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
`___________________
`
`
`
`EXCLUSIVE LICENSEE RAPID COMPLETIONS LLC’S
`RESPONSE TO PETITIONERS’ MOTION TO EXCLUDE
`
`
`
`
`
`
`Mail Stop “PATENT BOARD”
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`
`___________________
`
`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
`___________________
`
`
`
`EXCLUSIVE LICENSEE RAPID COMPLETIONS LLC’S
`RESPONSE TO PETITIONERS’ MOTION TO EXCLUDE
`
`
`
`
`
`
`Mail Stop “PATENT BOARD”
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`
`
`
`
`Exhibit 2021—Rystad Energy Report
`
`Case IPR2016-00596
`Patent 7,134,505
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`
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`Petitioners admit that they produced this exhibit in litigation. “[D]ocuments
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`provided to a party during discovery by an opposing party are presumed to be
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`authentic, shifting the burden to the producing party to demonstrate that the
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`evidence that they produced was not authentic.” See, e.g., Lorraine v. Markel Am.
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`Ins. Co., 241 F.R.D. 534, 552 (D. Md. 2007). Thus, this exhibit is presumed
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`authentic, and Petitioners do not even attempt to rebut that presumption.
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`Moreover, the document contains distinctive characteristics such as the marking
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`that the document is owned by Rystad Energy and repeated references to Rystad
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`Energy analysis. Petitioners offer no evidence that Baker Hughes fabricated a
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`Rystad Energy report or that it would have a reason to retain a fabricated Rystad
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`Energy report. Thus, they have failed to meet their burden.
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`
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`With regard to Petitioners’ hearsay objection to page 10, Petitioners object
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`to the portion of this document that corroborates the market share estimates
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`provided in the unobjected to Ghiselin report (exhibit 2011). However, these
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`estimates fall under hearsay exceptions (17) and (18). They are contained in a
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`market report relied upon by an expert in the field—Mr. McGowen. At any rate,
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`even if the market share estimates do not fall under those exceptions, this page of
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`the exhibit is still admissible for a purpose other than proving the truth of the
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`1
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`Case IPR2016-00596
`Patent 7,134,505
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`matter asserted. Namely, that persons in the field expected the patented
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`technology to have had a significant market share. Even if the actual market share
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`for this technology differed from the reported amount, the fact that practitioners
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`expected the technology to be increasingly competitive against traditional plug and
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`perf demonstrates that the technology has received praise and success.
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`
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`Moreover, even if the Board deems this exhibit inadmissible for any reason,
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`it may still be considered under Rule 703. See, e.g., SK Innovation Co. v. Celgard
`
`LLC, IPR2014-00680, Paper 57 at 28 (PTAB Sept. 25, 2015) (admitting evidence
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`of commercial success under Rule 703). Respondent’s expert Mr. McGowen
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`testified:
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`Rystad Energy noted that demand for open-hole ball drop systems had
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`grown from less than $100 million per year in 2008 to nearly $500
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`million per year in 2012. It also explained that the technology
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`accounted for 70% of the completions installed in the Bakken
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`formation and it projected significant growth in other plays. This
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`report also credits Packers Plus with developing open-hole ball drop
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`technology in 2001. BH00364675.
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`Ex. 2034 at 49. Petitioners have not moved to exclude this testimony, and thus the
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`substantive information contained on page 14 of Exhibit 2021 has already been
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`admitted. Under Rule 703, any otherwise inadmissible evidence underlying Mr.
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`McGowen’s testimony is also admissible “if [its] probative value in helping the
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`2
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`Case IPR2016-00596
`Patent 7,134,505
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`jury evaluate the opinion substantially outweighs [its] prejudicial effect.” Here,
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`Exhibit 2021 is probative of commercial success as it corroborates the testimony of
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`Mr. McGowen and the other evidence relied upon by Mr. McGowen. Petitioners
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`identify no prejudicial effect from admitting these statements, and it is difficult to
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`imagine how this type of market report could be prejudicial at all, especially since
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`it is being presented to the Board rather than a jury. See SK Innovation Co.,
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`IPR2014-00680, Paper 57 at 28. Indeed, Petitioners do not even raise a Rule 403
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`objection, which sets a much lower bar for establishing prejudicial effect.
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`Exhibit 2022—Article Regarding Schlumberger
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`
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`With regard to Petitioners’ authenticity objection, Petitioners mistakenly
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`assert that Respondent “has not proven authenticity.” But Petitioners bear the
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`burden of demonstrating that this exhibit is inadmissible. Sipnet EU S.R.O. v.
`
`Straight Path IP Group, Inc., IPR2013-00246, Paper No. 63 at 2 (PTAB Oct. 9,
`
`2014) (citing 37 C.F.R. §§ 42.20(c), 42.62(a)).
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`To establish authenticity, Rule 901 requires that “the proponent must
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`produce evidence sufficient to support a finding that the item is what the proponent
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`claims it is.” Here, Respondent claims that exhibit 2022 is an online Rigzone
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`article. The exhibit itself contains distinctive marks such as the URL for the article
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`and the layout of a Rigzone article. Accordingly, it is authentic under Rule
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`901(b)(4) and it is self-authenticating as a periodical under Rule 903(6). See, e.g.,
`
`
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`3
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`Case IPR2016-00596
`Patent 7,134,505
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`Ciampi v. City of Palo Alto, 790 F. Supp. 2d 1077, 1091 (N.D. Cal. 2011)
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`(admitting Internet printouts that “contain sufficient indicia of authenticity,
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`including distinctive newspaper and website designs, dates of publication, page
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`numbers, and web addresses”). The testimony of Mr. Delaney also confirms that
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`the exhibit is a Rigzone article. Fed. R. Ev. 901(1); Ex. 2045. Although
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`Petitioners question the basis for this testimony, they have not moved to exclude it
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`or even asserted that it is inaccurate. Thus, they have not met their burden.
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`
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`With regard to Petitioners’ hearsay objection, this exhibit falls under
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`exception (18) for the same reasons as exhibit 2021 discussed above—it is a
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`periodical relied upon by Mr. McGowen. See Ex. 2034 at 50.
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`Moreover, even if the Board deems this exhibit inadmissible for any reason,
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`it may still be considered under Rule 703. Mr. McGowen testified:
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`Some of the best evidence of the commercial and technological
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`significance of the 774 Patent/Invention is that Schlumberger, a
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`technology leader itself and one of the world’s largest oil and gas
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`service companies, purchased a stake in Packers Plus and negotiated
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`exclusive rights to deploy and market Packer Plus technology
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`worldwide, excluding North America.
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`Ex. 2034 at 50. Again, Petitioners have not moved to exclude this testimony. As
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`with Exhibit 2021, the evidence underlying this testimony is probative of
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`
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`4
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`commercial success and praise and Petitioners identify no prejudicial effect from
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`Case IPR2016-00596
`Patent 7,134,505
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`admitting the evidence.
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`Exhibit 2024 – Baker Hughes Development Documents
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`
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`Petitioners’ relevance objection to this exhibit goes to weight not
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`admissibility. First, Petitioners argue that Respondent failed to show that Baker
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`Hughes acquired the Packers Plus design drawing while it was developing its own
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`system. Petitioners are wrong.
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`As an initial matter, Petitioners do not dispute that they obtained a Packers
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`Plus design drawing of its StackFRAC system, that the drawing is dated 2003, that
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`they modified the drawing to remove the Packers Plus logo, or that this modified
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`drawing was located within a collection of papers related to the early development
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`of their competing open hole ball drop system. Petitioners had an opportunity to
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`confront this document and offer conflicting evidence or testimony, but they
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`offered nothing. That fact alone indicates that the evidence of copying is strong—
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`certainly strong enough to overcome the minimal threshold of Rule 402.
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`Moreover, Petitioners fail to acknowledge that exhibit 2024 is a collection of
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`development documents for Baker Hughes’ open hole fracturing system. It
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`contains numerous references to the “Iso-Frac” system in development in 2004.
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`See Ex. 2024 at 6. It also labels the drawing of Packers Plus’s open hole ball drop
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`system as the “Iso-Frac System.” Id. at 13. Finally, it contains slides from a
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`5
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`Case IPR2016-00596
`Patent 7,134,505
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`Power Point presentation regarding the development of “IsoFrac,” which identify
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`Packers Plus as the only competition with a “proven system.” Id. at 25-26.
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`Exhibit 2019 establishes that Baker Hughes actually sold its competing open hole
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`ball drop system under the name “FracPoint,” and that by 2005, it had sold only 4
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`such systems. Ex. 2019 at 6.
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`Given this background, consider the logical leaps one would need to make to
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`conclude that Baker Hughes obtained the Packers Plus drawing after it had
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`completed development of its FracPoint system. That would mean that, after
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`Baker Hughes had finalized its FracPoint system in late 2004 or 2005, someone at
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`Baker Hughes obtained a confidential Packers Plus design drawing from 2003.
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`That person decided to keep the document, and he or she then modified it to make
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`it look like a Baker Hughes document. But instead of applying the actual name of
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`Baker Hughes’s completed system, he or she applied the prototype name of the
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`system—Iso-Frac. Then that person stuffed the drawing into a stack of papers
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`created during the initial design period for Iso-Frac. The fact that Baker Hughes
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`would even attempt to imply this far-fetched scenario—without offering any
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`evidence to back it up—may be the strongest evidence yet that Baker Hughes
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`copied Packers Plus.
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`Second, Petitioners argue that the tools used in its Fracpoint system are
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`similar to the tools used in Thomson. Petitioners fail to explain how this issue
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`6
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`Case IPR2016-00596
`Patent 7,134,505
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`relates to their relevance objection, but it appears to be a recitation of Petitioners’
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`“no nexus” argument from their reply. However, the Federal Circuit has already
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`rejected Petitioners’ misinterpretation of the law:
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`Kohler’s argument relies on an incorrect interpretation of our case
`
`law. We have held that ‘[w]hile objective evidence of nonobviousness
`
`lacks a nexus if it exclusively relates to a feature that was ‘known in
`
`the prior art,’ the obviousness inquiry centers on whether ‘the claimed
`
`invention as a whole’ would have been obvious.’ Where the
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`allegedly obvious patent claim is a combination of prior art
`
`elements, we have explained that the patent owner can show that
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`it is the claimed combination as a whole that serves as a nexus for
`
`the objective evidence; proof of nexus is not limited to only when
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`objective evidence is tied to the supposedly “new” feature(s).
`
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`WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1331–32 (Fed. Cir. 2016) (internal
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`citations omitted, emphasis added). Here, the patented invention combines various
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`prior art tools such as packers and sliding sleeves in a new way—it uses them for
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`multi-stage open hole fracturing. Because Petitioners have not asserted Thomson
`
`as an anticipation reference with respect to the open hole claims, there is simply no
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`evidence from which the Board could conclude that Thomson discloses the
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`claimed invention as a whole. In contrast, exhibit 2024 establishes that Baker
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`Hughes developed its Iso-Frac system, i.e., FracPoint, as an open hole fracturing
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`
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`7
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`Case IPR2016-00596
`Patent 7,134,505
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`system. Ex. 2024 at 4 (describing the development of a packing element for “the
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`open hole frac system”). Thus, there is a nexus between objective evidence related
`
`to FracPoint and the claimed invention. Exhibit 2024 is relevant objective
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`evidence of copying.
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`Exhibit 2025 – Packers Plus Design Drawing
`
`
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`With regard to Petitioners’ authenticity objection, Petitioners again fail to
`
`meet their burden. Sipnet EU S.R.O. v. Straight Path IP Group, Inc., IPR2013-
`
`00246, Paper No. 63 at 2 (PTAB Oct. 9, 2014) (citing 37 C.F.R. §§ 42.20(c),
`
`42.62(a)). Respondent claims that this exhibit is a Packers Plus design drawing. It
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`was produced by Packers Plus in litigation and it contains various markings
`
`indicating that it was made by Packers Plus. Moreover, Mr. Delaney, a paralegal
`
`with the law firm representing Packers Plus confirms that the exhibit is a Packers
`
`Plus drawing. Ex. 2045. Although Petitioners question the basis for this
`
`testimony, they have not moved to exclude it. Thus this exhibit is authentic under
`
`Rule 901(b)(1) and (4).
`
`
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`With regard to Petitioners’ relevance objection, because they do not dispute
`
`that Exhibit 2024 contains a modified Packers Plus design drawing, there is little
`
`need to rely on exhibit 2025. Nonetheless, this exhibit is still relevant for the same
`
`reasons discussed above with respect to exhibit 2024.
`
`Exhibit 2034—McGowen Declaration
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`
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`8
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`Case IPR2016-00596
`Patent 7,134,505
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`Petitioners object to the portion of Mr. McGowen’s testimony where he lists
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`Baker Hughes product numbers that have been used over time and documents
`
`produced by Baker Hughes that corroborate his opinions. For example, Mr.
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`McGowen testified: “The following Baker Hughes packers are used by Baker
`
`Hughes as solid body packers with respect to this claim: OH Packers H40936 RE
`
`Packers H30187 H30192 H30407.” Ex. 2034 at 81-82. But Petitioners had an
`
`opportunity to cross examine Mr. McGowen regarding this opinion, thus, it is not
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`hearsay. Even if the referenced product numbers were considered hearsay, they are
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`admissible under Rule 703 as explained above.
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`Moreover, Petitioners do not dispute that Mr. McGowen has recited the
`
`correct product numbers, nor do they assert that his testimony must be excluded as
`
`unreliable under Rule 702. Thus, they fail to identify any substantive opinions that
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`would be affected by a ruling on this motion. For example, even if the Board were
`
`to strike certain product numbers and source citations, this objection would have
`
`no impact on Mr. McGowen’s opinions that FracPoint employs the patented
`
`technology, or that FracPoint has been commercially successful. Petitioners have
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`not moved to exclude those opinions. Thus, Petitioners’ motion would lead to the
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`bizarre result that an expert may testify as to the commercial success of a product
`
`as long as he does not name the various components of the product.
`
`
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`9
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`Case IPR2016-00596
`Patent 7,134,505
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`With regard to IPR2016-00596 and IPR2016-00597, Petitioners raise two
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`additional arguments. First, they claim that Respondent did not disclose some of
`
`the data underlying Mr. McGowen’s opinions. But the allegedly undisclosed data
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`was produced by Petitioners or served on Petitioners. Petitioners’ real complaint
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`seems to be that Respondent did not file these materials with the Board. But Rule
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`702 states that a qualified expert may offer opinion testimony, and Rule 703 states
`
`that the expert may base that testimony on information he/she is aware of. Neither
`
`Rule requires that all evidence underlying an opinion be offered into evidence.
`
`Indeed, one of the primary purposes of expert testimony is to summarize and
`
`explain large amounts of complex data to avoid requiring a factfinder to do that
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`work.1 That is precisely what Mr. McGowen did, and Petitioners have not even
`
`attempted to argue that his analysis is unreliable under Rule 702. Indeed, they rely
`
`on his analysis to support the swell packer argument raised in their reply. Thus,
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`this objection must fail.
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`Finally, petitioners object that evidence of commercial success is not
`
`relevant to the ’505 and ’634 claims. While it is true that the objective evidence is
`
`more straightforward with regard to the ’774 claims, this evidence is still relevant
`
`1 Mr. McGowen prepared a Microsoft Access database summarizing
`information from various Baker Hughes documents. This database cannot be filed
`in the Board’s electronic filing system, but Respondent is more than happy to
`submit it to the Panel if it will resolve this objection.
`
`
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`10
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`Case IPR2016-00596
`Patent 7,134,505
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`to the ’505 and ’634 claims. The open hole claims of those two patents all require
`
`forcing treatment fluid into an open hole segment. Petitioners’ only theory as to
`
`why those limitations are present in the prior art is based on multi-stage fracturing.
`
`Thus, the success of an infringing system like FracPoint is relevant to show that
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`Petitioners’ theories must fail.
`
`Dated: April 28, 2017
`
`
`
`
`
`
` Respectfully submitted,
`
`Rapid Completions LLC
`
`
`By /Justin T. Nemunaitis/
`Hamad M. Hamad, Reg. No. 64,641
`Bradley W. Caldwell (pro hac vice)
`Justin T. Nemunaitis (pro hac vice)
`CALDWELL CASSADY CURRY, P.C.
`2101 Cedar Springs Road, Suite 1000
`Dallas, Texas 75201
`Telephone: 214.888.4848
`Facsimile: 214.888.4849
`hhamad@caldwellcc.com
`bcaldwell@caldwellcc.com
`jnemunaitis@caldwellcc.com
`rapid@caldwellcc.com
`
`Dr. Gregory Gonsalves, Reg. No. 43,639
`GONSALVES LAW FIRM
`2216 Beacon Lane
`Falls Church, Virginia 22043
`Telephone: 571.419.7252
`gonsalves@gonsalveslawfirm.com
`
`
`
`
`
`
`
`
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`11
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`Case IPR2016-00596
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`CERTIFICATION OF SERVICE
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`
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` The undersigned hereby certifies that the foregoing document was
`
`
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`served electronically via e-mail in its entirety on the following counsel of record
`
`for Petitioner:
`
`Mark T. Garrett (Lead Counsel)
`Eagle H. Robinson (Back-up Counsel)
`NORTON ROSE FULBRIGHT US LLP
`mark.garrett@nortonrosefulbright.com
`eagle.robinson@nortonrosefulbright.com
`
`
`
`Date: April 28, 2017
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` /Hamad M. Hamad/
`
`Hamad M. Hamad, Reg. No. 64,641
`
`
`
`
`
`12
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`
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