`
`Case IPR2016-01496
`Patent 7,134,505
`
`
`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 IPR2016-01496
`Patent 7,134,505
`___________________
`
`
`
`EXCLUSIVE LICENSEE RAPID COMPLETIONS LLC’S
`RESPONSE
`
`
`
`
`Mail Stop “PATENT BOARD”
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`

`

`Case IPR2016-01496
`Patent 7,134,505
`
`
`
`I.
`
`II.
`
`TABLE OF CONTENTS
`
`Introduction ...................................................................................................... 1
`
`Overview of the Patented Technology ............................................................ 1
`
`III. Claim Interpretation ......................................................................................... 2
`
`A.
`
`Solid Body Packer ................................................................................. 2
`
`IV. Obviousness Analysis ...................................................................................... 4
`
`A.
`
`B.
`
`The Level of Ordinary Skill in the Art .................................................. 5
`
`The Objective Indicia of Non-Obviousness .......................................... 6
`
`1.
`
`2.
`
`3.
`
`4.
`
`5.
`
`6.
`
`The Claimed Technology Operates Contrary to the Accepted
`Wisdom That Prevailed at the Time of the Invention and it
`Demonstrated Unexpected Results. ............................................ 7
`
`The Claimed Technology Has Received Industry Praise and
`Recognition. ..............................................................................13
`
`Baker Hughes Copied the Claimed Technology. .....................18
`
`The Claimed Technology Has Enjoyed Significant Commercial
`Success. .....................................................................................24
`
`There Is a Nexus Between the Claimed Technology and Its
`Commercial Success. ................................................................28
`
`The Length of Intervening Time Between the Asserted Prior
`Art Dates and the Claimed Invention Objectively Demonstrate
`that the Invention Was Not Obvious. ........................................30
`
`C.
`
`D.
`
`Opinions of Learned Experts ...............................................................30
`
`The Petition Fails to Establish Lane-Wells as Prior Art. ....................33
`
`V. Overall Conclusions on Obviousness ............................................................39
`
`
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`Case IPR2016-01496
`Patent 7,134,505
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`
`
`TABLE OF AUTHORITIES
`
`Cases
`Akamai Techs., Inc. v. Cable & Wireless Internet Servs., Inc.
`
`344 F.3d 1186 (Fed.Cir.2003) .......................................................................18
`
`Apple Inc. v. Samsung Elecs. Co.
`
`No. 2015-1171, 2016 WL 5864573 (Fed. Cir. Oct. 7, 2016) ................. 21, 24
`
`Application of Bayer
`
`568 F.2d 1357 (C.C.P.A. 1978) .............................................................. 35, 37
`
`Ashland Oil, Inc. v. Delta Resins & Refractories, Inc.
`
`776 F.2d 281 (Fed. Cir. 1985) .......................................................................24
`
`Black & Decker, Inc. v. Positec USA, Inc.
`
`No. 2015-1646, 2016 WL 2898012 (Fed. Cir. May 18, 2016) .............. 32, 40
`
`Blue Calypso, LLC v. Groupon, Inc.
`
`815 F.3d 1331 (Fed. Cir. 2016) .............................................................. 35, 37
`
`Bruckelmyer v. Ground Heaters, Inc.
`
`445 F.3d 1374 (Fed. Cir. 2006) .....................................................................35
`
`Carella v. Starlight Archery & Pro Line Co.
`804 F.2d 135 (Fed. Cir. 1986), amended on reh'g sub nom.
`
`Carella v. Starlight Archery, No. 86-728, 1986 WL 1154370
`(Fed. Cir. Dec. 16, 1986) ........................................................................ 36, 38
`
`
`
`Crocs, Inc. v. Int’l Trade Comm’n
`
`598 F.3d 1294 (Fed.Cir.2010) ...................................................................6, 32
`
`dunnhumby USA, LLC v. emnos USA Corp.
`
`No. 13-CV-0399, 2015 WL 1542365, (N.D. Ill. Apr. 1, 2015) ...................... 4
`
`Dynamic Drinkware, LLC v. Nat'l Graphics, Inc.
`
`800 F.3d 1375 (Fed. Cir. 2015) .....................................................................40
`
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`Case IPR2016-01496
`Patent 7,134,505
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`
`Envtl. Designs, Ltd. v. Union Oil Co. of California
`
`713 F.2d 693 (Fed. Cir. 1983) ......................................................................... 5
`
`Gambro Lundia AB v. Baxter Healthcare Corp.
`
`110 F.3d 1573 (Fed. Cir. 1997) .....................................................................28
`
`Graham v. John Deere Co. of Kansas City
`
`383 U.S. 1 (1966) ............................................................................................. 5
`
`In re Cyclobenzaprine Hydrochloride Extended–Release Capsule Patent Litig.
`
`676 F.3d 1063 (Fed. Cir. 2012) ....................................................................... 5
`
`In re Hall
`
`781 F. 2d 897 (Fed. Cir. 1986) ......................................................................34
`
`In re Hedges
`
`783 F.2d 1038 (Fed.Cir.1986) ......................................................................... 7
`
`In re Kahn
`
`441 F.3d 977 (Fed Cir. 2006) ........................................................................39
`
`In re Klopfenstein
`
`380 F.3d 1345 (Fed. Cir. 2004) .....................................................................36
`
`In re Lister
`
`583 F.3d 1307 (Fed. Cir. 2009) ........................................................ 35, 36, 37
`
`In re Magnum Oil Tools Int’l, Ltd.
`
`829 F.3d 1364 (Fed. Cir. 2016) .............................................................. 37, 40
`
`InTouch Techs., Inc. v. VGO Commc'ns, Inc.
`
`751 F.3d 1327 (Fed. Cir. 2014) .............................................................. 31, 32
`
`Intri-Plex Techs., Inc. v. Saint-Gobain Performance Plastics Rencol Ltd.,
`IPR2014-00309, Paper 83 (PTAB March 23, 2014) ....................................... 7
`
`
`J.T. Eaton & Co. v. Atlantic Paste & Glue Co.
`
`106 F.3d 1563 (Fed.Cir.1997) .......................................................................25
`
`
`
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`

`Case IPR2016-01496
`Patent 7,134,505
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`
`KSR Int’l Co. v. Teleflex Inc.
`
`550 U.S. 398 (2007).......................................................................................39
`
`Kyocera Wireless Corp. v. Int’l Trade Comm’n
`
`545 F.3d 1340 (Fed. Cir. 2008) .....................................................................34
`
`Leo Pharm. Prod., Ltd. v. Rea
`
`726 F.3d 1346 (Fed. Cir. 2013) .....................................................................30
`
`MPHJ Tech. Investments, LLC v. Ricoh Americas Corp.
`
`847 F.3d 1363 (Fed. Cir. 2017) ....................................................................... 3
`
`Orthopedic Equipment Co., Inc. v. All Orthopedic Appliances, Inc.
`
`707 F.2d 1376 (Fed.Cir.1983) ......................................................................... 5
`
`Procter & Gamble Co. v. Teva Pharm. USA, Inc.
`
`566 F.3d 989 (Fed. Cir. 2009) ................................................................ 33, 39
`
`Ring Plus, Inc. v. Cingular Wireless, LLC
`
`No. CIV.A. 2:06-CV-159DF, 2007 WL 5688765 (E.D. Tex. July 9, 2007) ... 4
`
`Seadrill Americas Inc. v. Transocean Offshore Deepwater Drilling Inc.
`IPR2015-01929, Paper 105 (PTAB May 18, 2017) ......................................29
`
`
`SRI Int’l, Inc. v. Internet Sec. Sys., Inc.
`
`511 F.3d 1186 (Fed. Cir. 2008) ........................................................ 34, 35, 37
`
`Standard Oil Co. v. American Cyanamid Co.
`
`774 F.2d 448 (Fed.Cir.1985) ........................................................................... 6
`
`Tec Air, Inc. v. Denso Mfg. Michigan Inc.
`
`192 F.3d 1353 (Fed. Cir. 1999) .....................................................................25
`
`Vederi, LLC v. Google, Inc.
`
`744 F.3d 1376 (Fed. Cir. 2014) ....................................................................... 4
`
`W.L. Gore & Assoc., Inc. v. Garlock, Inc.
`
`721 F.2d 1540 (Fed.Cir. 1983) ........................................................................ 7
`
`
`
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`Case IPR2016-01496
`Patent 7,134,505
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`
`W.L. Gore & Associates, Inc. v. Garlock, Inc.
`
`721 F.2d 1540 (Fed. Cir. 1983) .....................................................................31
`
`WBIP, LLC v. Kohler Co.
`
`829 F.3d 1317 (Fed. Cir. 2016) .....................................................................29
`
`Wyers v. Master Lock Co.
`
`616 F.3d 1231 (Fed. Cir. 2010) .....................................................................18
`
`Statutes
`
`35 U.S.C. § 102(b) ...................................................................................................35
`
`35 U.S.C. § 103 .......................................................................................................... 4
`
`35 U.S.C. § 316(e) ..................................................................................................... 5
`
`Other Authorities
`
`MPEP § 2128 ...........................................................................................................34
`
`
`
`
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`

`Case IPR2016-01496
`Patent 7,134,505
`
`Exhibit
`2003
`2004
`
`2005
`2006
`
`2007
`
`2008
`
`2009
`
`2010
`
`2011
`
`2012
`
`2013
`
`2014
`
`2015
`
`2016
`
`2017
`2018
`
`Exhibit List
`Description
`Email correspondence between J. Nemunatis and M. Garrett
`R. Seale et al., Effective Stimulation of Horizontal Wells—A
`New Completion Method, SPE 106357, Society of
`Petroleum Engineers (2006)
`Exploration and Development, Alberta Oil Magazine
`Leading the Way: Multistage fracking pioneer Packers Plus
`plays major role in cracking the tight oil code, Canadian
`OilPatch Technology Guidebook (2012)
`Financial Post, “Entrepreneur of the Year: National
`Winner”
`Innovation—Groundbreaking Innovation in Calgary,
`Calgary Herald (Feb. 12, 1014)
`J. Chury, Packers Plus Technology Becoming the Industry
`Standard, The Oil Patch Report (Dec. 2010/Jan. 2011)
`P. Roche, Open-Hole or Cased and Cemented, New
`Technology Magazine (Nov. 2011)
`R. Ghiselin, Qittitut Consulting, Sleeves vs. Shots—The
`Debate Rages (Aug. 2011)
`Van Dyke, Kate, “Fundamentals of Petroleum,” Fourth Ed.
`(1997)
`“Proven Performance: Read how Packers Plus systems and
`solutions have delivered results around the world,” Packers
`Plus Energy Services Inc., accessed May 24, 2016,
`http://packersplus.com/proven-performance/?type=case-
`study&system=stackfrac-hd-system&pag=3%20#p3
`A. Casero, Open Hole Multi-Stage Completion System in
`Unconventional Plays: Efficiency, Effectiveness and
`Economics, SPE 164009 (2013)
`Encyclopedia of Hydrocarbons, Chapter 3.1: Upstream
`technologies
`D. Lohoefer, Comparative Study of Cemented versus
`Uncemented Multi-Stage Fractured Wells in the Barnett
`Shale, SPE 135386, Society of Petroleum Engineers (2010)
`Ali Daneshy Deposition Transcript (11/9/2016)
`Packers Plus advertising brochure (2010)
`
`- vi -
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`Case IPR2016-01496
`Patent 7,134,505
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`2019
`
`2020
`
`2021
`
`2022-2038
`2039
`
`2040
`2041
`
`2042
`
`2043
`2044
`2045
`2046
`
`2047
`
`2048
`2049
`2050
`2051
`2052
`2053
`2054
`
`2055
`
`2056
`
`Baker Hughes, “FracPoint Completion System Isolated
`Openhole Horizontal Well in Lower Huron Shale” (2011)
`Baker Hughes, Enhancing Well Performance Through
`Innovative Completion Technologies,” presentation, (Sept.
`10-12, 2012)
`Canadian Society for Unconventional Resources, Press
`Release, “Unconventional Industry Awards Innovative
`Thinking” (Oct. 3, 2012)
`reserved
`Weatherford presentation titled, “Openhole Completion
`Systems
`Halliburton v. Packers Plus, Fourth Amended Petition
`Baker Hughes’ and Peak Completions’ Subpoena to
`Halliburton
`Rapid Completions v. Baker Hughes, et al. Order dismissing
`Pegasi
`reserved
`Vikram Rao Deposition Transcript
`Westin, Scott, Private Property, PwC, (Jan. 2, 2013)
`Yager, David, Court Case Now On: It’s Packers Plus
`Versus The World – Here’s What’s at Stake for Multi-stage
`Horizontal Completion Companies, EnergyNow Media
`(Feb. 23, 2017)
`BH00364675, CONFIDENTIAL Ball activated sliding
`sleeves report
`UNREDACTED J.J. Girardi Decl.
`REDACTED J.J. Girardi Decl.
`UNREDACTED H. McGowen Decl.
`REDACTED H. McGowen Decl.
`Baker Hughes Design Documents
`Packers Plus Design Document
`Rigzone, Schlumberger Acquires Stake in Packers Plus
`(Nov. 22, 2005)
`Britt, L. and Smith, M., Horizontal Well Completion,
`Stimulation Optimization, and Risk Mitigation, SPE 125526
`(2009)
`Packers Plus case study, StackFRAC system provides
`superior production economics
`
`- vii -
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`
`
`

`

`2057
`
`2058
`
`2059
`
`2060
`2061
`2062
`
`2063
`
`2064
`
`2065
`
`2066
`
`2067
`
`2068
`
`2069
`
`2070
`
`2071
`
`2072
`
`2073
`
`Case IPR2016-01496
`Patent 7,134,505
`
`Packers Plus Case Study, StackFRAC HD system enables
`high stimulation rates
`Packers Plus StackFRAC Video,
`http://packersplus.com/solution/stackfrac-hd-system/
`Baker Hughes FracPoint Video,
`https://www.youtube.com/watch?v=s5ZQCRRZzXE
`reserved
`Business News Network Packers Plus Feature
`Ingersoll, C, “BP and the Deepwater Horizon Disaster of
`2010” (Apr. 3, 2012)
`Crosby, D.G., “Methodology to Predict the Initiation of
`Multiple Transverse Fractures from Horizontal Wellbores”
`(2001)
`Kaiser, P., “Hydraulic Fracturing Mine Back Trials – Design
`Rationale and Project Status” (2013)
`Stoltz, L.R., “Probabilistic Reserves Assessment Using A
`Filtered Monte Carlo Method In a Fractured Limestone
`Reservoir” SPE 39714 (1998)
`Emanuele, M. A., “A Case History: Completion and
`Stimulation of Horizontal Wells with Multiple Transverse
`Hydraulic Fractures in the Lost Hills Diatomite” SPE 39941
`(1998)
`Gaynor, Tom M., “Tortuosity Versus Micro-Tortuosity –
`Why Little Things Mean a Lot” SPE/IADC 67818 (2001)
`Cramer, David, “Stimulating Unconventional Reserviors:
`Lessons Learned, Successful Practices, Areas for
`Improvement” SPE 114172 (2008)
`Ahmadzamri, A.F., “Development and Testing of Advanced
`Wireline Conveyance Technology for Rugose Open Hole
`Conditions” IPTC 17442 (2014)
`Calixto, Eduardo, “Gas and Oil Reliability Engineering,
`Modeling and Analysis” 2nd Edition (2016)
`Cramer, D.D., “The Application of Limited-Entry
`Techniques in Massive Hydraulic Fracturing Treatments”
`SPE 16189 (1987)
`Lloyd, B., “Rotary steerable drilling improves deployment
`of advanced completion” World Oil, January 2011
`reserved
`
`- viii -
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`
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`

`2074
`
`2075
`
`2076
`
`2077
`
`2078
`
`2079
`
`2080
`2081
`2082
`2083
`2084
`2085
`2086
`
`2087
`
`2088
`
`2089
`2090
`2091
`2092
`
`2093
`
`2094
`
`Case IPR2016-01496
`Patent 7,134,505
`
`Feng Yuan, “Single-Size-Ball Interventionless Multi-Stage
`Stimulation System Improves Stimulated Reservoir Volume
`and Eliminates Milling Requireents: Case Studies,
`SPE171183-MS, 2014
`A.B. Yost, “Hydraulic Fracturing of a Horizontal Well in a
`Naturally Fractured Reservoir: Gas Study for Multiple
`Fracture Design,” SPE 17759, 1988
`A.W. Layne, Insights Into Hydraulic Fracturing of a
`Horizontal Well in a Naturally Fractured Formation,” SPE
`18255, 1988
`A.B. Yost, “Air Drilling and Multiple Hydraulic Fracturing
`of a 72 Slant Well in Devonian Shale,” SPE 21264, 1990
`H.H. Abass, A Case History of Completing and Fracture
`Stimulating a Horizontal Well, SPE 29443
`A.P. Damgaard, “A Unique Method for Perforating,
`Fracturing, and Completing Horizontal Wells, SPE 19282
`reserved
`UNREDACTED McGowen Supplemental Declaration
`Michael Delaney Declaration
`William Diggons Declaration
`REDACTED McGowen Supplemental Declaration
`Ali Daneshy Deposition Transcript (3/29/2017)
`Rigzone TRAINING, How Does Acidizing Work to
`Stimulate Production?,
`http://www.rigzone.com/training/insight.asp?insight_id=320
`Carl T. Montgomery, Hydraulic Fracturing—History of an
`Enduring Technology, 2010
`R.E. Hurst, “Development and Application of ‘Frac’
`Treatments in the Permian Basin,” SPE 405 (1954).
`U.S. Patent No. 556,669
`Reserved
`Packers Plus Declaration
`V. Rao, 1984 and Beyond: The Advent of Horizontal Wells
`(JPT Oct. 2007)
`V. Rao & R. Rodriguez, “Accelerating Technology
`Acceptance: Hypotheses and Remedies for Risk-Averse
`Behavior in Technology Acceptance, SPE 98511 (2005)
`First Supplemental Berryman Report
`
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`Case IPR2016-01496
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`2095
`2096
`2097
`
`2098
`
`2099
`
`2100
`
`U.S. Pat. No. 7,571,765
`Reserved
`Canadian trial transcript excerpt submitted as ex. 1027 in
`IPR2016-00598
`Austin et al. Simultaneous Multiple Entry Hydraulic
`Fracture Treatments of Horizontally Drilled Wells, SPE
`18263 (1988)
`Owens et al., Practical Considerations of Horizontal Well
`Fracturing in the “Danish Chalk,” SPE25058 (1992)
`Murray et al., A Case Study for Drilling and Completing a
`Horizontal Well in the Clinton Sandstone, SPE 37354
`(1996)
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`Case IPR2016-01496
`Patent 7,134,505
`
`
`I.
`
`Introduction
`
`This is the second attempt made by Petitioners to render the claims of this
`
`patent unpatentable. Despite now having had multiple opportunities to marshal
`
`evidence of obviousness they have yet again failed to meet their burden. Instead of
`
`attempting to show that a POSITA would attempt multi-stage open hole fracturing,
`
`Petitioners now focus on multi-stage acidizing. This effort must fail as well.
`
`The primary reference cited in the Petition, Lane-Wells, does not specify any
`
`particular packer for use in open hole acidizing. Petitioners acknowledge that
`
`inflatable packers were commonly used in open holes, but they propose that a
`
`POSITA would modify Lane-Wells to employ solid body packers based on
`
`Ellsworth. However, the fail to show that the purported benefits identified in
`
`Ellsworth—long term sealing—would motivate a POSITA to undertake the
`
`additional risk and cost of using solid body packers for an acidizing job that would
`
`take a few days or less. Such an incomplete theory cannot overcome the objective
`
`evidence that the claims at issue are patentable.
`
`II. Overview of the Patented Technology
`
`The claimed technology provides a method of fracturing multiple stages of
`
`an open hole horizontal wellbore (“open hole ball drop fracturing” or “OHBD”).
`
`This tubing string must contain at least three solid body packers and two ball
`
`activated sliding sleeves. When the packers are set, they seal against the wellbore
`
`
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`wall and divide the horizontal section into multiple “open hole segments.” At this
`
`point, the operator may commence a stimulation treatment.
`
`Case IPR2016-01496
`Patent 7,134,505
`
`
`III. Claim Interpretation
`
`A.
`
`Solid Body Packer
`
`The parties agree that a packer is a tool used to create a seal between the
`
`tubing string and borehole wall using a packing element. They dispute what
`
`distinguishes solid body packers from other types of packers.
`
`The intrinsic evidence makes clear that this term refers to a packer with an
`
`element that is solid rather than hollow, as is the case with inflatable packers. The
`
`specification explains: “In an open hole, preferably, the packers include solid body
`
`packers including a solid, extrudable packing element.” ’774 patent at 4:4-4:5. In
`
`describing the figure 1 embodiment, it further explains that the “packers are of the
`
`solid body-type with at least one extrudable packing element, for example, formed
`
`of rubber.” ’774 patent at 6:29-6:30. It contrasts this type of packer with
`
`“inflatable element packers,” which it describes as being “inflated with pressure
`
`using a bladder.” Id. at 1:43-48. Thus, if the Panel believes that a construction is
`
`appropriate, it should construe this term to mean “a packer including a solid,
`
`extrudable packing element.”
`
`Petitioners’ proposal is based on a legal misunderstanding. According to
`
`Petitioners, the Board should narrow the scope of this term because of the
`
`
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`Case IPR2016-01496
`Patent 7,134,505
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`following statement contained in a provisional application: “A solid body packer is
`
`defined as a tool to create a seal between tubing and casing or the borehole wall
`
`using a packing element which is mechanically extruded, using either mechanically
`
`or hydraulically applied force.” Provisional Application No. 60/404,783 filed on
`
`Aug. 21, 2002. The problem with their argument is that this statement was made
`
`in a provisional application and never incorporated into the intrinsic evidence.
`
`Under these circumstances, the provisional application is decisive evidence that
`
`Petitioners’ proposed construction is incorrect.
`
`In MPHJ Tech. Investments, LLC v. Ricoh Americas Corp., 847 F.3d 1363,
`
`1367 (Fed. Cir. 2017), the patent at issue traced priority back to a provisional
`
`application. That provisional application contained a disclaimer limiting the scope
`
`of the claimed invention. When the applicant filed its non-provisional application,
`
`it decided not to include that disclaimer in the application. The Federal Circuit
`
`held that the patentee’s decision to delete the limiting language from the indicated
`
`that the relevant claims were not limited as described in the provisional
`
`application. Id. at 1369.
`
`Just as in MPHJ, the patent at issue in this proceeding omitted the allegedly
`
`limiting definition contained in a provisional application. Accordingly, the claims
`
`must not be limited by that provisional application language. See also dunnhumby
`
`USA, LLC v. emnos USA Corp., No. 13-CV-0399, 2015 WL 1542365, at *11 (N.D.
`
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`Case IPR2016-01496
`Patent 7,134,505
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`Ill. Apr. 1, 2015). (refusing to consider a provisional application part of the file
`
`history even though the patent-at-issue listed the provisional application as a
`
`priority document); Ring Plus, Inc. v. Cingular Wireless, LLC, No. CIV.A. 2:06-
`
`CV-159DF, 2007 WL 5688765, at *10 (E.D. Tex. July 9, 2007) (refusing to import
`
`limitations from a provisional application and noting that such reliance on a
`
`provisional application relates to validity, i.e., the priority date, not claim
`
`construction); Cf. Vederi, LLC v. Google, Inc., 744 F.3d 1376, 1383 (Fed. Cir.
`
`2014) (treating provisional application as intrinsic evidence only after noting that it
`
`was incorporated by reference into the asserted patents).
`
`IV. Obviousness Analysis
`
`Petitioners do not contend that anyone performed the claimed method prior
`
`to the inventors’ use of the method described below. They rely only on
`
`obviousness. A patent is invalid for obviousness “if the differences between the
`
`subject matter sought to be patented and the prior art are such that the subject
`
`matter as a whole would have been obvious at the time the invention was made to a
`
`person having ordinary skill in the art to which said subject matter pertains.” 35
`
`U.S.C. § 103. Obviousness is a question of law based on underlying factual
`
`findings: (1) the scope and content of the prior art; (2) the differences between the
`
`claims and the prior art; (3) the level of ordinary skill in the art; and (4) objective
`
`indicia of nonobviousness. Graham v. John Deere Co. of Kansas City, 383 U.S. 1,
`
`
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`Case IPR2016-01496
`Patent 7,134,505
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`17–18 (1966). The Board must consider all four Graham factors prior to reaching
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`a conclusion regarding obviousness. In re Cyclobenzaprine Hydrochloride
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`Extended–Release Capsule Patent Litig., 676 F.3d 1063, 1076–77 (Fed. Cir. 2012).
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`Petitioners bears the burden of proving obviousness by a preponderance of the
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`evidence. 35 U.S.C. § 316(e).
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`A. The Level of Ordinary Skill in the Art
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`Factors that may be considered in determining the level of ordinary skill in
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`the art include: (1) the educational level of the inventor; (2) type of problems
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`encountered in the art; (3) prior art solutions to those problems; (4) rapidity with
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`which innovations are made; (5) sophistication of the technology; and (6)
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`educational level of active workers in the field. Orthopedic Equipment Co., Inc. v.
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`All Orthopedic Appliances, Inc., 707 F.2d 1376 at 1381–1382 (Fed.Cir.1983). Not
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`all such factors may be present in every case, and one or more of these or other
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`factors may predominate in a particular case. “The important consideration lies in
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`the need to adhere to the statute, i.e., to hold that an invention would or would not
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`have been obvious, as a whole, when it was made, to a person of ‘ordinary skill in
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`the art’—not to the judge, or to a layman, or to those skilled in remote arts, or to
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`geniuses in the art at hand.” Envtl. Designs, Ltd. v. Union Oil Co. of California,
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`713 F.2d 693, 696–97 (Fed. Cir. 1983).
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`Case IPR2016-01496
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`According to Petitioners, a person of ordinary skill in the art relevant to the
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`’774 Patent as of November 19, 2001 would have had at least a Bachelor of
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`Science degree in mechanical, petroleum, or chemical engineering and at least 2-3
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`years of experience with downhole completion technologies related to fracturing.
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`Pet. at 10. Petitioners also contend that a POSITA would be aware of efforts to
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`minimize cost and motivated to perform fracture stimulation as efficiently as
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`possible. Pet. at 26-27. Respondent does not dispute these statements. However,
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`the need to minimize cost does not mean that a POSITA would compromise
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`engineering principles or act contrary to accepted wisdom. see also Standard Oil
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`Co. v. American Cyanamid Co., 774 F.2d 448, 454 (Fed.Cir.1985) (“A person of
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`ordinary skill in the art is also presumed to be one who thinks along the line of
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`conventional wisdom in the art.”). Because Petitioners fail to appreciate this
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`principle, their obviousness analysis is mistaken.
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`B.
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`The Objective Indicia of Non-Obviousness
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`Objective indicia “can be the most probative evidence of nonobviousness in
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`the record, and enables the court to avert the trap of hindsight.” Crocs, Inc. v. Int’l
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`Trade Comm’n, 598 F.3d 1294, 1310 (Fed.Cir.2010) (internal quotation marks
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`omitted). It may confirm the patentability of claims even where all of the other
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`Graham factors support a finding of obviousness. See Intri-Plex Techs., Inc. v.
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`Saint-Gobain Performance Plastics Rencol Ltd., IPR2014-00309, Paper 83 at 37
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`(PTAB March 23, 2014) (explaining that the evidence of commercial success alone
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`compelled a finding of non-obviousness).
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`1.
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`The Claimed Technology Operates Contrary to the
`Accepted Wisdom That Prevailed at the Time of the
`Invention and it Demonstrated Unexpected Results.
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`“Proceeding contrary to the accepted wisdom . . . is ‘strong evidence of
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`unobviousness.’” In re Hedges, 783 F.2d 1038, 1041 (Fed.Cir.1986) (citing W.L.
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`Gore & Assoc., Inc. v. Garlock, Inc., 721 F.2d 1540, 1552 (Fed.Cir. 1983)). To the
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`extent the patented invention is used for fracturing, that is exactly what the
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`inventors did.
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`As explained above, a POSITA would have believed that disc-shaped “bi-
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`wing” fractures should be carefully spaced apart by using perforated casing to
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`dictate where fractures initiate. This conventional thinking is described in multiple
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`sources. A 1988 paper written by Halliburton explains: “To be effectively fracture
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`stimulated, a horizontally drilled well must be cased and cemented through the
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`horizontal producing section of the well. Casing and cementing the horizontal
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`section allows fracture initiation points to be controlled in placing multiple
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`fractures.” Ex. 2098 at 1. A 1992 paper written by Halliburton and Maersk
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`(“Owens”) notes: “A horizontal well that is to be fracture stimulated over
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`multiple zones must be cased and cemented.” Ex. 2099 at 2. That sentiment is
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`echoed in Damgaard, another paper written in 1992: “Successful liner installation
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`and cementation is considered a prerequisite to ensure adequate zonal isolation
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`for multiple fracture treatments in horizontal wells.” Ex. 2079 (emphasis added).
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`Three years later, Halliburton and Pennzoil published a paper (“Abass”) describing
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`various discoveries related to multistage fracturing. Abass specifically mentions
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`the Yost experiments. Ex. 2078 at 2. Nonetheless, it found that “[c]asing and
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`cementing a horizontal well is essential to provide zone selectivity and isolation
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`during fracture stimulation.” This is because “[p]erforations play a crucial role in
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`achieving a successful fracturing treatment in horizontal wellbores.” Id.
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`(emphasis added). Even in 2007, the Encyclopedia of Hydrocarbons stated:
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`“whenever completion operations require hydraulic fracturing, the horizontal
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`holes are in fact cased, cemented, and perforated to facilitate effective
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`fracturing.” Ex. 2015 at 190. A number of other documents, such as Lane-Wells
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`and Thomson, also evidence this mindset based on the fact that they only mention
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`multi-stage fracturing in the context of cased wells.
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`The patented technology operates contrary to this conventional wisdom
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`because it exposes entire open hole annular segments to fracturing pressures. As a
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`result, fractures tend to form at natural weakpoints in the rock, not the precise point
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`in the well where the port is located. It is not surprising then that the patented
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`technology was met with skepticism. See, e.g., Ex. 2014, A. Casero, SPE 164009
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`at 5 (explaining that “[s]ome of the features of the OHMS approach are often
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`depicted as disadvantages, such as the inferred inability to control the initiation
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`point of the fractures”).
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`For its part, Packers Plus has worked to counteract this accepted wisdom
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`with empirical data. In a 2006 paper reporting on the results of hundreds of open
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`hole ball drop jobs, it noted that:
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`What has been witnessed in the field is when the horizontal wellbore is
`partitioned, each compartment has a unique pressure signature for
`fracturing and or stimulating. (Figure 2) This unique pressure signature
`for each stage provides real time evidence that the packers are providing
`the mechanical diversion for which they were designed. If the fracture
`or stimulation was going past the packer, then the pressures would be
`the same for the adjacent interval.
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`Ex. 2004 at 3. In a 2010 paper comparing the results of open hole ball drop
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`completions (“OHMS”) with cemented completions it explained:
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`The data set for OHMS fractured wells compared to the data set for
`cemented fractured wells indicates that open hole wells, on average,
`performed better. Significantly, no failures or shut-in periods were
`observed for the OHMS wells. This establishes the viability, reliability
`and effectiveness of this technology for the long-term life of wells not
`only in the Barnett, but for performance enhancement in other shale
`plays.
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`Ex. 2016 at 1. Packers Plus has also published microseismic data indicating just
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`how effectively the patented technology has been able to generate fractures:
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`Ex. 2018 at 4. Each of the colored dots above indicate a microseismic event. This
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`data shows that—contrary to the conventional wisdom, which would have
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`anticipated open hole fracturing to leave significant sections of the wellbore
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`unstimulated—the patented technology achieved full fracture coverage of the
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`wellbore.
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`These results have been “surprising.” Ex. 2050, McGowen Decl. at 40. Mr.
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`McGowen has explained the significance of this discovery:
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`[T]he efficacy evidenced by the production results from treatments
`using StackFRAC, and the improved logistical efficiency relative to
`Plug and Perf, were both astonishing. It is remarkable to me even now
`and it definitely would have been inconceivable to a POSITA in 2001,
`especially in light of the contraindications contained in Thompson and
`the conventional wisdom in the industry at the time.
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`Ex. 2050, McGowen Decl. at 41.
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`In its IPR2016-01380 institution decision, the Panel disagreed that the
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`patented invention operates contrary to the prevailing wisdom of the time. It cited
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`the Ghiselin study (IPR2016-01380 Ex. 2011) as explaining that this technology is
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`more efficient than plug and perf for wells with a high number of stages. Decis