DCT
6:22-cv-00050
Midas Green Tech LLC v. Rhodium Enterprises Inc
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Midas Green Technologies, LLC (Texas)
- Defendant: Rhodium Enterprises, Inc. (Delaware), and numerous related entities and individuals.
- Plaintiff’s Counsel: K&L Gates LLP
- Case Identification: 6:22-cv-00050, W.D. Tex., 11/07/2022
- Venue Allegations: Venue is based on Defendants allegedly maintaining regular and established places of business and committing acts of patent infringement at facilities in Rockdale and Temple, Texas, both within the Western District of Texas.
- Core Dispute: Plaintiff alleges that Defendants’ industrial-scale cryptocurrency mining operations utilize immersion cooling systems that infringe two patents related to technology for cooling electronic appliances.
- Technical Context: The technology involves immersing high-power-density electronics, such as cryptocurrency mining hardware, in a non-conductive fluid to manage the intense heat they generate, a critical factor for operational efficiency and profitability.
- Key Procedural History: The complaint alleges that Defendants' principals previously operated under a different entity, Immersion Systems LLC, which Plaintiff sued in 2020 for infringing the same patents. That prior litigation allegedly resulted in a claim construction order construing key terms and put Defendants on notice of the patents and their alleged infringement. The complaint also alleges Defendants have funded inter partes review (IPR) and post-grant review (PGR) proceedings against the patents-in-suit.
Case Timeline
| Date | Event |
|---|---|
| 2012-12-14 | Earliest Priority Date for ’457 and ’446 Patents |
| 2018-02-17 | YouTube videos allegedly show Individual Defendants with prior cooling systems |
| 2019-09-03 | ’457 Patent Issued |
| 2020-02-07 | Midas allegedly sends notice letter re: ’457 Patent to Defendants' prior entity |
| 2020-04-01 | First Rhodium entity allegedly formed |
| 2020-05-29 | Midas files suit against Defendants' prior entity, Immersion Systems |
| 2020-10-27 | ’446 Patent Issued |
| 2020-11-24 | Midas amends complaint vs. Immersion Systems to add ’446 Patent |
| 2021-11-22 | Court issues claim construction order in Immersion Systems litigation |
| 2022-01-13 | Original complaint filed in the current action against Rhodium |
| 2022-11-07 | Second Amended Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 10,405,457 - “Appliance Immersion Cooling System,” Issued Sep. 3, 2019
The Invention Explained
- Problem Addressed: The patent identifies challenges with prior art immersion cooling systems, including difficult maintenance access for vertically-stacked components and non-uniform coolant flow, which can lead to uneven cooling and inefficient performance (’457 Patent, col. 2:30-41; Compl. ¶117).
- The Patented Solution: The invention proposes a horizontal tank design that improves access to electronics. It features a plenum at the bottom to distribute dielectric fluid uniformly upwards across all electronic appliances and a weir integrated along a long wall to facilitate uniform recovery of the heated fluid into a reservoir for re-cooling and recirculation (’457 Patent, Abstract; col. 3:40-col. 4:34). This design aims to achieve more consistent cooling and simplify maintenance.
- Technical Importance: The described architecture seeks to provide a more scalable, efficient, and reliable solution for managing heat in high-density data centers, which is particularly relevant to energy-intensive applications like cryptocurrency mining (’457 Patent, col. 2:42-47).
Key Claims at a Glance
- The complaint asserts infringement of at least independent claim 6 (Compl. ¶83).
- The essential elements of claim 6 (a "tank module") include:
- A tank for immersing electrical appliances in a dielectric fluid, with appliances held in respective slots.
- A weir integrated into a long wall of the tank to facilitate uniform recovery of the fluid.
- A dielectric fluid recovery reservoir positioned beneath the weir's overflow lip.
- A primary circulation facility, including a plenum at the bottom of the tank, to circulate and dispense the fluid upwardly through each appliance slot.
- A control facility to manage the operation of the primary fluid circulation based on the fluid's temperature.
- The complaint alleges infringement of one or more claims, reserving the right to assert others (Compl. ¶80).
U.S. Patent No. 10,820,446 - “Appliance Immersion Cooling System,” Issued Oct. 27, 2020
The Invention Explained
- Problem Addressed: As a continuation of the application that led to the ’457 Patent, the ’446 Patent addresses the same technical problems of difficult maintenance and non-uniform coolant flow in prior art systems (’446 Patent, col. 2:30-41; Compl. ¶120).
- The Patented Solution: The ’446 Patent discloses and claims a similar solution built around a horizontal tank with a plenum for uniform fluid distribution and a weir for uniform fluid recovery (’446 Patent, Abstract; col. 3:40-col. 4:34). The core architecture is consistent with that of the parent ’457 Patent.
- Technical Importance: This patent provides continued protection for the core inventive concepts related to efficient, large-scale immersion cooling architecture.
Key Claims at a Glance
- The complaint asserts infringement of at least independent claim 6 (Compl. ¶100).
- The essential elements of claim 6 (a "tank module") are structurally and functionally very similar to claim 6 of the ’457 Patent, including:
- A tank with appliance slots for immersing electronics in dielectric fluid.
- A weir integrated into a long wall for uniform fluid recovery.
- A primary circulation facility with a plenum to dispense fluid upwardly.
- A control facility to manage the primary circulation based on fluid temperature.
- The complaint alleges infringement of one or more claims, reserving the right to assert others (Compl. ¶97).
III. The Accused Instrumentality
Product Identification
The accused instrumentalities are the "appliance immersion cooling systems" and "tank modules" designed, built, and used by the Rhodium Defendants in their "industrial-scale" cryptocurrency mining facilities located in Rockdale and Temple, Texas (Compl. ¶¶1, 50, 52).
Functionality and Market Context
The complaint alleges Defendants operate data centers where "bitcoin miners" (high-powered computers) are submerged in a dielectric cooling fluid within "specialized tank modules" (Compl. ¶¶50-51). This liquid cooling technology is allegedly used to "optimize the hash rate, or processing power" of the miners, which is a direct driver of revenue (Compl. ¶51). The complaint includes a photograph of the accused systems operating inside Defendants' Rockdale facility (Compl. ¶52). Plaintiff alleges that the design of these systems is "materially identical" to that of a previous system marketed by the individual defendants' prior company, Immersion Systems LLC (Compl. ¶68).
IV. Analysis of Infringement Allegations
’457 Patent Infringement Allegations
| Claim Element (from Independent Claim 6) | 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... | Defendants' systems consist of "specialized tank modules" in which "bitcoin miners" are submerged in dielectric fluid. A photo shows these modules at the Rockdale facility. | ¶¶50, 51, 52 | col. 10:15-26 |
| a weir, integrated horizontally into the long wall of the tank adjacent all appliance slots, having an overflow lip... | The accused systems allegedly feature a "holed weir design" where heated fluid "exits the sides." | ¶61 | col. 10:27-33 |
| a dielectric fluid recovery reservoir positioned vertically beneath the overflow lip of the weir... | The accused systems possess "fluid recovery chambers" on the sides of the central area. A provided video screenshot is described as "looking down into the fluid recovery chamber." | ¶61 | col. 10:34-38 |
| a primary circulation facility adapted to circulate the dielectric fluid through the tank, comprising: a plenum, positioned adjacent the bottom of the tank, adapted to dispense the dielectric fluid... upwardly... | A "pump system" sends fluid to a "dry cooler" and back. The fluid flows "up through the miners." The complaint notes "plenum" was a construed term in prior litigation involving the allegedly identical system. A photo shows an external "dry cooler" unit. | ¶¶61, 73, 118 | col. 10:39-47 |
| a control facility adapted to control the operation of the primary fluid circulation facility as a function of the temperature of the dielectric fluid... | Defendants operate an "industrial-scale" mining operation which, by necessity, requires control systems to manage temperature and performance for profitability. | ¶¶50, 83 | col. 10:48-52 |
- Identified Points of Contention:
- Scope Questions: A central question may be whether the defendants' "holed weir design" and "fluid recovery chamber" (Compl. ¶61) meet the structural and functional limitations of the claimed "weir" and "dielectric fluid recovery reservoir," particularly as those terms may have been construed in the prior litigation mentioned in the complaint (Compl. ¶73).
- Technical Questions: The complaint's infringement theory rests heavily on the allegation that the current Rhodium systems are "materially identical" to the prior Immersion Systems design (Compl. ¶68). A key factual dispute will likely involve a direct technical comparison between the accused Rhodium systems and the specific limitations recited in the claims.
’446 Patent Infringement Allegations
| Claim Element (from Independent Claim 6) | 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... | Defendants' systems consist of "specialized tank modules" in which "bitcoin miners" are submerged in dielectric fluid. | ¶¶50, 51, 52 | col. 10:1-8 |
| a weir, integrated horizontally into the long wall of the tank adjacent all appliance slots... | The accused systems allegedly feature a "holed weir design" where heated fluid "exits the sides." | ¶61 | col. 10:9-13 |
| a primary circulation facility adapted to circulate the dielectric fluid through the tank, comprising: a plenum... | A "pump system" sends fluid to a "dry cooler" and back. The fluid flows "up through the miners." The complaint notes "plenum" was a construed term in prior litigation involving the allegedly identical system. | ¶¶61, 73, 121 | col. 10:14-22 |
| a control facility adapted to control the operation of the primary fluid circulation facility as a function of the temperature... | Defendants operate an "industrial-scale" mining operation which, by necessity, requires control systems to manage temperature and performance for profitability. | ¶¶50, 100 | col. 10:23-27 |
- Identified Points of Contention:
- Scope Questions: As with the ’457 patent, the analysis will focus on whether the components of the accused systems, such as the "holed weir design," fall within the scope of the claim terms "weir" and "plenum."
- Technical Questions: Evidentiary questions will surround the precise operational details of the accused systems. The complaint presents a marketing image from Rhodium's website, which it argues suggests a system identical to the one previously accused of infringement (Compl. ¶68). Proving this technical identity will be a focus.
V. Key Claim Terms for Construction
The Term: "weir"
- Context and Importance: This term is central to the claimed invention's method of uniformly recovering heated fluid. The complaint alleges the accused system uses a "holed weir design" (Compl. ¶61) and notes that "weir" was a term the parties agreed to construe in prior litigation involving the allegedly identical system (Compl. ¶73). Practitioners may focus on this term because its construction, and whether the accused structure meets it, appears to be a primary axis of the infringement dispute.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification describes the weir's function broadly as being "adapted to facilitate substantially uniform recovery of the dielectric fluid" (’457 Patent, col. 3:52-56).
- Evidence for a Narrower Interpretation: Claim 6 requires the weir to be "integrated horizontally into the long wall of the tank adjacent all appliance slots" (’457 Patent, col. 10:27-29). Figures 5 and 6 depict a specific embodiment of the weir as a structural component of the tank wall with openings.
The Term: "plenum"
- Context and Importance: This term defines the structure for distributing cool fluid into the tank. Its proper function is critical to achieving the patent's goal of uniform cooling. Like "weir," the complaint states this term was subject to an agreed-upon construction in the prior litigation (Compl. ¶73). The dispute may center on whether the fluid distribution system at the bottom of the accused tanks constitutes a "plenum" under that construction.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The function is described as dispensing "the dielectric fluid substantially uniformly upwardly through each appliance slot" (’457 Patent, col. 10:45-47).
- Evidence for a Narrower Interpretation: The specification describes a specific "plenum facility" comprising an "orifice plate" and a "plenum chamber" (’457 Patent, col. 4:13-15). Figures 7-9 illustrate this specific two-part structure.
VI. Other Allegations
- Indirect Infringement: The complaint alleges that Defendants induced infringement by providing designs and instructions to third-party manufacturers to build the accused systems and by providing infringing directions to the subsidiary entities that operate the mining facilities (Compl. ¶¶91-92, 108-109). It further alleges that the corporate parents and individual defendants induced infringement by directing and controlling the infringing activities of the operating subsidiaries (Compl. ¶¶94, 111).
- Willful Infringement: The complaint alleges willful infringement based on extensive pre-suit knowledge. The allegations include that Defendants' principals had notice of the ’457 Patent via a letter and claim chart sent to their prior company in February 2020 (Compl. ¶¶63, 81), and notice of the ’446 patent via the subsequent litigation against that company (Compl. ¶¶72, 98). The complaint further alleges that the claim construction order in the prior litigation gave Defendants knowledge of the patents' validity and infringement, yet they continued to operate and expand their infringing business (Compl. ¶¶75, 113, 116).
VII. Analyst’s Conclusion: Key Questions for the Case
- A central issue will be one of corporate and individual liability: The complaint dedicates significant effort to linking the current Rhodium defendants to a prior entity, Immersion Systems, and its principals. A key question for the court will be whether the knowledge allegedly obtained by the individual defendants and their prior company can be imputed to the current corporate defendants to establish pre-suit knowledge for willfulness.
- A second key question will be one of technical infringement: While the complaint alleges the accused systems are "materially identical" to a prior design, the case will depend on factual proof. The core technical question is whether the specific components of Rhodium's operational cooling systems—such as its "holed weir" and fluid distribution manifold—perform the functions required by and fall within the established scope of claim terms like "weir" and "plenum."
- Finally, the case presents a significant question of willfulness and egregious conduct: Given the detailed history alleged in the complaint—including a prior lawsuit, a claim construction order, and funded validity challenges—a primary focus will be on Defendants' state of mind. The court will need to determine if Defendants proceeded with their business despite an objectively high likelihood that their actions constituted infringement of a valid patent, a key inquiry for enhanced damages.