UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`PETROLEUM GEO-SERVICES INC.
`and
`ION GEOPHYSICAL CORPORATION
`AND ION INTERNATIONAL S.A.R.L.
`Petitioners,
`v.
`WESTERNGECO L.L.C.
`Patent Owner.
`____________
`Case IPR2014-006881
`U.S. Patent No. 7,080,607
`____________
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`
`Pursuant to 37 C.F.R. § 42.107(a) and the Board’s Order dated May 19,
`
`2015 (Paper No. 69), Patent Owner, WesternGeco L.L.C. (“WesternGeco” or
`
`“Patent Owner”), submits this Preliminary Response to the Petition for Inter Partes
`
`Review (“Petition”) of U.S. Patent No. 7,080,607 (the “’607 patent”) filed by
`
`Petitioners, ION Geophysical Corporation and ION International S.A.R.L.
`
`(collectively, “ION”) in IPR2015-00567 (“the ’567 IPR”).
`
`
`1 Case IPR2015-00567 has been joined with this proceeding. This Preliminary
`
`Response is being concurrently filed in that proceeding.
`
`

`
`
`
`I.
`
`II.
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`TABLE OF CONTENTS
`
`INTRODUCTION ........................................................................................... 1
`
`ION’S PETITION AND JOINDER MOTION SHOULD BE DENIED
`BECAUSE ION AND PGS ARE IN PRIVITY AND BECAUSE ION
`FAILED TO NAME ALL REAL PARTIES IN INTEREST ......................... 5
`
`A.
`
`B.
`
`C.
`
`D.
`
`E.
`
`Privity is Flexibly Applied and Broader Than Real Party-In-Interest .. 6
`
`PGS’s Relationship to the ION Litigation Establishes Privity ........... 11
`
`PGS’s Substantive Legal Relationship With ION Establishes Privity
` ............................................................................................................. 15
`
`PGS is a RPI Under the Guidelines ..................................................... 18
`
`At a Minimum, Patent Owner Deserves Additional Discovery on
`Privity and RPI .................................................................................... 20
`
`III.
`
`ION’S VALIDITY ARGUMENTS ARE BARRED UNDER RES
`JUDICATA AND COLLATERAL ESTOPPEL AND CANNOT SUPPORT
`TRIAL INSTITUTION ................................................................................. 20
`
`A.
`
`ION’s Petition is Barred Under the Doctrine of Collateral Estoppel .. 22
`
`1.
`
`2.
`
`Collateral Estoppel Applies to IPR Proceedings ...................... 22
`
`Collateral Estoppel is Appropriate ............................................ 25
`
`B.
`
`ION’s Petition is Barred Under the Doctrine of Res Judicata ............ 27
`
`IV.
`
`ION’S PRIOR STATEMENTS AND ADJUDICATIONS CONTRADICT
`ITS SUBSTANTIVE ARGUMENTS ........................................................... 29
`
`A.
`
`B.
`
`ION Previously Rejected Its Current Characterizations of the Prior Art
` ............................................................................................................. 30
`
`ION Previously Admitted That WesternGeco’s Commercial
`Embodiments Practice The Claimed Inventions ................................. 33
`
`JOINDER IS IMPOSSIBLE WITHOUT COMPROMISING THE
`EXISTING SCHEDULE AS WELL AS PATENT OWNER’S DUE
`i
`
`V.
`
`
`
`

`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`PROCESS RIGHTS ...................................................................................... 34
`
`
`
`VI. CONCLUSION .............................................................................................. 35
`
`
`
`ii
`
`
`
`
`
`

`
`
`I.
`
`INTRODUCTION
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`ION’s petition and motion to join IPR2014-00688 (“the ’688 IPR”) are a
`
`sham as well as an impermissible second—if not third or fourth—bite at the apple.
`
`ION is an adjudicated infringer of U.S. Patent No. 7,080,607 (“the ’607 patent”)
`
`and has already lost on the same validity arguments that it attempts to relitigate
`
`here, first on summary judgment, then at trial, and then again post-trial. Having
`
`been sued in 2009, ION was time-barred under 35 U.S.C. § 315(b) from filing its
`
`own IPR. Instead, ION seeks to join its proxy’s, Petroleum Geo-Services, Inc.’s
`
`(“PGS’s”), ’688 IPR in an attempt to skirt the rules. This Board should see
`
`through this ruse— PGS and ION are privies with close corporate ties that have
`
`worked together for years to invalidate the ’607 patent. Accordingly, the Board
`
`must deny ION’s joinder motion, deny ION’s petition, and terminate the ’688 IPR.
`
`*
`
`*
`
`*
`
`ION is time-barred from filing an IPR challenging the ’607 patent. Over
`
`five years ago Patent Owner sued ION for infringement of multiple patents,
`
`including the ’607 patent. See WesternGeco LLC v. ION Geophysical Corp., No.
`
`09-cv-01827 (S.D. Tex. 2009) (the “ION litigation”). Thus, 35 U.S.C. § 315(b)
`
`bars ION from now challenging the ’607 patent’s validity through an IPR
`
`proceeding.
`
`PGS is likewise barred from challenging the ’607 patent as ION’s proxy and
`
`
`
`1
`
`

`
`
`thus barred from launching an IPR proceeding for ION to then join. PGS and
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`ION’s attempt to distinguish themselves for the purpose of these IPR proceedings
`
`is simply a ruse based on concealment—if not outright misrepresentation—of the
`
`relevant facts. Both a strong contractual relationship and a strong collaborative
`
`relationship exist between ION and PGS regarding the validity of the ’607 patent,
`
`making these two parties privies for purposes of these proceedings.
`
`Their contractual relationship began
`
`
`
`
`
`
`
`
`
`
`
`Alongside this contractual relationship, ION and PGS have entered into a
`
`collaboration regarding the subject matter of these proceedings, coordinating their
`
`efforts across multiple forums to invalidate the ’607 patent. This collaboration
`
`
`2
`
`
`
`
`
`
`
`2
`
`

`
`
`included PGS and ION strategizing from at least 2011 onwards, as part of the ION
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`litigation, to invalidate Patent Owner’s patents. (See Ex. 2015.) It also included
`
`discussions regarding prior art before PGS filed its IPR challenging the ’607
`
`patent. And it further includes PGS’s and ION’s continued collusion regarding the
`
`’567 IPR and the ’688 IPR. (See Ex. 2018.)
`
`ION and PGS’s tight relationship regarding the subject matter of these
`
`proceedings predates either of their petitions and renders the parties privies, if not
`
`also unnamed RPIs for each other’s requested IPR. Both IPRs are time-barred
`
`under § 315(b) and both Petitions are defective in not naming all RPIs. These fatal
`
`defects cannot now be cured—ION’s petition and request for joinder must be
`
`denied and PGS’s ’688 IPR terminated.
`
`
`
`Additionally, the twin doctrines of collateral estoppel and res judicata
`
`preclude ION’s entire case. ION lost on the same invalidity arguments at trial that
`
`it attempts to raise here. ION’s failure to appeal those issues makes that judgement
`
`final and conclusive as between the parties. Moreover, ION’s new IPR arguments
`
`directly contradict its prior factual representations in district court as well as in
`
`counterpart proceedings before foreign patent tribunals. ION cannot relitigate
`
`decided issues, nor abandon its prior positions merely because they belie ION’s
`
`newfound arguments.
`
`
`
`*
`
`*
`
`*
`
`3
`
`

`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`Procedurally, the Board must vacate its Joinder Order because the Board
`
`
`
`lacked the statutory power to act as it did. (See Paper Nos. 60, 63, and 69.)
`
`Although the Board attempted to cure this defect by providing Patent Owner with a
`
`Preliminary Response by authorizing this paper, this does not retroactively cure the
`
`basic defect of the Order in that the PTAB did not have the statutory authority to
`
`issue the Order when it did. The Joinder Order thus should be vacated.
`
`If after vacating the order, the Board decides to reconsider ION’s request for
`
`joinder, the Board should deny joining ION to the ’688 IPR and deny instituting
`
`ION’s petition, because (1) ION and PGS are in privity, which invalidates the ’688
`
`IPR and leaves no proceeding for ION to join; (2) ION is precluded under 35
`
`U.S.C. § 315(b) from pursuing its own, standalone IPR; (3) ION failed to name
`
`PGS as a RPI, which invalidates ION’s petition; and (4) principles of former
`
`adjudication preclude ION’s entire case, whether it is brought in a standalone or in
`
`a joined proceeding.
`
`
`
`But even if the Board were somehow to find to the contrary, it is too late to
`
`simply join ION to the ’688 IPR. PGS’s reply brief is due in only a week, and the
`
`oral hearing is next month. The issues engendered by joinder cannot fairly be
`
`heard, let alone adjudicated, within that schedule. Should the Board grant joinder,
`
`Patent Owner respectfully requests that the Board align this schedule with the
`
`second round of IPRs (IPR2014-01475, IPR2014-01477, IPR2014-01478)—which
`
`
`
`4
`
`

`
`
`address the same patents and nearly identical references and arguments—to
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`provide Patent Owner a Response as well as time and process to sufficiently
`
`defend itself. (See Paper No. 63.)
`
`II.
`
`ION’S PETITION AND JOINDER MOTION SHOULD BE DENIED
`BECAUSE ION AND PGS ARE IN PRIVITY AND BECAUSE ION
`FAILED TO NAME ALL REAL PARTIES IN INTEREST
`
`The Board should deny joinder, deny instituting trial on ION’s petition, and
`
`terminate the ’688 IPR because PGS and ION are in privity and ION was sued
`
`more than one year before the ’688 IPR filing date. ION was sued for infringing
`
`the ’607 patent in 2009 with its DigiFIN system. PGS—ION’s “launch partner”
`
`for DigiFIN from 2007 to present—did not bring this action until the spring of
`
`2014. Section 315(b) establishes, however, that “[a]n inter partes review may not
`
`be instituted 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.” Thus,
`
`section 315(b) plainly precludes the ’567 IPR as a standalone proceeding, and
`
`ION’s and PGS’s privity relationship invalidates the ’688 IPR, leaving nothing for
`
`ION to join.
`
`There is compelling evidence that PGS and ION are privies. For example,
`
`there is strong evidence of ION and PGS colluding to invalidate the ’607 patent
`
`across multiple forums, including the present one. (Exs. 2015; 2018.) There is
`
`
`
`5
`
`

`
`
`also evidence of
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`
`
` (See Exs. 2069, 2027.)3
`
`This evidence also shows that ION should have named PGS as a RPI on its
`
`petition. Its failure to do so renders its petition fatally defective.
`
`A.
`
`Privity is Flexibly Applied and Broader Than Real Party-In-
`Interest
`
`Privity “is more expansive” than RPI and “encompass[es] parties that do not
`
`necessarily need to be identified in the petition as a ‘real party-in-interest.’” Office
`
`Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48759 (Aug. 14, 2012)
`
`(hereinafter, “OPTP Guide”). The privity assessment is both equitable and flexible
`
`in nature, with the goal being to determine “whether the relationship between the
`
`purported ‘privy’ and the relevant other party is sufficiently close such that both
`
`should be bound by the trial outcome and related estoppels.” Id. Thus, “the privity
`
`inquiry focuses on the relationship between parties” as opposed to the non-party’s
`
`relationship to a proceeding. Aruze Gaming Macau, Ltd. v. MGT Gaming, Inc.,
`
`IPR2014-01288, Paper No. 13 at 13 (Feb. 20, 2015). Consistent with this, the
`
`
`3 Although there is evidence of multiple agreements with warranty or
`
`indemnification provisions, ION remarkably denies the very existence of any such
`
`agreements. (Ex. 2018; Ex. 1058 at 17:15-21; and Paper No.66.)
`
`
`
`6
`
`

`
`
`Office Patent Trial Practice Guide makes clear that the central focus of the privity
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`assessment is whether the parties are close enough that estoppel provisions would
`
`apply between the parties. OPTP Guide, 77 Fed. Reg. at 48759.
`
`The Supreme Court identified in Taylor v. Sturgell six categories of
`
`situations where nonparty estoppel would apply, noting that the list only provided
`
`“a framework for [the] consideration of virtual representation,” and did not
`
`“establish a definitive taxonomy.” 553 U.S. 880, 893, n. 6 (2008). One such
`
`category binds a nonparty to a previous judgment if the nonparty “assumed control
`
`over the litigation in which that judgment was rendered.” Id. at 895. While this
`
`category states that control is a requirement, “[t]he actual assumption of control of
`
`the lawsuit is not necessary for a finding of privity; the opportunity, or legal right
`
`to assume control is sufficient.” Aruze Gaming Macau, Ltd., IPR2014-01288,
`
`Paper No. 13 at 14.
`
`For example, one party expressly or impliedly giving another party the
`
`authority to represent it in a proceeding may establish privity. See Gen. Foods
`
`Corp. v. Mass. Dep’t of Pub. Health, 648 F.2d 784, 787 (1st Cir. 1981) (finding
`
`privity where a member of a trade association contributed money towards litigation
`
`expenses and thus impliedly authorized the trade association to represent the
`
`member in the action). Similarly, privity has been found where a nonparty has a
`
`direct relationship with the underlying facts of a case, has similar interests as the
`
`
`
`7
`
`

`
`
`party to the case, and is aware of the case. See Cal. Physicians, Serv. V. Aoki
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`Diabetes Research Inst., 163 Cal. App. 4th 1506, 1521 (Cal. Ct. App. 2008)
`
`(finding privity where the nonparty administered the insurance claims at issue in
`
`the first proceeding, the nonparty’s denial of insurance coverage was disputed in
`
`the first proceeding, and the nonparty’s witnesses had testified in the proceeding
`
`defending the coverage determination).
`
`
`
`While establishing control is one way to justify preclusion under Taylor, it is
`
`not the only way. A “substantive legal relationship” may also be sufficient to
`
`justify preclusion. Id. at 894. While Taylor does not specifically list
`
`indemnification agreements under this category, the Court acknowledges that its
`
`list is not all inclusive and, both before and after Taylor, lower courts have
`
`recognized that an indemnification relationship establishes privity. See e.g.,
`
`Internal Marine, LLC v. FDT, LLC, 2014 U.S. Dist. LEXIS 175544 at *17 (E.D.
`
`La. Dec. 18, 2014) (noting that “[t]he fact that the Supreme Court in Taylor did not
`
`specifically mention [sic] include the indemnitor/indemnitee relationship does not
`
`mean that it does not suffice for a finding of a pre-existing legal relationship”);
`
`Lanphere Enters., Inc. v. Doorknob Enters. LLC, 145 Fed. App’x 589, 592 (9th
`
`Cir. 2005) (affirming the district court’s conclusion that an indemnity relationship
`
`established privity for preclusion purposes). Similarly, the Board has found
`
`litigation defense agreements and indemnification agreements establish privity.
`
`
`
`8
`
`

`
`
`Gen. Elec. Co. v. Transdata, Inc., IPR2014-01559, Paper No. 23 at 8-11 (Apr. 15,
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`2015) (finding a litigation defense agreement established privity); see also First
`
`Data Corp. v. Cardsoft (Assignment for the Benefit of Creditors), LLC, IPR2014-
`
`00715, Paper No. 9 at 7-10 (Oct. 17, 2014) (finding an indemnitor, who had
`
`control and/or an opportunity to control events leading up to the filing of a petition,
`
`to be a RPI).
`
`
`
`In addition to indemnification agreements, the Board has repeatedly found
`
`the existence of a privity relationship between a manufacturer of an accused
`
`product and the purchaser of the accused product for the purpose of standing. For
`
`example, in SAP America, Inc. v. Pi-Net Int’l, Inc., the Board explained that the
`
`legislative history of the America Invents Act (“AIA”) establishes that “‘privy’
`
`effectively means customers of the petitioner.” CBM2013-00013, Paper No. 15 at
`
`4 (Sept. 19, 2013). Specifically, the Board pointed to Senator Schumer’s statement
`
`that:
`
`
`
`Section 18 of the America Invents Act, of which Senator Kyl and I
`were the authors, relates to business method patents. As the architect
`of this provision, I would like to make crystal clear the intent of its
`language. . . As originally adopted in the Senate, subsection (a)(1)(B)
`only allowed a party to file a section 18 petition if either that party or
`its real parties in interest had been sued or accused of infringement. In
`the House, this was expanded to also cover cases where a “privy” of
`the petitioner had been sued or accused of infringement. A “privy” is
`9
`
`

`
`
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`a party that has a direct relationship to the petitioner with respect to
`the allegedly infringing product or service. In this case, it effectively
`means customers of the petitioner. With the addition of the word
`“privy,” a company could seek a section 18 proceeding on the basis
`that customers of the petitioner had been sued for infringement.
`
`157 Cong. Rec. S. 5432 (daily ed. Sept. 8, 2011) (emphasis added). Based in part
`
`on this statement, the Board found that a manufacturer of an accused device is in
`
`privity with the purchaser of an accused device for standing purposes under the
`
`AIA. SAP, CBM2013-0013, Paper No. 15 at 5. The Board also found that because
`
`the indemnification relationship related to the product at issue in the proceeding, it
`
`further supported a finding of privity. Id.; see also E-Bay Enterprise, Inc. v.
`
`Lockwood, CBM2014-00025, Paper No. 24 at 9-12 (May 2014) (finding that an
`
`indemnitor was in privity with an indemnitee via an indemnification agreement and
`
`thus had standing to file a Covered Business Method (“CBM”) proceeding).
`
`The Covered Business Method (“CBM”) statute confers standing only where
`
`“the person or the person’s real party in interest or privy has been sued for
`
`infringement of the patent or has been charged with infringement under the
`
`patent.” AIA § 18(a)(1)(B) (emphasis added). Similarly, 35 U.S.C. § 315(b) states
`
`that “[a]n inter partes review may not be instituted 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
`
`
`
`10
`
`

`
`
`infringement of the patent.” Thus, both statutes use the term “privy” in connection
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`with whether a party has standing to file a petition for either a CBM or IPR.
`
`It has long been established that “there is a natural presumption that identical
`
`words used in different parts of the same act are intended to have the same
`
`meaning.” Atl. Cleaners & Dryers, Inc. v. United States, 286 U.S. 427, 433
`
`(1932). However, this rule is flexible, and readily yields if there is such variation
`
`in connection with how the words are used as to “reasonably warrant that they
`
`were employed in different parts of the act with different intent.” Envtl. Defense v.
`
`Duke Energy Corp., 549 U.S. 561, 574 (2007). That is not the case here.
`
`Here, the term “privy” relates to standing in both the CBM and IPR
`
`provisions of the AIA. As such, privy must mean the same thing in the CBM and
`
`IPR standing statutes. Thus, the Board’s interpretation in CBM proceedings that
`
`both a manufacturer–customer relationship related to an accused device and
`
`
`
`establish privity must apply here. The ’567 IPR
`
`proceeding and the ’688 IPR must be terminated.
`
`PGS’s Relationship to the ION Litigation Establishes Privity
`
`B.
`PGS has a strong contractual relationship with ION, a strong cooperative
`
`
`
`relationship with ION, and is deeply invested in DigiFIN. The two are privies
`
`under 35 U.S.C. § 315(b).
`
`
`
`PGS has been purchasing the DigiFIN system from ION since it launched. Thus,
`
`
`
`11
`
`

`
`
`when PGS was made aware that DigiFIN was at issue in the ION litigation, it took
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`an active role in protecting its interests by collaborating with ION. Additionally,
`
`as part of PGS’s customer relationship with ION,
`
`
`
` Together, these relationships establish that PGS is a
`
`privy of ION.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`4 Including at least U.S. Patent Nos. 7,162,967, 7,080,607, and 7,293,520.
`12
`
`
`
`

`
`
`
`
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`
`
`
`
`
`
`
`
`
`
`Additionally, PGS was made aware of the ION litigation a mere matter of
`
`months after Patent Owner brought the case against ION. On December 8, 2009,
`
`Patent Owner provided PGS with notice of its infringement liability for using
`
`DigiFIN by providing it with a copy of the complaint. (Ex. 2008.) When PGS did
`
`not cooperate with providing discovery, Patent Owner subpoenaed PGS on January
`
`22, 2010 and identified “DigiFIN” as the accused product in the litigation. (Ex.
`
`2009.)5 After being served with process, PGS appeared in the ION litigation
`
`through its outside counsel, Heim, Payne & Chorush. (Ex. 2011.)
`
`While PGS was not a named defendant in the ION litigation, once entering
`
`an appearance, PGS was actively involved with the case. (See Ex. 2015.) PGS
`
`
`5 In a subsequent motion to compel discovery, Patent Owner identified PGS as one
`
`of the ION “customers who assemble [DigiFINs] into infringing systems either
`
`within the United States or abroad.” (Ex. 2010.)
`
`
`
`13
`
`

`
`
`consistently communicated with ION’s in-house counsel to discuss the ION
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`litigation. (Exs. 2015, 2016.) These communications included discussions
`
`regarding PGS’s assistance in making PGS witnesses available as well as ION’s
`
`
`
`
`
`
`
`
`
`invalidity and infringement arguments. (Exs. 2015, 2016.)
`
`—Oyvind Hillesund, the co-inventor
`
`of the ’520 patent, and Nils Lunde—who both proceeded to give deposition
`
`testimony at ION’s request. (Exs. 2141; 2142; 2157 at 60:14-61:10.)
`
`Additionally, PGS began claiming a “common interest privilege” over its
`
`communications with ION regarding “WG litigation” and “litigation interests.”
`
`(Ex. 2028.) PGS based this privilege assertion on “Western[Geco]’s litigiousness
`
`on the subject of DigiFIN giv[ing] rise to a common legal interest regarding the
`
`patent infringement assertions.” (Ex. 2029.)
`
`PGS’s role in the ION litigation only increased in November, 2012, after
`
`Patent Owner sent additional communications to PGS regarding PGS’s
`
`infringement of the ’607 patent.
`
`
`
`14
`
`
`
`
`
`

`
`
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
` Accordingly, PGS worked with ION in the
`
`ION litigation to invalidate the ’607 patent in an effort to prevent future litigation
`
`against PGS. (See, e.g., Ex. 2015; Ex. 2016.)
`
`Although PGS and ION’s efforts at the district court failed, the parties’
`
`strong relationship throughout the litigation makes them privies. PGS
`
`and purchased the accused product from ION, had similar interests
`
`as ION in protecting its rights in DigiFIN, and was well-aware of the ION
`
`litigation, contributing both ideas and witnesses. See Cal. Physicians, Serv., 163
`
`Cal. App. 4th at 1521. Additionally, PGS impliedly let ION conduct the litigation
`
`on PGS’s behalf by choosing not to intervene when it realized that its rights in
`
`DigiFIN were at issue. Gen. Foods Corp., 648 F.2d at 787. Thus, PGS is a privy
`
`of ION.
`
`C.
`
`PGS’s Substantive Legal Relationship With ION Establishes
`Privity
`
`Not only does PGS’s involvement in the ION litigation establish privity, but
`
`PGS’s substantial legal relationship with ION establishes privity.
`
`
`
`
`
`
`
`
`
`
`
`15
`
`

`
`
`
`
`
`
`
`Patent Owner Preliminary Response
`Patent Owner Preliminary Response
`Case IPR2014-00688
`Case IPR2014-00688
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`16
`
`>—a O\
`
`

`
`
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` ION also
`
`supplies the DigiFIN product to PGS. This relationship destroys PGS’s standing to
`
`6 Additional
`
`exist, but ION and PGS have refused to disclose
`
`them. (See Paper No. 66.)
`
`
`
`17
`
`

`
`
`file and maintain the ’688 IPR because ION was sued over one year ago. Joinder
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`must be denied, ION’s petition should be denied, and the ’688 IPR should be
`
`terminated.
`
`PGS is a RPI Under the Guidelines
`
`D.
`The strong relationship between ION and PGS makes PGS an unnamed RPI
`
`to the ’567 IPR under the various factors set forth in the Practice Guide. See
`
`Office Patent Trial Practice Guide, 77 Fed. Reg. 48756 at 48760. The first
`
`factor—the relationship of PGS to ION—is shown by PGS’s and ION’s close
`
`contractual and cooperative relationship regarding the subject matter of these
`
`proceedings. See supra at IIB and IIC.
`
`
`
` After
`
`further discussions—most of which ION and PGS have withheld from Patent
`
`Owner under the guise of privilege or by simply refusing to provide routine
`
`discovery—PGS filed the ’688 IPR as ION would have been time barred from
`
`doing so in its own name, but still giving ION the vehicle to later join the
`
`proceedings as an end-around the statutory bar.
`
`The second factor—the relationship of PGS to the petition itself—also
`
`shows PGS’s control over the ’567 IPR. ION filed the exact same petition that
`
`PGS filed in the ’688 IPR. Thus, PGS had de facto control over ION’s proceeding.
`
`
`
`18
`
`

`
`
`Moreover, PGS used the same prior art in the ’688 IPR that ION used at the district
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`court, and did so only after discussing the prior art with ION prior to filing its
`
`petition. This shows the strong cooperation between ION and PGS over the
`
`subject matter of ION’s petition.
`
`The third factor—the nature of the petitioner—similarly evidences PGS as
`
`an RPI in the ’567 IPR. ION is PGS’s supplier. (Ex. 2006.) Both PGS and ION
`
`have been charged with infringing the ’607 patent due to their use of ION’s
`
`products. (Ex. 2006.) If ION is successful at invalidating the ’607 patent, PGS’s
`
`potential liability for purchasing and using ION’s supplies may diminish.
`
`Additionally, PGS has claimed in district court that ION’s litigation regarding the
`
`’607 patent has shielded PGS from any liability for its own infringement. (Ex.
`
`2030.) Accordingly, PGS will directly benefit if ION successfully invalidates the
`
`’607 patent and has thus been colluding with ION in an effort to achieve this goal.
`
`(Ex. 2018.)
`
`
`
`Each of the three factors points to PGS being a proper RPI. Thus, PGS
`
`should have been named a RPI in ION’s petition. Office Patent Trial Practice
`
`Guide, 77 Fed. Reg. 48756 at 48759. ION’s failure to do so renders its petition
`
`defective and mandates that the petition as well as ION’s joinder request both be
`
`denied.
`
`
`
`
`
`19
`
`

`
`
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`E. At a Minimum, Patent Owner Deserves Additional Discovery on
`Privity and RPI
`
`As discussed above and previously, Patent Owner has been wrongfully
`
`deprived additional discovery on privity and RPI to uncover the full relationship
`
`between PGS and ION. (See Paper Nos. 60, 66; see also IPR2015-00567, Paper
`
`No. 15.) While Patent Owner has sought information regarding this relationship
`
`from both PGS and ION, these requests have been consistently denied—indeed,
`
`ION has denied the very existence of the few documents that PGS has produced.
`
`This resistance is not surprising because if PGS and ION are in privity, or if PGS
`
`and ION are RPIs of each other, the ’688 IPR and the ’567 IPR must terminate
`
`immediately. Due process, however, requires that Patent Owner be given the
`
`opportunity to seek this evidence, which is in the sole possession of PGS and ION
`
`and otherwise unavailable to Patent Owner. (Paper No. 66.) If the Board
`
`reconsiders ION’s petition and joinder request, Patent Owner respectfully requests
`
`leave to seek this discovery and be heard prior to any rulings from the Board.
`
`III.
`
`ION’S VALIDITY ARGUMENTS ARE BARRED UNDER RES
`JUDICATA AND COLLATERAL ESTOPPEL AND CANNOT
`SUPPORT TRIAL INSTITUTION
`
`ION cannot now challenge the ’607 patent’s validity when it did so at the
`
`district court and lost, especially on the very same grounds that failed in those prior
`
`proceedings. On June 12, 2009, Patent Owner sued ION for infringement of
`
`multiple patents, including the ’607 patent. (See the ION litigation.) Patent Owner
`20
`
`
`
`

`
`
`asserted that ION’s products and services related to steerable streamers–including
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`its DigiFIN lateral steering system–infringed Patent Owner’s patents. (Ex. 2007.)
`
`ION counterclaimed that the ’607 patent was invalid and proceeded to challenge
`
`the ’607 patent’s validity over five years of litigation (“the ION litigation”). ION’s
`
`arguments failed at trial, with the jury finding the ’607 patent was not invalid and
`
`that ION was guilty of willful infringement.7 The Court then denied ION’s post-
`
`trial motions and upheld the jury’s finding, and entered a final judgment on May 7,
`
`2014.
`
`More specifically, the district court found that “[t]he streamer positioning
`
`devices mentioned in the Workman Patent refers to depth control devices, not
`
`lateral positioning devices as used in the Bittleston patents” and that “ION’s expert
`
`witness, Robert Brune admitted that Claim 15 of the ‘607 patent requires lateral
`
`steering and Workman does not enable lateral steering.” (Ex. 2143.) This is
`
`consistent with Patent Owner’s evidence of record. (See, e.g., IPR2014-00688, Ex.
`
`2042 at ¶ 150, et seq. (“Workman does not enable a streamer positioning device as
`
`claimed.”).) And as discussed below, it is consistent with Mr. Workman’s own
`
`description of his work. (See, e.g., Ex. 2149
`
`
`
`
`7 While the jury found the infringement willful, the Court declined to so find based
`
`on the objective prong. (Ex. 2143.)
`
`
`
`21
`
`

`
`
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`) But it is
`
`inconsistent with ION’s current arguments, and ION thereby violates the doctrine
`
`of collateral estoppel by seeking to re-litigate this decided issue, as discussed
`
`below.
`
`ION could have appealed the district court’s findings and judgment that the
`
`’607 patent was not invalid directly to the Federal Circuit. After PGS filed its
`
`petition, however, ION chose not to. Having already lost on the issue of validity,
`
`ION is now precluded by collateral estoppel and res judicata from challenging the
`
`’607 patent’s validity here.
`
`A.
`
`ION’s Petition is Barred Under the Doctrine of Collateral
`Estoppel
`
`Collateral estoppel (or issue preclusion) prevents ION from re-challenging
`
`the validity of the ’607 patent in the ’567 IPR. The underlying rationale of the
`
`doctrine of collateral estoppel “protects a [party] from the burden of litigating an
`
`issue that has been fully and fairly tried in a prior action.” Comair Rotron, Inc. v.
`
`Nippon Densan Corp., 49 F.3d 1535, 1537 (Fed. Cir. 1995).
`
`Collateral Estoppel Applies to IPR Proceedings
`
`1.
`ION spent five years litigating the ’607 patent’s validity and lost. Despite
`
`having had this full and fair opportunity to litigate validity at the district court, ION
`
`now seeks another, and impermissible, opportunity to invalidate the patent. ION,
`22
`
`
`
`

`
`
`however, should not get a chance to relitigate the issues that were already decided
`
`Patent Owner Preliminary Response
`Case IPR2014-00688
`
`and disposed of by the district court and a jury after a four-week trial and many-
`
`months of post-trial briefing and argument. In re Freeman, 30 F.3d 1459, 1465
`
`(Fed. Cir. 1994) (stating that “a party who has litigated an issue and lost should be
`
`bound by that decision and cannot demand that the issue be decided over again”);
`
`see also Suel v. Secretary of Health & Human Servs., 192 F.3d 981, 985 (Fed.