DCT
2:25-cv-00743
Crusoe Energy Systems LLC v. Upstream Data Inc
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Crusoe Energy Systems LLC (Delaware)
- Defendant: Upstream Data Inc. (Canada)
- Plaintiff’s Counsel: Paul Hastings LLP; Potter Minton
- Case Identification: 2:25-cv-00743, E.D. Tex., 07/24/2025
- Venue Allegations: Plaintiff alleges venue is proper because Defendant is a foreign corporation that has committed acts of patent infringement within the Eastern District of Texas.
- Core Dispute: Plaintiff alleges that Defendant’s flare gas mitigation products, including its "Hash Generator" systems, infringe four U.S. patents related to systems and methods for generating and consuming power from stranded natural gas for on-site, energy-intensive computing.
- Technical Context: The technology addresses the dual problems of wasteful natural gas flaring at oil production sites and the high energy consumption of distributed computing tasks like cryptocurrency mining by using the flared gas as an on-site fuel source.
- Key Procedural History: The complaint alleges that Defendant had pre-suit knowledge of Plaintiff’s patent portfolio, citing a prior lawsuit in which Defendant allegedly acknowledged the patent application that matured into the ’307 Patent. The complaint also notes that Plaintiff previously sued one of Defendant’s customers, Alkane Midstream LLC, for infringement of the same four patents, a case that ended in settlement.
Case Timeline
| Date | Event |
|---|---|
| 2018-08-01 | Earliest Priority Date for all Asserted Patents |
| 2020-12-08 | U.S. Patent 10,862,307 Issues |
| 2020-12-08 | U.S. Patent 10,862,309 Issues |
| 2022-09-06 | U.S. Patent 11,437,821 Issues |
| 2022-09-20 | U.S. Patent 11,451,059 Issues |
| 2023-03-16 | Settlement in prior litigation involving the Asserted Patents (Crusoe v. Alkane) |
| 2025-07-24 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 11,451,059
- Patent Identification: U.S. Patent No. 11,451,059, "Systems and Methods for Generating and Consuming Power from Natural Gas," issued September 20, 2022.
The Invention Explained
- Problem Addressed: The patent addresses the economic waste and environmental harm caused by flaring "stranded" natural gas at oil wells, a byproduct that is often uneconomical to transport (Compl. ¶¶23-24). It simultaneously addresses the massive electricity demand of high-growth industries like cryptocurrency mining (Compl. ¶25).
- The Patented Solution: The invention is a system that captures stranded natural gas at the well site, uses it to fuel on-site power generators, and directs the generated electricity to power modular data centers performing distributed computing tasks (Compl. ¶27). A key technical feature highlighted in the complaint is the system's ability to "automatically controll[e] the electrical load of the distributed computing units based on operational parameters of the power generation module" (Compl. ¶35; ’059 Patent, col. 27:21-28:20). This suggests a dynamic load-balancing system responsive to the power supply.
- Technical Importance: This approach creates a symbiotic solution, turning an environmental liability and wasted resource (flared gas) into a valuable input for a power-intensive, revenue-generating activity (on-site computing) (Compl. ¶28).
Key Claims at a Glance
- The complaint asserts at least independent Claim 1 (Compl. ¶44).
- Based on the complaint's description, essential elements of Claim 1 include:
- A method for mitigating flaring.
- Receiving a fuel gas stream at a power generation system.
- Generating a high-voltage electrical output.
- Transforming the high-voltage output to a low-voltage output.
- Powering a plurality of distributed computing units.
- Automatically monitoring operational parameters of the power generation module.
- Modulating the electrical load of the computing units based on the monitored parameters.
U.S. Patent No. 10,862,307
- Patent Identification: U.S. Patent No. 10,862,307, "Systems and Methods for Generating and Consuming Power from Natural Gas," issued December 8, 2020.
The Invention Explained
- Problem Addressed: The patent background describes the dual problems of stranded natural gas lacking pipeline infrastructure and the high electricity costs for cryptocurrency mining operations, which can offset approximately 30% of total mining revenues (’307 Patent, col. 1:36-2:43).
- The Patented Solution: The patent discloses modular, transportable systems to convert raw natural gas into a fuel stream for on-site power generation, which in turn powers distributed computing units (’307 Patent, Abstract). A specific configuration for larger-scale applications involves a "parallel panel" designed to "combine and/or synchronize" the electrical outputs from multiple power generation modules before transforming the power for use by the data centers (’307 Patent, col. 4:49-62, Fig. 4).
- Technical Importance: The invention provides a scalable and mobile method to monetize an otherwise wasted energy source, allowing operators to deploy computing resources directly at the energy source and adapt the system's size to match gas flow rates (’307 Patent, col. 9:6-28).
Key Claims at a Glance
- The complaint asserts at least independent Claim 1 (Compl. ¶54).
- Essential elements of independent Claim 1 include:
- An electrical power generation system with one or more power generation modules.
- A parallel panel in electrical communication with the modules, adapted to receive, combine, and synchronize their high-voltage electrical outputs.
- An electrical transformation module to step down the combined high-voltage output to a low-voltage output.
- A distributed computing system powered by the system, comprising a communications system and a mobile data center with multiple distributed computing units.
- The complaint does not explicitly reserve the right to assert dependent claims.
Multi-Patent Capsule: U.S. Patent No. 10,862,309
- Patent Identification: U.S. Patent No. 10,862,309, "Systems and Methods for Generating and Consuming Power from Natural Gas," issued December 8, 2020.
- Technology Synopsis: This patent covers a flare mitigation system that generates power from natural gas for on-site computing. Its claims focus on controlling the system's electrical load based on the "gas profile of the fuel gas" received by the power generation system, creating a responsive loop between the fuel source and the power consumption (’309 Patent, col. 28:1-28).
- Asserted Claims: At least Claim 1 (Compl. ¶64).
- Accused Features: The complaint alleges that Defendant’s systems automatically control the electrical load of the computing system based on the fuel gas profile (Compl. ¶35).
Multi-Patent Capsule: U.S. Patent No. 11,437,821
- Patent Identification: U.S. Patent No. 11,437,821, "Systems and Methods for Generating and Consuming Power from Natural Gas," issued September 6, 2022.
- Technology Synopsis: As part of the same patent family, this invention also details systems for converting flared gas into electricity for on-site computing tasks. Similar to the ’307 Patent, the complaint highlights its recitation of a "parallel panel" architecture for combining and synchronizing power from multiple generators to support larger-scale, multi-generator applications (’821 Patent, col. 28:1-27; Compl. ¶35).
- Asserted Claims: At least Claim 1 (Compl. ¶74).
- Accused Features: The complaint alleges infringement by Defendant's systems that are used in multi-generator configurations (Compl. ¶35).
III. The Accused Instrumentality
Product Identification
The complaint identifies Defendant’s "flare gas mitigation products and services" generally as the "Accused Products" (Compl. ¶10). It specifically names the "Hash Generator" as an exemplary product (Compl. ¶36).
Functionality and Market Context
The "Hash Generator" is described in Defendant’s marketing as a "[n]atural gas generator + loadcenter in a complete, plumb & play skidded package" (Compl. ¶36). The complaint alleges these systems are manufactured and sold for generating electricity from natural gas to power bitcoin mining operations (Compl. ¶36). The complaint references a photograph from Defendant's website depicting the accused 'Hash Generator' as an integrated, skid-mounted unit (Compl. ¶36). It further alleges that "Hundreds of Hash Generators" are in use across North America and that Defendant advertises and sells products for installation in Texas through partners such as Giga Energy Solutions, which operates in "East Texas oil fields" (Compl. ¶¶37-38).
IV. Analysis of Infringement Allegations
’059 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A method comprising... automatically monitoring... operational parameters of the power generation module... | Defendant's systems allegedly include control systems that monitor the operational parameters of the on-site generator. | ¶35 | col. 17:1-12 |
| and upon determining a change in the gas profile, automatically modulate an electrical load of the distributed computing system. | Defendant's systems are alleged to automatically control the electrical load of the computing units (bitcoin miners) in response to changes in the power generation module's operating parameters. | ¶35 | col. 7:19-28 |
’307 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| an electrical power generation system comprising: one or more power generation modules... | The accused "Hash Generator" is a "natural gas generator + loadcenter" package. | ¶36 | col. 3:64-4:1 |
| a parallel panel... adapted to: receive the high-voltage electrical output from each of the power generation modules; and combine and synchronize said high-voltage electrical outputs... | The complaint alleges Defendant's systems for "larger-scale, multi-generator applications" include a "parallel panel" to combine and synchronize electrical outputs. | ¶35 | col. 4:49-54 |
| an electrical transformation module... adapted to... transform the combined high-voltage electrical output into a low-voltage electrical output... | The "loadcenter" component of the accused "Hash Generator" allegedly performs the function of transforming and distributing power to the computing units. | ¶36 | col. 4:55-62 |
| a distributed computing system powered by the electrical power generation system... | The accused products are used to power bitcoin mining, which is a form of distributed computing. | ¶36 | col. 4:63-5:1 |
Identified Points of Contention
- Technical Questions (Control Systems): A central factual question may be how Defendant's control systems operate. The complaint alleges the systems perform automatic load modulation based on generator parameters (’059 Patent) and the fuel gas profile (’309 Patent). The case may require evidence detailing the specific logic and sensor inputs used in the accused control systems to determine if they meet these claim limitations. The complaint references social media posts advertising Defendant's products for Texas installations, which may provide evidence of the product's marketed capabilities (Compl. ¶37).
- Scope Questions (Hardware Configuration): For claims requiring a "parallel panel" (’307 and ’821 Patents), a likely point of dispute will be the definition of this term. The question may be whether Defendant's method for aggregating power in multi-generator setups—which may or may not involve a distinct, singular "panel"—falls within the scope of this limitation as defined by the patent specification.
V. Key Claim Terms for Construction
The Term: "parallel panel" (from ’307 Patent, Claim 1)
Context and Importance: This term appears critical for allegations involving larger, multi-generator installations. Its construction will likely determine whether infringement is limited to single-generator units or extends to more complex and potentially more valuable multi-unit deployments sold by the Defendant. Practitioners may focus on whether this term requires a single, discrete hardware component or can cover a more distributed system of wiring and controllers that achieves the same function.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The claim language requires the panel be "adapted to... combine and/or synchronize" the electrical outputs (’307 Patent, col. 28:16-19). The use of "and/or" could support an interpretation where the panel need not perform both functions simultaneously, potentially broadening the term to cover simpler combining circuits.
- Evidence for a Narrower Interpretation: The specification’s primary embodiment depicts the "Parallel Panel" as a distinct block (460) in a system diagram, physically separate from the power generation modules (431a, 431b) and the electrical transformation module (435) (’307 Patent, Fig. 4). This may support an argument that the term requires a specific, unitary hardware component that merges electrical flows before they are transformed.
The Term: "gas profile" (from ’309 Patent, Claim 1)
Context and Importance: The novelty of the ’309 Patent appears to rest on the system's ability to react to changes in the "gas profile." The definition of this term—whether it means composition, pressure, flow rate, heat value, or a combination—will be central to the infringement analysis.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification does not appear to provide an explicit definition, which may support construing the term according to its plain and ordinary meaning to one of skill in the art, potentially encompassing a wide range of fuel gas characteristics.
- Evidence for a Narrower Interpretation: The detailed description mentions monitoring "gas flow rate at various locations, gas pressure at various locations" as exemplary operating parameters (’309 Patent, col. 7:14-16). A defendant may argue that "gas profile" should be limited to these specifically enumerated physical properties rather than encompassing chemical composition or heat value.
VI. Other Allegations
Indirect Infringement
The complaint alleges that Defendant induces infringement by selling the Accused Products to customers and providing instructions and support, encouraging them to operate the systems in an infringing manner (Compl. ¶¶47, 57). The alleged engagement with customer Giga Energy Solutions "who utilizes stranded natural gas to power bitcoin miners" is presented as factual support for this claim (Compl. ¶38).
Willful Infringement
Willfulness allegations are based on alleged pre-suit knowledge. The complaint asserts that Defendant was aware of the patent family because it previously filed a lawsuit against Plaintiff in which it acknowledged the application that issued as the ’307 Patent (Compl. ¶39). Furthermore, the complaint alleges Defendant knew of Plaintiff's prior infringement suit against one of its customers (Alkane Midstream) involving the same four patents, which ended in a settlement (Compl. ¶¶40-41).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of pre-suit knowledge and intent: Do Defendant's alleged acknowledgment of the ’307 patent application in prior litigation and its awareness of the infringement suit against its customer constitute the basis for willful infringement, potentially exposing Defendant to enhanced damages?
- A key evidentiary question will be one of technical operation: Does the complaint's allegation of "automatic control" based on fuel "gas profile" or generator "operational parameters" reflect the actual functionality of the accused "Hash Generator" systems, or is there a fundamental mismatch in how the control systems operate?
- The case may also turn on a question of definitional scope: Can the term "parallel panel," which is depicted as a discrete hardware component in patent figures, be construed to cover the various methods Defendant may use to aggregate power from multiple generators in its larger-scale deployments?