DCT

6:22-cv-00050

Midas Green Tech LLC v. Rhodium Enterprises Inc

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Key Events
Amended Complaint

I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 6:22-cv-00050, W.D. Tex., 03/29/2023 (Third Amended Complaint)
  • Venue Allegations: Venue is alleged to be proper based on Defendants maintaining at least two places of business within the Western District of Texas (in Rockdale and Temple) and committing acts of patent infringement within the district.
  • Core Dispute: Plaintiff alleges that Defendants’ immersion cooling systems, used in their large-scale cryptocurrency mining operations, infringe two patents related to efficient designs for such systems.
  • Technical Context: The lawsuit concerns immersion cooling technology, a method for managing heat in high-density computer systems, such as those used for cryptocurrency mining, by submerging electronics in a non-conductive (dielectric) fluid.
  • Key Procedural History: The complaint alleges that Defendants' founders were previously sued by Plaintiff over the same patents in a case involving a prior-formed entity, Immersion Systems LLC. In that earlier litigation (Midas v. Immersion Systems, N.D. Tex.), the court issued a claim construction order largely adopting Plaintiff's proposed interpretations. Plaintiff alleges that Defendants had pre-suit knowledge of the patents and infringement based on this prior litigation and associated notice letters, and that Defendants bankrolled post-grant invalidity challenges against the patents-in-suit.

Case Timeline

Date Event
2012-12-14 Priority Date for '457 and '446 Patents
2019-09-03 U.S. Patent No. 10,405,457 Issues
2020-02-07 Plaintiff sends notice letter re: '457 Patent to Immersion Systems LLC
2020-04-XX First Rhodium defendant entity (Rhodium 30MW LLC) is formed
2020-05-29 Plaintiff files suit against Immersion Systems LLC
2020-10-27 U.S. Patent No. 10,820,446 Issues
2020-11-24 Plaintiff asserts '446 Patent in Immersion Systems litigation
2021-11-22 Court issues claim construction order in Immersion Systems litigation
2022-01-13 Plaintiff files original complaint against Rhodium Defendants
2023-03-29 Plaintiff files Third Amended Complaint

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 10,405,457 - "Appliance Immersion Cooling System"

The Invention Explained

  • Problem Addressed: The patent describes two key problems with prior art immersion cooling systems. First, vertical-stack systems made it difficult to access and service individual electronic components without draining the entire tank of cooling fluid. Second, these systems often suffered from non-uniform fluid flow, leading to uneven cooling, hot spots, and inefficient operation (Compl. ¶99; ’457 Patent, col. 2:1-8, 30-36).
  • The Patented Solution: The invention proposes a horizontal tank system that allows for easier access to individual appliances. To solve the flow problem, it employs a specific fluid circulation architecture: a "plenum" at the bottom of the tank is designed to "dispense the dielectric fluid substantially uniformly upwardly through each appliance slot." After cooling the appliances, the heated fluid flows over a "weir" integrated into a long wall of the tank, which facilitates "substantially uniform recovery" of the fluid into a dedicated recovery reservoir for re-cooling and recirculation (Compl. ¶99; ’457 Patent, Abstract, Figs. 1, 11).
  • Technical Importance: This design purports to provide more efficient and effective cooling for high-density electronic systems by ensuring uniform fluid flow, while also improving serviceability compared to earlier vertical-stack designs (Compl. ¶99).

Key Claims at a Glance

  • The complaint asserts infringement of independent claims 1 and 6, among others (Compl. ¶¶ 41, 72).
  • Independent Claim 1 recites a complete cooling system with five main components:
    • A "tank" for immersing appliances, which includes a "weir" and a "dielectric fluid recovery reservoir".
    • A "primary circulation facility" including a "plenum" to dispense fluid uniformly upward.
    • A "secondary fluid circulation facility" to extract heat from the primary fluid.
    • A "control facility" to coordinate the operation of the circulation facilities.
  • Independent Claim 6 recites a "tank module" that includes the tank (with weir and reservoir), the primary circulation facility (with plenum), and the control facility, but does not require the secondary heat-extraction facility.
  • The complaint reserves the right to assert dependent claims (Compl. ¶41).

U.S. Patent No. 10,820,446 - "Appliance Immersion Cooling System"

The Invention Explained

  • Problem Addressed: As a continuation of the application that led to the ’457 Patent, the ’446 Patent addresses the same problems of difficult maintenance and non-uniform cooling in prior art systems (Compl. ¶102; ’446 Patent, col. 2:30-41).
  • The Patented Solution: The ’446 Patent describes the same technical solution as the ’457 Patent, utilizing a horizontal tank with a plenum for uniform fluid distribution and a weir for uniform fluid recovery to achieve efficient and even cooling (Compl. ¶102; ’446 Patent, Abstract).
  • Technical Importance: The technology provides an improved architecture for immersion cooling suitable for industrial-scale, high-density computing environments (Compl. ¶102).

Key Claims at a Glance

  • The complaint asserts infringement of independent claims 1 and 6, among others (Compl. ¶¶ 41, 85).
  • Independent Claim 1 recites a complete cooling system that is structurally very similar to claim 1 of the ’457 Patent, including the tank, weir, plenum, primary circulation facility, secondary circulation facility, and control facility. Notably, this claim does not explicitly recite the "dielectric fluid recovery reservoir" found in the ’457 Patent's claims.
  • Independent Claim 6 recites a "tank module" that, like claim 6 of the ’457 Patent, includes the tank, weir, primary circulation facility, and control facility, but also omits the "dielectric fluid recovery reservoir".
  • The complaint reserves the right to assert dependent claims (Compl. ¶41).

III. The Accused Instrumentality

Product Identification

Defendants' immersion cooling systems and tank modules, which are alleged to be proprietary designs used in-house at Defendants' bitcoin mining facilities in Rockdale, Temple, and a third Texas location (Compl. ¶¶ 38-40).

Functionality and Market Context

  • The accused instrumentalities are described as "fully integrated" liquid cooling systems for "an industrial-scale digital asset technology company" (Compl. ¶37). The systems function by submerging "bitcoin miners" (high-powered computers) in a dielectric cooling fluid inside specialized tank modules (Compl. ¶38).
  • An image from Defendants' Rockdale facility shows rows of these tank modules, each containing multiple vertically-oriented miners (Compl. ¶40, p. 12).
  • The complaint alleges these systems are critical to Defendants' business, allowing them to "predictably and consistently mine more bitcoin with fewer miners" by optimizing the processing power of the hardware (Compl. ¶38). The complaint further alleges that the design of these systems is "materially identical" to earlier systems developed by Defendants' founders under a different corporate entity (Compl. ¶¶ 55-56).

IV. Analysis of Infringement Allegations

The complaint does not include the referenced claim chart exhibits, which were filed under seal. The following summary is based on the detailed narrative descriptions of the technology and infringement provided in the body of the complaint.

'457 Patent Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
a tank adapted to immerse in a dielectric fluid a plurality of electrical appliances, each in a respective appliance slot distributed vertically along... Defendants operate "mining farms" with "bitcoin miners...submerged in dielectric cooling fluid within specialized tank modules" (Compl. ¶38). An image shows miners arranged in slots in the tanks (Compl. ¶40, p. 12). ¶¶38, 100 col. 10:36-41
a weir, integrated horizontally into the long wall of the tank...having an overflow lip adapted to facilitate substantially uniform recovery of the dielectric fluid... The system uses a weir "adapted to facilitate substantially uniform recovery of the dielectric fluid," which then "flows over the weir" (Compl. ¶99). Video stills allegedly show fluid "exits the sides in a fluid recovery chamber" (Compl. ¶48). ¶¶48, 99, 100 col. 10:41-47
a dielectric fluid recovery reservoir positioned vertically beneath the overflow lip of the weir and adapted to receive the dielectric fluid as it flows over the weir The system includes a "fluid recovery reservoir positioned vertically beneath the overflow lip of the weir" (Compl. ¶100). This is allegedly part of the "unique, innovative design" that achieves uniform flow (Compl. ¶99). ¶¶99, 100 col. 10:48-51
a primary circulation facility...comprising: a plenum, positioned adjacent the bottom of the tank, adapted to dispense the dielectric fluid substantially uniformly... The system includes a "primary circulation facility" with a "plenum, positioned adjacent the bottom of the tank, adapted to dispense the dielectric fluid substantially uniformly upwardly through each appliance slot" (Compl. ¶100). ¶100 col. 10:52-57
a secondary fluid circulation facility adapted to extract heat from the dielectric fluid circulating in the primary circulation facility... The system sends "heated dielectric fluid to a dry cooler and then back" (Compl. ¶48). A photograph shows an external heat exchanger connected by pipes labeled "FLUID OUT" (Compl. ¶49, p. 18). This is described as a "secondary fluid circulation facility" (Compl. ¶100). ¶¶48, 49, 100 col. 10:58-62
  • Identified Points of Contention:
    • Technical Question: A central factual question will be whether the accused systems actually achieve "substantially uniform" fluid distribution and recovery, as required by the claims. This will likely depend on expert testimony and empirical evidence regarding fluid dynamics within the tanks.
    • Scope Question: The infringement analysis may hinge on whether the accused "fluid recovery chamber" (Compl. ¶48) meets the structural and positional limitations of the claimed "dielectric fluid recovery reservoir positioned vertically beneath the overflow lip of the weir" (’457 Patent, cl. 1).

V. Key Claim Terms for Construction

  • The Term: "weir"

  • Context and Importance: This term is central to the claimed fluid recovery mechanism. The complaint notes that "weir" was a disputed term in the prior litigation against Defendants' predecessor entity, underscoring its importance to the dispute (Compl. ¶60, Ex. G). Practitioners may focus on this term because its construction will define the structural requirements for the overflow component of the accused system.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The term is not explicitly defined, which may support giving it a plain and ordinary meaning, such as any barrier over which fluid flows. The prior court's adoption of the "plain and ordinary meaning" could support this view (Compl. ¶61).
    • Evidence for a Narrower Interpretation: The specification consistently depicts the weir (22) as a specific structure "integrated horizontally into one long wall of the tank adjacent all appliance slots" (’457 Patent, col. 3:52-56, Fig. 5). A defendant could argue that the term is limited to this specific embodiment.

  • The Term: "substantially uniform"

  • Context and Importance: This term of degree qualifies both the distribution of fluid from the plenum and the recovery of fluid over the weir. Its construction is critical because it sets the evidentiary bar for proving infringement. The patent was explicitly designed to solve the "non-uniform flow patterns" of the prior art (Compl. ¶99), making the level of "uniformity" achieved a core issue.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The patent does not provide a quantitative measure for "uniform," suggesting it should not be interpreted as requiring perfect or absolute uniformity.
    • Evidence for a Narrower Interpretation: The specification contrasts the invention with prior art that resulted in "uneven cooling" (’457 Patent, col. 2:33-34). This context suggests "substantially uniform" must be construed as a level of uniformity sufficient to overcome the specific problems of the prior art.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges that parent entities Rhodium Enterprises, Inc. and Rhodium Technologies LLC induce infringement by directing their subsidiary defendants to use the infringing systems. It also alleges they induce third-party manufacturers, such as Ameritex Machine and Fabrication, LLC, by providing designs and instructions to build the infringing tank modules (Compl. ¶¶ 75-78, 88-92).
  • Willful Infringement: The complaint alleges that infringement has been willful based on extensive pre-suit knowledge. This knowledge is alleged to stem from a February 2020 notice letter and the prior lawsuit against Immersion Systems LLC, an entity founded and operated by the same individuals who now lead the Rhodium defendants (Compl. ¶¶ 70, 94). The complaint alleges that despite this knowledge, Defendants continued to operate and "aggressively sought to expand their operations" using the infringing technology (Compl. ¶94).

VII. Analyst’s Conclusion: Key Questions for the Case

  1. A central issue will be one of corporate successorship and knowledge: can the pre-suit notice and litigation history involving Immersion Systems LLC and its founders be legally imputed to the numerous Rhodium defendant entities to establish the knowledge and intent required for willful and induced infringement?
  2. A key evidentiary question will be one of technical performance: does the accused Rhodium cooling system actually operate in a way that achieves the "substantially uniform" fluid flow and recovery recited in the claims, or is there a functional mismatch that could support a non-infringement argument?
  3. The case will likely involve a question of claim differentiation and scope: how does the absence of the "dielectric fluid recovery reservoir" limitation in the asserted claims of the ’446 Patent, as compared to the ’457 Patent, impact the infringement analysis, and does this difference reflect a potential design-around by the Defendants that may avoid infringement of the earlier patent?