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 IPR2016-00598
`Patent 7,861,774
`______________
`
`
`
`PETITIONERS’ REPLY
`
`
`
`36591045.1
`
`
`
`______________
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`BAKER HUGHES INCORPORATED
`and
`BAKER HUGHES OILFIELD OPERATIONS, INC.,
`Petitioners
`
`v.
`
`PACKERS PLUS ENERGY SERVICES, INC.
`Patent Owner
`
`______________
`
`
`Case IPR2016-00598
`Patent 7,861,774
`______________
`
`
`
`PETITIONERS’ REPLY
`
`
`
`36591045.1
`
`
`
`Petitioner’s Exhibit List
`
`Case IPR2016-00598
`Patent 7,861,774
`
`1003
`
`Description
`Exhibit
`1001 U.S. Patent No. 7,861,774 (“the ’774 Patent”)
`1002 D.W. Thomson, et al., Design and Installation of a Cost-Effective
`Completion System for Horizontal Chalk Wells Where Multiple Zones
`Require Acid Stimulation, SPE (Society for Petroleum Engineering)
`37482 (1997) (“Thomson”)
`B. Ellsworth, et al., Production Control of Horizontal Wells in a
`Carbonate Reef Structure, 1999 Canadian Institute of Mining,
`Metallurgy, and Petroleum Horizontal Well Conference (“Ellsworth”)
`1004 U.S. Patent No. 5,449,039 (“Hartley”)
`1005 Declaration of Ali Daneshy, Ph.D. (“Daneshy1”)
`1006 KATE VAN DYKE, FUNDAMENTALS OF PETROLEUM ENGINEERING (4th
`ed. 1997)
`RON BAKER, A PRIMER OF OIL WELL DRILLING (5th ed. (revised) 1996)
`1007
`1008 U.S. Patent No. 4,099,563 (“Hutchison”)
`1009 U.S. Patent No. 5,375,662
`1010 U.S. Patent No. 6,257,338 (“Kilgore”)
`1011
`Excerpts of Prosecution History of the ’774 Patent
`1012 U.S. Provisional Application No. 60/404,783
`1013
`Excerpts of Prosecution History of U.S. Patent No. 7,134,505 (“the
`’505 Patent”)
`1014 Declaration of Christopher D. Hawkes, Ph.D., P.Geo., regarding the
`proceedings of the 7th One-Day Conference On Horizontal Well
`Technology Operational Excellence (Canada November 3, 1999)
`(including Ex. 1003 at 102-110)
`1015 Affidavit of Nancy Chaffin Hunter regarding the proceedings of the
`10th Middle East Oil Show & Conference (Bahrain March 15-18, 1997)
`(including Ex. 1002 at 12/26-23/26) – NOT FILED
`1016 Declaration of Rebekah Stacha regarding SPE 37482 (including Ex.
`1002 at Ex. A) – NOT FILED
`1017 Declaration of Rebekah Stacha regarding SPE 49523 (referencing Ex.
`1002 at p. 605, fn.28) – NOT FILED
`
`36591045.1
`
`i
`
`
`
`Exhibit
`1018
`
`Case IPR2016-00598
`Patent 7,861,774
`
`Description
`Table Associated with qrySumNetValuebyFamily from Ex. 2051
`(contains PROTECTIVE ORDER MATERIAL)
`1019 Affidavit of Nancy Chaffin Hunter, regarding the proceedings of the
`Production Operation Symposium (Oklahoma City, OK April 2-4,
`1995) (including R. Coon and D. Murray, Single-Trip Completion
`Concept Replaces Multiple Packers and Sliding Sleeves in Selective
`Multi-Zone Production and Stimulation Operations, SPE 29539 (1995))
`(“Coon”)
`1020 March 1, 2017 email from Justin Nemunaitis, confirming RE Packer
`revenue in Ex. 1018 was included in revenue figure reported at Ex.
`2034 at 42:9.
`Transcript of February 28, 2017 Deposition Testimony of Harold R.
`McGowen III (“McGowen”)
`Second Declaration of Ali Daneshy, Ph.D. (“Daneshy2”)
`P.D. Ellis, et al., Application of Hydraulic Fractures in Openhole
`Horizontal Wells, SPE/Petroleum Society of CIM 65464 (2000)
`(“Ellis”)
`1024 M.J. Rees, et al., Successful Hydrajet Acid Squeeze and Multifracture
`Acid Treatments in Horizontal Open Holes Using Dynamic Diversion
`Process and Downhole Mixing, SPE 71692 (Sep. 30, 2001) (citing Ex.
`1032 at fn. 1) (“Rees”)
`
`1021
`
`1022
`1023
`
`
`
`
`
`
`
`36591045.1
`
`ii
`
`
`
`Case IPR2016-00598
`Patent 7,861,774
`
`Table of Contents
`
`B.
`C.
`D.
`
`I.
`II.
`
`V.
`
`THE EVIDENCE OF OBVIOUSNESS IS STRONG .................................... 1
`RC’S CHALLENGES TO PETITIONERS’ MOTIVATION LACK
`MERIT (POR AT 54-56) ................................................................................. 2
`III. RC MISCHARACTERIZES A POSITA’S VIEWS (POR AT 9-21)............. 5
`A.
`Cemented Casing: Not a Requirement ................................................. 7
`B.
`RC’s “Conventional Wisdom” and Commercial Reasonableness
`Arguments: Irrelevant and Baseless ................................................... 11
`IV. RC’S SECONDARY CONSIDERATIONS EVIDENCE IS WEAK
`AND DOES NOT OUTWEIGH THE STRONG EVIDENCE OF
`OBVIOUSNESS (POR AT 22-40) ............................................................... 12
`A.
`The Claimed Methods Did Not Contravene
`Accepted Wisdom (POR at 22-25) ..................................................... 12
`RC Has Not Established Nexus (POR at 38-40) ................................. 12
`RC’s Industry Praise Lacks a Nexus (POR at 25-29) ......................... 16
`RC’s Commercial Success Evidence Lacks
`a Nexus (POR at 35-38) ...................................................................... 18
`RC’s Copying Evidence Is Meritless (POR at 30-35) ........................ 24
`E.
`SBP SHOULD BE DEFINED ....................................................................... 24
`
`
`
`
`
`36591045.1
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`iii
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`
`
`Table of Authorities
`
`Case IPR2016-00598
`Patent 7,861,774
`
` Page(s)
`
`Cases
`Cable Electric Products, Inc. v. Genmark, Inc.,
`770 F.2d 1015 (Fed. Cir. 1985) .......................................................................... 20
`
`CaptionCall, L.L.C. v. Ultratec, Inc.,
`IPR2015-00637, slip op. (P.T.A.B. Sep, 7, 2016) .............................................. 13
`
`Cisco Sys., Inc. v. C-Cation Techs., LLC,
`IPR2014-00454, slip op. (P.T.A.B. Aug. 29, 2014) ........................................... 19
`
`Classco, Inc. v. Apple, Inc.,
`838 F.3d 1214 (Fed. Cir. 2016) ............................... 15, 16, 17, 18, 19, 20, 22, 23
`
`Ecolochem, Inc. v. S. Cal. Edison Co.,
`227 F.3d 1361 (Fed. Cir. 2000) .......................................................................... 24
`
`Geo M. Martin Co. v. Alliance Mach. Sys. Int’l,
`618 F.3d 1294 (Fed. Cir. 2010) .................................................................... 2, 7, 8
`
`Laird Techs., Inc. v. GrafTech Int’l Holdings, Inc.,
`IPR2014-00024, slip op. (P.T.A.B. Mar. 25, 2015) ........................................... 19
`
`LG Chem, Ltd. v. Celgard, LLC,
`IPR2014-00692, slip op. (P.T.A.B. Oct. 5, 2015) .............................................. 13
`
`LKQ Corp. v. Clearlamp, LLC,
`IPR2013-00020, slip op. (P.T.A.B. Mar. 27, 2014) ........................................... 22
`
`Richdel, Inc. v. Sunspool Corp.,
`714 F.2d 1573 (Fed. Cir. 1983) .................................................................... 19, 20
`
`Rothman v. Target Corp.,
`556 F.3d 1310 (Fed. Cir. 2009) .......................................................................... 24
`
`Wm. Wrigley Jr. Co. v. Cadbury Adams USA LLC,
`683 F.3d 1356 (Fed. Cir. 2012) .......................................................................... 24
`
`Wyers v. Master Lock Co.,
`616 F.3d 1231 (Fed. Cir. 2010) ...................................................................... 7, 10
`36591045.1
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`iv
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`Case IPR2016-00598
`Patent 7,861,774
`
`I.
`
`THE EVIDENCE OF OBVIOUSNESS IS STRONG
`
`Rapid Completions LLC (“RC”) does not identify any differences between
`
`Thomson’s system and the system recited in the claims. POR at 41-43. RC relies
`
`on “pumping fracturing fluid into an open hole annular segment to fracture a
`
`formation” as a distinction (POR 52), but that would occur performing Thomson’s
`
`acid frac through Thomson’s system in an open wellbore like Ellsworth’s. Petition
`
`at 37-38 (element 1[n]); id. at 25-28.
`
`Furthermore, as Petitioners explained, a POSITA would have had an
`
`incentive to minimize costs associated with materials and operations relative to
`
`typical completions. Petition at 25-27; Daneshy1 at ¶¶47-49, 75; Ellsworth at 3, 8;
`
`Thomson at 101. Ellsworth explains eliminating cemented liners enhanced the
`
`cost effectiveness of horizontal completions. See Ellsworth at 8 (cited in Petition
`
`at 26-27 and in Daneshy1 at ¶75 (cited in Petition at 26-27)). Thomson touts
`
`reductions in operational time and consequent cost savings from using its system
`
`and completion technique relative to those “normally required to stimulate multiple
`
`zones,”1 which was very significant. McGowen at 37:20-38:5 (“hundreds of
`
`thousands of dollars per day”), 44:22-47:25 (using Thomson’s system to stimulate
`
`required 12-18 hours, and initial project estimate was 30 days to complete each of
`
`1 Thomson at 101 (cited in Petition at 27 and in Daneshy1 at ¶75; see also
`
`Daneshy1 at ¶49 (cited in ¶75)); see also Thomson at 103 (Table 5).
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`Case IPR2016-00598
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`four wells normally). Mr. McGowen also confirmed that economics drove
`
`completion-method decisions. McGowen at 18:8-13.
`
`Likewise, RC’s own evidence shows such efficiencies drove development
`
`and were realized. See Ex. 2003 at 2-3; see also Ex. 2004 at 1, Abstract (plug and
`
`perf (“P&P”) was often “costly and time prohibitive” and Packers Plus’s (“PP’s”)
`
`system eliminated problems with cementing liners and was more operationally
`
`efficient), 2 (new system “lowered completion and operations costs”), 3 (same at
`
`first full paragraph of second column); Ex. 2011 at 4 (66% of respondents said cost
`
`savings drove open-hole multi-stage (“OHMS”) usage).
`
`II. RC’S CHALLENGES TO PETITIONERS’ MOTIVATION LACK
`MERIT (POR AT 54-56)
`
`RC offers no support for its argument that conventional wisdom in 2001
`
`demanded cemented casing to produce effective fractures.2 POR at 55. RC points
`
`to a statement by Mr. McGowen on page 25 of his declaration, but that statement
`
`likewise cites no support (id. (citing Ex. 2034 at 25:16-19)), and Mr. McGowen
`
`retreated from his assertion that cemented casing was required. McGowen at
`
`
`2 The claims do not require “effective” fractures or fractures of any particular type,
`
`shape, or size, or location within a segment. McGowen at 23:18-30:6; see Geo M.
`
`Martin Co. v. Alliance Mach. Sys. Int’l, 618 F.3d 1294, 1303 (Fed. Cir. 2010)
`
`(“commercial speed” not required).
`
`36591045.1
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`2
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`Case IPR2016-00598
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`72:24-79:4 (agreeing “going without cemented casing” was one “option to
`
`consider” at 75:25-76:2, and conceding that OHMS fracturing with sliding sleeves
`
`and external casing packers had been conducted by the invention date at 76:2-
`
`79:4). Additional arguments refuting these non-supported positions appear below
`
`in Section III.
`
`RC cites to Dr. Daneshy’s 2007 encyclopedia section (POR at 55 (citing Ex.
`
`2002)), but fails to show any connection to 2001’s conventional wisdom.
`
`Regardless, Dr. Daneshy explains that it related to unique—and distinct—
`
`applications ((Ex. 2016 (replacement) at 15:1-17:14)), where were dissimilar to
`
`Ellsworth’s (Ex. 2034 at 35:11-12; McGowen at 14:4-25 (Ellsworth’s highly-
`
`depleted reservoir)).
`
`RC contends a POSITA would have considered departing from P&P too
`
`risky (POR at 56), but cites only Thomson’s “serious risks and expense problems”
`
`for support. But Mr. McGowen—RC’s own expert—was unconvinced of actual
`
`expense problems, especially given the significant cost savings attributed to using
`
`Thomson’s system. McGowen at 34:3-39:10 and 41:21-24, 44:22-48:14, 60:2-
`
`61:6. Furthermore, Thomson’s “risks” were operational3 (Daneshy at ¶15, and
`
`3 Mr. McGowen was also uncertain that the first Thomson “risk” he previously
`
`sponsored actually resulted in expense or operational problems. McGowen at
`
`33:20-39:10 and 41:21-24; see also Daneshy2 at ¶¶16-19.
`
`36591045.1
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`¶¶11-14&16-21 (describing Thomson’s plug-setting and torque-concern issues
`
`cited by Mr. McGowen as “alarming”)), not risks to life/limb (McGowen at 58:11-
`
`59:6). They did not concern Thomson’s MSAF tools or packers (Daneshy2 at
`
`¶15), and were not uncommon in the industry, even with operations involving
`
`well-proven tools and systems. Id. at ¶22. RC’s own evidence reflects several
`
`risks posed by P&P. See, e.g., Ex. 2004 at 1/5 (2nd col., 1st paragraph), 2/5 (2nd full
`
`paragraph); Ex. 2001 at 3/5 (describing P&P-related “safety” considerations).
`
`Finally, RC and Mr. McGowen provide no pre-invention date references reflecting
`
`any fear of open-hole fracturing (McGowen at 110:22-111:2), and Mr. McGowen
`
`named no covered stimulation procedure that resulted in, or was avoided out of
`
`concern for, personal injury (id. at 111:3-13).
`
`Moreover, Mr. McGowen’s views of Thomson depend on his incorrect
`
`belief that a POSITA, despite having only a few years of experience, would have
`
`had “ultimate responsibility” for a completion assembly
`
`they suggested.
`
`McGowen at 33:16-21, 53:9-24, 56:17-58:10; Daneshy2 at ¶23. He therefore
`
`attributed an unreasonably high level of risk aversion to a POSITA (see McGowen
`
`at 40:8-41:20, 43:7-44:21, 53:16-24; Daneshy2 at ¶¶24-30), rendering them unable
`
`to even consider Thomson’s effective new system and cost-saving stimulation
`
`approach (Ex. 2034 at 24:20-22; McGowen at 37:20-38:5, 44:22-47:25; contra
`
`Dansehy2 at ¶¶27-30).
`
`36591045.1
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`But a POSITA would not have had ultimate responsibility for such a project,
`
`even one using a completion approach that POSITA suggested. Daneshy2 at ¶¶27-
`
`30. That is not how the industry operated at the time of the invention (id. at ¶¶27-
`
`28), as even Mr. McGowen seemed to recognize (McGowen at 56:17-58:10).
`
`III. RC MISCHARACTERIZES A POSITA’S VIEWS (POR AT 9-21)
`RC contends that using Thomson’s system in an open hole like Ellsworth’s
`
`would have “compromise[d] engineering principles” or involved a POSITA acting
`
`“contrary to accepted wisdom.” POR at 10. The shortcomings of RC’s contrary-
`
`to-accepted-wisdom arguments appear below. RC does not explain what
`
`engineering principles would have been compromised, nor does the evidence show
`
`any.
`
`For example, the structural integrity of the wellbore, and the ability of the
`
`Thomson’s solid body packers (“SBPs”) to isolate therein, were two potential
`
`engineering issues the evidence shows would not have been compromised using
`
`Thomson’s system in an open hole like Ellsworth’s. See Petition at 25-27;
`
`Ellsworth at 3 (cited in Petition at 9, 11, 25-26); Daneshy1 at ¶75 (cited in Petition
`
`at 25-27); Petition at 11-12 (discussing testimony of PP’s expert). Ellsworth
`
`explicitly stated that SBPs provided isolation in near-gauge holes during
`
`stimulation. Ellsworth at 3 (cited in Daneshy1 at ¶¶42, 51 (cited in Petition at 11))
`
`and in Petition at 9, 11, 25-26); see also Kilgore at 3:67-4:4, 4:35-42 (cited in
`
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`Case IPR2016-00598
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`Daneshy1 at ¶51 and in Petition at 11). While Mr. McGowen believed Ellsworth’s
`
`acidizing SBPs need not have withstood fracturing pressure (McGowen at 5:8-
`
`7:14, 8:9-13:11), he agreed engineering them to withstand such pressure at that
`
`time would not have violated prudent engineering practice (id. at 19:3-7).
`
`Moreover, his belief that Ellsworth’s use of “acidizing” meant matrix acidizing
`
`only and not acid fracturing (McGowen at 8:9-10:11) contradicts other prior art
`
`reflecting that “acidizing” included both matrix acidizing and acid fracturing (Ex.
`
`1006 at 164 (cited in Petition at 6)).
`
`Furthermore, Mr. McGowen did not share RC’s position that, in 2001,
`
`conventional wisdom “required” cemented casing for multi-stage fracturing. POR
`
`at 14-15 (“required”); but see McGowen at 72:24-73:24, 74:22-75:24, 75:25-76:2
`
`(agreeing “going without cemented casing” was one “option to consider”), 76:2-
`
`79:4 (conceding that OHMS fracturing in horizontal wellbore segments was
`
`known); see also Coon at 13-14/19 (showing/describing one such system for
`
`OHMS fracturing without “required” casing).
`
`Regardless, RC’s approach is also legally incorrect because obviousness
`
`does not require absolute predictability or demand that the invention be the
`
`preferred or most desirable method described in the prior art. See In re Fulton, 391
`
`F.3d 1195, 1200 (Fed. Cir. 2004); see also In re Kubin, 561 F.3d 1351, 1360 (Fed.
`
`Cir. 2009). This is especially true here because the method claims do not require
`
`36591045.1
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`6
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`stimulation within any specific formation (Ex. 1001 at 13:61-16:27), or the
`
`initiation of a fracture in any particular location within the relevant wellbore
`
`segment or having any particular type, shape, or size (McGowen at 23:18-30:6).
`
`See Geo M. Martin, 618 F.3d at 1303; Wyers v. Master Lock Co., 616 F.3d 1231,
`
`1243 (Fed. Cir. 2010).
`
`A. Cemented Casing: Not a Requirement
`RC argues that, in 2001, a POSITA would understand that a wellbore must
`
`be segmented into multiple stages/zones to create multiple fractures (POR at 14),
`
`and a POSITA would expect this segmentation to require a cased and cemented
`
`wellbore (POR at 15). These arguments fail for several independent reasons.4
`
`First, they are factually incorrect. Limited entry created multiple fractures in
`
`a single zone/stage. See Ex. 2034 at 24:8-19. In addition, Ellis created multiple
`
`fractures in a single open-hole zone/stage using a string of ported subs. Ellis
`
`(published in 2000) at 5, 6, 7 (point 3 under Conclusions); Daneshy2 at ¶44; Rees
`
`(published in 2001) (citing Ellis at fn.1). Additionally, Mr. McGowen admitted
`
`cemented casing was not required for multi-stage fracturing of a horizontal
`
`segment of a wellbore, agreeing that “going without cemented casing would have
`
`been an option to consider.” McGowen at 75:25-76:2 (emphasis added); see also
`
`4 RC cites no pre-invention evidence on POR 14-17 – only its expert’s declaration
`
`and Dr. Daneshy’s testimony.
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`id. at 72:24-76:2. He also conceded OHMS fracturing had been conducted using
`
`external casing packers and mechanically-shiftable sliding sleeves. Id. at 75:25-
`
`79:4. Coon shows (in Fig. 1) and describes such a system, which “gave the
`
`operator the option of acid or low-volume sand fracturing.” Coon at 14/20; id. at
`
`13/20 (title); id. at 2-3/20 (establishing Coon’s pre-invention publication).
`
`Second, RC’s citation to Mr. McGowen’s declaration (Ex. 2034 –
`
`“McGDec.”) for support fails. On POR 15, RC cites McGDec. page 22 to support
`
`its cemented-casing argument, but that page contains no citation to any pre-
`
`invention reference, and includes essentially the same unsupported statement: that
`
`the “conventional wisdom” in 2001 was that “horizontal boreholes should be
`
`cased, cemented, and perforated to facilitate effective fracturing.” Ex. 2034 at
`
`22:18-20 (emphasis added). But effective fracturing is not required by the claims5,
`
`and Mr. McGowen admitted cemented casing was not required for such fracturing.
`
`McGowen at 72:24-79:4 (explained above).
`
`
`5 The method claims do not require stimulation within any specific formation (Ex.
`
`1001 at 13:61-16:27), or the initiation of a fracture in any particular location within
`
`the relevant wellbore segment or having any particular type, shape, or size
`
`(McGowen at 23:18-30:6). See Geo M. Martin, 618 F.3d at 1303 (Fed. Cir. 2010)
`
`(“commercial speed” not required).
`
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`RC also argues that using cemented casing gave operators the ability to
`
`“control precisely”—through perforation placement—where each fracture would
`
`form, which a POSITA allegedly believed “was critical to ensure that fractures are
`
`properly spaced apart. [McGDec.] at 23.” POR at 16. RC cites no supporting pre-
`
`invention evidence, and while Mr. McGowen cites Ex. 2042 on McGDec. page 23,
`
`that evidence should not be considered under Rules 22(a) and 23(a). But even if
`
`considered, it fails to help RC.
`
`Mr. McGowen quotes Ex. 2042 (pages 9-10), in apparent support of his
`
`contention that P&P “was deemed necessary.” McGDec. at 23:2-10. He cites a
`
`sentence expressing that unfavorable fracture initiation may cause problems with
`
`both fracture execution (screen-out) and production response by harming the
`
`wellbore-to-fracture connection. Ex. 2042 at 9-10/13. But Ex. 2042 is not stating
`
`that open-hole fracturing is causing such problems.6 Instead, it discusses fracture
`
`initiation problems with three subject wells—which were cemented and cased. Id.
`
`at 10-11/13 and 3-4/13; Daneshy2 at ¶¶31-33.
`
`Indeed, a POSITA would have appreciated that the cited wellbore-to-
`
`fracture connection problem, which can lead to screen-out and production response
`
`issues, was not the issue in open holes—where the fracturing fluid had full access
`
`6 RC also does not contend any pre-invention reference explicitly teaches away
`
`from open-hole fracturing. McGowen at 79:11-82:4.
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`Case IPR2016-00598
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`to the wellbore—that it was in cased holes, where the fracturing fluid’s only
`
`formation access was through perforations. See Ellis at 1 (lines 6-9 under
`
`“Common Uses”), 7 (points 1 and 2 under “Conclusions”); Daneshy2 at ¶¶38-39,
`
`46-47.
`
`Ellis explains that the wellbore-to-fracture connection problems discussed in
`
`RC’s Ex. 2042 could be reduced or eliminated by hydraulically fracturing in open-
`
`hole horizontal wells, which “show[ed] little or no wellbore to fracture connection
`
`problems.” Compare Ex. 2042 at 9-10/13 with Ellis at 1 (Abstract, 2nd paragraph)
`
`and 7 (points 1 and 2 under “Conclusions”); Daneshy2 at ¶¶42-45. Moreover, the
`
`fracture tortuosity issue in Ex. 2042 is also irrelevant because the claims do not
`
`require proppant, which contributes to the screen-out issue cited by Mr. McGowen
`
`at 9-10/13 of Ex. 2042. Ex. 2034 at 23:8-10; McGowen at 21:15-22:15; Wyers,
`
`616 F.3d at 1243.
`
`RC also argues that fractures too close together caused problems that would
`
`have motivated a POSITA to use cemented casing to control fracture spacing,
`
`including (1) “significant loss of production,” (2) some unidentified “worse”
`
`problem if fractures intersected, and (3) near-wellbore tortuosity problems. POR at
`
`16-17. RC’s block cite to McGDec. pages 23-25 for (1) should be ignored (Rule
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`6(a)(3)), as should its citation to Dr. Daneshy’s testimony for (1) because that
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`testimony was not tied to any particular time, and Dr. Daneshy did not testify such
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`an event would necessarily cause a significant loss of production (Ex. 2016
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`(replacement) at 30:17-31:3). Neither RC nor Mr. McGowen cites any evidence
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`that fractures growing into each other (i.e., (2)) was a recognized problem in 2001.
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`See Ex. 2034 at 24:20-31; McGowen at 108:9-110:21. For (3), Mr. McGowen’s
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`citation to Ex. 2039 as supporting the declaration quote on POR 17 should be
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`ignored because RC failed to cite Ex. 2039 in the POR. Rules 22(a), 23(a).
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`Regardless, Ellis teaches—as explained above—that near-wellbore tortuosity, and
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`resulting problems like screen-out (see Ex. 2039 at 2/8), were reduced or solved by
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`open-hole fracturing, not by P&P. See Ellis at 1 (Abstract, 2nd paragraph) and 7
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`(points 1 and 2 under “Conclusions”); Daneshy2 at ¶¶34-38, 42-47. Moreover, the
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`fracture tortuosity issue in Ex. 2039 is also irrelevant because the claims do not
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`require proppant.
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`B. RC’s “Conventional Wisdom” and Commercial Reasonableness
`Arguments: Irrelevant and Baseless
`
`RC’s cemented-casing-is-critical arguments on POR 19-20 are irrelevant and
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`incorrect for the reasons provided in Section III.A. RC’s suggestion that a
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`POSITA would have viewed using Thomson’s system to acid frac in an open hole
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`as risking “catastrophic failure and death” is baseless. POR at 20. None of Mr.
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`McGowen’s pre-invention date references taught that open-hole fracturing was
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`dangerous (McGowen at 110:22-111:2), and he could not identify a covered
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`stimulation procedure that resulted in, or was avoided out of concern for, personal
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`injury (id. at 111:3-13). RC suggests that a POSITA would have considered such a
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`“risk” coupled with Thomson’s operational challenges to outweigh the potential
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`economic gain of using Thomson’s system in an open hole like Ellsworth’s. POR
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`at 20-21 (citing Ex. 2034 at 28). But, during his deposition, Mr. McGowen backed
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`away from his declaration contention that “millions of dollars in reserves” were
`
`“likely … lost due to [Thomson’s alleged] failures,” admitting he was uncertain
`
`they were not outweighed by the cost savings realized from using Thomson’s
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`system and completion approach. McGowen at 60:2-61:6; see also id. at 34:3-
`
`39:10 and 41:21-24, 44:22-48:14.
`
`IV. RC’S SECONDARY CONSIDERATIONS EVIDENCE IS WEAK AND
`DOES NOT OUTWEIGH THE STRONG EVIDENCE OF
`OBVIOUSNESS (POR AT 22-40)
`A. The Claimed Methods Did Not Contravene Accepted Wisdom
`(POR at 22-25)
`
`For the reasons in Section III.A. above, none of RC’s pre-invention evidence
`
`supports the “accepted wisdom” RC contends was contravened. Moreover, RC
`
`does not contend that any pre-invention reference explicitly teaches away from
`
`using a system like Thomson’s to hydraulically fracture an open hole like
`
`Ellsworth’s. McGowen at 79:11-82:4.
`
`B. RC Has Not Established Nexus (POR at 38-40)
`RC does not address nexus for any secondary consideration except
`
`commercial success, where it first argues—via one sentence—that the Board
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`should presume any commercial success is due to the patented invention (POR 38)
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`because “Mr. McGowen has opined that StackFRAC and FracPoint are ‘the
`
`invention disclosed and claimed in the patent.’ Ex. 2034, McGowen Dec. at 43.”
`
`But this improperly incorporates by reference Mr. McGowen’s page 43 analysis
`
`(which itself does not show how either system meets any method claim), and the
`
`Board need not grant RC’s alleged nexus or commercial success evidence
`
`substantial weight as a result. See, e.g., CaptionCall, L.L.C. v. Ultratec, Inc.,
`
`IPR2015-00637, slip op. at 64-65 (Paper 98) (P.T.A.B. Sep, 7, 2016) (citing Rules
`
`42.6(a)(3) and 42.24).
`
`Regardless, claim 1 is the only claim Mr. McGowen substantively
`
`addressed. Ex. 2034 at 43:5-13 and claim 1 charts; McGowen at 139:3-5, 133:14-
`
`139:5. Mr. McGowen’s declaration (even if incorporated by reference) offers
`
`nothing to support a nexus to any of claims 2-16. McGowen at 139:3-5, 133:14-
`
`139:5. And while RC has cited to page 43 and “Exs. A, B” of Mr. McGowen’s
`
`expert report (Ex. 2034),7 RC does not discuss with specificity the details of Mr.
`
`McGowen’s analysis or how it allegedly shows that each limitation of claim 1 is
`
`met. POR at 33-34; see also id. at 25, 35-40. Thus, substantial weight need not be
`
`given to the improperly incorporated expert arguments. See, e.g., LG Chem, Ltd. v.
`
`
`7 POR at 33.
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`Celgard, LLC, IPR2014-00692, slip op. at 32-33 (Paper 76) (P.T.A.B. Oct. 5,
`
`2015).
`
`But, even if Mr. McGowen’s claim 1 analyses are considered in full, they
`
`are still insufficient to entitle RC to any nexus presumption.
`
`First, there is no difference between Thomson’s system and either PP’s
`
`StackFRAC system or Petitioners’ FracPoint system with respect to claim 1. See
`
`Petition at 22-38 (addressing Thomson’s disclosure relative to claim 1); compare
`
`Ex. 2034 claim 1 charts for StackFRAC and FracPoint systems; see also McGowen
`
`at 64:1-65:25, 67:5-9 (StackFRAC system meets claim 1 structure), 67:22-69:23
`
`(Thomson and StackFRAC systems are same with respect to claim 1 structure),
`
`71:10-72:23 (Thomson and FracPoint systems are same with respect to claim 1
`
`structure). Furthermore, Mr. McGowen confirmed that, despite his conclusory
`
`assertions that Petitioners and PP both performed the recited method steps, he
`
`provided no evidence: (1) that PP performed any of the method steps required of
`
`claim 1 (McGowen at 133:14-136:14), or (2) that Petitioners performed any of the
`
`method steps required of claim 1 (id. at 136:15-139:2). All revenue RC relies on
`
`via Messrs. Girardi’s and McGowen’s declarations is from equipment sales, not
`
`sales of services. Id. at 121:14-132:8, especially 131:24-132:3 (Petitioners’
`
`revenue – solely equipment sales), 132:9-133:2 (PP provides no pumping services;
`
`PP’s revenue assumed to be equipment only).
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`RC relies specifically on “pumping fracturing fluid into an open hole annular
`
`segment to fracture a formation” as the alleged novel use (“ANU”) not in
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`Thomson. See POR at 52. But its failure to provide any evidence of any such use
`
`by PP or Petitioners precludes any nexus presumption, see Classco, Inc. v. Apple,
`
`Inc., 838 F.3d 1214, 1220 (Fed. Cir. 2016).
`
`RC’s advertising evidence does not cure these deficiencies. POR at 39-40.
`
`Exhibit 2029 (PP case study) is dated May 26, 2015 and RC provides no
`
`evidence about any dissemination; it cannot provide a nexus for any pre-May 26,
`
`2015 commercial success. Exhibit 2030 (PP case study) has a copyright date of
`
`2016 (4/5) and RC provides no evidence about any dissemination; it cannot
`
`provide a nexus for any pre-2016 commercial success. While Ex. 2018 describes
`
`the ANU, it also touts a Thomson-like use of FracPoint (“system can also be used
`
`for isolation in a cased-hole environment”). Exhibit 2019 is not an advertisement
`
`per se, and highlights several non-claimed alternatives (see 4, 5, 7, 10, 11, 16, 20)
`
`and non-claimed uses for FracPoint (12: “cased hole applications” and “vertical …
`
`wellbores”). RC provides no date and no evidence of dissemination of or the
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`public’s access to either the StackFRAC or FracPoint videos (Exs. 2031-2032).
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`POR at 34.
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`C. RC’s Industry Praise Lacks a Nexus (POR at 25-29)
`RC’s industry praise and recognition evidence consists of articles, industry
`
`reports, and a television story. All are focused on the StackFRAC system, already
`
`taught by Thomson (see supra Section IV.B.), rather than on the ANU. Thus,
`
`RC’s industry praise evidence lacks the required nexus. Classco, 838 F.3d at 1220.
`
`Specifically:
`
`Ex. 2033: RC does not assert that the video’s praise was due to the ANU.
`
`The story focuses on PP’s design of a “downhole system.” The operator
`
`representative discussing their use of PP’s technology does not reference the
`
`StackFRAC system or the ANU.
`
`Ex. 2007: RC cites the article’s use of “Packers Plus technology” in the
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`Bakken oilfield, and the article references the creation of the “StackFrac system,”
`
`but the article does not assert the E&Y award was due to the ANU.
`
`Ex. 2009: RC cites the title, which is directed to “Packers Plus technology”
`
`and not the ANU, and a sentence discussing marketing of the “innovative
`
`StackFRAC system” rather than the ANU.
`
`Ex. 2006: This article contains no citation to the ANU. RC cites the
`
`article’s reference to multistage fracturing in horizontal wells with the StackFRAC
`
`system, but Thomson disclosed that non-open-hole use. Thomson at 97 (Abstract).
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`Ex. 2020: RC cites the article’s reference to the development of “hydraulic
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`fracturing technologies … particularly using horizontal wells,” but that was
`
`disclosed in Thomson (id.), and the article does not specify which “technologies”
`
`or mention the ANU.
`
`Ex. 2008: RC cites the article’s characterization of PP as “[c]reators of the
`
`StackFRAC system, the first ball drop system used to complete horizontal wells in
`
`multiple stages,” but that was disclosed in Thomson. Id.
`
`Ex. 2005: RC cites the article’s characterization of “StackFRAC, [PP’s]
`
`prize product and primary innovation, is an open hole ball drop completion system
`
`… credited with unlocking old resource plays,” but there is no explicit reference to
`
`the ANU, and Thomson’s system was an “open hole ball drop completion system”
`
`because it could be used in an open hole. See Petition at 22-38; Ex. 2016
`
`(replacement) at 101:21-102:2.
`
`The Rystad Energy exhibit (2021) and the BP paper exhibit (2001) lack a
`
`sufficient nexus to the ANU. Classco, 838 F.3d at 1220. Exhibit 20
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