`___________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`___________________
`
`
`
`BAKER HUGHES INCORPORATED and
`BAKER HUGHES OILFIELD OPERATIONS, INC.,
`Petitioners
`
`v.
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`PACKERS PLUS ENERGY SERVICES INC.,
`Patent Owner
`
`___________________
`
`Case IPR2016-01506
`Patent 7,861,774
`___________________
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`
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`EXCLUSIVE LICENSEE RAPID COMPLETIONS LLC’S
`MOTION TO RECONSIDER INSTITUTION DECISION
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`
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`
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`Mail Stop “PATENT BOARD”
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
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`
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`Case IPR2016-01506
`Patent 7,861,774
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`TABLE OF CONTENTS
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`INTRODUCTION ........................................................................................... 1
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`PRECISE RELIEF REQUESTED .................................................................. 1
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`I.
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`II.
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`III. LEGAL STANDARDS ................................................................................... 1
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`IV. ARGUMENT ................................................................................................... 2
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`A.
`
`B.
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`The Panel Relied on a Legally Erroneous Interpretation of
`35 U.S.C. § 314(a). ................................................................................ 2
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`The Panel Relied on an Erroneous Interpretation of Law in
`Evaluating Lane-Wells Under § 102(b). ............................................... 9
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`Cases
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`TABLE OF AUTHORITIES
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`Arnold Partnership v. Dudas
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`362 F.3d 1338 (Fed. Cir. 2004) ....................................................................... 2
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`Blue Coat Sys., Inc. v. Finjan, Inc.
`IPR2017-01441, Paper 11-12 (PTAB Jan. 23, 2017) ...................................... 5
`
`
`Chao v. Roy’s Const., Inc.
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`517 F.3d 180 (3d Cir. 2008) ........................................................................2, 8
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`Conopco, Inc. v. The Proctor & Gamble Co.
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`IPR2014-00628, Paper 21 (PTAB Oct. 20, 2014) ........................................... 3
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`Donovan v. Adams Steel Erection, Inc.
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`766 F.2d 804 (3d Cir. 1985) ............................................................................ 2
`
`In re Lister
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`583 F.3d 1307 (Fed. Cir. 2009) .................................................................9, 10
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`In re Magnum Oil Tools Int’l, Ltd.
`
`No. 2015-1300, 2016 WL 3974202 (Fed. Cir. July 25, 2016) ........................ 3
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`LG Elecs. Inc. v. Core Wireless Licensing S.A.R.L.
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`IPR2016-00986, Paper No. 12 (PTAB Aug. 22, 2016) .......................... 4, 5, 6
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`Netapp Inc. v. Crossroads Sys., Inc.
`
`IPR2015-00776, Paper 12 (PTAB Sept. 8, 2015) ........................................... 8
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`Nvidia Corp. v. Samsung Elecs. Co.
`
`IPR2016-00134, Paper 9 (PTAB May 4, 2016) ..........................................4, 6
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`Samsung Elec. Co. v. Rembrandt Wireless Techs., LP
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`IPR2015-00114, Paper No. 14 (Jan. 28, 2015) ............................................... 5
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`Toyota Motor Corp. v. American Vehicular Sciences LLC
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`IPR2015-00262, Paper 10 (PTAB Jan. 29, 2015) .......................................3, 4
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`US Endodontics, LLC v. Gold Standard Instruments, LLC
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`IPR2015-01476, Paper 13 (PTAB Oct. 26, 2015) ........................................... 7
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`Statutes
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`35 U.S.C. § 102(b) .................................................................................................1, 9
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`35 U.S.C. § 314(a) ........................................................................................... passim
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`35 U.S.C. § 315(d) ..................................................................................................... 4
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`35 U.S.C. § 325(d) ........................................................................................ 2, 3, 4, 5
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`37 C.F.R. § 42.71(c) ................................................................................................... 2
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`37 C.F.R. § 42.71(d) .................................................................................................. 1
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`I.
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`INTRODUCTION
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`The Panel recently issued institution decisions in three IPRs based on similar
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`or identical reasons. IPR2016-01496, IPR2016-01505, IPR2016-01506. While
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`Respondent intends to challenge those reasons in each proceeding as it advances,
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`the Board’s decisions also contain two legal errors that justify reconsideration.
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`Specifically, the Panel: (1) mistakenly concluded that discretionary denial of
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`institution under 35 U.S.C. § 314(a) requires a showing of “substantial similarity;”
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`and (2) it applied the incorrect legal test when evaluating whether Lane-Wells
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`qualifies as prior art under 35 U.S.C. § 102(b). Respondent requests that the Board
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`reconsider its decision regarding those issues and deny institution.
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`II.
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`PRECISE RELIEF REQUESTED
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`Respondent requests rehearing and reversal of the institution decisions in
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`IPR2016-01496, IPR2016-01505, IPR2016-01506 as to all claims and grounds.1
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`III. LEGAL STANDARDS
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`“A party dissatisfied with a decision may file a request for rehearing,
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`without prior authorization from the Board.” 37 C.F.R. § 42.71(d). “The request
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`must specifically identify all matters the party believes the Board misapprehended
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`or overlooked, and the place where each matter was previously addressed in a
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`motion, an opposition, or a reply.” Id.
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`1 For ease of reading, Respondent files this identical motion in each proceeding.
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`When asked to review a decision on a petition, a panel looks for an abuse of
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`discretion. 37 C.F.R. § 42.71(c). An abuse of discretion occurs when a decision is
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`based on an erroneous interpretation of law, or if a factual finding is not supported
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`by substantial evidence, or if the decision represents an unreasonable judgment in
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`weighing relevant factors. Arnold Partnership v. Dudas, 362 F.3d 1338, 1340 (Fed.
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`Cir. 2004).
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`“It is settled that where an agency departs from established precedent
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`without announcing a principled reason for such a reversal, its action is arbitrary,
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`and an abuse of discretion, and should be reversed.” Donovan v. Adams Steel
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`Erection, Inc., 766 F.2d 804, 807 (3d Cir. 1985) (internal citations omitted). This
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`principle precludes an agency from disregarding its prior case law without a
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`“principled reason.” Chao v. Roy’s Const., Inc., 517 F.3d 180, 190 (3d Cir. 2008).
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`IV. ARGUMENT
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`A. The Panel Relied on a Legally Erroneous Interpretation of 35
`U.S.C. § 314(a).
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`In addition to disputing the merits of the Petition in its Preliminary
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`Response, Respondent identified two statutory bases for denial of the petition: 35
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`U.S.C. § 325(d) and § 314(a). See Prel. Resp. at §§ II.A-C. Respondent also cited
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`prior PTAB precedent explaining the contours of these provisions. Id. Although
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`the institution decision acknowledged these arguments, it only analyzed
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`Respondent’s § 325(d) argument. It appears that the Panel mistakenly concluded
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`that rejection of a Petition under § 314(a) requires a patent owner to prove
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`substantial similarity as contemplated by § 325(d). As explained below, this
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`conclusion was legal error, and Respondent requests reconsideration of its § 314(a)
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`challenge under the correct standard.2
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`Section 325(d) identifies substantial similarity as one factor that the Board
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`may consider when denying a petition; it contains no language limiting the Board’s
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`authority to only considering that factor when exercising its discretion to deny a
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`petition. Conopco, Inc. v. The Proctor & Gamble Co., IPR2014-00628, Paper 21
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`at 6 (PTAB Oct. 20, 2014) (explaining that similarity between petitions is just “one
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`2 The Panel also erred to the extent it based its decision on arguments
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`omitted from the Petition or shifted the burden onto respondent to demonstrate
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`substantial similarity. See In re Magnum Oil Tools Int’l, Ltd., No. 2015-1300,
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`2016 WL 3974202, at *10 (Fed. Cir. July 25, 2016) (finding “no support for the
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`PTO’s position that the Board is free to adopt arguments on behalf of petitioners
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`that could have been, but were not, raised by the petitioner during an IPR”); Toyota
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`Motor Corp. v. American Vehicular Sciences LLC, IPR2015-00262, Paper 10 at 3
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`(PTAB Jan. 29, 2015) (denying Petition where Petitioner failed to explain why it
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`did not include the grounds of a follow-on petition in an earlier filed petition).
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`of several circumstances that inform our decision to decline to institute review”).
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`Indeed, the Board has previously explained that § 314(a) and § 325(d) provide
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`“separate” bases for denial of a petition, and that there is no substantial similarity
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`requirement under § 314(a). See, e.g., Nvidia Corp. v. Samsung Elecs. Co.,
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`IPR2016-00134, Paper 9 at 6-7 and 12-13 (PTAB May 4, 2016) (explaining the
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`different factors considered in a § 314(a) analysis and a § 325(d) analysis); LG
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`Elecs. Inc. v. Core Wireless Licensing S.A.R.L., IPR2016-00986, Paper No. 12 at
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`15 (PTAB Aug. 22, 2016) (listing § 314(a) factors without reference to § 325(d)).
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`Lest there be any doubt as to the Board’s authority, § 315(d) states:
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`[D]uring the pendency of an inter partes review, if another proceeding
`or matter involving the patent is before the Office, the Director may
`determine the manner in which the inter partes review or other
`proceeding or matter may proceed, including providing for stay,
`transfer, consolidation, or termination of any such matter or proceeding.
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`This provision allows the Board to terminate a serial petition, and it contains no
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`requirement that the Board find substantial similarity between the follow-on
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`petition and the earlier petition.
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`This makes sense. The Board has consistently warned petitioners against
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`abusive serial petitions. Toyota Motor Corp., Paper No. 7 at 7-8 (explaining that
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`“the opportunity to read Patent Owner’s Preliminary Response in [the previous IPR
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`proceeding], prior to filing the Petition here, is unjust”); Samsung Elec. Co. v.
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`Rembrandt Wireless Techs., LP, IPR2015-00114, Paper No. 14 at 7 (Jan. 28,
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`2015). (“Petitioner is requesting, essentially, a second chance to challenge the
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`claims. We, however, are not persuaded that a second chance would help ‘secure
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`the just, speedy, and inexpensive resolution of every proceeding.’”). For these
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`warnings to carry weight, they must be applicable even if a follow-on petition
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`contains arguments that are not substantially similar to an earlier filed petition.
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`Indeed, the risk of abuse may be greatest when a later-filed petition is dissimilar to
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`an earlier-filed petition, e.g., because the petitioner developed new theories after
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`reviewing a preliminary response or institution decision.
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`To be sure, a number of the Board’s prior decisions have denied petitions
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`under both § 325(d) and § 314(a). But see, e.g., LG Elecs., IPR2016-00986, Paper
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`No. 12 at 15 (denying petition under 314(a) without evaluating substantial
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`similarity under § 325(d)); Blue Coat Sys., Inc. v. Finjan, Inc., IPR2017-01441,
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`Paper 11-12 at 8-10 (PTAB Jan. 23, 2017) (denying petition as to grounds that
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`were substantially similar and also new grounds). However, neither party has cited
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`any statutory authority or past precedent requiring a finding of substantial
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`similarity before denying a petition under § 314(a). By imposing such a
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`requirement, the Panel has signaled a dramatic policy shift and actually encouraged
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`abusive, serial petitions. After all, why should a petitioner worry about presenting
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`its best arguments in a petition if it can use that petition as a placeholder to elicit a
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`preliminary response and then supplement its theories in a later petition by merely
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`swapping out one asserted reference? Accordingly, Respondent requests that the
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`Board reconsider its § 314(a) challenge consistent with the Board’s past precedent.
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`This precedent indicates that the Board considers seven factors when
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`evaluating a challenge under § 314(a). See, e.g., Nvidia Corp., IPR2016-00134,
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`Paper 9 at 6-7; LG Elecs., IPR2016-00986, Paper No. 12 at 15. Factors one and
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`two relate to the Board’s finite resources. Factor three considers whether the initial
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`and follow-on petitions relate to the same claims. Factor four considers whether
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`the petitioner knew or should have known of the later-filed theories earlier. Factor
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`five and six consider whether the petitioner obtained a tactical advantage by filing
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`the follow-on petition after reviewing the patent owner’s preliminary response.
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`Factor seven considers the petitioner’s excuse for filing serial petitions. Id.
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`Respondent’s Preliminary Response demonstrates that all of these factors
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`weigh against institution of this Petition. Petitioners waited until after they had
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`reviewed Respondent’s Preliminary Responses to file follow-on petitions against
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`the exact same claims addressed in their initial Petition. Prelim. Resp. at § II.B.
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`The Petition offers no justification as to why Petitioners waited so long to file these
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`serial petitions, and in fact, when pressed to explain why they could not have
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`asserted their Lane-Wells theories earlier, they refused to respond or provide
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`substantiating evidence. Id. at § II.A. This is not a situation where the Board is
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`called upon to resolve a split of authority or to decide between competing
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`interpretations of the facts. The case law regarding § 314(a) is established and the
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`basic facts are undisputed. Consistent application of the Board’s precedent to these
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`facts calls for denial of this Petition.
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`Even if the Board were to consider the similarity of the Petitions in
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`evaluating this § 314(a) challenge, that consideration does not weigh in favor of
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`institution. To justify the burden and expense of a follow-on petition, a petitioner
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`must demonstrate that its asserted grounds “are improvements upon [the] grounds”
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`that have already been instituted. US Endodontics, LLC v. Gold Standard
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`Instruments, LLC, IPR2015-01476, Paper 13 at 9-10 (PTAB Oct. 26, 2015).
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`Petitioners have not done so.
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`The Panel identified only a single difference between the two theories at
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`issue—the cased/open hole distinction between Thomson and Lane Wells.
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`However, it is unclear why this distinction is particularly relevant with regard to
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`the ’505 and ’634 patents given that nearly all of the challenged claims do not even
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`contain open hole limitations. With regard to the open hole claims, Petitioners
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`have not asserted Lane-Wells or Thomson as stand alone references. Thus, the
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`relevant inquiry is not whether these two references are substantially similar, but
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`whether the proposed Thomson-Ellsworth and Lane-Wells-Ellsworth combinations
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`are substantially similar. They are. As to both of these theories, Petitioners allege
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`that a POSITA would employ the proposed combinations in open hole wells.
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`Indeed, the fact that Petitioners seek consolidation of these theories is evidence of
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`their similarity.
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`More importantly, even if the asserted grounds are meaningfully different,
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`the Panel erred by failing to consider why these Petitions are different. “Absent a
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`good reason, a subsequently filed petition that only corrects defects identified by a
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`Board decision in a prior petition is not typically granted.” Netapp Inc. v.
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`Crossroads Sys., Inc., IPR2015-00776, Paper 12 at 8 (PTAB Sept. 8, 2015). If the
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`difference identified by the Panel arose in response Respondent’s Preliminary
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`Response, then this fact weighs against institution, not in favor of it.
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`Here, the open hole/cased hole distinction identified by the Board was the
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`primary issue addressed in Respondent’s preliminary response in IPR2016-00596.
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`See, e.g., Prelim. Resp. at 29 (“As to this key question—whether a PHOSITA
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`would have expected an open hole version of Thompson to work for its intended
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`purpose—Petitioners offer no evidence.”). Thus, the Panel’s finding that the
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`follow-on Petition attempts to correct this deficiency is a fact that should weigh
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`decisively against institution.
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`This Panel has discretion when evaluating a challenge under § 314(a).
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`However, that discretion is not unconstrained; the Board must be mindful of its
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`past precedent. See supra § III; Chao, 517 F.3d at 190. Accordingly, Respondent
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`respectfully requests that the Panel evaluate its § 314(a) challenge to the Petition
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`and deny institution.
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`B.
`The Panel Relied on an Erroneous Interpretation of Law in
`Evaluating Lane-Wells Under § 102(b).
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`In its Preliminary Response, Respondent asserted that Petitioners had failed
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`to show that Lane-Wells qualifies as prior art under 35 U.S.C. § 102(b).
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`Specifically, it asserted that Petitioners had only provided evidence that Lane-
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`Wells was received at a library, not that it was publicly accessible, i.e., that an
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`ordinarily skilled artisan, exercising reasonable diligence, could locate the
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`reference. Prelim. Resp. at 13-14. The Panel found otherwise, stating:
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`Petitioner provides evidence that Lane-Wells was received not by just
`any library, but the Library of Congress. Additionally, Petitioner
`provides evidence that Lane-Wells was received by the Library of
`Congress not shortly before, but decades before the earliest possible
`priority date of the ’505 patent.
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`IPR2016-01496, Decision at 12. However, it was legal error for the Panel to
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`conclude that these facts qualify Lane-Wells as prior art.
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`The mere fact that a document is stored in the Library of Congress is
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`insufficient to qualify the document as prior art under 35 U.S.C. § 102(b). In re
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`Lister, 583 F.3d 1307, 1314 (Fed. Cir. 2009). In In re Lister, the reference at issue
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`was submitted to the copyright office and stored in the Library of Congress. Id. at
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`1313. The Patent Office argued that the reference was “publicly accessible”
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`because it could be located through a copyright database search and through two
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`commercial database services. Id. at 1315. The Federal Circuit concluded that the
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`reference was publicly accessible through the commercial services, but not through
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`the copyright database because that database did not allow for keyword searching.
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`Id. Because the Patent Office had failed to show that the commercial database
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`services had incorporated the reference as of the relevant critical date, it found that
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`the Patent Office had failed to even present a prima facie case that the reference
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`was prior art. Id. at 1317. Notably, the Federal Circuit reached this conclusion
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`despite finding that the reference was received by the Library of Congress years
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`before the relevant critical date.
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`Thus, it was legal error for the Panel to forgo an analysis as to whether
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`Lane-Wells was indexed and cataloged in a meaningful way. See Prelim. Resp. at
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`12-13 (citing relevant authority). Alternatively, to the extent the Panel based its
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`decision on factual assumptions as to the operation of the Library of Congress, this
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`too would have been error. Considering the evidence of record and the applicable
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`law, Petitioners have failed to show that Lane-Wells was publicly accessible as of
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`the relevant priority date. The record is simply devoid of any evidence as to how
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`this reference was indexed or how a person of skill in the art could actually locate
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`it without already being aware of its existence.
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`This is not an issue that Petitioners may correct with supplemental evidence.
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`35 U.S.C. § 314(a) permits institution of a petition only if the petition itself
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`demonstrates that the petitioner is likely to prevail. Because the evidence included
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`in the Petitions fails to establish even a prima facie case of invalidity under the
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`relevant Federal Circuit authority, Petitioners cannot carry their burden under §
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`314(a). If Petitioners do attempt to submit supplemental evidence to address this
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`issue, it only highlights the deficiency in the Petitions. This is especially true here
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`where Respondent requested that Petitioners explain how they located Lane-Wells
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`so that it could address this issue in its Preliminary Responses, but Petitioners
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`refused the request. Ex. 2003. Accordingly, Respondent respectfully requests that
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`the Panel reconsider its decision and find that Petitioners failed to meet their
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`burden of establishing Lane-Wells as prior art.
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`Dated: February 14, 2017
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` Respectfully submitted,
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`Rapid Completions LLC
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`
`By /Justin T. Nemunaitis/
`Hamad M. Hamad, Reg. No. 64,641
`Bradley W. Caldwell (pro hac vice)
`Justin T. Nemunaitis (pro hac vice)
`CALDWELL CASSADY CURRY, P.C.
`2101 Cedar Springs Road, Suite 1000
`Dallas, Texas 75201
`Telephone: 214.888.4848
`Facsimile: 214.888.4849
`hhamad@caldwellcc.com
`bcaldwell@caldwellcc.com
`jnemunaitis@caldwellcc.com
`rapid@caldwellcc.com
`
`Dr. Gregory Gonsalves, Reg. No. 43,639
`GONSALVES LAW FIRM
`2216 Beacon Lane
`Falls Church, Virginia 22043
`Telephone: 571.419.7252
`gonsalves@gonsalveslawfirm.com
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`CERTIFICATION OF SERVICE
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` The undersigned hereby certifies that the foregoing document was
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`served electronically via e-mail in its entirety on the following counsel of record
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`for Petitioner:
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`Mark T. Garrett (Lead Counsel)
`Eagle H. Robinson (Back-up Counsel)
`NORTON ROSE FULBRIGHT US LLP
`mark.garrett@nortonrosefulbright.com
`eagle.robinson@nortonrosefulbright.com
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`
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`Date: February 14, 2017
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` /Hamad M. Hamad/
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`Hamad M. Hamad, Reg. No. 64,641
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