UNITED STATES PATENT AND TRADEMARK OFFICE
`
`______________
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`BAKER HUGHES INCORPORATED
`and
`BAKER HUGHES OILFIELD OPERATIONS, INC.,
`Petitioners
`
`v.
`
`PACKERS PLUS ENERGY SERVICES, INC.
`Patent Owner
`
`______________
`
`
`Case IPR2016-00596
`Patent 7,134,505
`______________
`
`
`
`PETITIONERS’ REPLY
`
`
`
`36598348.1
`
`
`
`______________
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`BAKER HUGHES INCORPORATED
`and
`BAKER HUGHES OILFIELD OPERATIONS, INC.,
`Petitioners
`
`v.
`
`PACKERS PLUS ENERGY SERVICES, INC.
`Patent Owner
`
`______________
`
`
`Case IPR2016-00596
`Patent 7,134,505
`______________
`
`
`
`PETITIONERS’ REPLY
`
`
`
`36598348.1
`
`
`
`Petitioner’s Exhibit List
`
`Case IPR2016-00596
`Patent 7,134,505
`
`Description
`Exhibit
`1001 U.S. Patent No. 7,134,505 (the “’505 Patent”)
`1002 D.W. Thomson, et al., Design and Installation of a Cost-Effective
`Completion System for Horizontal Chalk Wells Where Multiple Zones
`Require Acid Stimulation, SPE (Society for Petroleum Engineering)
`37482 (1997) (“Thomson”)
`1003 U.S. Patent No. 5,449,039 (“Hartley”)
`B. Ellsworth, et al., Production Control of Horizontal Wells in a
`1004
`Carbonate Reef Structure, 1999 Canadian Institute of Mining,
`Metallurgy, and Petroleum Horizontal Well Conference (“Ellsworth”)
`1005 U.S. Patent No. 5,375,662 (“Echols”)
`1006 U.S. Patent 4,018,272 (“Brown”)
`1007 Declaration of Ali Daneshy, Ph.D. (“Daneshy1”)
`1008 KATE VAN DYKE, FUNDAMENTALS OF PETROLEUM ENGINEERING (4th
`ed. 1997)
`RON BAKER, A PRIMER OF OIL WELL DRILLING (5th ed. (revised)
`1996)
`1010 U.S. Patent No. 4,099,563 (“Hutchison”)
`1011 U.S. Patent No. 6,257,338 (“Kilgore”)
`1012
`Excerpts of Prosecution History of U.S. Patent No. 7,861,774, a
`continuation of the ’505 Patent
`Excerpts of Prosecution History of the ’505 Patent
`1013
`1014 U.S. Provisional Application No. 60/404,783
`1015 Dictionary Definition from WEBSTER’S THIRD NEW INTERNATIONAL
`DICTIONARY OF THE ENGLISH LANGUAGE UNABRIDGED (1986)
`1016 U.S. Patent No. 4,279,306
`1017 K.W. Lagrone, et al., A New Development in Completion Methods,
`SOCIETY OF PETROLEUM ENGINEERING, Paper 530-PA (1963)
`(“Lagrone”)
`
`1009
`
`36598348.1
`
`i
`
`
`
`Case IPR2016-00596
`Patent 7,134,505
`
`Description
`Exhibit
`1018 M.J. Eberhard, et al., Current Use of Limited-Entry Hydraulic
`Fracturing in the Codell/Niobrara Formations—DJ Basin, SPE
`(Society for Petroleum Engineering) 29553 (1995)
`1019 Declaration of Christopher D. Hawkes, Ph.D., P.Geo., regarding the
`proceedings of the 7th One-Day Conference On Horizontal Well
`Technology Operational Excellence (Canada November 3, 1999)
`(including Ex. 1004 at 102-110)
`1020 Affidavit of Nancy Chaffin Hunter regarding the proceedings of the
`10th Middle East Oil Show & Conference (Bahrain March 15-18,
`1997) (including Ex. 1002 at 12/26-23/26) – NOT FILED
`1021 Declaration of Rebekah Stacha regarding SPE 37482 (including Ex.
`1002 at Ex. A) – NOT FILED
`1022 Declaration of Rebekah Stacha regarding SPE 49523 (referencing Ex.
`1002 at p. 605, fn.28) – NOT FILED
`9/21/2016 Declaration of Christopher D. Hawkes, Ph.D., P.Geo.,
`regarding the proceedings of the 7th One-Day Conference On
`Horizontal Well Technology Operational Excellence (Canada
`November 3, 1999) (including Ex. 1004 at 102/253-110/253 and
`228/253-236/253) – NOT FILED
`1024 Declaration of Rebekah Stacha regarding SPE 29553 (including Ex.
`1018 at Ex. A) – NOT FILED
`1025 Affidavit of Nancy Chaffin Hunter regarding the proceedings of the
`Joint Rocky Mountain Meeting/Low-Permeability Reservoirs
`Symposium and Exhibition (Denver, CO March 19-22, 1995)
`(including Ex. 1018 at 11/24-21/24) – NOT FILED
`1026 Affidavit of Rodolfo Diaz regarding July 1963 Journal of Petroleum
`Technology (including Ex. 1017 at 695-702) – NOT FILED
`Table Associated with qrySumNetValuebyFamily from Ex. 2051
`(contains PROTECTIVE ORDER MATERIAL)
`
`1027
`
`1023
`
`36598348.1
`
`ii
`
`
`
`Case IPR2016-00596
`Patent 7,134,505
`
`Description
`Exhibit
`1028 Affidavit of Nancy Chaffin Hunter, regarding the proceedings of the
`Production Operation Symposium (Oklahoma City, OK April 2-4,
`1995) (including R. Coon and D. Murray, Single-Trip Completion
`Concept Replaces Multiple Packers and Sliding Sleeves in Selective
`Multi-Zone Production and Stimulation Operations, SPE 29539
`(1995))
`(“Coon”)
`1029 March 1, 2017 email from Justin Nemunaitis, confirming RE Packer
`revenue in Ex. 1027 was included in revenue figure reported at Ex.
`2034 at 42:9.
`Transcript of February 28, 2017 Deposition Testimony of Harold R.
`McGowen III (“McGowen”)
`Second Declaration of Ali Daneshy, Ph.D. (“Daneshy2”)
`P.D. Ellis, et al., Application of Hydraulic Fractures in Openhole
`Horizontal Wells, SPE/Petroleum Society of CIM 65464 (2000)
`(“Ellis”)
`1033 M.J. Rees, et al., Successful Hydrajet Acid Squeeze and Multifracture
`Acid Treatments in Horizontal Open Holes Using Dynamic Diversion
`Process and Downhole Mixing, SPE 71692 (Sep. 30, 2001) (citing
`Ex. 1032 at fn. 1)
`
`1031
`1032
`
`1030
`
`
`
`
`
`
`
`36598348.1
`
`iii
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`
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`Case IPR2016-00596
`Patent 7,134,505
`
`Table of Contents
`
`V.
`
`RC’S THOMSON ARGUMENT (GROUNDS 1-4) ...................................... 1
`I.
`RC’S THOMSON-ECHOLS ARGUMENTS (GROUND 4) ......................... 2
`II.
`III. RC’S THOMSON-BROWN ARGUMENTS (GROUNDS 5-8) .................... 3
`IV. THE OBVIOUSNESS EVIDENCE IS STRONG
`(GROUNDS 3 AND 7) .................................................................................... 6
`RC’S MERITLESS CHALLENGES TO PETITIONERS’
`MOTIVATION (POR AT 47-49).................................................................... 7
`VI. RC MISCHARACTERIZES A POSITA’S VIEWS (POR AT 8-20)........... 10
`A.
`Cemented Casing: Not Required ........................................................ 10
`B.
`RC’s “Conventional Wisdom” and Commercial Reasonableness
`Arguments: Irrelevant and Baseless ................................................... 15
`VII. RC’S SECONDARY CONSIDERATIONS EVIDENCE IS WEAK
`AND DOES NOT OUTWEIGH THE STRONG EVIDENCE OF
`OBVIOUSNESS (POR AT 21-39) ............................................................... 15
`A. No Contravention of Accepted Wisdom (POR at 21-24) ................... 15
`B.
`RC Has Not Established Nexus (POR at 37-38) ................................. 16
`C.
`RC’s Industry Praise (POR at 25-29) .................................................. 18
`D.
`RC’s Commercial Success Evidence (POR at 34-37) ........................ 21
`E.
`RC’s Copying Evidence Is Meritless (POR at 30-35) ........................ 26
`
`
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`36598348.1
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`
`
`Table of Authorities
`
`Case IPR2016-00596
`Patent 7,134,505
`
` Page(s)
`
`Cases
`Cable Electric Products, Inc. v. Genmark, Inc.,
`770 F.2d 1015 (Fed. Cir. 1985) .......................................................................... 23
`
`CaptionCall, L.L.C. v. Ultratec, Inc.,
`IPR2015-00637, slip op. (P.T.A.B. Sep, 7, 2016) .............................................. 16
`
`Cisco Sys., Inc. v. C-Cation Techs., LLC,
`IPR2014-00454, slip op. (P.T.A.B. Aug. 29, 2014) ........................................... 22
`
`Classco, Inc. v. Apple, Inc.,
`838 F.3d 1214 (Fed. Cir. 2016) ..................................... 17, 19, 20, 21, 22, 25, 26
`
`Ecolochem, Inc. v. S. Cal. Edison Co.,
`227 F.3d 1361 (Fed. Cir. 2000) .......................................................................... 27
`
`Geo M. Martin Co. v. Alliance Mach. Sys. Int’l,
`618 F.3d 1294 (Fed. Cir. 2010) .................................................................. 7, 8, 10
`
`Laird Techs., Inc. v. GrafTech Int’l Holdings, Inc.,
`IPR2014-00024, slip op. (P.T.A.B. Mar. 25, 2015) ........................................... 22
`
`LG Chem, Ltd. v. Celgard, LLC,
`IPR2014-00692, slip op. (P.T.A.B. Oct. 5, 2015) .............................................. 16
`
`LKQ Corp. v. Clearlamp, LLC,
`IPR2013-00020, slip op. (P.T.A.B. Mar. 27, 2014) ........................................... 25
`
`Richdel, Inc. v. Sunspool Corp.,
`714 F.2d 1573 (Fed. Cir. 1983) .......................................................................... 22
`
`Rothman v. Target Corp.,
`556 F.3d 1310 (Fed. Cir. 2009) .......................................................................... 27
`
`Wm. Wrigley Jr. Co. v. Cadbury Adams USA LLC,
`683 F.3d 1356 (Fed. Cir. 2012) .......................................................................... 26
`
`Wyers v. Master Lock Co.,
`616 F.3d 1231 (Fed. Cir. 2010) ...................................................................... 7, 13
`36598348.1
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`Case IPR2016-00596
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`
`I.
`
`RC’S THOMSON ARGUMENT (GROUNDS 1-4)
`
`RC’s attorney argument that Petitioners have not shown Thomson’s
`
`retrievable packer meets the claimed solid body packer (“SBP”) is meritless. POR
`
`at 50-53. Thomson’s Fig. 3 labels the packer with multiple packing elements
`
`(“MPEs”) the retrievable packer:
`
`See Corrected Petition (“CP”) at 27, 32. RC removed that label in support of their
`
`it-is-not-clear-which-packer-is-retrievable argument:
`
`
`
`
`
`See POR at 50-51.
`
`Dr. Daneshy need not have designed a packer to have competently/correctly
`
`declared that the retrievable packer in Fig. 4—just like the retrievable packer in
`
`Fig. 3—shows MPEs. Daneshy1 at ¶¶70-73 (cited in CP at 32). Mr. McGowen
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`never designed a packer. McGowen at 113:6-7. But he did not challenge Dr.
`
`Daneshy’s opinion. See Ex. 2034; McGowen at 62:11-65:25 (conceding
`
`Thomson’s tubing string meets all tubing string limitations of claims 24 and 27,
`
`which require SBPs with MPEs); see id. at 33:20-25 (reflects meaning of “tubing
`
`string”).
`
`II. RC’S THOMSON-ECHOLS ARGUMENTS (GROUND 4)
`RC’s attorney argument that Petitioners have not provided a motivation to
`
`combine Echols’ sleeve arrangements with Thomson’s (POR at 54-55) fails for
`
`several reasons.
`
`First, it incorrectly presumes Ground 4 requires casing. See POR at 54-55.
`
`But claim 11 is directed to an apparatus, not a method of using it in any particular
`
`environment; no casing is required (or precluded). Ex. 1001 at claims 1, 11.
`
`Moreover, Petitioners did not contend that the modified Thomson system had to be
`
`used in a cased hole, instead discussing the utility of using same in “longer zones”
`
`(not “longer cased zones”). CP at 51-52. RC did not argue Petitioners’ modified
`
`Thomson system would have had no utility in longer open-hole zones. POR at 54-
`
`55.
`
`Second, RC’s position fails even if Petitioners’ position is construed as
`
`directed to cased-hole environments. RC incorrectly argues that increasing the
`
`number of perforations in that casing would have been required (see POR at 54-
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`55) to increase the number of fracture points in the formation (as Petitioners
`
`contended). CP at 51-52. But reducing the number of perforations could have
`
`increased the number of fracture points through “limited entry.” Petitioners cite
`
`Daneshy1 at ¶80 (cited in CP at 51-52), which draws support from Lagrone (cited
`
`in CP at 51-52) about limited entry, which involved spacing out (not increasing the
`
`number of) perforations to treat—through more fractures—more of a given zone.
`
`Ex. 2034 at 24:8-19. The POR fails to address this, and RC failed to get Dr.
`
`Daneshy’s support for a contrary position. Ex. 2016 (replacement) at 100:22-
`
`103:17.
`
`III. RC’S THOMSON-BROWN ARGUMENTS (GROUNDS 5-8)
`First, RC argues that without “actual testing data or pressure rating
`
`information,” a POSITA would have no reason to use Brown’s packer in place of
`
`Thomson’s. POR at 55. RC cites no supporting authority, and fails to address any
`
`of Petitioners’ Dr. Daneshy-supported motivations. CP at 56-57.
`
`Second, RC contends Thomson teaches away from Brown’s packer by
`
`teaching the importance of “packers with no mandrel movement.” POR at 57-58.
`
`But Thomson teaches that to hydraulically set multiple packers, “no mandrel
`
`movement in relation to the slips of the packer should occur while setting.”
`
`Thomson at 98 (emphasis added). This enables any number of such packers to be
`
`set simultaneously “without the requirement for expansion devices between the
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`packers to account for mandrel movement.” Id. at 98 (emphasis added); Daneshy2
`
`at ¶¶5-6.
`
`In other words, Thomson teaches avoiding packers that require mandrel
`
`movement to set slips unless expansion joints/devices are included between them.
`
`Daneshy2 at ¶7. Otherwise, such mandrel movement could set some slips before
`
`others, precluding simultaneous packer setting (Thomson’s stated goal); but that is
`
`not how Brown’s packer works. Id.
`
`As Brown’s Figures 1 and 2 show, the movement of fluid pressure-driven
`
`cone spreader elements 21 and 22 sets slips 15, not the movement of the packer
`
`mandrel 11 (denoted “PACKER BODY” in the CP). CP at 54-55; Brown at 4:49-
`
`5:6; Daneshy2 at ¶¶8-10. Furthermore, because Brown’s packers are set by
`
`hydraulic pressure rather than tension, the entire tubing string can be pressurized at
`
`once to set multiple ones of Brown’s packers simultaneously (just like Thomson’s
`
`hydraulically-set packers), eliminating the need for expansion joints between
`
`packers. Id. at ¶10.
`
`While RC is correct that mandrel movement occurs (POR at 57), that
`
`movement occurs after the slips are set. Daneshy2 at ¶9. Moreover, such
`
`movement across multiple Brown packers in a modified Thomson string would
`
`occur simultaneously, and it and any other incidental movement would be
`
`accommodated by the type of tube stretching Brown describes. Id. at ¶¶9-10. A
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`POSITA would have recognized Brown’s packers did not violate Thomson’s stated
`
`concern. Id. at ¶5, 10.
`
`Third, RC argues balls B seated in seats S would be “require[d]” to set each
`
`Brown packer, adding complexity. POR at 58-59. But setting each Brown packer
`
`required only sufficient pressure from fluid entering expansion chamber 16
`
`through mandrel port 17 (see CP at 53-55), and Thomson already teaches using a
`
`setting plug for that purpose (see Thomson at 99-100).
`
`Fourth, RC argues that even if the Brown packers could be used with
`
`Thomson’s system, Brown allegedly teaches that “increase[ing] pressure in the
`
`tubing string could cause the packers to release,” which would “allow the
`
`fracturing fluid to flow into the annulus without fracturing the formation” during a
`
`fracturing treatment – a “fatal problem.” POR at 59.
`
`But the pressure increase RC cites concerning release following inadvertent
`
`premature setting is the same pressure increase used to set a packer in a desired
`
`location. Brown at 5:45-6:28. At the desired location, after that pressure is
`
`released, the packer “remains set.” Id. at 6:29-36 (emphasis added). The manner
`
`in which it is then released (id. at 7:6-29) is—as explained by Dr. Daneshy—the
`
`same as Thomson’s packers (Daneshy1 at ¶86 (cited in CP at 55)). Thus, RC’s
`
`alleged “fatal problem” would not exist during fracturing after purposefully setting
`
`such packers.
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`IV. THE OBVIOUSNESS EVIDENCE IS STRONG (GROUNDS 3 AND 7)
`Nothing separates Thomson and claims 23 and 27 except Thomson’s
`
`cemented casing. CP at 46-49 (VIII.C.). RC does not contend otherwise. POR at
`
`42 (IV.D.1.). Stimulating a stable open hole like Ellsworth’s through Thomson’s
`
`system meets these claims. CP at 41-49 (addressing claims 19, 23, 24, and 27), 27-
`
`36 (addressing predicate-supporting claim 1).
`
`Furthermore, a POSITA would have been incentivized to minimize costs
`
`associated with materials and operations relative to typical completions. CP at 47-
`
`49; Daneshy1 at ¶¶41-42, 47-49, 75; Ellsworth at 3, 8; Thomson at 101. Ellsworth
`
`teaches eliminating cemented liners enhanced the cost effectiveness of horizontal
`
`completions. See Ellsworth at 8 (cited (incorrectly as “at 9”) in CP at 48 and in
`
`Daneshy1 at ¶47, 49, 75 (cited in CP at 48)). And Thomson touts reductions in
`
`operational time and consequent cost savings from using its system and completion
`
`technique relative to those “normally required to stimulate multiple zones,”1 which
`
`was very significant. McGowen at 37:20-38:5 (“hundreds of thousands of dollars
`
`per day”), 44:22-47:25 (discussing Thomson at 97-98). Mr. McGowen also
`
`confirmed that, more broadly, economics drove completion-method decisions.
`
`McGowen at 18:8-13.
`
`1 Thomson at 101 (cited in CP at 48 and in Daneshy1 at ¶49); see also Thomson at
`
`103 (Table 5).
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`RC’s own evidence shows such efficiencies drove development and were
`
`realized. See Ex. 2003 at 2-3; see also Ex. 2004 at 1, Abstract (plug and perf
`
`(“P&P”) was often “costly and time prohibitive” and Packers Plus’s (“PP’s”)
`
`system eliminated problems with cementing liners and was more operationally
`
`efficient), 2 (new system “lowered completion and operations costs”), 3 (same at
`
`first full paragraph of second column); Ex. 2011 at 4 (66% of respondents said cost
`
`savings drove open-hole multi-stage (“OHMS”) usage).
`
`CHALLENGES
`V. RC’S MERITLESS
`MOTIVATION (POR AT 47-49)
`RC’s challenges assume fracturing is required. See POR at 47 (“However,
`
`PETITIONERS’
`
`TO
`
`Petitioners improperly assume that a POSITA would have recognized that multi-
`
`stage open hole fracturing was even an option in the first place.”) (second
`
`emphasis added); see also id. at 47-49. But neither claim 23 nor claim 27 requires
`
`fracturing. Ex. 1001 at claims 19, 23, 24, and 27; McGowen at 19:8-20:19 (no
`
`fracture required), 20:20-21:21:11 (similar). The claims do not even require a
`
`particular fluid pressure to be reached. McGowen at 21:12-22:13. Therefore,
`
`RC’s attempt to narrow claims 23 and 27 to require fracturing should fail. See
`
`Wyers v. Master Lock Co., 616 F.3d 1231, 1243 (Fed. Cir. 2010); Geo M. Martin
`
`Co. v. Alliance Mach. Sys. Int’l, 618 F.3d 1294, 1303 (Fed. Cir. 2010).
`
`Regardless, RC’s motivation challenges fail. RC offers no pre-invention
`
`evidence that conventional wisdom in 2001 demanded cemented casing to produce
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`effective fractures.2 POR at 47. RC cites a statement on page 25 of Ex. 2034, but
`
`that statement cites no support (id. at 47-48 (citing Ex. 2034 at 25:16-19)), and Mr.
`
`McGowen retreated from his assertion that cemented casing was required.
`
`McGowen at 72:24-79:4 (agreeing “going without cemented casing” was one
`
`“option to consider” at 75:25-76:2, and conceding that OHMS fracturing with
`
`sliding sleeves and external casing packers had been conducted by the invention
`
`date at 76:2-79:4). Additional arguments refuting these non-supported positions
`
`appear below in Section VI.A.
`
`RC cites Dr. Daneshy’s 2007 encyclopedia section (POR at 48 (citing Ex.
`
`2002)), but fails to show any connection to 2001’s conventional wisdom.
`
`Regardless, Dr. Daneshy explains that it related to unique—and distinct—
`
`applications (Ex. 2016 (replacement) at 15:1-17:14)), which were dissimilar to
`
`Ellsworth’s (Ex. 2034 at 35:11-12; McGowen at 14:4-25 (Ellsworth’s highly-
`
`depleted reservoir)).
`
`RC contends a POSITA would have considered departing from P&P too
`
`risky (POR at 48-49), but cites only Thomson’s “serious risks and expense
`
`problems” for support. Mr. McGowen was unconvinced of actual expense
`
`problems. McGowen at 34:3-39:10 and 41:21-24, 44:22-48:14, 60:2-61:6.
`
`2 The claims also do not require any level of stimulation effectiveness. See Geo M.
`
`Martin, 618 F.3d at 1303 (“commercial speed” not required).
`
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`Furthermore, Thomson’s “risks” were operational3 (Daneshy2 at ¶¶11-21), not
`
`risks to life/limb (McGowen at 58:11-59:6). They did not concern Thomson’s
`
`MSAF tools or packers and were not uncommon in the industry, even with
`
`operations involving well-proven tools and systems. Daneshy2 at ¶¶11-15, 22.
`
`RC’s own evidence reflects P&P posed risks. Ex. 2004 at 1/5 (2nd col., 1st
`
`paragraph), 2/5 (2nd full paragraph); Ex. 2001 at 3/5 (P&P-related “safety”
`
`considerations). Finally, RC and Mr. McGowen provide no pre-invention date
`
`references reflecting any fear of open-hole fracturing (McGowen at 110:22-111:2),
`
`and Mr. McGown named no covered stimulation procedure that resulted in, or was
`
`avoided out of concern for, personal injury (id. at 111:3-13).
`
`Moreover, Mr. McGowen’s views of Thomson depend on his incorrect
`
`belief that a POSITA, despite having only a few years of experience, would have
`
`had “ultimate responsibility” for a completion assembly
`
`they suggested.
`
`McGowen at 33:16-21, 53:9-24, 56:17-58:10. He therefore attributed an
`
`unreasonably high level of risk aversion to a POSITA (see id. at 40:8-41:20, 43:7-
`
`44:21, 53:16-24), rendering them unable to even consider Thomson’s effective
`
`
`3 Mr. McGowen was also uncertain that the first Thomson “risk” he previously
`
`sponsored actually resulted in expense or operational problems. See McGowen at
`
`33:20-39:10 and 41:21-24.
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`new system and cost-saving stimulation approach (Ex. 2034 at 24:20-22;
`
`McGowen at 37:20-38:5, 44:22-47:25).
`
`Dr. Daneshy disagrees. Daneshy2 at ¶¶22-26. A POSITA would not have
`
`had ultimate responsibility for such a project, even one using a completion
`
`approach that POSITA suggested. Id. at ¶¶27-30. That is not how the industry
`
`operated at the time of the invention (id. at ¶¶28-30), as even Mr. McGowen
`
`seemed to recognize (McGowen at 56:17-58:10).
`
`VI. RC MISCHARACTERIZES A POSITA’S VIEWS (POR AT 8-20)
`A. Cemented Casing: Not Required
`RC argues that, in 2001, a POSITA would understand that a wellbore must
`
`be segmented into multiple stages/zones to create multiple fractures (POR at 13),
`
`and a POSITA would expect this segmentation to require a cased and cemented
`
`wellbore (POR at 14). These arguments fail for several independent reasons.
`
`First, these arguments, and the balance of Section IV.A.2., presume the
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`claims require fracturing. They do not. See supra Section V. As a result, RC’s
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`Section IV.A.2. arguments, and the balance of its characterization of a POSITA
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`(which also presumes the claims require fracturing),4 should be rejected. Geo M.
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`4 See POR at 18-19 (arguing in Section IV.A.4. about using casing to control
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`fracture initiation), 19-20 (arguing in Section IV.A.5. about not deviating from
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`P&P for fracturing).
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`Martin, 618 F.3d at 1303.
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`Second, both arguments are factually incorrect. Limited entry created
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`multiple fractures in a single zone/stage. See Ex. 2034 at 8-19. Additionally, Mr.
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`McGowen admitted cemented casing was not required for multi-stage fracturing of
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`a horizontal segment of a wellbore, agreeing that “going without cemented casing
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`would have been an option to consider.” McGowen at 75:25-76:2 (emphasis
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`added); see also id. at 72:24-76:2. He also conceded OHMS fracturing had been
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`conducted using external casing packers and mechanically-shiftable sliding
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`sleeves. Id. at 75:25-79:4. Coon shows (in Fig. 1) and describes such a system,
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`which “gave the operator the option of acid or low-volume sand fracturing.” Ex.
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`1028 at 14/20; id. at 13/20 (title); id. at 2-3/20 (establishing Coon’s pre-invention
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`publication).
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`Third, RC’s citation
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`to Mr. McGowen’s declaration (Ex. 2034 –
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`“McGDec.”) for support fails. On POR 14, RC cites McGDec. page 22 to support
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`its cemented-casing argument, but that page contains no citation to any pre-
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`invention reference, and includes essentially the same unsupported statement: that
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`the “conventional wisdom” in 2001 was that “horizontal boreholes should be
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`cased, cemented, and perforated to facilitate effective fracturing.” Ex. 2034 at
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`22:18-20 (emphasis added). But neither fracturing, nor effective fracturing, is
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`required (see supra Section V), and Mr. McGowen admitted cemented casing was
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`not required for such fracturing. McGowen at 72:24-79:4 (explained above).
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`RC also argues that using cemented casing gave operators the ability to
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`“control precisely”—through perforation placement—where each fracture would
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`form, which a POSITA allegedly believed “was critical to ensure that fractures are
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`properly spaced apart. [McGDec.] at 23.” RC cites no supporting pre-invention
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`evidence, and while Mr. McGowen cites Ex. 2042 on McGDec. page 23, that
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`evidence should not be considered under Rules 22(a) and 23(a). But even if
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`considered, it fails to help RC.
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`Mr. McGowen quotes Ex. 2042 (pages 9-10), in apparent support of his
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`contention that P&P “was deemed necessary.” McGDec. at 23:2-10. He cites a
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`sentence expressing that unfavorable fracture initiation may cause problems with
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`both fracture execution (screen-out) and production response by harming the
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`wellbore-to-fracture connection. Ex. 2042 at 9-10/13. But Ex. 2042 is not stating
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`that open-hole fracturing is causing such problems.5 Instead, it discusses fracture
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`initiation problems with three subject wells—which were cemented and cased. Id.
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`at 10-11/13 and 3-4/13; Daneshy2 at ¶¶31-33.
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`5 RC also does not contend any pre-invention reference explicitly teaches away
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`from open-hole fracturing. McGowen at 79:11-82:4.
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`Indeed, a POSITA would have appreciated that the cited wellbore-to-
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`fracture connection problem, which can lead to screen-out and production response
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`issues, was not the issue in open holes—where the fracturing fluid had full access
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`to the wellbore—that it was in cased holes, where the fracturing fluid’s only
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`formation access was through perforations. See Ex. 1032 (published in 2000) at 1
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`(lines 6-9 under “Common Uses”), 7 (points 1 and 2 under “Conclusions”);
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`Daneshy2 at ¶¶38-39, 46-47; see also Ex. 1033 (published in 2001) (citing Ex.
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`1032 at fn.1).
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`Exhibit 1032 explains that the wellbore-to-fracture connection problems
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`discussed in RC’s Ex. 2042 could be reduced or eliminated by hydraulically
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`fracturing in open-hole horizontal wells, which “show[ed] little or no wellbore to
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`fracture connection problems.” Compare Ex. 2042 at 9-10/13 with Ex. 1032 at 1
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`(Abstract, 2nd paragraph) and 7 (points 1 and 2 under “Conclusions”); Daneshy2 at
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`¶¶42-45. Moreover, the fracture tortuosity issue in Ex. 2042 is also irrelevant
`
`because the claims do not require proppant, which contributes to the screen-out
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`issue cited by Mr. McGowen at 9-10/13 of Ex. 2042. Ex. 2034 at 23:8-10;
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`McGowen at 21:15-22:15; Wyers, 616 F.3d at 1243.
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`RC also argues that fractures too close together caused problems that would
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`have motivated a POSITA to use cemented casing to control fracture spacing,
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`including (1) “significant loss of production,” (2) some unidentified “worse”
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`problem if fractures intersected, and (3) near-wellbore tortuosity problems. POR at
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`15-16. RC’s block cite to McGDec. pages 23-25 for (1) should be ignored (Rule
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`6(a)(3)), as should its citation to Dr. Daneshy’s testimony for (1) because that
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`testimony was not tied to any particular time, and Dr. Daneshy did not testify such
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`an event would necessarily cause a significant loss of production (Ex. 2016
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`(replacement) at 30:17-31:3). Neither RC nor Mr. McGowen cites any evidence
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`that fractures growing into each other (i.e., (2)) was a recognized problem in 2001.
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`See Ex. 2034 at 24:20-31; McGowen at 108:9-110:21. For (3), Mr. McGowen’s
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`citation to Ex. 2039 as supporting the declaration quote on POR 16 should be
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`ignored because RC failed to cite Ex. 2039 in the POR. Rules 22(a), 23(a).
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`Regardless, Ex. 1032 teaches—as explained above—that near-wellbore tortuosity,
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`and resulting problems like screen-out (see Ex. 2039 at 2/8), were reduced or
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`solved by open-hole fracturing, not by P&P. See Ex. 1032 at 1 (Abstract, 2nd
`
`paragraph) and 7 (points 1 and 2 under “Conclusions”); Daneshy2 at ¶¶34-38, 42-
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`47. Moreover, the fracture tortuosity issue in Ex. 2039 is also irrelevant because
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`the claims do not require proppant.
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`B. RC’s “Conventional Wisdom” and Commercial Reasonableness
`Arguments: Irrelevant and Baseless
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`RC’s cemented-casing-is-critical arguments on POR 18-19 are irrelevant and
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`incorrect for the reasons provided in Section VI.A. RC’s suggestion that a
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`POSITA would have viewed using Thomson’s system to acid frac in an open hole
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`as risking “catastrophic failure and death” is baseless. POR at 19. None of Mr.
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`McGowen’s pre-invention date references taught that open-hole fracturing was
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`dangerous (McGowen at 110:22-111:2), and he could not identify a covered
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`stimulation procedure that resulted in, or was avoided out of concern for, personal
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`injury (id. at 111:3-13). RC suggests that a POSITA would have considered such a
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`“risk” coupled with Thomson’s operational challenges to outweigh the potential
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`economic gain of using Thomson’s system in an open hole like Ellsworth’s. POR
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`at 19-20 (citing Ex. 2034 at 28). But, during his deposition, Mr. McGowen backed
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`away from his declaration contention that “millions of dollars in reserves” were
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`“likely … lost due to [Thomson’s alleged] failures.” McGowen at 60:2-61:6; see
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`also id. at 34:3-39:10 and 41:21-24, 44:22-48:14.
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`VII. RC’S SECONDARY CONSIDERATIONS EVIDENCE IS WEAK AND
`DOES NOT OUTWEIGH THE STRONG EVIDENCE OF
`OBVIOUSNESS (POR AT 21-39)
`A. No Contravention of Accepted Wisdom (POR at 21-24)
`RC’s “accepted wisdom” depends on the claims requiring fracturing. See
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`POR at 22. They do not (supra Section V.), and this argument can therefore be
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`rejected. Independently, and for the other reasons in Section VI.A. above, RC’s
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`“accepted wisdom” arguments fail.
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`B. RC Has Not Established Nexus (POR at 37-38)
`RC addresses nexus only for commercial success. See POR at 37. But RC
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`fails to explain how the allegedly commercially successful technologies are
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`covered by claims 23 and 27. See POR at 24, 32-38. RC argues on POR 32 that
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`Mr. McGowen “concluded”
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`that Petitioners’ FracPoint system and PP’s
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`StackFRAC system “practice at least one claim of the patent”—citing “Ex. 2034
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`… at 34, Exs. A, B,”—but only claims 24 and 27 are discussed in those charts (not
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`claim 23). Moreover, RC does not discuss with specificity the details of Mr.
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`McGowen’s analysis or how it allegedly shows that each limitation of claim 27 is
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`met. POR at 32-33. Therefore, substantial weight need not be given to that
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`improperly-incorporated analysis (see, e.g., LG Chem, Ltd. v. Celgard, LLC,
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`IPR2014-00692, slip op. at 32-33 (Paper 76) (P.T.A.B. Oct. 5, 2015)) or RC’s
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`alleged nexus or commercial success evidence (see, e.g., CaptionCall, L.L.C. v.
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`Ultratec, Inc., IPR2015-00637, slip op. at 64-65 (Paper 98) (P.T.A.B. Sep, 7, 2016)
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`(citing Rules 42.6(a)(3) and 42.24)).
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`Even if Mr. McGowen’s claim 24 and 27 analyses are fully considered, they
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`do not entitle RC to any nexus presumption.
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`First, there is no difference between Thomson’s system and either PP’s
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`StackFRAC system or Petitioners’ FracPoint system with respect to claims 24 and
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`27 (and 23, to the extent considered by the Board). See CP at 41-49 (addressing
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`claims 19, 23, 24, and 27), 27-36 (addressing claim 1, which supports the mapping
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`for claims 19 and 24); compare Ex. 2034 claim 24 and 27 claim charts for
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`StackFRAC and FracPoint systems; see also McGowen at 64:1-65:25, 69:24-
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`70:20, 71:10-72:23.
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`Furthermore, Mr. McGowen confirmed he provided no evidence that PP
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`(McGowen at 133:14-136:14) or Petitioners (id. at 136:15-139:5) performed any
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`method steps. All revenue RC relies on via Messrs. Girardi’s and McGowen’s
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`declarations is from equipment sales, not sales of services. Id. at 121:14-132:8,
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`especially 131:24-132:3 (Petitioners’ revenue – solely equipment sales), 132:9-
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`133:2 (PP provides no pumping services; PP’s revenue assumed to be equipment-
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`only).
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`RC relies specifically on
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