Trials@uspto.gov
`571-272-7822
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`Paper 33
`Entered: December 15, 2014
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`PETROLEUM GEO-SERVICES INC.,
`Petitioner,
`
`v.
`
`WESTERNGECO LLC,
`Patent Owner.
`____________
`
`Case IPR2014-00687
`Patent 7,162,967 B2
`____________
`
`Before BRYAN F. MOORE, SCOTT A. DANIELS, and
`BEVERLY M. BUNTING, Administrative Patent Judges.
`
`DANIELS, Administrative Patent Judge.
`
`DECISION
`Decision on Institution of Inter Partes Review
`37 C.F.R. § 42.108
`
`
`571-272-7822
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`
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`
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`
`Paper 33
`Entered: December 15, 2014
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`PETROLEUM GEO-SERVICES INC.,
`Petitioner,
`
`v.
`
`WESTERNGECO LLC,
`Patent Owner.
`____________
`
`Case IPR2014-00687
`Patent 7,162,967 B2
`____________
`
`Before BRYAN F. MOORE, SCOTT A. DANIELS, and
`BEVERLY M. BUNTING, Administrative Patent Judges.
`
`DANIELS, Administrative Patent Judge.
`
`DECISION
`Decision on Institution of Inter Partes Review
`37 C.F.R. § 42.108
`
`
`
`IPR2014-00687
`Patent 7,162,967 B2
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`I. INTRODUCTION
`
`A. Background
`Petroleum Geo-Services (“Petitioner”) filed a Petition to institute an
`inter partes review of claims 1 and 15 of U.S. Patent No. 7,162,967 B2 (“the
`’967 patent”).1 Paper 1 (“Pet.”). WesternGeco LLC (“Patent Owner”)
`timely filed a Preliminary Response. Paper 26 (“Prelim. Resp.”).
`We have authority to determine whether to institute an inter partes
`review under 35 U.S.C. § 314; 37 C.F.R. § 42.4(a). Upon consideration of
`the Petition and the Preliminary Response, we determine that Petitioner has
`established a reasonable likelihood of prevailing on the claims challenged in
`the Petition. Accordingly, we institute an inter partes review for claims 1
`and 15 of the ’967 patent.
`B. Additional Proceedings
`Petitioner states that related lawsuits involving the ’967 patent
`presently asserted against Petitioner are WesternGeco LLC v. Petroleum
`Geo-Services, Inc., 4:13-cv-02725 (the “PGS lawsuit”) in the Southern
`District of Texas and WesternGeco LLC v. ION Geophysical Corp., 4:09-cv-
`01827 (the “ION lawsuit”) also in the Southern District of Texas. Pet. 10.
`Petitioner also has concurrently filed three additional petitions
`challenging the patentability of claims 1 and 15 of U.S. Patent No. 7,080,607
`B2 (“the ’607 patent”); claims 1, 2, 6, 18, 19, and 23 of U.S. Patent No.
`7,293,520 B2 (“the ’520 patent”); and claim 14 of U.S. Patent No. 6,691,038
`
`
`1 The Petition was initially accorded the filing date of April 23, 2014. Paper
`6. Following submission of an updated Mandatory Notice (Paper 18) on
`August 5, 2014, including additional real-parties-in-interest, we exercised
`our discretion under 37 C.F.R. § 42.5(c), changing the filing date of the
`Petition to August 5, 2014. Paper 22.
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`2
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`B2 (“the ’038 patent”).2 See IPR2014-00688; IPR2014-00689; IPR2014-
`00678.
`C. The ’967 Patent
`The ’967 patent (Ex. 1001), titled “Control System for Positioning of
`Marine Seismic Streamers,” generally relates to a method and apparatus for
`improving marine seismic survey techniques by more effectively controlling
`the movement and positioning of marine seismic streamers towed in an array
`behind a boat. Ex. 1001, col. 1, ll. 24–36. As illustrated in Figure 1 of the
`’967 patent, reproduced below, labeled prior art, a seismic source, for
`example, air gun 14, is towed by boat 10 producing acoustic signals, which
`are reflected off the earth below. Id. at col. 1, ll. 36–38. The reflected
`signals are received by hydrophones (no reference number) attached to
`streamers 12, and the signals “digitized and processed to build up a
`representation of the subsurface geology.” Id. at col. 1, ll. 38–41.
`
`
`2 The ’520, ’607, and ’967 patents each issued as continuations of
`Application No. 09/787,723, filed July 2, 2001, now U.S. Patent No.
`6,932,017, which was in turn a 35 U.S.C. § 371 national stage filing from
`Patent Cooperation Treaty application number PCT/IB99/01590, filed
`September 28, 1999, claiming foreign priority under 35 U.S.C. § 119 from
`Great Britain patent application number 9821277.3, filed October 1, 1998.
`See Ex. 1001, col. 1, ll. 7–16.
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`Figure 1 depicts an array of seismic streamers 12 towed behind the
`vessel.
`In order to obtain accurate survey data, it is necessary to control the
`positioning of the streamers, both vertically in the water column, as well as
`horizontally against ocean currents and forces, which can cause the normally
`linear streamers to bend and undulate and, in some cases, become entangled
`with one another. Id. at col. 1, l. 42–col. 2, l. 25.
`As depicted by Figure 1, each streamer 12 is maintained in a generally
`linear arrangement behind the boat by deflector 16 which horizontally
`positions the end of each streamer nearest the vessel. Id. at 43–45. Drag
`buoy 20 at the end of each streamer farthest from the vessel creates tension
`along the streamer to maintain the linear arrangement.
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`Additionally, to control the position and linear shape of the streamer,
`a plurality of streamer positioning devices, called “birds” 18, are attached
`along the length of each streamer. The birds are horizontally and vertically
`steerable and control the shape and position of the streamer in both vertical
`(depth) and horizontal directions. Id. at col. 3, ll. 53–61. The birds’s job is
`usually to maintain the streamers in their linear and parallel arrangement,
`because, when the streamers are horizontally out of position, the efficiency
`of the seismic data collection is compromised. Id. at col. 2, ll. 14–17. The
`most important task of the birds, however, is to keep the streamers from
`tangling. Id. at col. 4, ll. 4–5.
`Figure 2 of the ’967 patent, reproduced below, illustrates a preferred
`embodiment of bird 18 as it relates to the described invention.
`
`
`As depicted by Figure 2 of the ’967 patent, when the streamers are towed,
`birds 18 are capable of controlling their own position, and hence the position
`of streamers 12, in both horizontal and vertical directions. Id. at col. 5,
`ll. 34–36. In a preferred embodiment of the bird, the ’967 patent explains
`that “[t]he bird 18 preferably has a pair of independently moveable wings 28
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`that are connected to rotatable shafts 32 that are rotated by wing motors 34
`and that allow the orientation of the wings 28 with respect to the bird body
`30 to be changed.” Id. at col. 5, ll. 50–54.
`Global control system 22 located on or near the vessel, controls the
`birds on each streamer to maintain the streamers in their particular linear and
`parallel arrangement. Id. at col. 3, ll. 62–66. The control system is provided
`with a model (desired) position representation of each streamer in the towed
`streamer array, and also receives (actual) position information from each of
`the birds. Id. at col. 4, ll. 21–23. The control system uses the desired and
`actual position of the birds to “regularly calculate updated desired vertical
`and horizontal forces the birds should impart on the seismic streamers 12 to
`move them from their actual positions to their desired positions.” Id. at
`col. 4, ll. 37–40.
`D. Illustrative Claim
`Claims 1 and 15 are independent. Claim 1 is a method claim, and
`claim 15, an apparatus claim, illustrates the claimed subject matter and is
`reproduced below:
`
`15. An array of seismic streamers towed by a towing
`vessel comprising:
`(a) a plurality of streamer positioning devices on or inline
`with each streamer, at least one of the streamer positioning devices
`having a wing;
`(b) a global control system transmitting location information to at
`least one local control system on the at least one streamer
`positioning device having a wing, the local control system
`adjusting the wing.
`
`Ex. 1001, col. 11, ll. 16–24.
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`Basis
`§ 102
`§ 103
`§ 102
`§ 103
`§ 103
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`E. The Alleged Grounds of Unpatentability
`Petitioner contends that the challenged claims are unpatentable on the
`following specific grounds.3
`
`References
`’636 PCT4
`’636 PCT
`Ambs5
`Ambs
`’636 PCT and Elholm6
`
`
`Claims Challenged
`1 and 15
`1 and 15
`1 and 15
`1 and 15
`1 and 15
`
`II. CLAIM CONSTRUCTION
`Petitioner proposes constructions for “streamer positioning device,”
`“global control system,” “location information,” and “local control system.”
`Patent Owner proposes a claim construction only for “streamer positioning
`device” and “global control system.” Pet. 22–28, Prelim. Resp. 20–27.
`A. Streamer Positioning Device
`We construe the same limitation “streamer positioning device,” in the
`context of claims 1 and 18 of the ’520 patent. See IPR 2014-00689, Paper
`31 at 9–10. As set forth below, we adopt that same construction here,
`although we do not repeat our analysis. See NTP Inc., v. Research in
`
`
`3 Petitioner supports its challenge with Declarations of Dr. Brian J. Evans,
`Ph.D. (Ex. 1002) (“Evans Decl.”) and Dr. Jack H. Cole, Ph.D. (Ex. 1003)
`(“Cole Decl.”). See infra.
`4 Ex. 1004, WO 98/28636 (July 2, 1998).
`5 Ex. 1005, U.S. Patent No. 6,011,752 (Jan. 4, 2000).
`6 Ex. 1006, U.S. Patent No. 5,532,975 (July 2, 1996).
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`Motion, Ltd., 418 F.3d 1282, 1293 (Fed. Cir. 2005) (When construing claims
`in patents that derive from the same parent application and share common
`terms, “we must interpret the claims consistently across all asserted
`patents.”). Because, inter alia, the Specification of the ’967 patent discloses
`that “positioning” of the device may be accomplished by either horizontal
`and vertical steering, or both, of the device, and that the device may be a
`bird or other type of device, any interpretation including specific directional
`terms would read limitations improperly from the Specification into the
`claims. The broadest reasonable interpretation of “streamer positioning
`device” is, therefore, “a device that positions a streamer as it is towed.”
`B. Global Control System
`Petitioner argues that “global control system” should be interpreted as
`“a control system that sends commands to other devices in a system (e.g.,
`local control systems).” Pet. 24. Patent Owner agrees with this
`interpretation. Prelim. Resp. 26–27. The problem with this interpretation is
`that it defines “global control system” solely in functional terms, i.e., by
`what the control system does, rather than what it is. In both the method
`claim 1, and the apparatus claim 15, the global control system is a structural
`element, and its function, “transmitting location information” is clearly
`recited in both claims. We are not persuaded that either party has provided
`sufficient reason to ascribe further functional elucidation to this term. From
`a structural and apparatus standpoint, neither party has presented any
`argument that this term needs interpretation. On this record, no express
`construction of “global control system” is needed for this Decision.
`C. Location Information
`Independent claims 1 and 15 recite the limitation “location
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`information.” Petitioner asserts that this term should be interpreted as
`“information regarding location.” Pet. 26–27. This interpretation is circular
`in that it merely reverses the substantive nouns in the term, placing a
`preposition between them to indicate a relationship, a relationship no
`different than the original claim term itself, “location information.”
`Moreover, Petitioner does not explain why the term “location information”
`requires an express construction on this record. On this record, no express
`construction of “location information” is needed for this Decision.
`D. Local Control System
`Petitioner contends that “local control system” should be interpreted
`as “a control system located on or near the streamer positioning devices
`(e.g., birds).” Pet. 27–28 (emphasis added). Patent Owner does not provide
`an interpretation. The Specification of the ’967 patent states that the “local
`control system [is] located within or near the birds 18.” Ex. 1001, col. 3, ll.
`65–66. The Specification further explains that “[t]he inventive control
`system is based on shared responsibilities between the global control system
`22 located on the seismic survey vessel 10 and the local control system 36
`located on the bird 18.” Id. at col. 10, ll. 18–21. Figure 3 appears to
`disclose an embodiment having local control system 36 on, or within, bird
`body 30. Figure 4, on the other hand, does not schematically indicate a
`specific position for local control system 36 relative to bird 18, or bird body
`30, only that it is part of the control communication between streamer 12
`and the bird.
`Although both claims 1 and 15 recite the local control system “on” the
`streamer positioning device, the descriptions referenced above from the
`Specification, in context, appear to use the words, “within,” “near,” and
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`“on,” essentially interchangeably, as non-exclusive alternatives. In context
`with the Specification under the broadest reasonable construction, we find
`Petitioner’s proposed claim construction, absent the example, to be
`reasonable for the purposes of this Decision, and Patent Owner does not
`oppose that construction. See Prelim. Resp. 20–27. In light of the
`Specification, “local control system” means “a control system located on or
`near the streamer positioning devices.”
`
`
`III. ANALYSIS
`A. Statutory Bar Under 35 U.S.C. § 315(b)
`Patent Owner disputes that Petitioner timely filed its Petition for an
`inter partes review. Prelim. Resp. 6–9. Specifically, under 35 U.S.C.
`§ 315(b), a party may not file a petition for inter partes review if the party
`had been served with a complaint alleging infringement more than one year
`previously. Patent Owner asserts that Petitioner was served with a
`complaint on March 14, 2011.
`On June 12, 2009, Patent Owner filed, via the court’s electronic case
`filing procedure (“ECF”), a complaint initiating the ION lawsuit, alleging
`infringement of the ’967 patent against ION based on ION’s “DigiFIN” and
`other products. Prelim. Resp. 6. Patent Owner also filed a similar complaint
`against a company called Fugro, a customer of ION, which was consolidated
`with the ION lawsuit. Id. (citing Ex. 2037). On December 8, 2009,
`remarking that Petitioner may have been involved in the design and testing
`of the ION products, Patent Owner provided Petitioner via email with a copy
`of the complaint against ION. Id. (citing Ex. 2008).
`Subsequently, Patent Owner subpoenaed Petitioner on January 22,
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`2010 to produce documents and evidence relating inter alia to Petitioner’s
`use and operation of ION’s DigiFIN product. Id. (citing Ex. 2009). In
`response to the subpoena, Petitioner appeared in the ION lawsuit through its
`counsel, Heim, Payne & Chorush. Id. at 6 (citing Ex. 2011). On March 14,
`2011, Patent Owner filed an amended complaint in the ION lawsuit via the
`court’s electronic filing system (“ECF”), naming ION and Fugro, but not
`Petitioner. Id. (citing Ex. 2012). Patent Owner argues that because
`Petitioner’s counsel, as an ECF notice recipient in the ION lawsuit, received
`a copy of the amended complaint against Fugro and ION on March 14, 2011,
`Petitioner was therefore “served” in accordance with 35 U.S.C. § 315(b) the
`same day. Id. at 7. Thus, it is Patent Owner’s position that because
`Petitioner was “served” with the complaint more than one year before filing,
`the Petition here is now time-barred.
`The Board has dealt with similar arguments regarding the statutory
`interpretation of 35 U.S.C. § 315(b) before in Motorola Mobility LLC v.
`Arnouse, Case IPR2013-00010 (PTAB Jan. 30, 2013) (Paper 20) (the
`“Motorola decision”). For reasons similar to those set forth in the Motorola
`decision, we do not adopt the statutory construction that mere receipt of a
`complaint, via email or even ECF, initiates the one-year time period. We
`specifically agree with the Motorola Panel’s review and interpretation of the
`legislative history and intent of 35 U.S.C. § 315(b) in that, “[w]e do not
`believe that the Congress intended to have the time period start before a
`petitioner is officially a defendant in a law suit.” Id. at 5.
`Patent Owner specifically argues that the present proceeding differs
`from Motorola because in the ION lawsuit “Petitioner was served with
`process and formally appeared,” (emphasis omitted) and was thus “‘brought
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`under a court’s authority, by formal process’ before being served with the
`amended complaint.” Prelim. Resp. 7–8 n.1 (citing Murphy Bros., Inc. v.
`Michetti Pipe Stringing, Inc. 526 U.S. 344, 347 (1999)). Despite this factual
`difference from Motorola, Petitioner was not, and never has been, a party
`defendant in the ION lawsuit.
`Petitioner, in the ION lawsuit, was served under Fed. R. Civ. P. 45,
`with a third party subpoena, to produce documents and things relating to the
`ION lawsuit. See Ex. 2009. Although a person, or entity, may have been
`served properly with a subpoena, and may fall under a court’s authority for
`purposes of producing appropriate documents and things not protected by a
`privilege or protection, Fed. R. Civ. P. 45(c)–(e) does not express, or imply,
`that a person subject to the subpoena is a “defendant” to a lawsuit. Indeed,
`Fed. R. Civ. P. 45 specifically differentiates between a “person” served with
`the subpoena, and “a party” to the lawsuit. See Fed. R. Civ. P. 45 (d)(2)(B)
`(“A person commanded to produce documents or tangible things or to permit
`inspection may serve on the party or attorney designated in the subpoena a
`written objection to inspecting, copying, testing or sampling any or all of the
`materials.”). We are aware of no case law or precedent, nor has Patent
`Owner cited to any, indicating that serving a person with a subpoena, and
`subjecting them to the authority of the court in enforcing such subpoena
`under Fed. R. Civ. P. 45(e), provides sufficient legal process to make such
`person a defendant to a lawsuit.
`Thus, Petitioner was not a defendant in the ION lawsuit. Concomitant
`with our colleagues’ Motorola decision, we interpret 35 U.S.C. § 315(b) as
`requiring service upon a defendant to the lawsuit. Petitioner was not a
`defendant; thus, it was never “served with a complaint” in the ION lawsuit
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`as required by 35 U.S.C. § 315(b).7
`B. Real Parties-in-Interest Under 35 U.S.C. § 312(a)
`(1) PGSAI
`The statute governing inter partes review proceedings sets forth
`certain requirements for a petition for inter partes review, including that “the
`petition identif[y] all real parties in interest.” 35 U.S.C. § 312(a) (emphasis
`added); see also 37 C.F.R. § 42.8(b)(1) (requirement to identify real parties
`in interest in mandatory notices). The Office Patent Trial Practice Guide, 77
`Fed. Reg. 48,756, 48,764 (Aug. 14, 2012) (“Practice Guide”) explains that
`“[w]hether a party who is not a named participant in a given proceeding
`nonetheless constitutes a ‘real party-in-interest’ . . . to that proceeding is a
`highly fact-dependent question.” 77 Fed. Reg. at 48,759. The Practice
`Guide further states that:
`
`However, the spirit of that formulation as to IPR and
`PGR proceedings means that, at a general level, the “real
`party-in-interest” is the party that desires review of the
`patent. Thus, the “real party-in-interest” may be the
`petitioner itself, and/or it may be the party or parties at
`whose behest the petition has been filed.
`
`Id. (emphasis added). The determination of whether a non-party is a real
`party-in-interest involves a consideration of control; “[a] common
`consideration is whether the non-party exercised or could have exercised
`
`7 Patent Owner’s argument that S.D. Texas L.R. 5-1 states that the ECF
`notice “constitutes service of the document on those registered as Filing
`Users,” is not persuasive as to the intent of Congress with respect to
`§ 315(b). See 157 Cong. Rec. S5429 (daily ed. Sept. 8, 2011) (statement of
`Senator Kyl) (“it is important that the section 315(b) deadline afford
`defendants a reasonable opportunity to identify and understand the patent
`claims that are relevant to the litigation”).
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`control over a party’s participation in a proceeding.” Id.
`Patent Owner alleges that a company called PGS Americas, Inc.
`(“PGSAI”) is a real party in interest to this proceeding because an in-house
`attorney for PGSAI, Kevin Hart, has been involved in the ION lawsuit, and
`“controlled the review, dissemination and discussion of the prior art that was
`presented in the Petition.” Prelim. Resp. 10. Patent Owner argues that
`Kevin Hart retained trial counsel for Petitioners PGS and a related company
`PGS Geophysical AS, (“PGSAS”), and “acted as ‘[Petitioner’s] in-house
`counsel.’” Id. Patent Owner argues that Kevin Hart of PGSAI also
`controlled the negotiation of indemnity protections for PGSAS, with ION,
`for potential patent infringement related to DigiFIN. Id. (citing Ex. 2022;
`Ex. 2023). Patent Owner further asserts that PGSAI controlled the payment
`of DigiFIN invoices to ION as well as the repair and shipment of DigiFIN
`products for PGSAS. Id. (citing Ex. 2019–2021).
`Patent Owner’s argument relies on the requirement that all real
`parties-in-interest be identified in the Petition, and speculation that
`“[b]ecause PGSAI’s counsel is controlling [Petitioner’s] interests in the
`validity and infringement of the ‘967 patent, PGSAI is an RPI.” Id. at 11.
`The Practice Guide provides guidance regarding factors to consider in
`determining whether a party is a real party-in-interest. Considerations may
`include whether a non-party exercises control over a Petitioner’s
`participation in a proceeding. Other considerations may include whether a
`non-party, in conjunction with control, is funding the proceeding and
`directing the proceeding. 77 Fed. Reg. at 48,759–60.
`
`Patent Owner provides insufficient evidence to support its speculative
`contention that any party other than Petitioner is, in fact, funding or
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`controlling Petitioner’s involvement in this proceeding, or that the Petition
`was filed “at the behest” of any party other than Petitioner. We are not
`persuaded that the evidence of common in-house counsel between PGSAI
`and Petitioner shows that PGSAI funded, or directed, Petitioner in
`connection with the filing of this Petition. While Kevin Hart may act on
`behalf of PGS at times, and PGSAI at other times, this employment
`association does not explain the corporate, or legal, relationship between
`PGSAI and Petitioner, or demonstrate that PGSAI has the ability to control
`the proceeding before the Board, nor is it evidence of corporate control
`between PGS and PGSAI. Discussions of potential remedies and indemnity
`protections by Mr. Hart on behalf of either entity, without specific evidence
`of corporate relationship, control, or contractual obligations of these entities,
`fail to prove that any entity is able to control the actions of another.
`Moreover, invoice payments by PGSAI for the DigiFIN product repair and
`development, at best, show that PGSAI, may be a corporate financial
`structure, not that any control was exercised by PGSAI over Petitioner and
`this inter partes review proceeding.
`(2) ION
`Patent Owner asserts that ION is a real party in interest because
`(a) ION and Petitioner have a mutual desire to invalidate the ’967 patent and
`other WesternGeco patents, and because in this regard, Petitioner claimed a
`“common interest privilege” over communications with ION; (b) ION
`expressed its desire to satisfy its product assurance pledge and fulfill its
`obligations to Petitioner by securing rights to the DigiFIN product, or
`replace it with a non-infringing product; and (c) because Petitioner invoked
`ION’s indemnity obligations, notifying ION that Petitioner expected ION to
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`fulfill its obligations and provide a remedy should infringement be found in
`the district court. Prelim. Resp. 13–14 (citing Ex. 2022; Ex. 2027).
`The common interest privilege serves to protect confidential, or
`privileged, communications with third parties, which might otherwise be
`exceptions to the attorney-client privilege. There is nothing surreptitious
`about separate entities, as either third parties, or separate parties to a legal
`action, proclaiming shared interests to protect communications that are
`relevant to advance the interests of the entities possessing the common
`interest. See In re Regents of Univ. of California, 101 F.3d 1386, 1389 (Fed.
`Cir. 1996) (“The protection of communications among clients and attorneys
`‘allied in a common legal cause’ has long been recognized.”) (quoting In re
`Grand Jury Subpoena Duces Tecum, 406 F.Supp. 381, 386 (S.D.N.Y.1975)).
`The fact that Petitioner and ION, have a desire, and common interest, in
`invalidating the ’967 patent and other WesternGeco patents, and have
`collaborated together, and invoked a common interest privilege with respect
`to sharing potentially invalidating prior art references, does not persuade us
`that ION has the ability to control the instant Petition or is directing or
`funding the present proceeding.
`The Board has issued decisions determining that a non-party entity is
`a real party-in-interest. See Zoll Lifecor Corp. v. Philips Elecs. North
`America Corp., Case IPR2013-00609 (PTAB Mar. 20, 2014) (Paper 15) (the
`“Zoll Decision”). In the Zoll Decision, the Board was persuaded that an
`unnamed party to the IPR, Zoll Medical, exercised consistent control over
`Zoll Lifecore for over six years, including control of the inter partes review.
`Id. at 11. Specific evidence of control included Zoll Lifecor’s
`acknowledgment that Zoll Medical controlled 100% of Zoll Lifecor and
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`approved Zoll Lifecor’s corporate budget and plans. Id. Other evidence of
`control included the fact that common counsel for Zoll Medical and Zoll
`Lifecor would not state affirmatively that counsel did not provide input into
`preparation of the IPRs. Id. at 11–12. Additional evidence showed that only
`Zoll Medical’s management team attended court-ordered mediation in the
`underlying district court litigation filed against Zoll Lifecor. Id. at 12.
`We have no such evidence in this proceeding. ION and Petitioner are
`not related corporate entities. The evidence of record shows that Petitioner
`and ION preliminarily discussed potential remedies, relating to the product
`itself, not indemnification from litigation. Exs. 2022, 2027. As discussed
`above in section III.B.(1), absent specific facts evidencing the contractual
`obligations of the parties, we are not apprised of any evidence indicative of
`control, or potential to control this inter partes proceeding by ION.
`We, therefore, decline to deny the Petition for failure to comply with
`the requirement of 35 U.S.C. § 312(a)(2) for instituting an inter partes
`review.
`
`C. Privity Under 35 U.S.C. § 315(b)
`Under 35 U.S.C. § 315(b), institution of an inter partes review is
`barred “if the petition requesting the proceeding is filed more than 1 year
`after the date on which the petitioner, real party in interest, or privy of the
`petitioner is served with a complaint alleging infringement of the patent”
`(emphasis added). Patent Owner contends that ION is a privy of Petitioner
`by virtue of shared interests regarding the validity of the ’967 patent, the
`indemnity relationship between ION and Petitioner, the common interest
`privilege asserted by Petitioner and ION with respect to their
`communications in the ION lawsuit, and because Petitioner is essentially
`
`
`
`
`17
`
`
`
`IPR2014-00687
`Patent 7,162,967 B2
`
`arguing that remand or reversal of the ION lawsuit on appeal should also
`extinguish Petitioner’s liability for infringement of the ’967 patent. Prelim.
`Resp. 16–17.
`We note that “[t]he notion of ‘privity’ is more expansive,
`encompassing parties that do not necessarily need to be identified in the
`Petition as a ‘real party-in-interest.’” 77 Fed. Reg. at 48,759. It is
`undisputed that service was effected on ION as a named defendant in the
`ION lawsuit on June 12, 2009, more than one year before the filing date of
`this Petition. Patent Owner has not, however, provided evidence showing
`that Petitioner was a privy of ION on June 12, 2009 when ION was served
`with a complaint alleging infringement of the ’967 patent, nor a privy upon
`service of the amended complaint on March 14, 2011.
`The nature of shared interests in invalidating the ’967 patent,
`undertaking a joint defense and assertion of a common interest privilege
`does not, without more, indicate privity between Petitioner and ION. See
`Practice Guide, 77 Fed. Reg. at 48,760 (“[I]f Party A is part of a Joint
`Defense Group with Party B in a patent infringement suit, and Party B files a
`PGR petition, Party A is not a ‘real party-in-interest’ or a ‘privy’ for the
`purposes of the PGR petition based solely on its participation in that
`Group.”). Patent Owner contends that Petitioner and ION have spun a “web
`of interlaced interests and unified legal efforts regarding the ‘967 patent,
`infringement liability therefor [sic] and the validity thereof,” but
`collaboration, by itself, is not evidence that ION has any involvement either
`by way of control, or funding the filing of this Petition. Prelim. Resp. 15.
`Patent Owner has not provided evidence, or facts, that give rise to a
`showing of privity between ION and Petitioner. None of the evidence cited
`
`
`
`
`18
`
`
`
`IPR2014-00687
`Patent 7,162,967 B2
`
`by Patent Owner, on the record before us, is indicative of the existence,
`much less consummation, of an indemnification agreement for patent
`infringement litigation, or IPR proceedings, between ION and Petitioner.
`Moreover, as discussed above, Petitioner was never served as a party
`defendant in the ION lawsuit. Indemnification to fund or defend a lawsuit,
`arises only upon service of the lawsuit upon the defendant. See Atlanta Gas
`Light Co. v. Bennett Regulator Guards, Inc., Case IPR2013-00453, slip op.
`at 16 (PTAB Jan. 22, 2014) (Paper 31) (“Patent Owner’s privity theory relies
`fundamentally on [Indemnitor] having the right to control Petitioner’s
`involvement in this proceeding—a right that, at best, arises from Petitioner
`having been served with the complaint in the district court proceeding.”).
`Because Petitioner was never served as a defendant in the ION lawsuit, no
`indemnity impacting funding or control of such a defense could have arisen
`in that proceeding.
`The fact that Petitioner has argued in district court that judgment
`against ION (in the ION lawsuit) would, if affirmed, render the recovery
`against Petitioner duplicative, or upon reversal or remand, eliminate Patent
`Owner’s patent claims against Petitioner, also does not implicate specific
`control or funding by ION. Patent Owner has failed to explain why such an
`argument, while indicative of a customer-client relationship, establishes
`privity between ION and Petitioner. Specifically, Patent Owner does not
`describe how either scenario is determinative of control or funding of this
`proceeding. The outcome in both scenarios could be potentially applicable
`to ION’s customers irregardless of privity.
`Therefore, we conclude that institution of an inter partes review is not
`barred by 35 U.S.C. § 315(b).
`
`
`
`
`19
`
`
`
`IPR2014-00687
`Patent 7,162,967 B2
`
`
`We turn now to Petitioner’s asserted grounds of unpatentability, and
`Patent Owner’s arguments in its Preliminary Response, to determine
`whether Petitioner has met the threshold standard of 35 U.S.C. § 314(a).
`D. Claims 1 and 15 – Anticipation by ’636 PCT
`Petitioner asserts that claims 1 and 15 are anticipated by the ’636
`PCT. Pet. 29–40. Petitioner has established a reasonable likelihood of
`prevailing on its assertion that claims 1 and 15 are anticipated for the reasons
`explained below.
`1. Overview of ’636 PCT
`The ’636 PCT discloses a streamer control device, e.g. “a bird,” for
`controlling the position of a marine seismic streamer as it is towed behind a
`boat in a streamer array. Ex. 1004, 2. Figure 1 of the ’636 PCT, reproduced
`below, illustrates streamer control device 10 att
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