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`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 IPR2014-006891
`U.S. Patent No. 7,293,520
`____________
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`Pursuant to 37 C.F.R. § 42.107(a) and the Board’s Order dated May 19,
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`2015 (Paper 68), Patent Owner, WesternGeco L.L.C. (“WesternGeco” or “Patent
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`Owner”), submits this Preliminary Response to the Petition for Inter Partes Review
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`(“Petition”) of U.S. Patent No. 7,293,520 (the “’520 patent”) filed by Petitioners,
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`ION Geophysical Corporation and ION International S.A.R.L. (collectively,
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`“ION”) in IPR2015-00565 (“the ’565 IPR”).
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`1 Case IPR2015-00565 has been joined with this proceeding. This Preliminary
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`Response is being concurrently filed in that proceeding.
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`
`
`
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`I.
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`II.
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`Patent Owner Preliminary Response
`Case IPR2015-00689
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`TABLE OF CONTENTS
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`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
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`A.
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`B.
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`C.
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`D.
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`E.
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`Privity is Flexibly Applied and Broader Than Real Party-In-Interest .. 6
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`PGS’s Relationship to the ION Litigation Establishes Privity ........... 11
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`PGS’s Substantive Legal Relationship With ION Establishes Privity
` ............................................................................................................. 15
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`PGS is a RPI Under the Guidelines ..................................................... 18
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`At a Minimum, Patent Owner Deserves Additional Discovery on
`Privity and RPI .................................................................................... 20
`
`III.
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`ION’S VALIDITY ARGUMENTS ARE BARRED UNDER RES
`JUDICATA AND COLLATERAL ESTOPPEL AND CANNOT SUPPORT
`TRIAL INSTITUTION ................................................................................. 20
`
`A.
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`ION’s Petition is Barred Under the Doctrine of Collateral Estoppel .. 22
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`1.
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`2.
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`Collateral Estoppel Applies to IPR Proceedings ...................... 23
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`Collateral Estoppel is Appropriate ............................................ 25
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`B.
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`ION’s Petition is Barred Under the Doctrine of Res Judicata ............ 28
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`IV.
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`ION’S PRIOR STATEMENTS AND ADJUDICATIONS CONTRADICT
`ITS SUBSTANTIVE ARGUMENTS ........................................................... 29
`
`A.
`
`B.
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`ION Previously Rejected Its Current Characterizations of the Prior Art
` ............................................................................................................. 30
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`ION Previously Admitted That WesternGeco’s Commercial
`Embodiments Practice The Claimed Inventions ................................. 33
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`JOINDER IS IMPOSSIBLE WITHOUT COMPROMISING THE
`EXISTING SCHEDULE AS WELL AS PATENT OWNER’S DUE
`i
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`V.
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`Patent Owner Preliminary Response
`Case IPR2015-00689
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`PROCESS RIGHTS ...................................................................................... 34
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`VI. CONCLUSION .............................................................................................. 35
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`
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`ii
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`I.
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`INTRODUCTION
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`Patent Owner Preliminary Response
`Case IPR2014-00689
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`ION’s petition and motion to join IPR2014-00689 (“the ’689 IPR”) are a
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`sham as well as an impermissible second—if not third or fourth—bite at the apple.
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`ION is an adjudicated infringer of U.S. Patent No. 7,293,520 (“the ’520 patent”)
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`and has already lost on the same validity arguments that it attempts to relitigate
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`here, first on summary judgment, then at trial, and then again post-trial. Having
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`been sued in 2009, ION was time-barred under 35 U.S.C. § 315(b) from filing its
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`own IPR. Instead, ION seeks to join its proxy’s, Petroleum Geo-Services, Inc.’s
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`(“PGS’s”), ’689 IPR in an attempt to skirt the rules. This Board should see
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`through this ruse—PGS and ION are privies with close corporate ties that have
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`worked together for years to invalidate the ’520 patent. Accordingly, the Board
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`must deny ION’s joinder motion, deny ION’s petition, and terminate the ’689 IPR.
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`*
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`*
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`*
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`ION is time-barred from filing an IPR challenging the ’520 patent. Over
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`five years ago Patent Owner sued ION for infringement of multiple patents,
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`including the ’520 patent. See WesternGeco LLC v. ION Geophysical Corp., No.
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`09-cv-01827 (S.D. Tex. 2009) (the “ION litigation”). Thus, 35 U.S.C. § 315(b)
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`bars ION from now challenging the ’520 patent’s validity through an IPR
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`proceeding.
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`PGS is likewise barred from challenging the ’520 patent as ION’s proxy and
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`1
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`thus barred from launching an IPR proceeding for ION to then join. PGS and
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`Patent Owner Preliminary Response
`Case IPR2014-00689
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`ION’s attempt to distinguish themselves for the purpose of these IPR proceedings
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`is simply a ruse based on concealment—if not outright misrepresentation—of the
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`relevant facts. Both a strong contractual relationship and a strong collaborative
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`relationship exist between ION and PGS regarding the validity of the ’520 patent,
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`making these two parties privies for purposes of these proceedings.
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`Their contractual relationship began
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`Alongside this contractual relationship, ION and PGS have entered into a
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`collaboration regarding the subject matter of these proceedings, coordinating their
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`efforts across multiple forums to invalidate the ’520 patent. This collaboration
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`2
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`2
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`included PGS and ION strategizing from at least 2011 onwards, as part of the ION
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`Patent Owner Preliminary Response
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`litigation, to invalidate Patent Owner’s patents. (See Ex. 2015.) It also included
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`discussions regarding prior art before PGS filed its IPR challenging the ’520
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`patent. And it further includes PGS’s and ION’s continued collusion regarding the
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`’565 IPR and the ’689 IPR. (See Ex. 2018.)
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`ION and PGS’s tight relationship regarding the subject matter of these
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`proceedings predates either of their petitions and renders the parties privies, if not
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`also unnamed RPIs for each other’s requested IPR. Both IPRs are time-barred
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`under § 315(b) and both Petitions are defective in not naming all RPIs. These fatal
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`defects cannot now be cured—ION’s petition and request for joinder must be
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`denied and PGS’s ’689 IPR terminated.
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`
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`Additionally, the twin doctrines of collateral estoppel and res judicata
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`preclude ION’s entire case. ION lost on the same invalidity arguments at trial that
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`it attempts to raise here. ION’s failure to appeal those issues makes that judgement
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`final and conclusive as between the parties. Moreover, ION’s new IPR arguments
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`directly contradict its prior factual representations in district court as well as in
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`counterpart proceedings before foreign patent tribunals. ION cannot relitigate
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`decided issues, nor abandon its prior positions merely because they belie ION’s
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`newfound arguments.
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`*
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`*
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`*
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`3
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`Patent Owner Preliminary Response
`Case IPR2014-00689
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`Procedurally, the Board must vacate its Joinder Order because the Board
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`
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`lacked the statutory power to act as it did. (See Paper Nos. 54, 62, and 68.)
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`Although the Board attempted to cure this defect by providing Patent Owner with a
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`Preliminary Response by authorizing this paper, this does not retroactively cure the
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`basic defect of the Order in that the PTAB did not have the statutory authority to
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`issue the Order when it did. The Joinder Order thus should be vacated.
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`If after vacating the order, the Board decides to reconsider ION’s request for
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`joinder, the Board should deny joining ION to the ’689 IPR and deny instituting
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`ION’s petition, because (1) ION and PGS are in privity, which invalidates the ’689
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`IPR and leaves no proceeding for ION to join; (2) ION is precluded under 35
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`U.S.C. § 315(b) from pursuing its own, standalone IPR; (3) ION failed to name
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`PGS as a RPI, which invalidates ION’s petition; and (4) principles of former
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`adjudication preclude ION’s entire case, whether it is brought in a standalone or in
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`a joined proceeding.
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`But even if the Board were somehow to find to the contrary, it is too late to
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`simply join ION to the ’689 IPR. PGS’s reply brief is due in only a week, and the
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`oral hearing is next month. The issues engendered by joinder cannot fairly be
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`heard, let alone adjudicated, within that schedule. Should the Board grant joinder,
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`Patent Owner respectfully requests that the Board align this schedule with the
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`second round of IPRs (IPR2014-01475, IPR2014-01477, IPR2014-01478)—which
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`4
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`address the same patents and nearly identical references and arguments—to
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`Patent Owner Preliminary Response
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`provide Patent Owner a Response as well as time and process to sufficiently
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`defend itself. (See Paper No. 62.)
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`II.
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`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
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`The Board should deny joinder, deny instituting trial on ION’s petition, and
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`terminate the ’689 IPR because PGS and ION are in privity and ION was sued
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`more than one year before the ’689 IPR filing date. ION was sued for infringing
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`the ’520 patent in 2009 with its DigiFIN system. PGS—ION’s “launch partner”
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`for DigiFIN from 2007 to present—did not bring this action until the spring of
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`2014. Section 315(b) establishes, however, that “[a]n inter partes review may not
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`be instituted if the petition requesting the proceeding is filed more than 1 year
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`after the date on which the petitioner, real party in interest, or privy of the
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`petitioner is served with a complaint alleging infringement of the patent.” Thus,
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`section 315(b) plainly precludes the ’565 IPR as a standalone proceeding, and
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`ION’s and PGS’s privity relationship invalidates the ’689 IPR, leaving nothing for
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`ION to join.
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`There is compelling evidence that PGS and ION are privies. For example,
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`there is strong evidence of ION and PGS colluding to invalidate the ’520 patent
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`across multiple forums, including the present one. (Exs. 2015; 2018.) There is
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`5
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`also evidence of
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`Patent Owner Preliminary Response
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` (See Exs. 2069; 2027.)3
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`This evidence also shows that ION should have named PGS as a RPI on its
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`petition. Its failure to do so renders its petition fatally defective.
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`A.
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`Privity is Flexibly Applied and Broader Than Real Party-In-
`Interest
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`Privity “is more expansive” than RPI and “encompass[es] parties that do not
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`necessarily need to be identified in the petition as a ‘real party-in-interest.’” Office
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`Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48759 (Aug. 14, 2012)
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`(hereinafter, “OPTP Guide”). The privity assessment is both equitable and flexible
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`in nature, with the goal being to determine “whether the relationship between the
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`purported ‘privy’ and the relevant other party is sufficiently close such that both
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`should be bound by the trial outcome and related estoppels.” Id. Thus, “the privity
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`inquiry focuses on the relationship between parties” as opposed to the non-party’s
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`relationship to a proceeding. Aruze Gaming Macau, Ltd. v. MGT Gaming, Inc.,
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`IPR2014-01288, Paper No. 13 at 13 (Feb. 20, 2015). Consistent with this, the
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`3 Although there is evidence of multiple agreements with warranty or
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`indemnification provisions, ION remarkably denies the very existence of any such
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`agreements. (Ex. 2018; Ex. 1064 at 17:15-21; and Paper No. 65.)
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`6
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`Office Patent Trial Practice Guide makes clear that the central focus of the privity
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`assessment is whether the parties are close enough that estoppel provisions would
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`apply between the parties. OPTP Guide, 77 Fed. Reg. at 48759.
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`The Supreme Court identified in Taylor v. Sturgell six categories of
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`situations where nonparty estoppel would apply, noting that the list only provided
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`“a framework for [the] consideration of virtual representation,” and did not
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`“establish a definitive taxonomy.” 553 U.S. 880, 893, n. 6 (2008). One such
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`category binds a nonparty to a previous judgment if the nonparty “assumed control
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`over the litigation in which that judgment was rendered.” Id. at 895. While this
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`category states that control is a requirement, “[t]he actual assumption of control of
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`the lawsuit is not necessary for a finding of privity; the opportunity, or legal right
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`to assume control is sufficient.” Aruze Gaming Macau, Ltd., IPR2014-01288,
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`Paper No. 13 at 14.
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`For example, one party expressly or impliedly giving another party the
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`authority to represent it in a proceeding may establish privity. See Gen. Foods
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`Corp. v. Mass. Dep’t of Pub. Health, 648 F.2d 784, 787 (1st Cir. 1981) (finding
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`privity where a member of a trade association contributed money towards litigation
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`expenses and thus impliedly authorized the trade association to represent the
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`member in the action). Similarly, privity has been found where a nonparty has a
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`direct relationship with the underlying facts of a case, has similar interests as the
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`7
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`party to the case, and is aware of the case. See Cal. Physicians, Serv. V. Aoki
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`Patent Owner Preliminary Response
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`Diabetes Research Inst., 163 Cal. App. 4th 1506, 1521 (Cal. Ct. App. 2008)
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`(finding privity where the nonparty administered the insurance claims at issue in
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`the first proceeding, the nonparty’s denial of insurance coverage was disputed in
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`the first proceeding, and the nonparty’s witnesses had testified in the proceeding
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`defending the coverage determination).
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`While establishing control is one way to justify preclusion under Taylor, it is
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`not the only way. A “substantive legal relationship” may also be sufficient to
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`justify preclusion. Id. at 894. While Taylor does not specifically list
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`indemnification agreements under this category, the Court acknowledges that its
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`list is not all inclusive and, both before and after Taylor, lower courts have
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`recognized that an indemnification relationship establishes privity. See e.g.,
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`Internal Marine, LLC v. FDT, LLC, 2014 U.S. Dist. LEXIS 175544 at *17 (E.D.
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`La. Dec. 18, 2014) (noting that “[t]he fact that the Supreme Court in Taylor did not
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`specifically mention [sic] include the indemnitor/indemnitee relationship does not
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`mean that it does not suffice for a finding of a pre-existing legal relationship”);
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`Lanphere Enters., Inc. v. Doorknob Enters. LLC, 145 Fed. App’x 589, 592 (9th
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`Cir. 2005) (affirming the district court’s conclusion that an indemnity relationship
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`established privity for preclusion purposes). Similarly, the Board has found
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`litigation defense agreements and indemnification agreements establish privity.
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`8
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`Gen. Elec. Co. v. Transdata, Inc., IPR2014-01559, Paper No. 23 at 8-11 (Apr. 15,
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`Patent Owner Preliminary Response
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`2015) (finding a litigation defense agreement established privity); see also First
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`Data Corp. v. Cardsoft (Assignment for the Benefit of Creditors), LLC, IPR2014-
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`00715, Paper No. 9 at 7-10 (Oct. 17, 2014) (finding an indemnitor, who had
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`control and/or an opportunity to control events leading up to the filing of a petition,
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`to be a RPI).
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`In addition to indemnification agreements, the Board has repeatedly found
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`the existence of a privity relationship between a manufacturer of an accused
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`product and the purchaser of the accused product for the purpose of standing. For
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`example, in SAP America, Inc. v. Pi-Net Int’l, Inc., the Board explained that the
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`legislative history of the America Invents Act (“AIA”) establishes that “‘privy’
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`effectively means customers of the petitioner.” CBM2013-00013, Paper No. 15 at
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`4 (Sept. 19, 2013). Specifically, the Board pointed to Senator Schumer’s statement
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`that:
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`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
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`Patent Owner Preliminary Response
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`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.
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`157 Cong. Rec. S. 5432 (daily ed. Sept. 8, 2011) (emphasis added). Based in part
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`on this statement, the Board found that a manufacturer of an accused device is in
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`privity with the purchaser of an accused device for standing purposes under the
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`AIA. SAP, CBM2013-0013, Paper No. 15 at 5. The Board also found that because
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`the indemnification relationship related to the product at issue in the proceeding, it
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`further supported a finding of privity. Id.; see also E-Bay Enterprise, Inc. v.
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`Lockwood, CBM2014-00025, Paper No. 24 at 9-12 (May 2014) (finding that an
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`indemnitor was in privity with an indemnitee via an indemnification agreement and
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`thus had standing to file a Covered Business Method (“CBM”) proceeding).
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`The Covered Business Method (“CBM”) statute confers standing only where
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`“the person or the person’s real party in interest or privy has been sued for
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`infringement of the patent or has been charged with infringement under the
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`patent.” AIA § 18(a)(1)(B) (emphasis added). Similarly, 35 U.S.C. § 315(b) states
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`that “[a]n inter partes review may not be instituted if the petition requesting the
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`proceeding is filed more than 1 year after the date on which the petitioner, real
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`party in interest, or privy of the petitioner is served with a complaint alleging
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`10
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`infringement of the patent.” Thus, both statutes use the term “privy” in connection
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`with whether a party has standing to file a petition for either a CBM or IPR.
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`It has long been established that “there is a natural presumption that identical
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`words used in different parts of the same act are intended to have the same
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`meaning.” Atl. Cleaners & Dryers, Inc. v. United States, 286 U.S. 427, 433
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`(1932). However, this rule is flexible, and readily yields if there is such variation
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`in connection with how the words are used as to “reasonably warrant that they
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`were employed in different parts of the act with different intent.” Envtl. Defense v.
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`Duke Energy Corp., 549 U.S. 561, 574 (2007). That is not the case here.
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`Here, the term “privy” relates to standing in both the CBM and IPR
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`provisions of the AIA. As such, privy must mean the same thing in the CBM and
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`IPR standing statutes. Thus, the Board’s interpretation in CBM proceedings that
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`both a manufacturer–customer relationship related to an accused device and
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`establish privity must apply here. The ’565 IPR and the
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`’689 IPR must be terminated.
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`PGS’s Relationship to the ION Litigation Establishes Privity
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`B.
`PGS has a strong contractual relationship with ION, a strong cooperative
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`relationship with ION, and is deeply invested in DigiFIN. The two are privies
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`under 35 U.S.C. § 315(b).
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`PGS has been purchasing the DigiFIN system from ION since it launched. Thus,
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`11
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`when PGS was made aware that DigiFIN was at issue in the ION litigation, it took
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`Patent Owner Preliminary Response
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`an active role in protecting its interests by collaborating with ION. Additionally,
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`as part of PGS’s customer relationship with ION,
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` Together, these relationships establish that PGS is a
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`privy of ION.
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`4 Including at least U.S. Patent Nos. 7,162,967, 7,080,607, and 7,293,520.
`12
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`Additionally, PGS was made aware of the ION litigation a mere matter of
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`months after Patent Owner brought the case against ION. On December 8, 2009,
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`Patent Owner provided PGS with notice of its infringement liability for using
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`DigiFIN by providing it with a copy of the complaint. (Ex. 2008.) When PGS did
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`not cooperate with providing discovery, Patent Owner subpoenaed PGS on January
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`22, 2010 and identified “DigiFIN” as the accused product in the litigation. (Ex.
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`2009.)5 After being served with process, PGS appeared in the ION litigation
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`through its outside counsel, Heim, Payne & Chorush. (Ex. 2011.)
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`While PGS was not a named defendant in the ION litigation, once entering
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`an appearance, PGS was actively involved with the case. (See Ex. 2015.) PGS
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`5 In a subsequent motion to compel discovery, Patent Owner identified PGS as one
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`of the ION “customers who assemble [DigiFINs] into infringing systems either
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`within the United States or abroad.” (Ex. 2010.)
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`13
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`consistently communicated with ION’s in-house counsel to discuss the ION
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`litigation. (Exs. 2015, 2016.) These communications included discussions
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`regarding PGS’s assistance in making PGS witnesses available as well as ION’s
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`invalidity and infringement arguments. (Exs. 2015, 2016.)
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`—Oyvind Hillesund, the co-inventor
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`of the ’520 patent, and Nils Lunde—who both proceeded to give deposition
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`testimony at ION’s request. (Exs. 2141, 2142; 2157 at 60:14-61:10.) Additionally,
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`PGS began claiming a “common interest privilege” over its communications with
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`ION regarding “WG litigation” and “litigation interests.” (Ex. 2028.) PGS based
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`this privilege assertion on “Western[Geco]’s litigiousness on the subject of
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`DigiFIN giv[ing] rise to a common legal interest regarding the patent infringement
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`assertions.” (Ex. 2029.)
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`PGS’s role in the ION litigation only increased in November, 2012, after
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`Patent Owner sent additional communications to PGS regarding PGS’s
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`infringement of the ’520 patent.
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`14
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` Accordingly, PGS worked with ION in the
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`ION litigation to invalidate the ’520 patent in an effort to prevent future litigation
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`against PGS. (See, e.g., Ex. 2015; Ex. 2016.)
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`Although PGS and ION’s efforts at the district court failed, the parties’
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`strong relationship throughout the litigation makes them privies. PGS
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`and purchased the accused product from ION, had similar interests
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`as ION in protecting its rights in DigiFIN, and was well-aware of the ION
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`litigation, contributing both ideas and witnesses. See Cal. Physicians, Serv., 163
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`Cal. App. 4th at 1521. Additionally, PGS impliedly let ION conduct the litigation
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`on PGS’s behalf by choosing not to intervene when it realized that its rights in
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`DigiFIN were at issue. Gen. Foods Corp., 648 F.2d at 787. Thus, PGS is a privy
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`of ION.
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`C.
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`PGS’s Substantive Legal Relationship With ION Establishes
`Privity
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`Not only does PGS’s involvement in the ION litigation establish privity, but
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`PGS’s substantial legal relationship with ION establishes privity.
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`15
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`Patent Owner Preliminary Response
`Patent Owner Preliminary Response
`Case IPR2014-00689
`Case IPR2014-00689
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`p—n ON
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`Patent Owner Preliminary Response
`Case IPR2014-00689
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` ION also
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`supplies the DigiFIN product to PGS. This relationship destroys PGS’s standing to
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`6 Additional
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`exist, but ION and PGS have refused to disclose
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`them. (See Paper No. 65.)
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`file and maintain the ’689 IPR because ION was sued over one year ago. Joinder
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`must be denied, ION’s petition should be denied, and the ’689 IPR should be
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`terminated.
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`PGS is a RPI Under the Guidelines
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`D.
`The strong relationship between ION and PGS makes PGS an unnamed RPI
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`to the ’565 IPR under the various factors set forth in the Practice Guide. See
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`Office Patent Trial Practice Guide, 77 Fed. Reg. 48756 at 48760. The first
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`factor—the relationship of PGS to ION—is shown by PGS’s and ION’s close
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`contractual and cooperative relationship regarding the subject matter of these
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`proceedings. See supra at IIB and IIC.
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`further discussions—most of which ION and PGS have withheld from Patent
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`Owner under the guise of privilege or by simply refusing to provide routine
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`discovery—PGS filed the ’689 IPR as ION would have been time barred from
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`doing so in its own name, but still giving ION the vehicle to later join the
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`proceedings as an end-around the statutory bar.
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`The second factor—the relationship of PGS to the petition itself—also
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`shows PGS’s control over the ’565 IPR. ION filed the exact same petition that
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`PGS filed in the ’689 IPR. Thus, PGS had de facto control over ION’s proceeding.
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`Moreover, PGS used the same prior art in the ’689 IPR that ION used at the district
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`Patent Owner Preliminary Response
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`court, and did so only after discussing the prior art with ION prior to filing its
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`petition. This shows the strong cooperation between ION and PGS over the
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`subject matter of ION’s petition.
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`The third factor—the nature of the petitioner—similarly evidences PGS as
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`an RPI in the ’565 IPR. ION is PGS’s supplier. (Ex. 2006.) Both PGS and ION
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`have been charged with infringing the ’520 patent due to their use of ION’s
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`products. (Ex. 2006.) If ION is successful at invalidating the ’520 patent, PGS’s
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`potential liability for purchasing and using ION’s supplies may diminish.
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`Additionally, PGS has claimed in district court that ION’s litigation regarding the
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`’520 patent has shielded PGS from any liability for its own infringement. (Ex.
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`2030.) Accordingly, PGS will directly benefit if ION successfully invalidates the
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`’520 patent and has thus been colluding with ION in an effort to achieve this goal.
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`(Ex. 2018.)
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`Each of the three factors points to PGS being a proper RPI. Thus, PGS
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`should have been named a RPI in ION’s petition. Office Patent Trial Practice
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`Guide, 77 Fed. Reg. 48756 at 48759. ION’s failure to do so renders its petition
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`defective and mandates that the petition as well as ION’s joinder request both be
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`denied.
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`Patent Owner Preliminary Response
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`E. At a Minimum, Patent Owner Deserves Additional Discovery on
`Privity and RPI
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`As discussed above and previously, Patent Owner has been wrongfully
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`deprived additional discovery on privity and RPI to uncover the full relationship
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`between PGS and ION. (See Paper Nos. 59, 65; see also IPR2015-00565, Paper
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`No. 15.) While Patent Owner has sought information regarding this relationship
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`from both PGS and ION, these requests have been consistently denied—indeed,
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`ION has denied the very existence of the few documents that PGS has produced.
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`This resistance is not surprising because if PGS and ION are in privity, or if PGS
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`and ION are RPIs of each other, the ’689 IPR and the ’565 IPR must terminate
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`immediately. Due process, however, requires that Patent Owner be given the
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`opportunity to seek this evidence, which is in the sole possession of PGS and ION
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`and otherwise unavailable to Patent Owner. (Paper No. 65.) If the Board
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`reconsiders ION’s petition and joinder request, Patent Owner respectfully requests
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`leave to seek this discovery and be heard prior to any rulings from the Board.
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`III.
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`ION’S VALIDITY ARGUMENTS ARE BARRED UNDER RES
`JUDICATA AND COLLATERAL ESTOPPEL AND CANNOT
`SUPPORT TRIAL INSTITUTION
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`ION cannot now challenge the ’520 patent’s validity when it did so at the
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`district court and lost, especially on the very same grounds that failed in those prior
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`proceedings. On June 12, 2009, Patent Owner sued ION for infringement of
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`multiple patents, including the ’520 patent. (See the ION litigation.) Patent Owner
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`asserted that ION’s products and services related to steerable streamers–including
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`Patent Owner Preliminary Response
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`its DigiFIN lateral steering system–infringed Patent Owner’s patents. (Ex. 2007.)
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`ION counterclaimed that the ’520 patent was invalid and proceeded to challenge
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`the ’520 patent’s validity over five years of litigation (“the ION litigation”). ION’s
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`arguments failed at trial, with the jury finding the ’520 patent was not invalid and
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`that ION was guilty of willful infringement.7 The Court then denied ION’s post-
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`trial motions and upheld the jury’s finding, and entered a final judgment on May 7,
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`2014.
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`More specifically, the district court found that “[t]he streamer positioning
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`devices mentioned in the Workman Patent refers to depth control devices, not
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`lateral positioning devices as used in the Bittleston patents.” (Ex. 2143.) This is
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`consistent with Patent Owner’s evidence of record. (See, e.g., Ex. 2042 at ¶ 150, et
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`seq. (“Workman does not enable a streamer positioning device as claimed.”).) And
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`as discussed below, it is consistent with Mr. Workman’s own description of his
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`work. (See, e.g., Ex. 2149
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`) But it is inconsistent with
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`7 While the jury found the infringement willful, the Court declined to so find based
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`on the objective prong. (Ex. 2143.)
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`ION’s current arguments, and ION thereby violates the doctrine of collateral
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`estoppel by seeking to re-litigate this decided issue, as discussed below.
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`Additionally, the district court found that:
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`The Workman patent states only that a “threshold parameter” of “at
`least 100 meters” be maintained. This threshold parameter does not
`specify that a precise spacing be set and maintained between adjacent
`streamers. WesternGeco aptly points out that, without maintaining
`any space, the streamers could range from 100 meters apart to 100
`miles.
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`(Ex. 2143 at 10 (emphasis added).) ION also has no basis to re-litigate this
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`decided issue in a separate forum.
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`ION could have appealed the district court’s findings and judgment that the
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`’520 patent was not invalid directly to the Federal Circuit. After PGS filed its
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`petition, however, ION chose not to. Having already lost on the issue of validity,
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`ION is now precluded by collateral estoppel and res judicata from challenging the
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`’520 patent’s validity here.
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`A.
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`ION’s Petition is Barred Under the Doctrine of Collateral
`Estoppel
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`Collateral estoppel (or issue preclusion) prevents ION from re-challenging
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`the validity of the ’520 patent in the ’566 IPR. The underlying rationale of the
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`doctrine of collateral estoppel “protects a [party] from the burden of litigating an
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`issue that has been fully and fairly tried in a prior action.” Comair Rotron, Inc. v.
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`Patent Owner Preliminary Response
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`Nippon Densan Corp., 49 F.3d 1535, 1537 (Fed. Cir. 1995).
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`Collateral Estoppel Applies to IPR Proceedings
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`1.
`ION spent five years litigating the ’520 patent’s validity and lost. Despite
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`having had this full and fair opportunity to litigate validity at the district court, ION
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`now seeks another, and impermissible, opportunity to invalidate the patent. ION,
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`however, should not get a chance to relitigate the issues that were already decided
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`and disposed of by the district court and a jury af