Trials@uspto.gov
`571-272-7822
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`
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`Paper 8
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`Entered: August 22, 2016
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`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 B2
`____________
`
`Before SCOTT A. DANIELS, NEIL T. POWELL and
`CARL M. DEFRANCO, Administrative Patent Judges.
`
`DEFRANCO, Administrative Patent Judge.
`
`
`
`DECISION TO INSTITUTE
`37 C.F.R. § 42.108
`
`
`
`I. INTRODUCTION
`This is a preliminary proceeding to decide whether inter partes review
`
`of U.S. Patent No. 7,861,774 B2 (“the ’774 patent”) should be instituted
`under 35 U.S.C. § 314(a). Packers Plus Energy Services Inc. (“Packers
`Plus”) is the owner of the ’774 patent. Baker Hughes Incorporated and
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`

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`IPR2016-00598
`Patent 7,861,774 B2
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`Baker Hughes Oilfield Operations, Inc. (“Baker Hughes”) filed a Petition
`(“Pet.”) challenging claims 1–16 of the ’774 patent. Rapid Completions
`LLC, the exclusive licensee of the ’774 patent, filed a Preliminary Response
`(“Prelim. Resp.”). After considering the Petition and Preliminary Response,
`we institute inter partes review on all of the challenged claims.
`II. BACKGROUND
`The ’774 Patent
`A.
`The ’774 patent describes a tubing string for treating and stimulating
`flow from particular segments of an oil or gas well formation while sealing
`off other segments. Ex. 1001, Abstract. Typically, a tubing string is run into
`a wellbore as a conduit for oil and gas products to flow to the surface. Id. at
`1:28–48. But when natural formation pressure is insufficient, a well
`“stimulation” technique is employed, which involves injecting fracturing
`fluids into the formation to enlarge existing channels and thereby improve
`inflow into the wellbore. Id. at 1:35–39. And, because a wellbore may cross
`multiple zones within an oil or gas formation, only some of which contain
`desirable products, the ability to isolate and stimulate certain zones within
`the formation is key to controlling and optimizing production from the well.
`Ex. 1009, 113–116, Figs. 7 and 11.
`As described in the ’774 patent, the tubing string includes a series of
`ports along its length, with a ball-actuated sliding sleeve mounted over each
`port, for selectively permitting the release of fluid from certain segments of
`the tubing string. Id. at 2:39–65, 6:37–7:31. Special sealing devices, called
`“solid body packers,” are mounted along the length of the tubing string
`downhole and uphole of each port. Id. at 2:39–65, 6:4–36. The solid body
`packers are disposed about the tubing string and seal the annulus between
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`IPR2016-00598
`Patent 7,861,774 B2
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`the tubing string and the wellbore wall, thereby dividing the wellbore into a
`series of isolated segments. Id. at 6:18–24. When the sliding sleeve over a
`particular port is activated to an open position, fluid can pass into one
`segment of the wellbore but is prevented from passing into adjacent
`segments by the packers positioned on either side of the port. Id. at 6:50–57.
`B.
`The Related District Court Action
`The ’774 patent is involved in a concurrent district court action, Rapid
`
`Completions LLC v. Baker Hughes Incorporated, No. 6:15-cv-00724 (E.D.
`Tex.), which was filed July 31, 2015. Paper 5.
`
`C.
`The Challenged Claims
`
`Claim 1, the only independent claim at issue, recites a method for
`“fracturing a hydrocarbon-containing formation accessible through a
`wellbore.” As paraphrased below, the method comprises essentially the
`following steps:
`“running a tubing string into an open hole and uncased,
`non-vertical section of the wellbore, the tubing string having a
`long axis and an inner bore and comprising”
`“a first port” and “a second port” in the wall
`of the tubing string,
`“a first sliding sleeve having a seat with a
`first diameter” and “a second sliding sleeve having
`a seat with a second diameter smaller than the first
`diameter,” moveable relative to the first and
`second ports, respectively, between closed and
`open positions,
`“a first solid body packer,” “a second solid
`body packer,” and “a third solid body packer”
`mounted between and on either side of the first and
`second ports “to seal about the tubing string and
`against a wellbore wall,”
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`IPR2016-00598
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`“expanding radially outward the first, second and third
`solid body packers” until they set and seal against the wellbore
`wall and “create a first annular wellbore segment” and “a
`second annular wellbore segment” between the solid body
`packers
`that
`are
`“substantially
`isolated
`from
`fluid
`communication” with each other,
`
`“conveying a fluid conveyed sealing device through the
`tubing string to pass through the first sliding sleeve and to land
`in and seal against the seat of the second sliding sleeve moving
`the second sliding sleeve to the open port position permitting
`fluid flow through the second port,” and
`
`“pumping fracturing fluid through the second port and
`into the second annular wellbore segment to fracture the
`hydrocarbon-containing formation.”
`
`Ex. 1001, 13:60–15:6.
`D.
`The Asserted Grounds
`Baker Hughes challenges claims 1–16 on grounds of obviousness
`
`under 35 U.S.C. § 103, asserting that they are unpatentable over the
`combined teachings of Thomson1 and Ellsworth.2 Pet. 5. Baker Hughes
`asserts additionally that claim 15 is unpatentable as obvious over the
`combination of Thomson, Ellsworth, and Hartley.3 Id. In further support of
`these challenges, Baker Hughes proffers the Declaration of Ali Daneshy,
`Ph.D. (Ex. 1005).
`
`
`1 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 37482, © Society of Petroleum Engineers
`(1997) (“Thomson”) (Ex. 1002).
` B. Ellsworth et al., Production Control of Horizontal Wells in a Carbonate
`Reef Structure, © 1999 CIM 1999 Horizontal Well Conference
`(“Ellsworth”) (Ex. 1003).
` U.S. Patent No. 5,449,039, iss. Sep. 12, 1995 (“Hartley”) (Ex. 1004).
`
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`III. ANALYSIS
`In this preliminary proceeding, we determine whether Bakes Hughes
`has demonstrated a reasonable likelihood that “at least 1 of the claims
`challenged in the petition” is unpatentable. 35 U.S.C. § 314(a). As always,
`our goal is “the just, speedy, and inexpensive resolution” of the validity of
`the challenged claims. 37 C.F.R. § 42.1(b).
`A.
`Claim Construction
`In the Petition, Baker Hughes proposes a construction for three claim
`terms. Pet. 20–22. Packers Plus, in turn, states that it “disagrees” with
`Baker Hughes’s proposed constructions and “intends to dispute them,” but
`offers no construction of its own, except to say “there is no need for the
`Board to address these disputes now.” Prelim. Resp. 19. We recognize that
`a patent owner is under no obligation to respond to the petition in a
`preliminary proceeding. Nonetheless, construing the claims at this stage
`may be necessary to determining whether to institute in the first instance and
`may also benefit the parties by serving as a road map for trial. That said,
`however, construing the claims without hearing first from the patent owner
`poses a risk because, come the time of trial, the patent owner may very well
`dispute that initial construction in its patent owner response, thereby forcing
`the Board to revisit the issue and possibly adopt a new construction after
`interpreting the claims differently in the preliminary proceeding. See SAS
`Institute, Inc. v. ComplementSoft, LLC, Nos. 2015-1346, -1347, 2016 WL
`3213103, at *7 (Fed. Cir. June 10, 2016) (“What concerns us is not that the
`Board adopted a construction in its final written decision, as the Board is
`free to do, but that the Board ‘change[d] theories in mid-stream.’” (quoting
`Belden Inc. v. Berk-Tec LLC, 805 F.3d 1064, 1080 (Fed. Cir. 2015)). So as
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`to avoid the claim terms from becoming moving targets, we think a better
`approach in this case is to defer the issue of claim construction until we hear
`first from both parties. We can measure the reasonable likelihood of proving
`unpatentability of the challenged claims without making an express
`construction at this time.
`B.
`The Challenges As Premised on Thomson and Ellsworth
`Our analysis focuses on the challenge against independent claim 1 and
`the asserted combination of Thomson and Ellsworth, as all of the challenges
`stem from that foundational premise. Baker Hughes asserts that Thomson
`discloses all of the steps called for by claim 1, except that Thomson does not
`disclose expressly running the tubing string into “an open hole and uncased,
`non-vertical section of the wellbore.” Pet. 22–38. An annotation of Figure 3
`of Thomson, depicted below, illustrates its identity to the claimed invention.
`
`Thomson, Fig. 3 (annotated)
`As shown, annotated Figure 3 depicts a tubing string within a
`wellbore. Pet. 25. The tubing string is equipped with solid body packers
`(shown in red) on each side of a so-called “MSAF tool” (shown in blue),
`which Thomson expressly calls a “sliding sleeve.” Ex. 1002, at 1, 2.
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`Although Figure 3 shows only a single sliding sleeve between two packers,
`Thomson states that “[u]p to 9 MSAF tools can be run in the [tubing system]
`with isolation of each zone being achieved by hydraulic-set retrievable
`packers that are positioned on each side of an MSAF tool.” Id. at 1
`(“Abstract”); see also id. at 4. Insofar as the initial record indicates,
`Thomson appears to meet the arrangement of the tubing string called for by
`claim 1, including the “port,” “sliding sleeve,” and ”solid body packer”
`limitations.
`With respect to the steps of claim 1 reciting “conveying a fluid
`conveyed sealing device through the tubing string” and “pumping fracturing
`fluid” into the annular segment, Thomson states that the sliding sleeve
`“allow[s] communication between the tubing and annulus once the sleeve is
`moved to the open position.” Id. at 2. An annotation of Figure 5 of
`Thomson, depicted below, shows operation of the sliding sleeve from a
`closed to an open position.
`
`
`Thomson, Fig. 5 (annotated)
`According to Thomson, “[a] ball seat is threaded on the bore of [the]
`sleeve, and when the correct size ball lands on the ball seat, applied pressure
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`from above moves the sleeve to the down/open position.” Id. at 2.
`Furthermore, each “ball and seat form a seal that prevents pumped fluid
`from entering lower zones” of the tubing string. Id. On this record, we are
`persuaded that those descriptions by Thomson meet the “conveying” and
`“pumping” steps of claim 1.
`However, an issue exists about whether Thomson’s tubing string is
`capable of being run into an “open” and “uncased” wellbore, as claim 1
`requires. See Pet. 25–27; Prelim. Resp. 30–31. To that end, Baker Hughes
`proffers Ellsworth for teaching that a tubing string for cased holes, like that
`of Thomson, can also be used effectively in open, uncased holes. Pet. 25–
`27. Figure 5 of Ellsworth depicts a solid body packer and sliding sleeve
`arrangement similar to that of Thomson, only within an open, uncased hole.
`Ex. 1003 at 4, Fig. 5. Notably, Ellsworth explains that “solid body packers
`(SBP’s) (see Figure 4) have been used to establish open hole isolation” and
`that such packers “provide a long-term solution to open hole isolation
`without the aid of cemented liners.” Ex. 1003 at 3 (emphases added). Baker
`Hughes’s declarant testifies that using Thomson’s tubing string in an open,
`uncased section would have been a “straightforward task” and a skilled
`artisan would have been motivated to do so in order to “minimize the time
`and expense of completing a well.” Ex. 1005 ¶¶ 75–78 (citing Ex. 1003
`at 3, 9).
`Based on the record before us, Baker Hughes has demonstrated a
`reasonable likelihood that Thomson’s tubing string system meets each and
`every element of claim 1 and is capable of operating in either a cased or
`uncased environment as taught by Ellsworth. Packers Plus raises several
`arguments in response, none of which persuade us at this time. First, we are
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`not persuaded by the contention that Thomson is not a printed publication.
`Prelim. Resp. 20–25. Based on our initial review, Thomson has multiple
`indicators of public dissemination before the priority date of the ’774 patent.
`For instance, Thomson includes a copyright notice of 1997 and states “[t]his
`paper was prepared for presentation at the 1997 SPE Production Operations
`Symposium, held in Oklahoma City, Oklahoma, 9–11 March 1997.” Ex.
`1002, 1. It also includes contact information for obtaining permission to
`reproduce the paper. Id. Finally, it includes the authors’ acknowledgement
`of various oil and gas companies for “their support . . . and permission to
`publish this paper.” Id. at 5. At this stage, that evidence, on the face of the
`document itself, persuades us that Baker Hughes has demonstrated a
`reasonable likelihood of establishing Thomson’s publication before the
`priority date of the ’774 patent.4
`Packers Plus also argues that, even if combined, Thomson and
`Ellsworth lack the claim limitation of pumping fracturing fluid into an
`“open” and “uncased” wellbore. According to Packers Plus, Ellsworth is
`directed to a “conventional” completion system, not “hydraulic fracturing”
`through “open hole annular segments.” Prelim. Resp. 33–34. We are not
`persuaded. As we see it, Ellsworth teaches a completion system in which an
`“open hole horizontal wellbore” is “segmented into three sections, with the
`ability to produce any or all of these sections.” Ex. 1003, 2–3. And,
`
`4 Nonetheless, we recognize that the evidence of publication, as it stands
`now, may be hearsay or lack authentication. In that regard, we direct the
`parties to 37 C.F.R. § 42.64(b)(1), which addresses the time for objecting to
`evidence submitted during a preliminary proceeding once trial has been
`instituted. Additionally, we direct the parties to 37 C.F.R. § 42.123, which
`addresses the time for submitting supplemental information relevant to a
`challenge on which trial has been instituted.
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`according to Ellsworth, “solid body packers” were used “to establish open
`hole isolation.” Id. at 3. Once the “open hole packers” were set, another
`tool was used “to circulate inhibited fluid into the annulus.” Id.; see also id.
`at 4–5 (Figs. 5, 7). Those descriptions, in our view, evince a reasonable
`likelihood that Thomson, as taught by Ellsworth, is capable of “open hole”
`hydraulic fracturing.
`We have considered Packers Plus’s other arguments with respect to
`the combination of Thomson and Ellsworth (Prelim. Resp. 25–32, 34–38)
`but do not find them persuasive on the current record. At this stage, we
`determine that Baker Hughes has demonstrated a reasonable likelihood of
`proving that at least independent claim 1 of the ’774 patent would have been
`unpatentable for obviousness over Thomson and Ellsworth.
`Having decided that Thomson and Ellsworth evince a reasonable
`likelihood that at least one of the claims challenged in the Petition is
`unpatentable, we exercise our discretion under 37 C.F.R. § 42.108 to have
`the review proceed on all of the challenged claims on which Thomson and
`Ellsworth serve as the basis for unpatentability. In doing so, we seek to
`achieve finality of review at the Board and avoid parallel or serial review at
`the district court, at least with respect to Baker Hughes and the grounds in
`which Thomson and Ellsworth are proffered. See Intex Recreation Corp. v.
`Bestway Inflatables & Material Corp., IPR2016-00180, Paper 13, at 8–11
`(PTAB Jun. 6, 2016); see also Synopsys, Inc. v. Mentor Graphics Corp., 814
`F.3d 1309, 1316 (Fed. Cir. 2016) (stating that “[t]he validity of claims for
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`which the Board did not institute inter partes review can still be litigated in
`district court”).5
`
`IV. CONCLUSION
`After considering the evidence and arguments presented in the
`Petition and Preliminary Response, we determine that Baker Hughes has
`demonstrated a reasonable likelihood of success in proving that at least
`independent claim 1 of the ’774 patent is unpatentable. And in keeping with
`our mission of resolving patent validity disputes in a just, speedy, and
`inexpensive manner, we exercise our discretion to institute inter partes
`review on all of the challenged claims and on all of the asserted grounds, as
`raised in the Petition.
`
`V. ORDER
`Accordingly, it is hereby:
`
`ORDERED that, pursuant to 35 U.S.C. § 314(a), an inter partes
`
`review of claims 1–16 of the ’774 patent is instituted on the statutory
`grounds of obviousness under 35 U.S.C. § 103 as asserted in the Petition and
`identified in section II. D. above; and
`
`FURTHER ORDERED that, pursuant to 35 U.S.C. § 314(c) and
`37 C.F.R. § 42.4(b), inter partes review of the ’774 patent shall commence
`on the entry date of this Order, and notice is hereby given of the institution
`of a trial.
`
`5 Also, with respect to dependent claim 15, Baker Hughes asserts an
`alternative ground which simply adds Hartley to the combination of
`Thomson and Ellsworth. Pet. 45–46. This is done in anticipation of a
`potential argument by Packers Plus that Thomson’s ball does not meet the
`“plug” limitation of claim 15. We view this ground as simply an extension
`of the ground premised on Thomson and Ellsworth, and thus exercise our
`discretion to have the review proceed on this alternative ground as well.
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`IPR2016-00598
`Patent 7,861,774 B2
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`FOR PETITIONERS:
`Mark T. Garrett
`Eagle H. Robinson
`NORTON ROSE FULBRIGHT US LLP
`mark.garrett@nortonrosefulbright.com
`eagle.robinson@nortonrosefulbright.com
`
`
`
`FOR PATENT OWNER:
`
`Michael B. Ray
`Lori A. Gordon
`Kyle Conklin
`STERNE, KESSLER, GOLDSTEIN & FOX PLLC
`mray-PTAB@skgf.com
`lgordon-PTAB@skgf.com
`kconklin-PTAB@skgf.com
`ptab@skgf.com
`
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