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
`
`
`
`
`
`
`Mail Stop “PATENT BOARD”
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`

`
`Case IPR2016-00596
`Patent 7,134,505
`
`
`
`I.
`
`II.
`
`TABLE OF CONTENTS
`Introduction ...................................................................................................... 1
`
`Overview of the Patented Technology ............................................................ 1
`
`III. Claim Interpretation ......................................................................................... 3
`
`A.
`
`B.
`
`C.
`
`Packing Element .................................................................................... 3
`
`Solid Body Packer ................................................................................. 3
`
`Sleeve Shifting Means ........................................................................... 6
`
`D. Has Engaged and Moved the Sliding Sleeve ........................................ 7
`
`E.
`
`F.
`
`Plug ........................................................................................................ 7
`
`Load Into One Another ......................................................................... 7
`
`IV. Obviousness Analysis With Regard to Thomson and Ellsworth Ground ....... 7
`
`A.
`
`The Level of Ordinary Skill in the Art .................................................. 8
`
`1.
`
`2.
`
`3.
`
`4.
`
`5.
`
`A POSITA Would Have Been Aware of a Variety of
`Different Completion Techniques ............................................10
`
`A POSITA Would Have Expected Multi-Stage Hydraulic
`Fracturing Operations to Require Cemented Casing ................13
`
`A POSITA Would Carefully Weigh the Risks, Reliability,
`and Economics of a Proposed Completion ...............................16
`
`Petitioners Improperly Assume that a POSITA Would Be
`Motivated to Act Contrary to the Conventional Wisdom in
`the Field .....................................................................................18
`
`Petitioners Fail to Acknowledge that a POSITA Would Be
`Motivated to Act in a Commercially Reasonable Way ............19
`
`B.
`
`The Objective Indicia of Non-Obviousness ........................................20
`
`1.
`
`2.
`
`The Claimed Technology Operates Contrary to the Accepted
`Wisdom That Prevailed at the Time of the Invention and it
`Demonstrated Unexpected Results ...........................................21
`
`The Claimed Technology Has Received Industry Praise and
`Recognition. ..............................................................................24
`
`
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`Case IPR2016-00596
`Patent 7,134,505
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`3.
`
`4.
`
`5.
`
`Petitioners Copied the Claimed Technology. ...........................29
`
`The Claimed Technology Has Enjoyed Commercial
`Success. .....................................................................................34
`
`There Is a Nexus Between the Claimed Technology and
`Its Commercial Success. ...........................................................37
`
`C.
`
`The Scope and Content of the Prior Art ..............................................39
`
`1.
`
`2.
`
`Thomson Describes a Cased Hole Fracturing Operation,
`Not Fracturing Through Open Hole Segments .........................39
`
`Ellsworth Describes Water Shut-Off Operations, Not
`Hydraulic Fracturing. ................................................................41
`
`D.
`
`The Differences Between the Prior Art and the Claimed
`Invention ..............................................................................................42
`
`1.
`
`2.
`
`Petitioners Fail to Show that Thomson Discloses
`Positioning a Tubing String Adjacent an Open Hole
`Section of the Wellbore ............................................................42
`
`Petitioners Fail to Show That Ellsworth Discloses
`Forcing Wellbore Fluid out of the Tubing String Port .............42
`
`E.
`
`F.
`
`Opinions of Learned Experts ...............................................................43
`
`Overall Conclusions on Obviousness ..................................................46
`
`V.
`
`Invalidity Analysis With Regard to Remaining Grounds .............................50
`
`A. Grounds 1-4—Petitioners Fail to Show that Thomson Discloses
`a Solid Body Packer Having Multiple Packing Elements...................50
`
`B.
`
`C.
`
`Ground 4—Petitioners Fail to Show that a POSITA Would
`Combine Thomson and Echols ...........................................................53
`
`Grounds 5-8—Petitioners Fail to Show that Thomson Could
`Be Combined With Brown. .................................................................55
`
`VI. Conclusion .....................................................................................................60
`
`
`
`
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`Case IPR2016-00596
`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) .......................................................................29
`
`Anascape, Ltd. v. Nintendo of Am. Inc.
`
`601 F.3d 1333 (Fed. Cir. 2010) ....................................................................... 6
`
`Apple Inc. v. Samsung Elecs. Co.
`
`No. 2015-1171, 2016 WL 5864573 (Fed. Cir. Oct. 7, 2016) ................. 31, 35
`
`Ashland Oil, Inc. v. Delta Resins & Refractories, Inc.
`
`776 F.2d 281 (Fed. Cir. 1985) .......................................................................34
`
`Black & Decker, Inc. v. Positec USA, Inc.
`
`No. 2015-1646, 2016 WL 2898012 (Fed. Cir. May 18, 2016) .............. 44, 46
`
`Crocs, Inc. v. Int’l Trade Comm’n
`
`598 F.3d 1294 (Fed.Cir.2010) ................................................................ 21, 44
`
`Dunnhumby USA, LLC v. Emnos USA Corp.
`
`No. 13-CV-0399, 2015 WL 1542365 (N.D. Ill. Apr. 1, 2015) ....................... 5
`
`Dynamic Drinkware, LLC v. Nat'l Graphics, Inc.
`
`800 F.3d 1375 (Fed. Cir. 2015) .....................................................................46
`
`Envtl. Designs, Ltd. v. Union Oil Co. of California
`
`713 F.2d 693 (Fed. Cir. 1983) ......................................................................... 9
`
`Gambro Lundia AB v. Baxter Healthcare Corp.
`
`110 F.3d 1573 (Fed. Cir. 1997) .....................................................................37
`
`Graham v. John Deere Co. of Kansas City
`
`383 U.S. 1 (1966) .......................................................................................8, 21
`
`In re Cyclobenzaprine Hydrochloride Extended–Release Capsule Patent Litig.
`676 F.3d 1063 (Fed. Cir. 2012) ....................................................................... 8
`
`
`
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`- iii -
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`Case IPR2016-00596
`Patent 7,134,505
`
`
`In re Gurley
`
`27 F.3d 551 (Fed. Cir. 1994) .........................................................................58
`
`In re Hedges
`
`783 F.2d 1038 (Fed.Cir.1986) .......................................................................21
`
`In re Kahn
`
`441 F.3d 977 (Fed Cir. 2006) ........................................................................46
`
`In re Magnum Oil Tools Int’l, Ltd.
`
`2016 WL 3974202 (Fed. Cir. 2016) ..............................................................46
`
`InTouch Techs., Inc. v. VGO Commc'ns, Inc.
`
`751 F.3d 1327 (Fed. Cir. 2014) .............................................................. 43, 45
`
`Intri-Plex Techs., Inc. v. Saint-Gobain Performance Plastics Rencol Ltd.
`IPR2014-00309, Paper 83 (PTAB March 23, 2014) .............................. 21, 38
`
`
`KSR Int’l Co. v. Teleflex Inc.
`
`550 U.S. 398 (2007)................................................................................ 46, 58
`
`McGinley v. Franklin Sports, Inc.
`
`262 F.3d 1339 (Fed. Cir. 2001) .....................................................................20
`
`Orthopedic Equipment Co., Inc. v. All Orthopedic Appliances, Inc.
`
`707 F.2d 1376 (Fed. Cir. 1983) ....................................................................... 8
`
`Procter & Gamble Co. v. Teva Pharm. USA, Inc.
`
`566 F.3d 989 (Fed. Cir. 2009) .......................................................................46
`
`Reiffin v. Microsoft Corp.
`
`214 F.3d 1342 (Fed. Cir. 2000) ....................................................................... 6
`
`Ring Plus, Inc. v. Cingular Wireless, LLC
`
`No. CIV.A. 2:06-CV-159DF, 2007 WL 5688765 (E.D. Tex. July 9, 2007) ... 5
`
`Standard Oil Co. v. American Cyanamid Co.
`
`774 F.2d 448 (Fed. Cir. 1985) ......................................................................... 9
`
`
`
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`Case IPR2016-00596
`Patent 7,134,505
`
`
`Star Scientific, Inc., v. R.J. Reynolds Tobacco Co.
`
`655 F.3d 1364 (Fed. Cir. 2011) .....................................................................20
`
`Vederi, LLC v. Google, Inc.
`
`744 F.3d 1376 (Fed. Cir. 2014) ....................................................................... 5
`
`W.L. Gore & Assoc., Inc. v. Garlock, Inc.
`
`721 F.2d 1540 (Fed. Cir. 1983) .............................................................. 21, 44
`
`Wyers v. Master Lock Co.
`
`616 F.3d 1231 (Fed. Cir. 2010) .....................................................................29
`
`X2Y Attenuators, LLC v. Intern’l Trade Comm.
`
`757 F.3d 1358 (Fed. Cir. 2014) ....................................................................... 6
`
`Statutes
`
`35 U.S.C. § 103 .......................................................................................................... 8
`
`35 U.S.C. § 316(e) ..................................................................................................... 8
`
`
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`Case IPR2016-00596
`Patent 7,134,505
`
`Exhibit List
`Description
`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)
`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
`reserved
`reserved
`Ali Daneshy Deposition Transcript (11/9/2016)
`Packers Plus advertising brochure (2010)
`
`- vi -
`
`Exhibit
`2001
`
`2002
`
`2003
`
`2004
`
`2005
`2006
`
`2007
`2008
`
`2009
`
`2010
`
`2011
`
`2012
`
`2013
`
`2014
`2015
`2016
`2017
`
`
`
`
`
`
`

`
`Case IPR2016-00596
`Patent 7,134,505
`
`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)
`BH00364675, CONFIDENTIAL Ball activated sliding
`sleeves report
`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)
`BH00363808, CONFIDENTIAL Baker Hughes Engineering
`Materials
`RC_PAC00019434, CONFIDENTIAL Packers Plus
`Engineering Drawing
`Baker Hughes 2008 10-K Shareholder Report
`Baker Hughes 2010 10-K Shareholder Report
`Baker Hughes 2013 10-K Shareholder Report
`Packers Plus case study, StackFRAC system provides
`superior production economics
`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
`Business News Network Packers Plus Feature
`UN-REDACTED H. McGowen Declaration
`UN-REDACTED J. J. Girardi Declaration
`REDACTED H. McGowen Declaration
`REDACTED J. J. Girardi Declaration
`Ingersoll, C, “BP and the Deepwater Horizon Disaster of
`2010” (Apr. 3, 2012)
`
`- vii -
`
`2018
`
`2019
`
`2020
`
`2021
`
`2022
`
`2023
`
`2024
`
`2025
`
`2026
`2027
`2028
`2029
`
`2030
`
`2031
`
`2032
`
`2033
`2034
`2035
`2036
`2037
`2038
`
`
`
`
`
`
`

`
`Case IPR2016-00596
`Patent 7,134,505
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`2039
`
`2040
`
`2041
`
`2042
`
`2043
`
`2044
`
`2045
`
`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)
`M. Delaney Declaration
`
`- viii -
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`

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`Case IPR2016-00596
`Patent 7,134,505
`
`
`I.
`
`Introduction1
`
`Petitioners propose various Thomson-based obviousness combinations that
`
`either would not or could not be made by a POSITA. Moreover, Petitioners
`
`misinterpret Thomson and rely on defective testimony from their expert Dr.
`
`Daneshy. Accordingly, Respondent respectullfy requests that the Board reject
`
`Petitioners’ challenges.
`
`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”).
`
`All of the claims at issue require running a tubing string into a wellbore where at
`
`least a portion of the non-vertical section of the wellbore is exposed to the
`
`rockface. This tubing string must contain at least three solid body packers and two
`
`ball activated sliding sleeves as illustrated, for example, in Figure 1a:
`
`
`
`
`1 Petitioners have asserted similar grounds against the ’774 patent, ’505
`patent, and ’634 patent. Respondent has filed similar responses in all three
`proceedings. For ease of reading, Respondent provides the following explanation of
`the overlap between the responses in these proceedings. Issues related to open hole
`fracturing are discussed most fully in the ’774 response (IPR2016-00598) as some
`aspects of that issue (e.g., claim construction, commercial success) are unique to the
`’774 patent. Responses for the ’505 and ’634 patents are substantively identical and
`also address the additional grounds asserted against those patents, which are not at
`issue in the ’774 proceeding.
`
`
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`Case IPR2016-00596
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`When the packers are set, they seal against the wellbore wall and divide the
`
`horizontal section into multiple “open hole segments.” At this point, the operator
`
`may commence the fracturing operation.
`
`Hydraulic fracturing is a process whereby fluid is pumped into a formation
`
`until the increase in pressure causes the rock to crack. In the claimed system, the
`
`fracturing operation begins by pumping a ball or plug onto the ball seat of a sliding
`
`sleeve. This ball is sized to pass through the ball seats closer to the surface and
`
`only seat on the seat of the sleeve it is designed to open. As the pumping increases
`
`the fluid pressure within the tubing string, the sleeve slides open to allow fluid
`
`communication between the inside of the tubing string and the segment to be
`
`fractured. Pumping is continued until this segment is fractured. Because the entire
`
`annular segment outside the sleeve is pressurized, the fracture can form at a natural
`
`weak point in the formation, as shown below:
`
`
`
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`Case IPR2016-00596
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`
`See also Ex. 2031, Packers Plus StackFRAC video at 3:15 (“Each fracture initiates
`
`in the open hole where breakdown pressure is lowest within the isolated stage.”)
`
`This process may be repeated for additional zones by dropping larger balls.
`
`III. Claim Interpretation
`
`A.
`
`Packing Element
`
`Respondent does not contend that this term requires a construction.
`
`B.
`
`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. While this dispute
`
`may not be relevant this proceeding,2 Respondent offers its position below.
`
`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
`
`
`2 This dispute is relevant to the litigation between the parties, but it is unclear
`why Petitioners raised it in this proceeding as they did not rely on their proposed
`construction for this term in their prior art analysis. There does not appear to be a
`need for the Board to resolve this dispute now.
`
`
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`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. Both parties’ experts agree that this term
`
`distinguishes between inflatable and non-inflatable packers. Ex. 2034, McGowen
`
`Decl. at 10; Ex. 1005, Daneshy Decl. at 21.
`
`Both parties’ experts also agree that this term can be readily understood by a
`
`person of ordinary skill in the art. Ex. 2034, McGowen Decl. at 10; Ex. 1005,
`
`Daneshy Decl. at 34. Thus, no construction is necessary. Nonetheless, if the Panel
`
`believes that a construction is appropriate, it should construe this term to mean “a
`
`packer including a solid, extrudable packing element.” This construction is
`
`consistent with the specification and the testimony of both parties’ experts. ’774
`
`patent at 4:4-4:5 (“In an open hole, preferably, the packers include solid body
`
`packers including a solid, extrudable packing element.”); Ex. 1005, Daneshy Decl.
`
`at 34 (“[A]s understood by a person of ordinary skill in the art, the term ‘solid body
`
`packer’ would mean ‘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
`
`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
`
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`or hydraulically applied force.” Provisional Application No. 60/404,783 filed on
`
`Aug. 21, 2002. The problem with this argument is that this statement was made in
`
`a provisional application and never incorporated into the intrinsic evidence. In
`
`fact, this patent also claims priority to another provisional application that was
`
`filed earlier. Provisional Application No. 60/331,491 filed on Nov. 19, 2001.
`
`A provisional application that neither is incorporated by reference into a
`
`non-provisional application nor explicitly discussed during prosecution is not a
`
`part of the intrinsic evidence. See Dunnhumby USA, LLC v. Emnos USA Corp.,
`
`No. 13-CV-0399, 2015 WL 1542365, at *11 (N.D. 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). Thus, Petitioners are incorrect in asserting that a statement in a
`
`provisional application can act as a disclaimer limiting claim scope.
`
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`Case IPR2016-00596
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`
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`Even if an unincorporated provisional application were considered intrinsic
`
`evidence, it cannot be used to contradict the actual specification of a patent. As the
`
`Federal Circuit has noted, an applicant can modify the description of an invention
`
`in a later application, and the later application controls for claim construction
`
`purposes. See X2Y Attenuators, LLC v. Intern’l Trade Comm., 757 F.3d 1358,
`
`1366 (Fed. Cir. 2014); see also id. at 1365 (Reyna, J., Concurring) (“While the
`
`scope of claims may be limited by statements in the specification of the patent, it
`
`does not follow that claims in a continuation-in-part patent are necessarily limited
`
`by the specification of a patent to which the continuation-in-part claims priority.”);
`
`Anascape, Ltd. v. Nintendo of Am. Inc., 601 F.3d 1333, 1338 (Fed. Cir. 2010) (“A
`
`description can be broadened by removing limitations.”); Reiffin v. Microsoft
`
`Corp., 214 F.3d 1342, 1345 (Fed. Cir. 2000) (finding error where district court
`
`limited claims based on an earlier application’s description of features as essential
`
`elements). Thus, the broadest reasonable interpretation for this term should be
`
`based on the actual patent specification, not the provisional application.
`
`C.
`
`Sleeve Shifting Means
`
`Respondent does not dispute that this term is governed by § 112 para. 6.
`
`Petitioners identify “pressurized fluid” as part of the corresponding structure for
`
`this term. That appears to be incorrect, but that dispute is immaterial to this
`
`proceeding.
`
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`Case IPR2016-00596
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`
`D. Has Engaged and Moved the Sliding Sleeve
`
`In IPR2016-650, the parties agreed that, for purposes of this proceeding the
`
`term “has engaged and moved” requires “a process of two events”: first, “the
`
`physical relationship between the first sleeve and the sliding sleeve changes to one
`
`of engagement”; second, “the first sleeve moves the sliding sleeve.” (Petition, p. 19
`
`(emphasis added).) The Panel adopted a different construction. It explained “in the
`
`context of the claims, we construe “engaged and moved” as requiring the two
`
`sleeves be involved in activity together, as distinguished from standing simply in
`
`physical contact with one another.” This constriction is consistent with the parties’
`
`proposals, despite being expressed in a more concise way. Accordingly,
`
`Respondent proposes that the Board endorse the parties’ agreement for this term.
`
`E.
`
`Plug
`
`Respondent does not contend that this term requires a contstruction
`
`F.
`
`Load Into One Another
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`Respondent does not oppose Petitioners’ Proposal for purposes of this
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`proceeding.
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`IV. Obviousness Analysis With Regard to Thomson and Ellsworth Ground
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`Petitioners do not contend that anyone performed the claimed methods prior
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`to the inventors’ use of the method described below. They rely only on
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`obviousness. A patent is invalid for obviousness “if the differences between the
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`subject matter sought to be patented and the prior art are such that the subject
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`matter as a whole would have been obvious at the time the invention was made to a
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`person having ordinary skill in the art to which said subject matter pertains.” 35
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`U.S.C. § 103. Obviousness is a question of law based on underlying factual
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`findings: (1) the scope and content of the prior art; (2) the differences between the
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`claims and the prior art; (3) the level of ordinary skill in the art; and (4) objective
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`indicia of nonobviousness. Graham v. John Deere Co. of Kansas City, 383 U.S. 1,
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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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`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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`1.
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`A POSITA Would Have Been Aware of a Variety of
`Different Completion Techniques.
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`Preparing a wellbore for oil or gas production can be significantly more
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`complicated than simply drilling a hole in the ground. Rather, an operator must
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`decide the specific drilling path for the wellbore, the underground formations to
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`target, mechanisms to protect the wellbore, and whether anything will be done to
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`stimulate the well to increase production, among other things.
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`In 2001, one of the simplest ways to complete a horizontal well was to
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`cement and case the vertical portion of the well, and leave the horizontal pay
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`interval open to the formation. Using this type of completion, the overburden
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`pressure of the earth forces hydrocarbons into the open portion of the wellbore and
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`up to the surface. The casing prevents oil and gas from seeping out of the wellbore
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`(e.g., to protect groundwater sources), as shown below:
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`Another technique for completing a wellbore is to use a (non-cemented)
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`perforated liner or casing. This completion type is similar to an open hole
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`completion, except that a length of liner or casing with holes is installed into the
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`horizontal wellbore section. Similar to an open hole completion, the entire rock
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`face of the horizontal wellbore section is directly exposed to the wellbore, but the
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`liner or casing protects against collapse of the wellbore. This type of completion is
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`illustrated below:
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`Although an open hole completion or a non-cemented cased hole completion
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`can be effective for many types of wells, these completions cause problems if a
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`portion of the wellbore passes through an undesirable formation. For example, if
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`the wellbore extends into a brine-producing formation, brine water can seep into
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`the wellbore and pollute the oil or gas flowing to the surface. The solution to this
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`problem is a water shut-off completion. To perform water shut-off, a perforated
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`tubing string with packers is installed to isolate the brine-producing formation from
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`the oil-and-gas-producing formation. With this isolation, only oil and gas enters
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`the wellbore.
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`The annotated diagram above illustrates water shut off—the oil or gas (red) enters
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`the perforated tubing string in the wellbore, but
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`due to the packers, water (blue) is isolated and is
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`shut off from entering the wellbore. One other
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`type completion technique mentioned in the
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`Petition is steam injection as referenced in
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`Hutchison. This technique requires the use of
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`multiple wellbores. Steam is injected into one
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`well, to force oil into another, nearby wellbore
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`as depicted to the right:
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`2.
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`A POSITA Would Have Expected Multi-Stage Hydraulic
`Fracturing Operations to Require Cemented Casing.
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`A POSITA would also have been familiar with hydraulic fracturing as a
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`technique that may be used to stimulate oil and gas production from a well. The
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`simplest form of hydraulic fracturing for a horizontal wellbore is to pump fluid into
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`an open hole section of the wellbore (a process known as “bullheading”). Because
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`the entire open hole section is exposed to increased fluid pressure, the fracture may
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`form at a random location somewhere in that section, as shown below:
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`While this technique can create a fracture somewhere in the wellbore, a POSITA
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`may seek to create multiple fractures throughout the wellbore.
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`To create multiple fractures, a POSITA would understand that that the
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`wellbore must be segmented into multiple stages or zones. In 2001, a POSITA
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`would have expected that this segmentation requires a cemented and cased
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`wellbore. See Ex. 2034, McGowen Decl. at 22. The conventional way to fracture
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`such a well is known as “plug and perf” fracturing. Using this technique, a
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`perforating gun is lowered into the well and used to place holes in the cement and
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`casing. Fluid is then pumped down the well where it is forced to exit through tho