Trials@uspto.gov
`571-272-7822
`
`
`
`
`Paper 19
`
`Entered: February 9, 2017
`
`
`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 IPR2016-01506
`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
`
`
`571-272-7822
`
`
`
`
`Paper 19
`
`Entered: February 9, 2017
`
`
`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 IPR2016-01506
`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
`
`
`
`IPR2016-01506
`Patent 7,861,774 B2
`
`Baker Hughes Oilfield Operations, Inc. (“Baker Hughes”) filed a Petition
`
`(“Pet.”) seeking inter partes review of 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 determine that Baker Hughes has demonstrated a
`
`reasonable likelihood of proving at least independent claim 1 of the ’774
`
`patent to be unpatentable. Accordingly, we authorize inter partes review to
`
`proceed on all of the challenged claims.
`
`II. BACKGROUND
`
`A.
`
`The ’774 Patent
`
`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. 1003, 2–3, Figs. 7, 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. Ex. 1001, 2:39–65, 6:37–7:31. Special sealing devices,
`
`2
`
`
`
`IPR2016-01506
`Patent 7,861,774 B2
`
`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 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.
`
`Related Cases
`
`
`
`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.), filed July 31, 2015. Paper 5. It is also the subject of a co-pending
`
`inter partes review proceeding, IPR2016-00598 (“the related -598 IPR”),
`
`which was instituted on August 22, 2016, and involves the identical claims
`
`challenged here.
`
`
`
`C.
`
`Challenged Claims
`
`Of the challenged claims, only claim 1 is independent. It recites a
`
`“method for fracturing a hydrocarbon-containing formation accessible
`
`through a wellbore.” As paraphrased below, the method steps include
`
`essentially:
`
`(1) “running a tubing string into an open hole and
`uncased, non-vertical section of the wellbore,” with the tubing
`string 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
`
`3
`
`
`
`IPR2016-01506
`Patent 7,861,774 B2
`
`
`diameter,” with both being positioned and
`moveable relative to their respective ports 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,”
`
`
`
`(2) “expanding radially outward the first, second and
`third solid body packers” until each “seals against the wellbore
`wall in the open hole and uncased, non-vertical section of the
`wellbore” to “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,
`
`
`(3) “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
`
`
`(4) “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
`
`
`
`In challenging claims 1–16, Baker Hughes raises essentially two
`
`grounds of obviousness under 35 U.S.C. § 103.1 Pet. 5. First, Baker Hughes
`
`asserts that claims 1–16 are unpatentable over the combined teachings of
`
`
`1 Baker Hughes asserts a third ground that additionally challenges claims 4
`and 6 on the same prior art as in the first ground, as well as “the knowledge
`of a person of ordinary skill in the art.” Pet. 6. We consider this ground as
`being no different than the first ground, which, as a matter of law, must also
`account for the knowledge that a skilled artisan brings to the table.
`
`4
`
`
`
`IPR2016-01506
`Patent 7,861,774 B2
`
`Lane-Wells2 and Ellsworth.3 Id. Second, Baker Hughes asserts that claim
`
`15 is also unpatentable as obvious over the combination of Lane-Wells and
`
`Ellsworth, like the first ground, as well as Hartley.4 Id. As additional
`
`evidence, Baker Hughes proffers the Declaration of Ali Daneshy, Ph.D.
`
`(Ex. 1005).
`
`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 asks for a construction of three claim
`
`terms—“solid body packer,” “fracturing fluid,” and “plug.” Pet. 24–26.
`
`Packers Plus responds that it “intends to dispute” the various constructions
`
`proposed by Baker Hughes but “there is no need for the Board to address
`
`these disputes now.” Prelim. Resp. 9–10. Instead, Packers Plus proposes a
`
`different term in need of construction—“the second annular wellbore
`
`segment.” Id. at 10–11. That term, however, was not addressed by Baker
`
`Hughes in its Petition.
`
`
`2 Lane-Wells Company, Tomorrow’s Tools—Today! Catalog No. 56,
`COMPOSITE CATALOG OF OIL FIELD AND PIPE LINE EQUIPMENT, 21st Ed.
`(1955-56), World Oil, The Gulf Publishing Company, Vol. 2 (“Lane-Wells”)
`(Ex. 1002).
`3 B. Ellsworth et al., Production Control of Horizontal Wells in a Carbonate
`Reef Structure, © 1999 CIM 1999 Horizontal Well Conference
`(“Ellsworth”) (Ex. 1003).
`4 U.S. Patent No. 5,449,039, iss. Sep. 12, 1995 (“Hartley”) (Ex. 1004).
`
`5
`
`
`
`IPR2016-01506
`Patent 7,861,774 B2
`
`
`We recognize that construing claim terms in a preliminary proceeding
`
`may be necessary to determining whether to institute in the first instance and
`
`may also benefit the parties in preparing for trial. That said, however,
`
`construing a claim term without hearing first from both parties poses a risk
`
`because, come time for trial, the unheard party may later dispute our initial
`
`construction, by way of patent owner response or petitioner reply, 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
`
`to avoid the claim terms from becoming moving targets, we think a better
`
`approach, at least in this case, is to defer the issue of claim construction until
`
`both parties have had a full and fair opportunity to understand and weigh in
`
`on the other party’s proposed constructions, i.e., the three terms proposed by
`
`Baker Hughes and the single term proposed by Packers Plus. At this stage,
`
`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 Lane-Wells and Ellsworth
`
`Our analysis focuses solely on the challenge against independent
`
`claim 1 and the asserted combination of Lane-Wells and Ellsworth. That
`
`same foundational premise underlies the challenges to other claims, i.e.,
`
`dependent claims 2–16. After reviewing the record, as it currently stands,
`
`Baker Hughes persuades us of a reasonable likelihood that the combination
`
`6
`
`
`
`IPR2016-01506
`Patent 7,861,774 B2
`
`of Lane-Wells and Ellsworth teaches each of the elements of claim 1,
`
`including running a tubing string into an open and uncased section of a
`
`wellbore. Pet. 26–49. For instance, Lane-Wells discloses expressly a tubing
`
`string that includes ball-actuated valves for acidizing “two zones with packer
`
`setting in either open-hole or cased hole completion.” Ex. 1002, 17
`
`(emphasis added). Furthermore, Baker Hughes’ declarant, Dr. Daneshy,
`
`provides persuasive testimony on Lane-Wells’s teaching of open-hole
`
`completion. Ex. 1005 ¶¶ 70–77.
`
`Alternatively, Baker Hughes proffers Ellsworth for teaching the
`
`effective use of a tubing string and packer arrangement in both cased and
`
`uncased wellbores. Pet. 35. Thus, even assuming a material dispute exists
`
`over the extent of Lane-Wells’s use in an “open” and “uncased” wellbore, as
`
`claim 1 requires, Ellsworth appears to teach the capability of running a
`
`tubing string, indeed, one with a sliding sleeve and packer arrangement
`
`similar to that of Lane-Wells, in an uncased, open hole, horizontal wellbore.
`
`Ex. 1003, 4–6, Figs. 5, 9; Ex. 1005 ¶ 76.
`
`And, although Lane Wells does not specify exactly what type of
`
`packer is used in the tubing string, Baker Hughes asserts that Ellsworth’s
`
`“solid body packer” is particularly “well-suited for use in the Lane Wells
`
`[s]ystem” because both references are directed to the same type of system,
`
`basically, a multi-zone system for open-hole acidizing. Pet. 32 (citing
`
`Ex. 1005 ¶¶ 78, 80). Indeed, 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, 3 (emphases added). Baker
`
`Hughes’s declarant, Dr. Daneshy, confirms that using Ellsworth’s solid body
`
`7
`
`
`
`IPR2016-01506
`Patent 7,861,774 B2
`
`packers with Lane-Wells’s multi-zone, open-hole system would have been a
`
`“straightforward task” and that a skilled artisan would have undertaken to do
`
`so in order to “minimize costs” associated with completion of a well. Ex.
`
`1005 ¶¶ 49–53, 78–84. Given these disclosures, we are persuaded of a
`
`reasonable likelihood that Lane Wells’s tubing string is capable of operating
`
`in an uncased, open-hole environment as taught by both Lane Wells and
`
`Ellsworth and that a skilled artisan would have understood the solid body
`
`packers taught by Ellsworth as a type of packer for use in Lane Wells’s
`
`multi-zone system.
`
`Packers Plus raises several arguments in response, none of which
`
`persuades us at this time. First, we are not persuaded by its contention that
`
`Lane-Wells is not a printed publication. Prelim. Resp. 12–16. Our
`
`preliminary review of the face of the document itself (showing a stamped
`
`date of receipt by Library of Congress) and the testimony of a Library of
`
`Congress “Senior Information and Reference Specialist” (that documents are
`
`shelved “within a couple of weeks” of being date-stamped) persuades us at
`
`this time that Lane-Wells was likely disseminated to the public before the
`
`priority date of the ’774 patent. Ex. 1002, 1, 7.
`
`Second, Packers Plus requests that we exercise our discretion under 35
`
`U.S.C. § 325(d) and decline to initiate inter partes review because
`
`substantially the same prior art and arguments were presented in the related
`
`-598 IPR. Prelim. Resp. 1–9. We disagree. While the secondary references
`
`are the same in both proceedings, the primary references are different, and
`
`each has merit for different reasons. See Paper 6 (Joinder Mot.), 6–7
`
`(acknowledging that Lane-Wells, relied on here, teaches “open hole”
`
`8
`
`
`
`IPR2016-01506
`Patent 7,861,774 B2
`
`completions, whereas Thomson,5 as asserted in the related -598 IPR, may
`
`not). As such, we decline to exercise our discretion under 35 U.S.C.
`
`§ 325(d).6
`
`Third, Packers Plus asserts that Baker Hughes fails to provide an
`
`adequate reason to combine Lane-Wells and Ellsworth because
`
`“conventional wisdom at the time” was that “multi-stage fracturing should
`
`be performed through a cemented liner, not open hole segments.” Prelim.
`
`Resp. 35–38 (citing Ex. 2015). That assertion ignores that both Lane-Wells
`
`and Ellsworth are directed expressly to “open hole” completion in three
`
`zones, with the ability to tap into any or all of the zones. Ex. 1002, 7;
`
`Ex. 1003, 1–4. That each of their teachings goes against conventional
`
`wisdom at the time does not discourage their unity, but rather favors it.
`
`Thus, at this time, the evidence supports a reasonable likelihood that a
`
`skilled artisan would have viewed Lane-Wells and Ellsworth as together
`
`teaching multi-stage fracturing in open-hole segments of a wellbore, as
`
`required by claim 1.
`
`Fourth, Packers Plus argues that objective evidence of
`
`nonobviousness demonstrates patentability of the challenged claims. Prelim.
`
`Resp. 17–29. In that regard, Packers Plus points to evidence of commercial
`
`
`5 D.W. Thomson, Design and Installation of a Cost-Effective Completion
`System for Horizontal Chalk Wells Where Multiple Zones Require Acid
`Stimulation, SPE 37482 (1997) (Ex. 1016).
`6 Packers Plus also argues that the Petition should be denied because it is “a
`second bite at the apple” that purportedly uses our institution decision from
`the related -598 IPR as a “roadmap.” Prelim. Resp. 2–7. We are not
`persuaded that a second petition on the same patent should be denied in the
`absence of a sufficient showing that it presents the same or substantially the
`same prior art or arguments as presented in the initial petition. See 35
`U.S.C. § 325(d).
`
`9
`
`
`
`IPR2016-01506
`Patent 7,861,774 B2
`
`success and industry praise of “open hole ball drop systems” sold by both
`
`Packers Plus and Baker Hughes that purportedly embody the claimed
`
`technology. Id. at 18–24. However, Packers Plus fails to proffer any
`
`evidence of relevant market share in asserting commercial success, without
`
`which we have no point of reference on which to evaluate the significance of
`
`the purported success. See In re Huang, 100 F.3d 135, 140 (Fed. Cir. 1996).
`
`Nor does Packers Plus provide any evidence or argument attributing the
`
`success or praise to features not already known in the prior art, i.e., features
`
`aside from the open-hole, ball-drop system for horizontal bores that we have
`
`determined as likely taught by Lane-Wells and Ellsworth. See ClassCo, Inc.
`
`v. Apple, Inc., 838 F.3d 1214, 1220 (Fed. Cir. 2016). Given those
`
`shortcomings, the record at this time does not support giving much, if any,
`
`weight to Packers Plus’s evidence of nonobviousness.
`
`In addition to the above arguments, we have considered Packers
`
`Plus’s other arguments but find them equally unpersuasive, at least on the
`
`current record. Thus, 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 Lane-Wells and
`
`Ellsworth. Having decided a reasonable likelihood exists 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 Lane-Wells 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 Lane-Wells and
`
`Ellsworth serve as the underlying premise of the challenge. See Intex
`
`10
`
`
`
`IPR2016-01506
`Patent 7,861,774 B2
`
`Recreation Corp. v. Bestway Inflatables & Material Corp., IPR2016-00180,
`
`Paper 13, at 8–11 (PTAB June 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 which the Board did not institute inter partes review
`
`can still be litigated in district court”).7
`
`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.
`
`Accordingly, it is hereby:
`
`V. ORDER
`
`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
`
`
`7 Also, with respect to dependent claim 15, Baker Hughes asserts an
`alternative ground which simply adds Hartley to the combination of Lane-
`Wells and Ellsworth. Pet. 57–58. This is done in anticipation of a potential
`argument by Packers Plus that Lane-Wells’s ball does not meet the “plug”
`limitation of claim 15. We view this ground as simply an extension of the
`ground premised on Lane-Wells and Ellsworth, and thus exercise our
`discretion to have the review proceed on this alternative ground as well.
`
`11
`
`
`
`IPR2016-01506
`Patent 7,861,774 B2
`
`
`
`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.
`
`
`
`FOR PETITIONER:
`
`Mark T. Garrett
`Eagle H. Robinson
`mark.garrett@nortonrosefulbright.com
`eagle.robinson@nortonrosefulbright.com
`
`
`
`FOR PATENT OWNER:
`
`Hamad Hamad
`hhamad@caldwellcc.com
`
`Gregory Gonsalves
`gonsalves@gonsalveslawfirm.com
`
`
`12
`
`
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