IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`McCLINTON ENERGY GROUP, LLC
`Petitioner
`
`v.
`
`MAGNUM OIL TOOLS INTERNATIONAL, Ltd.
`Patent Owner
`
`
`
`Inter Partes Review No. IPR2013-00231
`Patent No. 8,079,413
`
`PATENT OWNER'S REQUEST FOR REHEARING
`UNDER 37 C.F.R. § 42.71(d)
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`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`McCLINTON ENERGY GROUP, LLC
`Petitioner
`
`v.
`
`MAGNUM OIL TOOLS INTERNATIONAL, Ltd.
`Patent Owner
`
`
`
`Inter Partes Review No. IPR2013-00231
`Patent No. 8,079,413
`
`PATENT OWNER'S REQUEST FOR REHEARING
`UNDER 37 C.F.R. § 42.71(d)
`
`
`
`
`
`
`
`
`
`
`
`
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`IPR2013-00231
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`TABLE OF CONTENTS
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`1.0 INTRODUCTION .......................................................................................... 1
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`2.0 LEGAL STANDARDS ................................................................................... 1
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`3.0 ARGUMENTS ................................................................................................ 2
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`3.1 The Final Written Decision is clearly unreasonable because Patent
`Owner had no opportunity to address the underlying facts the
`Decision is based on ................................................................................... 3
`
`3.2 The Final Written Decision depends upon facts that are not within the
`record .......................................................................................................... 5
`
`3.3 The Final Written Decision is based on clearly erroneous fact findings
`because it misapprehended or overlooked the missing claim limitation
`of an insert adapted to receive or engage a setting tool that enters the
`first end of the body, as required in Claims 1-16 .................................... 7
`
`3.4 The Final Written Decision is not supported by "substantial evidence"
` ................................................................................................................... 11
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`4.0 CONCLUSION ............................................................................................. 12
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`
`ii
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`IPR2013-00231
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`
`
`CASES
`
`TABLE OF AUTHORITIES
`
`Eli Lilly & Co. v. Board of Regents of the University of Washington, 334 F.3d 1264
`(Fed. Cir. 2003) ................................................................................................... 2
`In re Kronig, 539 F.2d 1300 (C.C.P.A. 1976) .......................................................... 3
`In re Leithem, 661 F.3d 1316 (Fed. Cir. 2011) ......................................................... 3
`In re Moore, 444 F.2d 572 (C.C.P.A. 1971) ............................................................. 3
`In re Zurko, 258 F.3d 1379 (Fed. Cir. 2001) ............................................................ 6
`K/S Himpp v. Hear-Wear Technologies, LLC, 751 F.3d 1362 (Fed. Cir. 2014) ...... 6
`KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007) ................................... 4
`PerfectWeb Technologies, Inc. v. InfoUSA, Inc., 587 F.3d 1324 (Fed. Cir. 2009) .. 7
`Primera Technology, Inc. v. Automatic Manufacturing Systems, Inc.,
`
`IPR2013-00196, Paper No. 52 (August 29, 2014) .............................................. 7
`Stevens v. Tamai, 366 F.3d 1325 (Fed. Cir. 2004) ................................................... 2
`
`REGULATIONS
`
`37 C.F.R. § 42.71(c) ................................................................................................. 1
`37 C.F.R. § 42.71(d) ................................................................................................. 1
`
`iii
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`IPR2013-00231
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`Pursuant to 37 C.F.R. § 42.71(d), Patent Owner Magnum Oil Tools
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`International, Ltd. ("Patent Owner") hereby submits the following Request for
`
`Rehearing in response to the Final Written Decision dated September 2, 2014.
`
`1.0
`
`Introduction
`
`On September 23, 2013, the Board instituted trial on claims 1-20 of the '413
`
`Patent based on a combination of Lehr, Cockrell, Kristiansen, Slup, Streich, and
`
`McKeachnie. Decision on Petition, Paper No. 16. On September 2, 2014, the
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`Board issued a Final Written Decision finding claims 1-20 unpatentable over the
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`asserted prior art.
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`Patent Owner respectfully requests a rehearing on the Board's Final Written
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`Decision because (i) the Board failed to allow Patent Owner an opportunity to
`
`respond to arguments not of record, (ii) the Final Written Decision depends upon
`
`evidence that does not exist in the record before the Board, (iii) the Board
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`misapprehended or overlooked at least one limitation missing from the asserted
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`prior art that is required in claims 1-16, and (iv) the Board's factual findings are not
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`supported by substantial evidence.
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`2.0 Legal Standards
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`Review of a final decision is for an abuse of discretion. 37 C.F.R. §
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`42.71(c). "An abuse of discretion occurs where the decision (1) is clearly
`
`unreasonable, arbitrary, or fanciful; (2) is based on an erroneous conclusion of law;
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`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 1
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`IPR2013-00231
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`(3) rests on clearly erroneous fact findings; or (4) involves a record that contains
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`no evidence on which the Board could rationally base its decision." Stevens v.
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`Tamai, 366 F.3d 1325, 1329 (Fed. Cir. 2004) (quoting Eli Lilly & Co. v. Board of
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`Regents of the University of Washington, 334 F.3d 1264, 1266-67 (Fed. Cir.
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`2003)).
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`3.0 Arguments
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`The Final Written Decision is unreasonable because it denied the Patent
`
`Owner an opportunity to respond to arguments not of record.
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`The Decision also rests on clearly erroneous fact findings because it relied
`
`on a record that contains no evidence to support its conclusion that "the simple
`
`substitution of shearable threads, as taught by Cockrell (Ex. 1005, 5:43-47, 54-60),
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`for the retaining pins 31 that secure the deformable release device 30, as taught by
`
`Lehr (Ex. 1007 ¶ 44), would [] yield a predictable result."
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`The Decision also misapprehended or overlooked at least the claim
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`limitation that the insert must be adapted to receive a setting tool that enters the
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`body through the first end thereof, that is required in claims 1-16.
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`Finally, the Board's Decision involves a record that contains no evidence on
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`which the Board could rationally base its decision and thus is not supported by
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`substantial evidence, as required by the Federal Circuit.
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`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 2
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`IPR2013-00231
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`3.1 The Final Written Decision is clearly unreasonable because Patent
`Owner had no opportunity to address the underlying facts the
`Decision is based on
`
`The Final Written Decision was based on a "new" ground, not of record, that
`
`has denied Patent Owner a chance to respond. This is a clear abuse of discretion.
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`The Board ruled that "the simple substitution of shearable threads, as taught by
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`Cockrell (Ex. 1005, 5:43-47, 54-60), for the retaining pins 31 that secure the
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`deformable release device 30, as taught by Lehr (Ex. 1007 ¶ 44), would [] yield a
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`predictable result."1 Decision at p. 23 and 27. This "simple substitution" is not
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`part of the record. Indeed, Petitioner argued contrary to the Board's finding,
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`relying on its expert's declaration that states it would have been obvious to
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`substitute the shearable threads of Cockrell for the entire deformable release device
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`30 of Lehr, not Lehr's retaining pins 31. Petition at 31-32, and 47; see also Ex.
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`1 When the Board makes new finding of facts, and "reliance upon such facts
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`changes the thrust of the rejection, the Board's action 'does everything but cry out
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`for an opportunity to respond.'" In re Leithem, 661 F.3d 1316, 1319 (Fed. Cir.
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`2011) (quoting In re Moore, 444 F.2d 572, 574-75 (C.C.P.A. 1971)). "[T]he
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`ultimate criterion of whether a rejection is considered 'new' in a decision by the
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`[B]oard is whether [Patent Owner] ha[s] had fair opportunity to react to the thrust
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`of the rejection." Id. (quoting In re Kronig, 539 F.2d 1300, 1302-03 (C.C.P.A.
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`1976)).
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`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 3
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`IPR2013-00231
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`1020 at ¶ 75. Dr. Wooley's declaration states, "[i]t would have been obvious to
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`substitute the device with shearable threads of Cockrell for the deformable
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`release device of Lehr..." Id. (emphasis added).
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`To the contrary, the Petition is based on the proposed substitution of Lehr's
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`entire device 30 for Cockrell's shearable threads. The Petition makes no mention,
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`at all, of substituting Lehr's retaining pins 31 for Cockrell's shearable threads, as
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`decided in the Board's decision. Patent Owner has not been allowed an
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`opportunity to respond to the Board's new reasoning. Accordingly, the Final
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`Written Decision is unreasonable as it is based on a new ground that Patent Owner
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`has not been allowed a response.
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`Indeed, the substitution of Lehr's retaining pins 31 for Cockrell's shearable
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`threads is not a "simple substitution" of one known shearable element for another
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`known shearable element that would yield no more than a predictable result since
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`Lehr's retaining pins are not shear elements. KSR International Co. v. Teleflex
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`Inc., 550 U.S. 398, 416 (2007). The retaining pins of Lehr are not designed to
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`shear, and Lehr does not teach, show, or suggest that they do. And there is no
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`reason, of record or otherwise, for the retaining pins of Lehr to shear. To the
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`contrary, shearing pins or shearable threads would render Lehr inoperable. If
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`Lehr's pins 31 were substituted by Cockrell's shearable threads, Lehr's deformable
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`disk 30 would become superfluous and defeated because the shearable threads
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`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 4
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`IPR2013-00231
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`would become the very mechanism holding the deformable disk 30 in place that is
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`also deformable.
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`The Board abused its discretion because it was unreasonable to base a Final
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`Written Decision on new grounds that the Patent Owner never had an opportunity
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`to address. Stevens, 366 F.3d at 1329. For at least this reason, the Board should
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`reconsider its Decision with respect to all Claims 1-20 and grant Patent Owner a
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`rehearing and opportunity to address these points.
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`3.2 The Final Written Decision depends upon facts that are not within
`the record
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`The Final Written Decision with respect to obviousness is erroneous for the
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`additional reason that it is based upon facts that are not in the record. There is no
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`evidence in the record that "the simple substitution of shearable threads, as taught
`
`by Cockrell (Ex. 1005, 5:43-47, 54-60), for retaining pins 31 that secure the
`
`deformable release device 30, as taught by Lehr (Ex. 1007 ¶ 44), would [] yield a
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`predictable result." Decision at p. 23. The Petition does not assert any ground of
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`unpatentability based on Lehr's retaining pins. And nowhere in the Petition or Dr.
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`Wooley's expert declaration does the Petitioner provide evidentiary support that
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`substituting the shearable threads of Cockrell for the retaining pins of Lehr would
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`yield a predictable result. Indeed, the entire record is devoid of any evidence that it
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`would have been obvious to one of ordinary skill in the art at the time of the
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`invention to combine Lehr, Cockrell, and Kristiansen on the basis that substituting
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`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 5
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`IPR2013-00231
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`the shearable threads of Cockrell for the retaining pins of Lehr would have been a
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`"simple substitution," since this is not the simple substitution of one known
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`shearable element for another.2
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`The Federal Circuit has held that "the Board cannot simply reach
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`conclusions based on its own understanding or experience." K/S Himpp v. Hear-
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`Wear Technologies, LLC, 751 F.3d 1362, 1365 (Fed. Cir. 2014) (quoting In re
`
`Zurko, 258 F.3d 1379, 1386 (Fed. Cir. 2001)). The Board must instead "point to
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`some concrete evidence in the record in support of these findings." Id.
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`The Final Written Decision fails to identify concrete evidence in the record
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`to support the finding that it would have been obvious to substitute the shearable
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`threads of Cockrell for the retaining pins of Lehr, because this argument was not
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`presented by Petitioner. For at least this reason, Patent Owner respectfully
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`requests the Board to reconsider its Final Written Decision and find claims 1-20 of
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`the '413 Patent patentable over the asserted prior art.
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`
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`2 Patent Owner has been deprived of the opportunity to rebut the assertion that
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`substituting Lehr's retaining pins for the shearable threads of Cockrell would
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`have been a simple substitution since this rationale for combining does not appear
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`in the record and was not argued by Petitioner. As such, Patent Owner
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`respectfully requests that the Board consider such argument on rehearing.
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`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 6
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`IPR2013-00231
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`3.3 The Final Written Decision is based on clearly erroneous fact
`findings because it misapprehended or overlooked the missing
`claim limitation of an insert adapted to receive or engage a setting
`tool that enters the first end of the body, as required in Claims 1-
`16
`
`The Final Written Decision is based on an erroneous finding of fact. To
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`make a determination on the ultimate issue of obviousness, the Board must
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`determine the differences between the claimed subject matter and the prior art.
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`PerfectWeb Technologies, Inc. v. InfoUSA, Inc., 587 F.3d 1324, 1329 (Fed. Cir.
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`2009) ("an analysis of obviousness always depends on evidence that supports the
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`required Graham factual findings," including any differences between the claimed
`
`subject matter and the prior art) (emphasis added); see also Primera Technology,
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`Inc. v. Automatic Manufacturing Systems, Inc., IPR2013-00196, Paper No. 52 at p.
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`9 (August 29, 2014) (citing same).
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`In determining the scope of claim 1 of the '413 Patent, the Board found that
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`"[i]ndependent claim 1 recites, in relevant parts, 'an insert screwed into an inner
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`surface of the body…adapted to receive a setting tool,' 'the insert comprises one or
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`more shearable threads disposed on an inner surface,' 'the insert has a passageway,'
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`'the one or more shearable threads are adapted to deform to release the setting
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`tool…thereby providing a flow passage through the insert and the body.'"
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`Decision at p. 18. However, the Board's determination misapprehended or
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`overlooked a limitation found in claims 1-16 that require the insert to be "adapted
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`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 7
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`IPR2013-00231
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`to receive a setting tool that enters the body through the first end thereof." Ex.
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`[3001] at Col. 13, ll. 62-65 (emphasis added).
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`Indeed, the combination of Lehr, Cockrell, and Kristiansen does not teach,
`
`show, or suggest an insert adapted to receive or engage a setting tool that enters
`
`the body through the first end thereof, and adapted to deform to release the setting
`
`tool, as required in claims 1-16 of the '413 Patent. Lehr's deformable release
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`device 30 engages the plunger 80. Ex. [3003] at least at Figure 3B. Lehr's plunger
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`80, which is part of the setting tool, does not and cannot enter from the first end of
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`the body because of its protruding portion 83, as shown below in Figure 3B. Id. at
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`Figure 3B. Rather, the plunger 80 is assembled to the deformable release device
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`30, and is then inserted through the second end of the body 78. See, e.g. Id. at ¶¶
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`[0044], [0046], and [0048]. As shown in Figure 3B below, the plunger 80 enters
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`the second end of the body 78.
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`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 8
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`IPR2013-00231
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`Further, Lehr's plunger 80 is the only component that the deformable release
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`device 30 engages or receives. Therefore, Lehr's deformable release device 30
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`engages the plunger 80 (i.e. "setting tool") that enters the second end of the body,
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`contrary to the requirements of claims 1-16.
`
`Neither Cockrell nor Kristiansen remedy the deficiencies of Lehr. Cockrell
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`fails to teach a setting tool, much less one that enters from any end of the downhole
`
`tool. See generally Ex. [1005]. Kristiansen discloses a shear stud 4 that screws
`
`into a converter plug 4 that has been identified by the Petitioner and the Board to
`
`be equivalent to the claimed "insert". Ex. [1010] at Figure 1.
`
`
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`As shown in Figure 1 of Kristiansen, the shear stud 2 (not the converter plug
`
`4) connects to a setting tool, and is designed to break at its weak point 3. Upon
`
`shearing, only the upper portion of the shear stud is released from the plug/insert 4,
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`and the lower portion of the shear stud 2 remains in the plug/insert 4. Id. at Col. 8,
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`ll. 34-36. Therefore, Kristiansen does not and cannot disclose or suggest an insert
`
`that is (1) adapted to receive or engage a setting tool, much less a setting tool that
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`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 9
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`IPR2013-00231
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`enters the body through the first end thereof, and (2) an insert adapted to deform
`
`to release the setting tool.
`
`Accordingly, the Petition fails to present any evidence to support its
`
`assertion that the combination of Lehr, Cockrell, and Kristiansen discloses an
`
`insert (1) that is adapted to receive or engage a setting tool that enters the body
`
`through the first end thereof, and (2) is adapted to deform to release the setting
`
`tool, as required by claims 1-16. Patent Owner identified these discrepancies in
`
`various portions of its Response to the Petition. For example, Patent Owner argued
`
`that the combination of Lehr, Cockrell, and Kristiansen fails to disclose that "the
`
`insert (having the shearable threads on an inner surface thereof) must be adapted to
`
`receive a setting tool that enters the body through the first end of the plug body."
`
`Patent Owner's Response, Paper 15 at p. 17 (emphasis added). Patent Owner also
`
`argued, "[a]t the very least, the combination of Lehr, Cockrell, and Kristiansen
`
`fails to disclose or suggest an insert with shearable threads…adapted to engage a
`
`setting tool that enters the body through the first end of the body, wherein the
`
`shearable threads are adapted to release the setting tool." Id. at p. 19 (emphasis
`
`added); see also Id. at p. 22. The Petitioner tacitly conceded the existence of these
`
`crucial differences by wholly failing to rebut these arguments in Petitioner's Reply.
`
`Yet, the Final Written Decision does not take into account that the
`
`combination of Lehr, Cockrell, and Kristiansen does not teach, show, or suggest an
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`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 10
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`IPR2013-00231
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`insert adapted to receive or engage a setting tool that enters the body through the
`
`first end thereof, and adapted to deform to release the setting tool, as required in
`
`at least claims 1-16 of the '413 Patent. For this reason, the Final Written Decision
`
`should be reversed with respect to Claims 1-16.
`
`3.4 The Final Written Decision is not supported by "substantial
`evidence"
`
`The Federal Circuit requires the Board’s factual findings to be supported by
`
`"substantial evidence." K/S Himpp, 751 F.3d at 1364. According to the Federal
`
`Circuit, the "'substantial evidence' standard asks whether a reasonable fact finder
`
`could have arrived at the [Board's] decision." In re Gartside, 203 F.3d 1305, 1312
`
`(Fed. Cir. 2000). Here, the Board's factual findings are not supported by any
`
`evidence of record, much less "substantial evidence".
`
`As explained above, there is no evidence in the record to support the Board's
`
`finding that "the simple substitution of shearable threads, as taught by Cockrell
`
`(Ex. 1005, 5:43-47, 54-60), for retaining pins 31 that secure the deformable release
`
`device 30, as taught by Lehr (Ex. 1007 ¶ 44), would [] yield a predictable result."
`
`Furthermore, there is no evidence in the record to support the Board's finding that
`
`the combination of Lehr, Cockrell, and Kristiansen discloses or makes obvious all
`
`the limitations of claims 1-16. Specifically, there is no evidence in the record that
`
`the combination of Lehr, Cockrell, and Kristiansen discloses or suggests an insert
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`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 11
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`IPR2013-00231
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`"adapted to receive a setting tool that enters the body through the first end
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`thereof," as required in claims 1-16.
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`Therefore, a reasonable fact finder could not have arrived at the Board's
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`decision, and the Board's factual findings are not support by "substantial evidence."
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`4.0 Conclusion
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`The Final Written Decision is erroneous because it fails to account for
`
`distinct and important differences between the subject matter and the prior art, and
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`for the additional reason that it is based upon factual findings that are not
`
`supported in the record, and theories that were not advocated by Petitioner. Patent
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`Owner did not have an opportunity to respond to the newly created grounds
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`announced by the Final Written Decision. For the foregoing reasons, Patent
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`Owner respectfully requests that the Board withdraw its Decision finding Claims
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`1-20 of the '413 Patent unpatentable, and issue a Supplemental Final Written
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`Decision finding Claims 1-20 patentable over the asserted prior art.
`
`
`Dated: October 2, 2014
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`Respectfully submitted,
`
`
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`
`
`
`
`/Robb D. Edmonds/
`Robb D. Edmonds (Lead Counsel)
`Registration No. 46,681
`redmonds@edmondsnolte.com
`John D. Holman (Back-up Counsel)
`Registration No. 71,746
`jholman@edmondsnolte.com
`N. Alexander Nolte (Back-up Counsel)
`
`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 12
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`
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`IPR2013-00231
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`Registration No. 45,689
`EDMONDS & NOLTE, P.C.
`2625 Bay Area Blvd, Suite
`530 Houston, TX 77058
`Phone: 281-480-2700
`Fax: 281-480-2701
`
`Attorneys for Patent Owner Magnum
`Oil Tools International, Ltd.
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`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 13
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`IPR2013-00231
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`
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`CERTIFICATE OF SERVICE
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`The undersigned certifies in accordance with 37 C.F.R. § 42.205 that
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`service was made on the PETITIONER on October 2, 2014 as follows:
`
`Electronic Mail
`
`Patent Owner's Request for Rehearing
`
`Manner of Service:
`
`Documents served:
`
`Notice Persons Served: Jason A. Engel
`
`Jason.engel.ptab@klgates.com
`
`Robert Barrett
`
`Robert.barrett.ptab@klgates.com
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`K&L Gates LLP
`
`70 W. Madison, Suite 3100
`
`Chicago, IL 60602
`
`
`
`/Robb D. Edmonds/
`Robb D. Edmonds
`Registration No. 46,681
`
`PATENT OWNER'S REQUEST FOR REHEARING
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`Page | 14
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