuous flow of this gas is supplied to
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`a generator through a pipe where the generator may be co-housed with blockchain
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`mining equipment as illustrated in the screenshot (Hash Generator model), or
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`located in a separate adjacent enclosure (Hash Hut model) (limitations [1b], 1[c]):
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`1 EX2014.
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`PGR2023-00039
`Patent Owner’s Response
`
`EX2011, ¶10; EX2010, ¶76.
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`Petitioner has identified a single CryptoKube or Polivka system with
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`multiple ASIC mining servers as satisfying the “blockchain mining devices each
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`having a mining processor” limitations. Under this view an installation with a
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`single Upstream Data system with plural mining servers likewise meets the
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`limitation. EX2010, ¶77.
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`While the above example shows an installation with a single Upstream Data
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`system, many such installations comprise multiple systems. The following
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`photograph shows an installation with multiple Hash Generator systems running on
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`stranded gas at an oil production facility ([1b], [1c]):
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`PGR2023-00039
`Patent Owner’s Response
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`EX2011, ¶11; EX2010, ¶78.
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`The next screenshot shows the generator in its section of the enclosure
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`(limitation [1b]):
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`EX2011, ¶12.
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`PGR2023-00039
`Patent Owner’s Response
`Each Upstream Data blockchain mining device such as a Hash Generator or
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`a Hash Hut houses a number of mining processors - shown in the next screenshot
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`are racks of blockchain miners inside the enclosure, in this case Bitmain Antminer
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`S9 ASIC miners (limitation [1c_i]):
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`EX2011, ¶13; EX2010, ¶80.
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`Each miner is connected to the Hash Generator’s or Hash Hut’s network
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`interface as illustrated by the blue Ethernet cables in the screenshot above. The
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`network interface typically comprises a cellular or satellite modem, including the
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`corresponding antennas visible in the image of a multiple Hash Generator
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`installation above. (limitation [1c_ii]). EX2011, ¶14; EX2010, ¶81. The modem
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`comprises an internet connection with access to nodes comprising a blockchain
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`database. Id.
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`PGR2023-00039
`Patent Owner’s Response
`A miner such as the S9 (a mining processor) comprises hash boards with
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`dedicated blockchain mining ASICS and a controller performing a number of
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`functions, including network communication with blockchain database nodes as
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`illustrated in the following diagram from an S9 installation guide (limitation
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`[1c_iii]):
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`EX2015, 5; EX2011, ¶15; EX2010, ¶82.
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`In addition, Petitioner c