Opinion · Court of Appeals for the Federal Circuit
Sunoco Partners Marketing v. U.S. Venture, Inc.
- Type
- Opinion
- Court
- Court of Appeals for the Federal Circuit
- Jurisdiction
- Federal
- Date
- 2022-04-29
- Topic
- bankruptcy
Case: 20-1640 Document: 62 Page: 1 Filed: 04/29/2022 United States Court of Appeals for the Federal Circuit ______________________ SUNOCO PARTNERS MARKETING & TERMINALS L.P., Plaintiff-Cross-Appellant v. U.S. VENTURE, INC., U.S. OIL CO., INC., Defendants-Appellants ______________________ 2020-1640, 2020-1641 ______________________ Appeals from the United States District Court for the Northern District of Illinois in No. 1:15-cv-08178, Judge Rebecca R. Pallmeyer. ______________________ Decided: April 29, 2022 ______________________ JOHN R.
Citator
UpLaw has not yet analyzed Sunoco Partners Marketing v. U.S. Venture, Inc.. The absence of a flag is not a finding that it is good law.
Case: 20-1640 Document: 62 Page: 1 Filed: 04/29/2022
United States Court of Appeals
for the Federal Circuit
______________________
SUNOCO PARTNERS MARKETING & TERMINALS
L.P.,
Plaintiff-Cross-Appellant
v.
U.S. VENTURE, INC., U.S. OIL CO., INC.,
Defendants-Appellants
______________________
2020-1640, 2020-1641
______________________
Appeals from the United States District Court for the
Northern District of Illinois in No. 1:15-cv-08178, Judge
Rebecca R. Pallmeyer.
______________________
Decided: April 29, 2022
______________________
JOHN R. KEVILLE, Sheppard, Mullin, Richter & Hamp-
ton LLP, Houston, TX, argued for plaintiff-cross-appellant.
Also represented by MICHAEL C. KRILL, MICHELLE
REPLOGLE; RICHARD L. STANLEY, Law Office of Richard L.
Stanley, Houston, TX.
WILLIAM M. JAY, Goodwin Procter LLP, Washington,
DC, argued for defendants-appellants. Also represented by
GERARD JUSTIN CEDRONE, BRIAN DRUMMOND, SRIKANTH K.
REDDY, Boston, MA; JEFFREY COSTAKOS, KIMBERLY KRISTIN
DODD, Foley & Lardner LLP, Milwaukee, WI.
Case: 20-1640 Document: 62 Page: 2 Filed: 04/29/2022
2 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC.
______________________
Before PROST, REYNA, and STOLL, Circuit Judges.
PROST, Circuit Judge.
U.S. Venture, Inc. and U.S. Oil Co., Inc. (collectively,
“Venture”) appeal the judgment of the Northern District of
Illinois that Venture infringed patents owned by Sunoco
Partners Marketing & Terminals L.P. (“Sunoco”). Sunoco
cross-appeals. As to Venture’s appeal, we first reverse the
district court’s determination that the experimental-use
doctrine insulates a subset of asserted patent claims from
the on-sale bar, vacate the infringement judgment as to
those claims, and remand for the district court to analyze
the second prong of the on-sale bar. Second, we vacate the
infringement judgment with respect to patent claims that
we affirmed are invalid in a separate appeal. Third, we
adopt the district court’s claim constructions and affirm its
infringement judgment regarding two patent claims.
Fourth, we vacate the district court’s decision to treble the
damages award, remanding for further proceedings. On
the cross-appeal, we affirm the district court’s decisions to
deny lost-profits damages and to award a $2 million rea-
sonable royalty.
BACKGROUND
I. Butane Blending
Gasoline producers blend butane into gasoline before
selling it. They do that for at least two reasons: (1) butane
makes gasoline more volatile, helping vehicles start more
readily in colder temperatures, and (2) butane is cheaper
than gasoline, so adding butane increases profitability. Ef-
forts to achieve these benefits, however, are complicated by
the need to comply with environmental regulations. Be-
cause butane contributes to air pollution in warmer tem-
peratures, the U.S. Environmental Protection Agency
(“EPA”) regulates the volatility of gasoline. Sunoco’s pa-
tented technology seeks to maximize butane content while
Case: 20-1640 Document: 62 Page: 3 Filed: 04/29/2022
SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 3
complying with these regulations, which vary depending on
season and location.
Gasoline distribution is a multi-stage process. At a re-
finery, crude oil is refined into gasoline. After that, it goes
through a pipeline to a storage facility called a tank farm,
or terminal. There, it is dispensed from a “rack” into
trucks, which deliver it to gas stations. While butane
blending can be done anywhere along the line, doing it at
the last possible point—the tank farm—lets producers
maximize butane content based on the time of year and the
gasoline’s destination. If, by contrast, producers blend “at
refineries and in pipelines that serve several regions with
varying [volatility] limits,” they “can add only the amount
of butane permissible in the region with the strictest bu-
tane regulations.” Sunoco Partners Mktg. & Terminals
L.P. v. U.S. Venture, Inc., No. 15 C 8178, 2017 WL 1550188
, at *2 (N.D. Ill. Apr. 28, 2017) (“Claim Construction Op.”). Sunoco’s patents, accordingly, “describe a system and method for blending butane with the gasoline at a point close to the end of the distribution process: immediately be- fore being distributed to the tanker trucks that take gaso- line to consumer gas stations.”Id.
That way, producers
can “blend the maximum allowable butane into each batch
based on where the truck is going and what month it is.”
Id. at *1.
II. Procedural History
Sunoco sued Venture, alleging that its operation of bu-
tane-blending systems infringed claims of U.S. Patent
Nos. 7,032,629 (“the ’629 patent”), 6,679,302 (“the ’302 pa-
tent”), 9,494,948 (“the ’948 patent”), and 9,606,548 (“the
’548 patent”). Venture counterclaimed that the asserted
patents are not infringed, are invalid, and are unenforcea-
ble. After construing the claims, the district court ruled on
Case: 20-1640 Document: 62 Page: 4 Filed: 04/29/2022
4 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC.
various summary judgment motions 1 and held a bench
trial—ultimately awarding Sunoco $2 million in damages,
which it trebled to $6 million. Sunoco P’ship Mktg. & Ter-
minals L.P. v. U.S. Venture, Inc., 436 F. Supp. 3d 1099
, 1107 (N.D. Ill. 2020) (“Post-Trial Op.”). Venture appeals. Sunoco cross-appeals. We have jurisdiction under28 U.S.C. § 1295
(a)(1).
DISCUSSION
On appeal, Venture challenges the district court’s
(I) rejection of its on-sale-bar defense, (II) determination
that it infringed two patents we have since held invalid,
(III) construction of two claim terms, and (IV) decision to
enhance damages. On cross-appeal, Sunoco challenges the
district court’s decision not to grant lost-profits damages
and its reasonable-royalty award. We address each issue
in turn.
I. On-Sale Bar
We first address Venture’s on-sale-bar defense. If suc-
cessful, this defense would render invalid claim 2 of the
’629 patent and claims 2, 3, and 16 of the ’302 patent under
the principle that “no person is entitled to patent an ‘inven-
tion’ that has been ‘on sale’ more than one year before filing
a patent application” (i.e., before the critical date). Pfaff v.
Wells Elecs., Inc., 525 U.S. 55, 57
(1998) (quoting35 U.S.C. § 102
(b) (2006)2). To prevail, however, Venture needed to
show that, before the critical date, Sunoco’s patented in-
vention was both (1) “the subject of a commercial offer for
1 Sunoco Partners Mktg. & Terminals L.P. v. U.S.
Venture, Inc., 339 F. Supp. 3d 803, 822
(N.D. Ill. 2018) (“Summary Judgment Op.”); Sunoco Partners Mktg. & Ter- minals L.P. v. U.S. Venture, Inc., No. 15 C 8178,2017 WL 4283946
, at *10 (N.D. Ill. Sept. 27, 2017).
2 This version of § 102 also applies here. Summary
Judgment Op., 339 F. Supp. 3d at 816
. Case: 20-1640 Document: 62 Page: 5 Filed: 04/29/2022 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 5 sale” and (2) “ready for patenting.” Helsinn Healthcare S.A. v. Teva Pharms. USA, Inc.,139 S. Ct. 628, 630
(2019) (quoting Pfaff,525 U.S. at 67
). And Venture had to “prove the facts underlying both prongs . . . by clear and convinc- ing evidence.” Allen Eng’g Corp. v. Bartell Indus., Inc.,299 F.3d 1336, 1352
(Fed. Cir. 2002).
A patent owner like Sunoco can negate an on-sale bar
by demonstrating that the sale occurred “primarily for pur-
poses of experimentation.” Id.
This experimental-use doc- trine draws a “distinction between inventions put to experimental use and products sold commercially,” in the interest of protecting both “the public’s right to retain knowledge already in the public domain and the inventor’s right to control whether and when he may patent his in- vention.” Pfaff,525 U.S. at 64
. As the Supreme Court explained long ago, inventors may delay patenting to en- gage in “bona fide effort[s] to bring his invention to perfec- tion, or to ascertain whether it will answer the purpose intended.” City of Elizabeth v. Am. Nicholson Pavement Co.,97 U.S. 126, 137
(1877). At the same time, “[a]ny at- tempt to use [the invention] for a profit[] and not by way of experiment” before the critical date will “deprive the inven- tor of his right to a patent.”Id.
Otherwise, patent owners could “acquire[] an undue advantage over the public” by “preserv[ing] the[ir] monopoly . . . for a longer period than is allowed.”Id.
From this framework, it follows that “[i]f there is ade- quate proof that a device was sold primarily for experimen- tation, the first prong of Pfaff would not be met and it would be unnecessary to consider” Pfaff’s second prong. Al- len,299 F.3d at 1353
. That is how the district court pro- ceeded here. It denied summary judgment of invalidity because, in its view, Sunoco “demonstrated the requisite experimental intent.” Summary Judgment Op.,339 F. Supp. 3d at 817
. And it did so “on [that] basis alone, even though the parties also dispute[d] whether the inven- tion was ready for patenting.”Id.
After trial, the district
Case: 20-1640 Document: 62 Page: 6 Filed: 04/29/2022
6 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC.
court “adhere[d] to its previous analysis,” again rejecting
the defense. Post-Trial Op., 436 F. Supp. 3d at 1120.
“Application of the on-sale bar . . . is ultimately a ques-
tion of law that we review de novo.” Helsinn Healthcare
S.A. v. Teva Pharms. USA, Inc., 855 F.3d 1356, 1363
(Fed. Cir. 2017), aff’d,139 S. Ct. 628
(2019). “The factual findings underlying the district court’s conclusion are re- viewed for clear error.”Id.
For the reasons below, we
(A) reverse the district court’s determination that Ven-
ture’s on-sale-bar defense is negated by the experimental-
use doctrine and (B) remand for the district court to evalu-
ate the ready-for-patenting prong of the on-sale bar.
A. Commercial Sale
Two days before February 9, 2000, the critical date, the
inventors’ company, MCE Blending (“MCE”), offered to sell
an automated butane-blending system to a company called
Equilon Enterprise LLC (“Equilon”) and install it at Equi-
lon’s terminal in Detroit. Summary Judgment Op.,
339 F. Supp. 3d at 816
. MCE offered this system “in con-
sideration for” Equilon’s commitment to purchase at least
500,000 barrels of butane from MCE over roughly five
years. J.A. 9049. The district court decided that this trans-
action occurred primarily for experimental, rather than
commercial, purposes. Post-Trial Op., 436 F. Supp. 3d
at 1120. We disagree.
Whether the Equilon transaction was for primarily ex-
perimental or commercial purposes “is a question of law to
be analyzed based on the totality of the surrounding cir-
cumstances.” Petrolite Corp. v. Baker Hughes Inc., 96 F.3d 1423, 1426
(Fed. Cir. 1996). We assess the Equilon sale “under the law of contracts as generally understood,” focus- ing on “those activities that would be understood to be com- mercial sales and offers for sale ‘in the commercial community.’” Meds. Co. v. Hospira, Inc.,827 F.3d 1363, 1373
(Fed. Cir. 2016) (en banc) (quoting Grp. One, Ltd. v. Hallmark Cards, Inc.,254 F.3d 1041, 1046
(Fed. Cir.
Case: 20-1640 Document: 62 Page: 7 Filed: 04/29/2022
SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 7
2001)). Accordingly, we begin by analyzing the Equilon
agreement. The agreement begins by expressly describing
the transaction as a sale, without reference to any experi-
mental purpose. And as “consideration,” it identifies “the
purchase” of butane:
MCE agrees to sell to Equilon, and Equilon agrees
to purchase, the Equipment (as hereinafter de-
fined) along with a license to use certain technology
and software owned by MCE pertaining to the com-
puterized blending of Butane and gasoline stocks,
in consideration for the purchase and sale of Butane
as set forth herein.
J.A. 9049 (emphases added). As the agreement later spec-
ifies, Equilon “agree[d] to purchase a minimum of 500,000
barrels of Butane.” J.A. 9060.
The recitals section of the agreement reinforces the
sale’s commercial character. It states that MCE already
“developed” the relevant technology and equipment, that
Equilon wanted to purchase it, and that MCE was willing
to sell it, install it, and supply butane for it:
Whereas MCE has developed certain technology
and Equipment for the blending of butane and sim-
ilar components into gasolines in refined product
terminals utilizing butane to maximize the Reid
Vapor Pressure of the gasolines;
Whereas Equilon desires to utilize such blending
technology and have installed and purchase such
Equipment for blending butane in the refined pe-
troleum products terminal facility owned and oper-
ated by Equilon in Detroit, Michigan (the
“Terminal”); and
Whereas MCE is willing to install or cause to have
installed said blending Equipment and to supply
the butane to Equilon required for such blending at
the Terminal.
Case: 20-1640 Document: 62 Page: 8 Filed: 04/29/2022
8 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC.
J.A. 9049 (emphases added).
This agreement in some respects resembles a contract
we analyzed in Helsinn, in which a distributor “agreed to
purchase exclusively from Helsinn, and Helsinn agreed to
supply [its] requirements” of certain drugs. 855 F.3d at 1361
. Similarly here, the Equilon agreement bears “all the hallmarks of a commercial contract for sale.”Id. at 1364
. As in Helsinn, it represents “a ‘contract between parties to give and to pass rights of property for considera- tion which the buyer pays or promises to pay the seller for the thing bought or sold.’”Id.
(quoting Trading Techs. Int’l, Inc. v. eSpeed, Inc.,595 F.3d 1340, 1361
(Fed. Cir. 2010)). Specifically, the Equilon agreement obligated Equilon “to purchase a minimum of 500,000 barrels of butane from MCE at set prices over roughly five years” in exchange for MCE providing and installing the butane-blending system. Summary Judgment Op.,339 F. Supp. 3d at 816
.
Additionally, as in Helsinn, there is here “no sugges-
tion” that the agreement “did not involve transfer of title.”
855 F.3d at 1364
. Rather “it expressly contemplate[s] it.”Id.
Ownership of MCE’s system would pass to Equilon via
a bill of sale attached to the agreement:
The ownership and title to the Equipment shall be
conveyed to Equilon by MCE upon completion of the
Equipment installation and training, as verified by
written confirmation to Equilon, and subject to the
provisions below. At such time, MCE shall execute
a bill of sale in the form attach[ed] hereto as Sched-
ule 1.04 to effectuate the conveyance of ownership of
the Equipment to Equilon.
J.A. 9051 (emphases added); see also J.A. 9076 (bill of sale).
The district court saw things differently. In its view,
“the contract did not require Equilon to pay MCE anything
in exchange for the system in the normal course of events.”
Summary Judgment Op., 339 F. Supp. 3d at 818
; see also Case: 20-1640 Document: 62 Page: 9 Filed: 04/29/2022 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 9 Cross-Appellant’s Br. 26 (asserting that “Equilon paid nothing for” the system). But while it is true that the agreement allocated the cost of installation to MCE (up to $450,000), Summary Judgment Op.,339 F. Supp. 3d at 818
, that does not mean Equilon “exchanged no value for the equipment it received,” Appellants’ Br. 34. Rather, Equilon purchased MCE’s equipment by committing to buy MCE’s butane. That’s a sale. See Netscape Commc’ns Corp. v. Konrad,295 F.3d 1315
, 1324–25 (Fed. Cir. 2002)
(concluding that an offer to make a “remote database object
. . . in exchange for four months full time employment or no
more than $48,000” was a “commercial offer for sale”).
The district court discounted Equilon’s butane-buying
commitment because “butane is not the invention.” Sum-
mary Judgment Op., 339 F. Supp. 3d. at 820. According to
the district court, the Equilon agreement had “two distinct
sections,” one for “the installation of the butane blending
system” and another that was a “butane supply agree-
ment.” Id. at 821. But the provisions quoted above inter-
twine the sale of the equipment with the butane-supply
commitment. Indeed, without Equilon’s agreement to buy
butane in exchange for the equipment, it could hardly be
called a “sale”—but that is how the agreement describes
itself. Moreover, other provisions expressly interrelate the
cost of the blending system with Equilon’s purchase of bu-
tane. Under one scenario, if there is a “change in applica-
ble laws and regulations” resulting in “the inability to
lawfully blend Butane into gasoline at the Terminal using
the Equipment” but Equilon “has not purchased” a “mini-
mum [of] 450,000 barrels” of butane, the agreement pro-
vides Equilon the option to “(1) purchase the balance of
450,000 barrels of Butane minus the Butane theretofore
purchased . . . , or (2) pay a termination fee (representing
the balance of the purchase price of the Equipment) to be
invoiced by MCE, based on a percentage of the contract Bu-
tane quantities not lifted.” J.A. 9065–66.
Case: 20-1640 Document: 62 Page: 10 Filed: 04/29/2022
10 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC.
Sunoco’s principal hook for asserting a primarily exper-
imental purpose is a section of the agreement entitled
“Equipment Testing.” J.A. 9056–57. That section de-
scribes two sets of testing: pre-installation testing and
post-installation testing. But neither persuades us that
this sale was primarily experimental, rather than commer-
cial. First, the contract describes the pre-installation test-
ing as follows:
Prior to commencing installation of the Equipment,
MCE shall conduct such testing of the Equipment
as is necessary to determine whether the Equip-
ment satisfies minimum operating standards es-
tablished by MCE. In the event that MCE
determines, as a result of such testing, for what-
ever reason, that the Equipment does not satisfy
minimum operating standards established by
MCE, then MCE shall have the right to unilater-
ally terminate this Agreement without any further
obligation whatsoever, except that MCE shall be
obligated to remove at its cost and expense any
Equipment theretofore installed at the Terminal.
J.A. 9056. This provision does not necessarily evidence in-
tent to experiment with the system’s design. Rather, it
states MCE’s obligation to ensure that “the Equipment sat-
isfies minimum operating standards,” J.A. 9056—which in-
dicates merely that the sale was conditioned upon testing
to ensure satisfactory operation. Accordingly, this provi-
sion standing alone is inconclusive and insufficient to show
a primarily experimental purpose.
The testing that actually happened pursuant to this
provision, however, bears out that this pre-installation
testing does not indicate a primarily experimental purpose.
While Sunoco argues that MCE wanted “to experiment at
an actual tank farm and determine whether their idea was
capable of performing its intended purpose in its intended
environment,” Summary Judgment Op., 339 F. Supp. 3d
Case: 20-1640 Document: 62 Page: 11 Filed: 04/29/2022
SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 11
at 817, and that it therefore entered the agreement “for ac-
cess to Equilon’s facility to test under actual conditions,”
Cross-Appellant’s Br. 28, the pre-installation testing that
occurred did not need to be done at Equilon. Oral Arg.
at 31:02–10, No. 20-1640, https://oralargu-
ments.cafc.uscourts.gov/default.aspx?fl=20-1640_070920
21.mp3 (Sunoco’s Counsel: “[W]hen you’re talking about
software and whether two pieces of equipment will com-
municate, there’s no reason that has to be done at Equi-
lon.”). Indeed, the testing was not done at Equilon. Rather,
the only pre-installation testing that occurred (which was
done to determine whether the system could communicate
with a component called a Grabner analyzer) was done by
a third party, Wheatland Systems, in Kansas. Summary
Judgment Op., 339 F. Supp. 3d at 819
. On top of that, it
could have been done before or without the agreement.
J.A. 6447–48 (Q: “[Y]ou could have done it at any time prior
to you entering into the deal with Equilon in January of
2000, right?” A: “Right.”). The need to perform this testing,
therefore, cannot have been the primary purpose for the
Equilon sale.
And that is why Sunoco’s analogy to the Supreme
Court’s seminal City of Elizabeth case falls flat. While “the
nature of a street pavement,” the invention in that case, “is
such that it cannot be experimented upon satisfactorily ex-
cept on a highway, which is always public,” City of Eliza-
beth, 97 U.S. at 134
, Sunoco does not dispute that MCE’s
pre-installation testing was conducted at Wheatland, and
could have been performed before offering to sell the sys-
tem, Oral Arg. at 30:28–50 (Q: “Why was that testing nec-
essary to a contract for sale? . . . Why couldn’t it be done
before there was any kind of offer for sale? A: “There’s no
Case: 20-1640 Document: 62 Page: 12 Filed: 04/29/2022
12 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC.
reason, I guess, that it couldn’t have been—it was just part
of the experimentation.”). 3
The district court recognized that the pre-installation
testing did not take place at Equilon, but it reasoned none-
theless that this testing “reflect[ed] the inventors’ need to
experiment with their invention to determine whether it
would work as intended as of the moment they offered the
system to Equilon.” Summary Judgment Op., 339 F. Supp. 3d at 819
. If the district court was reasoning that this test- ing sufficiently showed a primarily experimental purpose, we disagree, for the reasons articulated above. If the dis- trict court was instead considering “whether the invention was under development, subject to testing, or otherwise still in its experimental stage at the time of the asserted sale,” that is not the question Pfaff prong 1 asks. Allen,299 F.3d at 1354
. “Instead,” it is “whether the primary purpose of the inventor at the time of the sale, as deter- mined from an objective evaluation of the facts surround- ing the transaction, was to conduct experimentation.”Id.
Although we have “recogniz[ed] an overlap of the experi- mental use negation” and the prong 2 “ready for patenting standard,” Invitrogen Corp. v. Biocrest Mfg., L.P.,424 F.3d 1374
, 1379–80 (Fed. Cir. 2005) (citing EZ Dock, Inc. v. Schafer Sys., Inc.,276 F.3d 1347, 1352
(Fed. Cir. 2002)),
here we think the district court’s “still under development”
observation regarding the Wheatland testing is better con-
sidered at prong 2.
3 For similar reasons, this testing is distinguishable
from Honeywell International Inc. v. Universal Avionics
Systems Corp., in which “Honeywell entered into . . . nego-
tiations to facilitate its programs to test” its terrain warn-
ing system with “human pilots in a genuine cockpit
setting.” 488 F.3d 982, 996
(Fed. Cir. 2007).
Case: 20-1640 Document: 62 Page: 13 Filed: 04/29/2022
SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 13
The post-installation testing provision fares no better
than the pre-installation testing provision. It states:
Upon completion of installation of the Equipment,
MCE shall provide Equilon with written notice of
such completion. Within three (3) days of said no-
tice, Equilon shall (i) make all necessary arrange-
ments within the Terminal to enable MCE to test
the Equipment to determine whether the Equip-
ment is properly blending butane, and (ii) provide
notification to MCE that said arrangements have
been made. MCE shall test the Equipment accord-
ing to parameters set forth in Schedule 1.10. MCE
shall proceed with testing in a timely manner and
have a period not to exceed ninety (90) days from
the date of said notification by Equilon to complete
its testing.
J.A. 9057. These tests are not experiments, but are ac-
ceptance tests to confirm that the equipment “is properly
blending butane”—that is, that it is working as promised.
E.g., J.A. 9051 (“MCE represents and warrants that upon
transfer of title to the Equipment, the Equipment . . . will
at such time be fit for the purpose of blending Butane into
gasoline products in compliance with all applicable laws.”).
That is borne out by Schedule 1.10, the cross-refer-
enced portion of the agreement that contains the testing
“parameters.” J.A. 9057. Starting from the top, Sched-
ule 1.10 is entitled “System Site Acceptance Test (‘SAT’) –
Equipment Testing Parameters.” J.A. 9078 (capitalization
normalized). It then states: “MCE shall test the Equip-
ment according to the following parameters and confirm
the Equipment is performing in accordance with MCE’s
representations, warranties, and guarantees.” J.A. 9078
(emphases added). Next, it lists various parameters for
MCE to “[v]erify” (e.g., “[v]erify communication cables are
properly installed and functioning”), subdivided by head-
ings like “Installation of Hardware,” “Electrical Wiring,”
Case: 20-1640 Document: 62 Page: 14 Filed: 04/29/2022
14 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC.
and “Hardware Functionality.” J.A. 9078. At the end,
Schedule 1.10 says: “Once verified, [the] system must run
twelve consecutive loads with an accuracy within +/- 2% of
the desired [Reid Vapor Pressure] with no system-related
alarm conditions.” J.A. 9078. As Venture points out, MCE
and Sunoco used the same set of tests in later commercial
contracts. 4 Compare J.A. 9057, with J.A. 8392, and
J.A. 11396. Simply put, these are “acceptance tests” to
“[v]erify” and “confirm” that the installed system func-
tioned as MCE warranted. J.A. 9057. They are not “exper-
iments” in the way the experimental-use doctrine
contemplates. Thus, neither of the agreement’s two “equip-
ment testing” provisions undermines our conclusion that
the Equilon agreement, on its face, memorializes a com-
mercial, bargained-for sale.
Although Sunoco also relies on the inventors’ testimony
that their intent was experimental, the district court
properly recognized that “the inventors’ subjective intent is
of minimal importance,” pivoting to “the objective evi-
dence” of the contract. Summary Judgment Op.,
339 F. Supp. 3d at 818
(citing Petrolite,96 F.3d at 1427
). We, too, think this testimony carries little weight. See Electromotive Div. of Gen. Motors Corp. v. Transp. Sys. Div. of Gen. Elec. Co.,417 F.3d 1203, 1212
(Fed. Cir. 2005) (“Certain things are settled. Significantly, an inventor’s subjective intent to experiment cannot establish that his activities are, in fact, experimental.”). Rather, we “have generally looked to objective evidence to show that a pre- critical date sale was primarily for experimentation.” 5Id.
4 This point was not among the “key differences” the
district court noted between the Equilon agreement and
these later agreements. See Post-Trial Op., 436 F. Supp.
3d at 1119–20.
5 For example, we previously have set forth a list of
objective factors relevant to deciding whether a public use
Case: 20-1640 Document: 62 Page: 15 Filed: 04/29/2022
SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 15
Here, particularly in view of the agreement’s provisions
discussed above, the record contains little to no objective
evidence indicating such a purpose.
Thwarting “an inventor’s attempt to commercialize his
invention beyond the statutory term” is the “overriding
concern of the on-sale bar.” Atlanta Attachment Co. v. Leg-
gett & Platt, Inc., 516 F.3d 1361, 1365
(Fed. Cir. 2008). Here, the testing described in the Equilon agreement oc- curred to effectuate the sale, rather than the sale occurring to occasion the testing. Therefore, we conclude that the Equilon agreement was an offer for sale made to commer- cially exploit the invention rather than primarily for exper- imental purposes. On that basis, we reverse the district court’s experimental-use determination and vacate its in- fringement determination with respect to ’629 patent claim 2 and ’302 patent claims 2, 3, and 16. or sale was “primarily experimental and not commercial”: (1) “the necessity for public testing,” (2) “the amount of con- trol over the experiment retained by the inventor,” (3) “the nature of the invention,” (4) “the length of the test period,” (5) “whether payment was made,” (6) “whether there was a secrecy obligation,” (7) “whether records of the experiment were kept,” (8) “who conducted the experiment,” (9) “the degree of commercial exploitation during testing,” (10) “whether the invention reasonably requires evaluation under actual conditions of use,” (11) “whether testing was systematically performed,” (12) “whether the inventor con- tinually monitored the invention during testing,” and (13) “the nature of the contacts made with potential cus- tomers.” Electromotive,417 F.3d at 1213
. “This list is not exhaustive, and all of the experimentation factors may not apply in a particular case.”Id.
Case: 20-1640 Document: 62 Page: 16 Filed: 04/29/2022
16 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC.
B. Ready for Patenting
As prefaced above, our conclusion on experimental use
does not necessarily render any asserted claims invalid.
Venture still must show that the system sold anticipated
or rendered obvious the claimed invention and that it was
ready for patenting. Allen, 299 F.3d at 1352
. The latter
showing can be made in “at least two ways: by proof of re-
duction to practice before the critical date[,] or by proof that
prior to the critical date the inventor had prepared draw-
ings or other descriptions of the invention that were suffi-
ciently specific to enable a person skilled in the art to
practice the invention.” Pfaff, 525 U.S. at 67–68. Accord-
ingly, we remand for the district court to assess these dis-
puted questions in the first instance.
II. Invalid Patent Claims
The district court also held that Venture infringed
’948 patent claim 7 and ’548 patent claims 1–3 and 6. Post-
Trial Op., 436 F. Supp. 3d at 1121–24. But the Patent Trial
and Appeal Board subsequently determined that those
claims (indeed, all claims of those patents) were unpatent-
able—a decision we later affirmed. Sunoco Partners Mktg.
& Terminals L.P. v. Magellan Midstream Partners L.P.,
853 F. App’x 668
(Fed. Cir. 2021). Given that Sunoco was “afforded the opportunity to exhaust [its] remedy of ap- peal,” Venture “should not have to continue defending a suit for infringement of an adjudged invalid patent.” See XY, LLC v. Trans Ova Genetics,890 F.3d 1282, 1294
(Fed. Cir. 2018) (cleaned up). Therefore, we vacate the in-
fringement judgment as to those invalid claims.
III. Claim Construction
We now consider Venture’s claim-construction chal-
lenges for ’302 patent claims 16–17 and ’629 patent
claim 31. Although we vacate the infringement judgment
with respect to ’302 patent claim 16 based on the on-sale-
bar issue, Venture represents that ’302 patent claim 17
Case: 20-1640 Document: 62 Page: 17 Filed: 04/29/2022
SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 17
and ’629 patent claim 31 are “unaffected” by that issue.
Appellants’ Br. 43. We therefore turn to Venture’s argu-
ments that the district court’s infringement determina-
tions regarding those claims rest on claim-construction
errors. “Claim terms are generally accorded their ordinary
meaning—that is, their meaning to a skilled artisan at the
time of the invention.” Intel Corp. v. Qualcomm Inc.,
21 F.4th 784, 791
(Fed. Cir. 2021). “This approach ‘pro- vides an objective baseline’ for our inquiry.”Id.
(quoting Phillips v. AWH Corp.,415 F.3d 1303, 1313
(Fed. Cir. 2005) (en banc)). “We review claim construction based on intrin- sic evidence de novo and review any findings of fact regard- ing extrinsic evidence for clear error.” SpeedTrack, Inc. v. Amazon.com, Inc.,998 F.3d 1373, 1378
(Fed. Cir. 2021) (cit- ing Teva Pharms. USA, Inc. v. Sandoz, Inc.,574 U.S. 318
,
331–32 (2015)). For the reasons set forth below, we affirm
with respect to both patent claims.
A. ’302 Patent Claim 17
The disputed claim phrase of the ’302 patent appears in
claim 14, on which claim 17 depends. We reproduce the
relevant claim language below, including claims 12 and 13
for context. Independent claim 12 recites:
12. A method for blending gasoline and butane at a
tank farm comprising:
a) drawing a gasoline stream from a tank of gaso-
line;
b) drawing a butane stream from a tank of butane;
c) blending the butane and gasoline streams, at the
tank farm, to form a blend; and
d) dispensing the blend to gasoline transport vehi-
cles using a dispensing unit located at a rack.
Dependent claim 13, in turn, adds that this method further
comprises the following two steps:
Case: 20-1640 Document: 62 Page: 18 Filed: 04/29/2022
18 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC.
a) determining a blend ratio of butane and gasoline
in the butane and gasoline streams that will yield
a desired vapor pressure, and
b) blending the gasoline and butane streams at the
blend ratio.
Claim 14 then adds the disputed phrase (emphasis added):
14. The method of claim 13, wherein the blend ra-
tio is determined from a vapor pressure of the gas-
oline stream and a vapor pressure of the butane
stream.
Claims 16 and 17 add further limitations.
During Markman proceedings, Venture argued that
the phrase “a vapor pressure of the butane stream” means
“vapor pressure determined by a measurement taken from
the butane stream.” Claim Construction Op., 2017 WL 1550188
, at *16. Sunoco, for its part, argued that the phrase did not need construction—proposing instead that it be construed according to its plain and ordinary mean- ing.Id.
At the time, Venture focused on arguing that var- ious “vapor pressure” measurements of the gasoline and butane streams must be taken at particular locations in the process.Id.
at *16–17. The district court concluded that
the phrase needed no construction and observed that “the
parties do not appear to dispute the meaning of ‘a vapor
pressure’ as a property of the stream.” Id. at *17.
Later, at summary judgment, Venture argued that cer-
tain of the accused systems did not infringe claim 16 “be-
cause they used only an ‘assumed’ butane vapor pressure
rather than ‘an actual butane vapor pressure.’” Summary
Judgment Op., 339 F. Supp. 3d at 832
. The district court disagreed, concluding that “[c]laim 16 does not expressly require the determination of such an ‘actual’ butane vapor pressure.”Id.
The court added also that Venture’s con- struction “makes little sense in light of claim 15, which re- cites steps for determining butane vapor pressure by Case: 20-1640 Document: 62 Page: 19 Filed: 04/29/2022 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 19 ‘drawing a sample of butane from the butane stream’ and ‘measuring the vapor pressure of the sample of butane.’”Id.
(quoting ’302 patent claim 15). In the district court’s view, Venture’s construction “would make claim 15 redun- dant.”Id.
After trial, the district court determined that Venture
infringed the disputed claim phrase because it “used a
value for butane vapor pressure—either determined from
a sampling of the butane stream or through the use of an
assumed value.” Post-Trial Op., 436 F. Supp. 3d at 1124.
The court acknowledged Venture’s contention that the ac-
cused systems “did not infringe if they used only a butane
vapor pressure value that was assumed or added to the pro-
grams by a human operator.” Id. at 1125. But it again
reasoned that “[t]he plain language . . . does not require
that butane vapor pressure be determined by sampling the
butane stream, as Venture’s own invalidity expert inter-
preted the claim.” Id. (citing J.A. 7881). It also reiterated
that “such an interpretation would render other claims su-
perfluous.” Id.
Now, on appeal, the parties once again disagree
whether the phrase “vapor pressure of the butane stream”
requires an actual vapor-pressure measurement, as Ven-
ture argued, or also covers an assumed vapor-pressure
value, as Sunoco contends. We agree with the district
court. The plain language of “a vapor pressure of the bu-
tane stream” does not expressly require an actual measure-
ment. Thus, the plain claim language strongly suggests
that there is no measurement requirement. This is bol-
stered by the construction of Venture’s invalidity expert.
Indeed, as the district court observed, that is how Venture’s
invalidity expert interpreted the phrase. J.A. 7881 (Q: “So
in your invalidity analysis, determining a blend ratio from
a vapor pressure of the gasoline stream and a vapor pres-
sure of the butane stream can be done using known or as-
sumed vapor pressure for the gasoline and the butane?”
A: “Yes, that could be done.”).
Case: 20-1640 Document: 62 Page: 20 Filed: 04/29/2022
20 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC.
Venture argues that actual measurement is required
because of the following passage in the patent specification:
To calculate the blend ratio one must first have
knowledge of the respective vapor pressures of the
gasoline and butane streams. Therefore, the vapor
pressures of the gasoline and butane streams are
preferably measured in order to generate the data
used in the blending ratio calculation. The meas-
urement can be carried out in a number of ways.
Because of the variability in[ ]vapor pressure of
gasoline (due to the varying composition of gasoline
delivered through pipelines) and butane (due to the
difference in vapor pressure of n-butane and isobu-
tane), the vapor pressure is preferably measured
directly, by a unit specifically designed to make
such measurements from samples of gasoline and
butane.
’302 patent col. 7 ll. 19–30. But this passage says merely
that the vapor pressures “are preferably measured,” ex-
pressing a preference but not a mandatory requirement for
how to obtain “knowledge of the respective vapor pres-
sures.” Id. at col. 7 ll. 19–20 (emphasis added). Ultimately,
we see nothing in this specification passage (or anywhere
else) that justifies limiting the claim to actual measure-
ments. We therefore adopt the district court’s claim con-
struction and affirm its judgment that Venture infringed
’302 patent claim 17.
B. ’629 Patent Claim 31
The parties also dispute the proper construction of
’629 patent claim 31, which recites (emphasis added):
31. A computer-implemented method for blending
a butane stream and a gasoline stream comprising
the steps of:
receiving a first measurement indicating a vapor
pressure of the gasoline stream;
Case: 20-1640 Document: 62 Page: 21 Filed: 04/29/2022
SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 21
calculating a blend rate at which the butane stream
can be blended with the gasoline stream;
transmitting an instruction to a programmable
logic controller for adjusting the butane stream to
the calculated blend rate for blending with the gas-
oline stream and distributing at a rack; and
receiving a second measurement indicating a vapor
pressure of the blended gasoline stream and bu-
tane stream.
Specifically, the parties disagree on whether the re-
ceived “first measurement” must be used in “calculating”
the blend rate. Venture maintained that certain of its sys-
tems do not infringe because “they collected the vapor pres-
sure of unblended gasoline only for recordkeeping
purposes” rather than using the measurement in the step
of calculating a blend rate. Post-Trial Op., 436 F. Supp. 3d
at 1126. The district court, however, concluded that
“claim 31 does not require that the measurement actually
be used to calculate the ratio.” Id. And although Venture
argued that interpreting the preamble as limiting, as the
district court did, “requires the court to conclude that the
measurement must be used as part of the blending,” the
court observed that “merely using the value for recordkeep-
ing purposes is consistent with” the limiting preamble. Id.
We agree with the district court’s ultimate conclusion.
First, the plain language of the “receiving” step does not
state that the first measurement must be used in the blend-
rate calculation. Rather, it just requires “receiving a first
measurement indicating a vapor pressure of the gasoline
stream” without specifying the measurement’s ultimate
purpose. Similarly, the “calculating” step does not specify
that the calculation is based on the received first measure-
ment. Simply put, the claim language does not tie these
two steps together. Although it is true, as Venture notes,
that the claim recites “no other means to calculate how
much butane to add,” Appellants’ Br. 48, Sunoco correctly
Case: 20-1640 Document: 62 Page: 22 Filed: 04/29/2022
22 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC.
notes that this is a “comprising” claim and therefore may
cover unclaimed elements, e.g., Invitrogen Corp. v. Biocrest
Mfg., L.P., 327 F.3d 1364, 1368
(Fed. Cir. 2003). Addition-
ally, even if the preamble is limiting, it does not require a
different result because using the measurement for record-
keeping purposes can, in the context of this patent, be con-
sidered part of the method described in the preamble. As
the district court noted, this follows from dependent
claims 32 and 33, which incorporate the preamble and
specify a recordkeeping step: “generating a report that in-
cludes the ‘first measurement.’” Post-Trial Op.,
436 F. Supp. 3d at 1126 (quoting ’629 patent claims 32
& 33). Accordingly, we adopt the district court’s claim con-
struction and affirm its judgment that Venture infringed
’629 patent claim 31.
IV. Enhanced Damages
Venture also challenges the district court’s decision to
enhance damages. District courts enjoy discretion to “in-
crease the damages up to three times the amount found or
assessed.” 35 U.S.C. § 284
. As the Supreme Court ex- plained, “[t]he sort of conduct warranting enhanced dam- ages has been variously described . . . as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, fla- grant, or—indeed—characteristic of a pirate.” Halo Elecs., Inc. v. Pulse Elecs., Inc.,579 U.S. 93
, 103–04 (2016). Stated differently, “such damages are generally reserved for egre- gious cases of culpable behavior.”Id. at 104
.
We have set forth the following factors to guide the en-
hancement analysis: (1) whether the infringer deliberately
copied the ideas or design of another, (2) whether the in-
fringer investigated the scope of the patent and formed a
good-faith belief that it was invalid or that it was not in-
fringed, (3) the infringer’s behavior as a party to the litiga-
tion, (4) the defendant’s size and financial condition, (5) the
closeness of the case, (6) the duration of defendant’s mis-
conduct, (7) remedial action by the defendant, (8) the
Case: 20-1640 Document: 62 Page: 23 Filed: 04/29/2022
SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 23
defendant’s motivation for harm, and (9) whether the de-
fendant attempted to conceal its misconduct. Read Corp.
v. Portec, Inc., 970 F.2d 816, 827
(Fed. Cir. 1992), abrogated in part on other grounds by Markman v. Westview Instru- ments, Inc.,517 U.S. 370
(1996). These factors are nonex- clusive, and district courts are not required to discuss them. Presidio Components, Inc. v. Am. Tech. Ceramics Corp.,875 F.3d 1369
, 1382–83 (Fed. Cir. 2017). Rather, they must “consider the particular circumstances of the case.”Id. at 1383
. We review “whether enhanced damages are appropriate” for abuse of discretion. Halo,579 U.S. at 107
.
Although the district court noted that “several” of the
factors “weigh in Venture’s favor,” Post-Trial Op.,
436 F. Supp. 3d at 1131, it nonetheless enhanced dam-
ages—for four reasons. First, the court noted “it appears
that Venture effectively copied the [patented] system.” Id.
at 1132. Second, the court concluded that an “opinion let-
ter provided to Venture by attorney John Manion [‘Manion
Opinion’],” on which Venture relied, “does not show that
Venture had a good-faith belief that it was not infringing
the patents.” Id. at 1133. Third, the court determined that
“Venture’s litigation conduct,” which it described as “less-
than-ideal,” “favors enhanced damages.” Id. at 1134–35.
Last, the court expressed that “Venture’s expansion of its
butane[-]blending business after this litigation began is
troublesome.” Id. at 1135. We conclude that the district
court abused its discretion in enhancing damages, based on
a clear factual error in the district court’s treatment of the
Manion Opinion—a ground that impacts its other enhance-
ment grounds.
“[A]n accused infringer’s reliance on an opinion of coun-
sel regarding noninfringement or invalidity of the asserted
patent remains relevant to the infringer’s state of mind
post-Halo.” Omega Pats., LLC v. CalAmp Corp., 920 F.3d 1337, 1353
(Fed. Cir. 2019). But an opinion of counsel like the Manion Opinion “must be competent or it is of little Case: 20-1640 Document: 62 Page: 24 Filed: 04/29/2022 24 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. value in showing the good faith belief of the infringer.” Co- mark Commc’ns, Inc. v. Harris Corp.,156 F.3d 1182, 1191
(Fed. Cir. 1998) (internal quotation marks omitted). Thus, before considering “the exculpatory value of an opinion of counsel, the legal advice contained therein must be found on the totality of the circumstances to be competent such that the client was reasonable in relying upon it.”Id.
Here, although the district court concluded that the Man-
ion Opinion “does not show that Venture had a good-faith
belief that it was not infringing the patents” and that
Sunoco “established that critical premises of the [opinion]
letter were flawed,” Post-Trial Op., 436 F. Supp. 3d
at 1133, the court made a clear factual error along the way,
as explained below.
Manion’s noninfringement opinion relied on the fact
that Venture’s system inserted an intermediate tank be-
tween the blending unit and the rack (i.e., the location
where gas is dispensed to trucks). Id. Noting that the pa-
tent examiner described the patented invention as “blend-
ing and dispensing . . . at a rack,” Manion opined that
“[b]ecause the unblended gasoline in [Venture’s] system
does not come from a tank and because the blended gaso-
line is dispensed to a tank, these claims are not infringed.”
J.A. 8273. A key reason the court discounted that opinion
was its view that Manion did not know the blended gaso-
line in Venture’s system could still flow immediately from
the intermediate tank to the rack where it would be dis-
pensed. Post-Trial Op., 436 F. Supp. 3d at 1133 (“At trial,
Manion testified that he was unaware of Venture’s design
for the blend to flow immediately from a tank to a truck
rack.”). But as Venture demonstrates, Manion’s testimony
makes clear that he did indeed understand this point. E.g.,
J.A. 7467 (“As an engineer, I realized that there was prod-
uct flowing in to the tank and there’s product flowing out
of the tank, and it’s conceivable that that could be happen-
ing simultaneously.”); J.A. 7473 (“[A]gain, the proposed
system was blending to a tank; and as we talked about
Case: 20-1640 Document: 62 Page: 25 Filed: 04/29/2022
SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 25
before, you know, it’s very common for you to be filling a
tank and emptying a tank at the same time. There’s noth-
ing that says you can’t drain a tank while you’re filling a
tank. . . . So, it’s very normal to be filling and dispensing
at the same time.”). The district court disregarded that tes-
timony because of other testimony that it saw as indicating
that Manion “had never heard of the type of tank that Ven-
ture used between the blending instrument and rack.”
Post-Trial Op., 436 F. Supp. 3d at 1134. But the record
shows that Manion was merely confused by an unfamiliar
term—“online rack tank”—that Sunoco’s attorney was us-
ing. E.g., J.A. 7459 (“I’m sorry, you said an online rack
tank? . . . . I don’t know what an online rack tank is. . . . I
would have to figure out what that means.”); J.A. 7468
(“Like I said previously, I’d never heard of an online rack
tank.”).
This error also undermines other grounds the district
court relied on for enhancement. Specifically, Venture’s
culpability (if any) for copying, as well as for its business
expansion, depends in part on whether it had a good-faith
belief that it was not infringing, which relates to the com-
petence of the Manion Opinion. And although the district
court’s finding regarding litigation conduct is not similarly
tied to its Manion-Opinion findings, acts of litigation mis-
conduct standing alone “are not sufficient for an increased
damages award . . . because they are not related to the un-
derlying act of infringement and say nothing about the cul-
pability of the infringer.” Jurgens v. CBK, Ltd., 80 F.3d 1566
, 1570–71 (Fed. Cir. 1996) (“Only a culpable infringer can be held liable for increased damages, not an innocent one.”); see also i4i Ltd. P’ship v. Microsoft Corp.,598 F.3d 831, 859
(Fed. Cir. 2010) (“[I]t would have been improper to enhance damages based solely on litigation miscon- duct . . . .”), aff’d,564 U.S. 91
(2011). As the Supreme Court explained in Halo, “[a]wards of enhanced damages . . . are not to be meted out in a typical infringement case, but are instead designed as a ‘punitive’ or ‘vindictive’ Case: 20-1640 Document: 62 Page: 26 Filed: 04/29/2022 26 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. sanction for egregious infringement behavior.”579 U.S. at 103
(emphasis added). Accordingly, because the district court’s enhancement “is based on clearly erroneous find- ings of fact,” it amounts to an abuse of discretion. Cybor Corp. v. FAS Techs., Inc.,138 F.3d 1448, 1460
(Fed. Cir. 1998) (en banc), abrogated on other grounds by Teva Pharms. USA, Inc. v. Sandoz, Inc.,789 F.3d 1335
(Fed. Cir.
2015). We therefore vacate the district court’s enhance-
ment determination and remand for the district court to
reassess enhancement.
V. Cross-Appeal
On cross-appeal, Sunoco challenges (A) the district
court’s decision to deny lost-profits damages and (B) its
reasonable-royalty award. We review the damages award,
including the decision whether to grant lost profits, for
clear error. Golden Blount, Inc. v. Robert H. Peterson Co.,
438 F.3d 1354, 1372
(Fed. Cir. 2006). Because we discern
no clear error in the district court’s decision to deny lost
profits or its reasonable-royalty calculation, we affirm
those aspects of the judgment.
A. Lost-Profits Damages
First, we address Sunoco’s argument that the district
court should have granted lost-profits damages. “When a
patentee proves it would have made additional sales but
for a defendant’s infringement, the patentee is entitled to
be made whole for the profits it proves it lost.” Mentor
Graphics Corp. v. EVE-USA, Inc., 851 F.3d 1275, 1284
(Fed. Cir. 2017). More specifically, “a patentee is entitled to lost[-]profit damages if it can establish four things: (1) demand for the patented product; (2) absence of ac- ceptable non-infringing alternatives; (3) manufacturing and marketing capability to exploit the demand; and (4) the amount of profit it would have made.”Id.
at 1285 (citing Panduit Corp. v. Stahlin Bros. Fibre Works,575 F.2d 1152, 1156
(6th Cir. 1978)).
Case: 20-1640 Document: 62 Page: 27 Filed: 04/29/2022
SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 27
At the district court, the parties focused on factor (2),
contesting whether Venture’s accused system, if modified
to be manually operated, was an available and acceptable
non-infringing alternative. Post-Trial Op., 436 F. Supp. 3d
at 1127–28. Although the court answered in the negative,
it nonetheless declined to award lost profits—concluding
that Sunoco had failed to prove factor (4), the amount of
profit it would have made. On this factor, Sunoco had ar-
gued it was entitled to $31.585 million, “the amount that
Sunoco would have received, had Venture signed a bu-
tane[-]supply agreement with Sunoco and the two parties
split the resulting profits fifty-fifty.” Id. at 1128. The dis-
trict court rejected this theory on the ground that butane-
supply agreements do not accurately reflect the value of the
patented invention—since “neither butane nor blended
gasoline is the patented invention.” Id.
That was not clear error. As Venture points out, the
butane-supply agreements reflect a bundle of goods and
services beyond just the patented invention—e.g., the pur-
chase and sale of butane, equipment maintenance and
monitoring, and a license to more than just the patented
technology. Appellants’ Reply Br. 11–13 (discussing the
particulars of agreements appearing at J.A. 11217–500).
This means Sunoco’s “$31.585 million figure represents
more than just the damage Sunoco incurred from Venture’s
infringement” and “do[es] not translate into the value of
the patent.” Post-Trial Op., 436 F. Supp. 3d at 1128. None
of Sunoco’s arguments to the contrary leave us with “the
definite and firm conviction that a mistake has been com-
mitted.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395
(1948). Rather, the reasons articulated by the district
court satisfy us that it did not clearly err in denying lost
profits. Accordingly, we decline to disturb the court’s deci-
sion to deny lost-profits damages.
Case: 20-1640 Document: 62 Page: 28 Filed: 04/29/2022
28 SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC.
B. Reasonable Royalty
Last, we turn to Sunoco’s challenge to the district
court’s reasonable-royalty calculation. “The amount of
damages determined by a district court is a question of fact
that is reviewed for clear error on appeal, while the method
used by a district court in reaching that determination is
reviewed for an abuse of discretion.” Cybor, 138 F.3d at 1461
. We discern no clear error or abuse of discretion in
the reasonable-royalty award, as the district court rejected
Sunoco’s reasonable-royalty analysis because it “suffers
from the same flaw as [Sunoco’s] lost profits analysis: it re-
lies in large part on a comparison with Sunoco’s butane
supply agreements, which cover services beyond simply the
value of the patents.” Post-Trial Op., 436 F. Supp. 3d
at 1129. Venture’s reasonable-royalty analysis, in con-
trast, was based on the difference between using a manual
blending system and using Sunoco’s automated system to
blend butane—calculating a $5.6 million royalty as the
maximum royalty the parties would have hypothetically
agreed upon. Id. The district court then credited the opin-
ion of Venture’s expert that a more likely royalty would be
a $2 million lump sum, and it checked that figure against
a $1.714 million figure calculated from a prior license
Sunoco granted to the previous owner of its patents, Texon,
after buying Texon’s blending business. Id. at 1129–30.
Because we see no clear error or abuse of discretion, we af-
firm the reasonable-royalty award. 6
6 Venture represents that damages would not need
to be recalculated if we reject Sunoco’s arguments on cross-
appeal (we do) and if Venture does not prevail on every ap-
pealed issue regarding infringement and invalidity (it
doesn’t). Oral Arg. at 1:40–2:53.
Case: 20-1640 Document: 62 Page: 29 Filed: 04/29/2022
SUNOCO PARTNERS MARKETING v. U.S. VENTURE, INC. 29
CONCLUSION
We have considered the parties’ remaining arguments
but find them unpersuasive. We vacate the district court’s
infringement judgment with respect to ’629 patent claim 2
and ’302 patent claims 2, 3, and 16, vacate its infringement
judgment with respect to the ’948 and ’548 patents, adopt
its claim constructions and affirm its infringement judg-
ment with respect to ’302 patent claim 17 and ’629 patent
claim 31, affirm its denial of lost-profits damages, and af-
firm its reasonable-royalty analysis. Since we here affirm
the judgment of infringement as to ’302 patent claim 17
and ’629 patent claim 31, we affirm the $2 million royalty.
The $2 million royalty is not subject to increase if the dis-
trict court finds infringement of other claims. We remand
for the district court to assess the ready-for-patenting
prong of the on-sale-bar analysis and reassess enhance-
ment for the reasons stated above and in light of the now
restricted scope of infringement. The permanent injunc-
tion entered by the district court is now expired due to the
expiration of the patents and in any event should be va-
cated except as to ’302 patent claim 17 and ’629 patent
claim 31.
AFFIRMED-IN-PART, REVERSED-IN-PART,
VACATED-IN-PART, AND REMANDED
COSTS
The parties shall bear their own costs.