throbber
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
`___________________
`
`
`
`EXCLUSIVE LICENSEE RAPID COMPLETIONS LLC’S
`MOTION TO RECONSIDER INSTITUTION DECISION
`
`
`
`
`
`
`Mail Stop “PATENT BOARD”
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`

`

`Case IPR2016-01506
`Patent 7,861,774
`
`TABLE OF CONTENTS
`
`INTRODUCTION ........................................................................................... 1
`
`PRECISE RELIEF REQUESTED .................................................................. 1
`
`I.
`
`II.
`
`III. LEGAL STANDARDS ................................................................................... 1
`
`IV. ARGUMENT ................................................................................................... 2
`
`A.
`
`B.
`
`The Panel Relied on a Legally Erroneous Interpretation of
`35 U.S.C. § 314(a). ................................................................................ 2
`
`The Panel Relied on an Erroneous Interpretation of Law in
`Evaluating Lane-Wells Under § 102(b). ............................................... 9
`
`
`
`
`
`
`- i -
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`

`Case IPR2016-01506
`Patent 7,861,774
`
`
`
`Cases
`
`
`TABLE OF AUTHORITIES
`
`
`Arnold Partnership v. Dudas
`
`362 F.3d 1338 (Fed. Cir. 2004) ....................................................................... 2
`
`Blue Coat Sys., Inc. v. Finjan, Inc.
`IPR2017-01441, Paper 11-12 (PTAB Jan. 23, 2017) ...................................... 5
`
`
`Chao v. Roy’s Const., Inc.
`
`517 F.3d 180 (3d Cir. 2008) ........................................................................2, 8
`
`Conopco, Inc. v. The Proctor & Gamble Co.
`
`IPR2014-00628, Paper 21 (PTAB Oct. 20, 2014) ........................................... 3
`
`Donovan v. Adams Steel Erection, Inc.
`
`766 F.2d 804 (3d Cir. 1985) ............................................................................ 2
`
`In re Lister
`
`583 F.3d 1307 (Fed. Cir. 2009) .................................................................9, 10
`
`In re Magnum Oil Tools Int’l, Ltd.
`
`No. 2015-1300, 2016 WL 3974202 (Fed. Cir. July 25, 2016) ........................ 3
`
`LG Elecs. Inc. v. Core Wireless Licensing S.A.R.L.
`
`IPR2016-00986, Paper No. 12 (PTAB Aug. 22, 2016) .......................... 4, 5, 6
`
`Netapp Inc. v. Crossroads Sys., Inc.
`
`IPR2015-00776, Paper 12 (PTAB Sept. 8, 2015) ........................................... 8
`
`Nvidia Corp. v. Samsung Elecs. Co.
`
`IPR2016-00134, Paper 9 (PTAB May 4, 2016) ..........................................4, 6
`
`Samsung Elec. Co. v. Rembrandt Wireless Techs., LP
`
`IPR2015-00114, Paper No. 14 (Jan. 28, 2015) ............................................... 5
`
`- ii -
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`

`

`Case IPR2016-01506
`Patent 7,861,774
`
`
`Toyota Motor Corp. v. American Vehicular Sciences LLC
`
`IPR2015-00262, Paper 10 (PTAB Jan. 29, 2015) .......................................3, 4
`
`US Endodontics, LLC v. Gold Standard Instruments, LLC
`
`IPR2015-01476, Paper 13 (PTAB Oct. 26, 2015) ........................................... 7
`
`Statutes
`
`35 U.S.C. § 102(b) .................................................................................................1, 9
`
`35 U.S.C. § 314(a) ........................................................................................... passim
`
`35 U.S.C. § 315(d) ..................................................................................................... 4
`
`35 U.S.C. § 325(d) ........................................................................................ 2, 3, 4, 5
`
`37 C.F.R. § 42.71(c) ................................................................................................... 2
`
`37 C.F.R. § 42.71(d) .................................................................................................. 1
`
`- iii -
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`

`

`Case IPR2016-01506
`Patent 7,861,774
`
`
`I.
`
`INTRODUCTION
`
`The Panel recently issued institution decisions in three IPRs based on similar
`
`or identical reasons. IPR2016-01496, IPR2016-01505, IPR2016-01506. While
`
`Respondent intends to challenge those reasons in each proceeding as it advances,
`
`the Board’s decisions also contain two legal errors that justify reconsideration.
`
`Specifically, the Panel: (1) mistakenly concluded that discretionary denial of
`
`institution under 35 U.S.C. § 314(a) requires a showing of “substantial similarity;”
`
`and (2) it applied the incorrect legal test when evaluating whether Lane-Wells
`
`qualifies as prior art under 35 U.S.C. § 102(b). Respondent requests that the Board
`
`reconsider its decision regarding those issues and deny institution.
`
`II.
`
`PRECISE RELIEF REQUESTED
`
`Respondent requests rehearing and reversal of the institution decisions in
`
`IPR2016-01496, IPR2016-01505, IPR2016-01506 as to all claims and grounds.1
`
`III. LEGAL STANDARDS
`
`“A party dissatisfied with a decision may file a request for rehearing,
`
`without prior authorization from the Board.” 37 C.F.R. § 42.71(d). “The request
`
`must specifically identify all matters the party believes the Board misapprehended
`
`or overlooked, and the place where each matter was previously addressed in a
`
`motion, an opposition, or a reply.” Id.
`
`
`1 For ease of reading, Respondent files this identical motion in each proceeding.
`
`
`
`
`- 1 -
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`

`

`Case IPR2016-01506
`Patent 7,861,774
`
`
`
`When asked to review a decision on a petition, a panel looks for an abuse of
`
`discretion. 37 C.F.R. § 42.71(c). An abuse of discretion occurs when a decision is
`
`based on an erroneous interpretation of law, or if a factual finding is not supported
`
`by substantial evidence, or if the decision represents an unreasonable judgment in
`
`weighing relevant factors. Arnold Partnership v. Dudas, 362 F.3d 1338, 1340 (Fed.
`
`Cir. 2004).
`
`“It is settled that where an agency departs from established precedent
`
`without announcing a principled reason for such a reversal, its action is arbitrary,
`
`and an abuse of discretion, and should be reversed.” Donovan v. Adams Steel
`
`Erection, Inc., 766 F.2d 804, 807 (3d Cir. 1985) (internal citations omitted). This
`
`principle precludes an agency from disregarding its prior case law without a
`
`“principled reason.” Chao v. Roy’s Const., Inc., 517 F.3d 180, 190 (3d Cir. 2008).
`
`IV. ARGUMENT
`
`A. The Panel Relied on a Legally Erroneous Interpretation of 35
`U.S.C. § 314(a).
`
`In addition to disputing the merits of the Petition in its Preliminary
`
`Response, Respondent identified two statutory bases for denial of the petition: 35
`
`U.S.C. § 325(d) and § 314(a). See Prel. Resp. at §§ II.A-C. Respondent also cited
`
`prior PTAB precedent explaining the contours of these provisions. Id. Although
`
`the institution decision acknowledged these arguments, it only analyzed
`
`
`
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`- 2 -
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`

`Case IPR2016-01506
`Patent 7,861,774
`
`
`Respondent’s § 325(d) argument. It appears that the Panel mistakenly concluded
`
`that rejection of a Petition under § 314(a) requires a patent owner to prove
`
`substantial similarity as contemplated by § 325(d). As explained below, this
`
`conclusion was legal error, and Respondent requests reconsideration of its § 314(a)
`
`challenge under the correct standard.2
`
`Section 325(d) identifies substantial similarity as one factor that the Board
`
`may consider when denying a petition; it contains no language limiting the Board’s
`
`authority to only considering that factor when exercising its discretion to deny a
`
`petition. Conopco, Inc. v. The Proctor & Gamble Co., IPR2014-00628, Paper 21
`
`at 6 (PTAB Oct. 20, 2014) (explaining that similarity between petitions is just “one
`
`
`2 The Panel also erred to the extent it based its decision on arguments
`
`omitted from the Petition or shifted the burden onto respondent to demonstrate
`
`substantial similarity. See In re Magnum Oil Tools Int’l, Ltd., No. 2015-1300,
`
`2016 WL 3974202, at *10 (Fed. Cir. July 25, 2016) (finding “no support for the
`
`PTO’s position that the Board is free to adopt arguments on behalf of petitioners
`
`that could have been, but were not, raised by the petitioner during an IPR”); Toyota
`
`Motor Corp. v. American Vehicular Sciences LLC, IPR2015-00262, Paper 10 at 3
`
`(PTAB Jan. 29, 2015) (denying Petition where Petitioner failed to explain why it
`
`did not include the grounds of a follow-on petition in an earlier filed petition).
`
`
`
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`- 3 -
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`Case IPR2016-01506
`Patent 7,861,774
`
`
`of several circumstances that inform our decision to decline to institute review”).
`
`Indeed, the Board has previously explained that § 314(a) and § 325(d) provide
`
`“separate” bases for denial of a petition, and that there is no substantial similarity
`
`requirement under § 314(a). See, e.g., Nvidia Corp. v. Samsung Elecs. Co.,
`
`IPR2016-00134, Paper 9 at 6-7 and 12-13 (PTAB May 4, 2016) (explaining the
`
`different factors considered in a § 314(a) analysis and a § 325(d) analysis); LG
`
`Elecs. Inc. v. Core Wireless Licensing S.A.R.L., IPR2016-00986, Paper No. 12 at
`
`15 (PTAB Aug. 22, 2016) (listing § 314(a) factors without reference to § 325(d)).
`
`Lest there be any doubt as to the Board’s authority, § 315(d) states:
`
`[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.
`
`This provision allows the Board to terminate a serial petition, and it contains no
`
`requirement that the Board find substantial similarity between the follow-on
`
`petition and the earlier petition.
`
`This makes sense. The Board has consistently warned petitioners against
`
`abusive serial petitions. Toyota Motor Corp., Paper No. 7 at 7-8 (explaining that
`
`“the opportunity to read Patent Owner’s Preliminary Response in [the previous IPR
`
`proceeding], prior to filing the Petition here, is unjust”); Samsung Elec. Co. v.
`
`
`
`
`- 4 -
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`

`Case IPR2016-01506
`Patent 7,861,774
`
`
`Rembrandt Wireless Techs., LP, IPR2015-00114, Paper No. 14 at 7 (Jan. 28,
`
`2015). (“Petitioner is requesting, essentially, a second chance to challenge the
`
`claims. We, however, are not persuaded that a second chance would help ‘secure
`
`the just, speedy, and inexpensive resolution of every proceeding.’”). For these
`
`warnings to carry weight, they must be applicable even if a follow-on petition
`
`contains arguments that are not substantially similar to an earlier filed petition.
`
`Indeed, the risk of abuse may be greatest when a later-filed petition is dissimilar to
`
`an earlier-filed petition, e.g., because the petitioner developed new theories after
`
`reviewing a preliminary response or institution decision.
`
`To be sure, a number of the Board’s prior decisions have denied petitions
`
`under both § 325(d) and § 314(a). But see, e.g., LG Elecs., IPR2016-00986, Paper
`
`No. 12 at 15 (denying petition under 314(a) without evaluating substantial
`
`similarity under § 325(d)); Blue Coat Sys., Inc. v. Finjan, Inc., IPR2017-01441,
`
`Paper 11-12 at 8-10 (PTAB Jan. 23, 2017) (denying petition as to grounds that
`
`were substantially similar and also new grounds). However, neither party has cited
`
`any statutory authority or past precedent requiring a finding of substantial
`
`similarity before denying a petition under § 314(a). By imposing such a
`
`requirement, the Panel has signaled a dramatic policy shift and actually encouraged
`
`abusive, serial petitions. After all, why should a petitioner worry about presenting
`
`its best arguments in a petition if it can use that petition as a placeholder to elicit a
`
`
`
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`- 5 -
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`

`Case IPR2016-01506
`Patent 7,861,774
`
`
`preliminary response and then supplement its theories in a later petition by merely
`
`swapping out one asserted reference? Accordingly, Respondent requests that the
`
`Board reconsider its § 314(a) challenge consistent with the Board’s past precedent.
`
`This precedent indicates that the Board considers seven factors when
`
`evaluating a challenge under § 314(a). See, e.g., Nvidia Corp., IPR2016-00134,
`
`Paper 9 at 6-7; LG Elecs., IPR2016-00986, Paper No. 12 at 15. Factors one and
`
`two relate to the Board’s finite resources. Factor three considers whether the initial
`
`and follow-on petitions relate to the same claims. Factor four considers whether
`
`the petitioner knew or should have known of the later-filed theories earlier. Factor
`
`five and six consider whether the petitioner obtained a tactical advantage by filing
`
`the follow-on petition after reviewing the patent owner’s preliminary response.
`
`Factor seven considers the petitioner’s excuse for filing serial petitions. Id.
`
`Respondent’s Preliminary Response demonstrates that all of these factors
`
`weigh against institution of this Petition. Petitioners waited until after they had
`
`reviewed Respondent’s Preliminary Responses to file follow-on petitions against
`
`the exact same claims addressed in their initial Petition. Prelim. Resp. at § II.B.
`
`The Petition offers no justification as to why Petitioners waited so long to file these
`
`serial petitions, and in fact, when pressed to explain why they could not have
`
`asserted their Lane-Wells theories earlier, they refused to respond or provide
`
`substantiating evidence. Id. at § II.A. This is not a situation where the Board is
`
`
`
`
`- 6 -
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`

`Case IPR2016-01506
`Patent 7,861,774
`
`
`called upon to resolve a split of authority or to decide between competing
`
`interpretations of the facts. The case law regarding § 314(a) is established and the
`
`basic facts are undisputed. Consistent application of the Board’s precedent to these
`
`facts calls for denial of this Petition.
`
`Even if the Board were to consider the similarity of the Petitions in
`
`evaluating this § 314(a) challenge, that consideration does not weigh in favor of
`
`institution. To justify the burden and expense of a follow-on petition, a petitioner
`
`must demonstrate that its asserted grounds “are improvements upon [the] grounds”
`
`that have already been instituted. US Endodontics, LLC v. Gold Standard
`
`Instruments, LLC, IPR2015-01476, Paper 13 at 9-10 (PTAB Oct. 26, 2015).
`
`Petitioners have not done so.
`
`The Panel identified only a single difference between the two theories at
`
`issue—the cased/open hole distinction between Thomson and Lane Wells.
`
`However, it is unclear why this distinction is particularly relevant with regard to
`
`the ’505 and ’634 patents given that nearly all of the challenged claims do not even
`
`contain open hole limitations. With regard to the open hole claims, Petitioners
`
`have not asserted Lane-Wells or Thomson as stand alone references. Thus, the
`
`relevant inquiry is not whether these two references are substantially similar, but
`
`whether the proposed Thomson-Ellsworth and Lane-Wells-Ellsworth combinations
`
`are substantially similar. They are. As to both of these theories, Petitioners allege
`
`
`
`
`- 7 -
`
`

`

`
`that a POSITA would employ the proposed combinations in open hole wells.
`
`Indeed, the fact that Petitioners seek consolidation of these theories is evidence of
`
`Case IPR2016-01506
`Patent 7,861,774
`
`their similarity.
`
`More importantly, even if the asserted grounds are meaningfully different,
`
`the Panel erred by failing to consider why these Petitions are different. “Absent a
`
`good reason, a subsequently filed petition that only corrects defects identified by a
`
`Board decision in a prior petition is not typically granted.” Netapp Inc. v.
`
`Crossroads Sys., Inc., IPR2015-00776, Paper 12 at 8 (PTAB Sept. 8, 2015). If the
`
`difference identified by the Panel arose in response Respondent’s Preliminary
`
`Response, then this fact weighs against institution, not in favor of it.
`
`Here, the open hole/cased hole distinction identified by the Board was the
`
`primary issue addressed in Respondent’s preliminary response in IPR2016-00596.
`
`See, e.g., Prelim. Resp. at 29 (“As to this key question—whether a PHOSITA
`
`would have expected an open hole version of Thompson to work for its intended
`
`purpose—Petitioners offer no evidence.”). Thus, the Panel’s finding that the
`
`follow-on Petition attempts to correct this deficiency is a fact that should weigh
`
`decisively against institution.
`
`This Panel has discretion when evaluating a challenge under § 314(a).
`
`However, that discretion is not unconstrained; the Board must be mindful of its
`
`past precedent. See supra § III; Chao, 517 F.3d at 190. Accordingly, Respondent
`
`
`
`
`- 8 -
`
`

`

`
`respectfully requests that the Panel evaluate its § 314(a) challenge to the Petition
`
`Case IPR2016-01506
`Patent 7,861,774
`
`and deny institution.
`
`B.
`The Panel Relied on an Erroneous Interpretation of Law in
`Evaluating Lane-Wells Under § 102(b).
`
`In its Preliminary Response, Respondent asserted that Petitioners had failed
`
`to show that Lane-Wells qualifies as prior art under 35 U.S.C. § 102(b).
`
`Specifically, it asserted that Petitioners had only provided evidence that Lane-
`
`Wells was received at a library, not that it was publicly accessible, i.e., that an
`
`ordinarily skilled artisan, exercising reasonable diligence, could locate the
`
`reference. Prelim. Resp. at 13-14. The Panel found otherwise, stating:
`
`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.
`
`IPR2016-01496, Decision at 12. However, it was legal error for the Panel to
`
`conclude that these facts qualify Lane-Wells as prior art.
`
`The mere fact that a document is stored in the Library of Congress is
`
`insufficient to qualify the document as prior art under 35 U.S.C. § 102(b). In re
`
`Lister, 583 F.3d 1307, 1314 (Fed. Cir. 2009). In In re Lister, the reference at issue
`
`was submitted to the copyright office and stored in the Library of Congress. Id. at
`
`1313. The Patent Office argued that the reference was “publicly accessible”
`
`
`
`
`- 9 -
`
`

`

`Case IPR2016-01506
`Patent 7,861,774
`
`
`because it could be located through a copyright database search and through two
`
`commercial database services. Id. at 1315. The Federal Circuit concluded that the
`
`reference was publicly accessible through the commercial services, but not through
`
`the copyright database because that database did not allow for keyword searching.
`
`Id. Because the Patent Office had failed to show that the commercial database
`
`services had incorporated the reference as of the relevant critical date, it found that
`
`the Patent Office had failed to even present a prima facie case that the reference
`
`was prior art. Id. at 1317. Notably, the Federal Circuit reached this conclusion
`
`despite finding that the reference was received by the Library of Congress years
`
`before the relevant critical date.
`
`Thus, it was legal error for the Panel to forgo an analysis as to whether
`
`Lane-Wells was indexed and cataloged in a meaningful way. See Prelim. Resp. at
`
`12-13 (citing relevant authority). Alternatively, to the extent the Panel based its
`
`decision on factual assumptions as to the operation of the Library of Congress, this
`
`too would have been error. Considering the evidence of record and the applicable
`
`law, Petitioners have failed to show that Lane-Wells was publicly accessible as of
`
`the relevant priority date. The record is simply devoid of any evidence as to how
`
`this reference was indexed or how a person of skill in the art could actually locate
`
`it without already being aware of its existence.
`
`
`
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`- 10 -
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`

`Case IPR2016-01506
`Patent 7,861,774
`
`
`
`This is not an issue that Petitioners may correct with supplemental evidence.
`
`35 U.S.C. § 314(a) permits institution of a petition only if the petition itself
`
`demonstrates that the petitioner is likely to prevail. Because the evidence included
`
`in the Petitions fails to establish even a prima facie case of invalidity under the
`
`relevant Federal Circuit authority, Petitioners cannot carry their burden under §
`
`314(a). If Petitioners do attempt to submit supplemental evidence to address this
`
`issue, it only highlights the deficiency in the Petitions. This is especially true here
`
`where Respondent requested that Petitioners explain how they located Lane-Wells
`
`so that it could address this issue in its Preliminary Responses, but Petitioners
`
`refused the request. Ex. 2003. Accordingly, Respondent respectfully requests that
`
`the Panel reconsider its decision and find that Petitioners failed to meet their
`
`burden of establishing Lane-Wells as prior art.
`
`
`
`
`- 11 -
`
`

`

`
`Dated: February 14, 2017
`
`
`
`
` Respectfully submitted,
`
`Case IPR2016-01506
`Patent 7,861,774
`
`Rapid Completions LLC
`
`
`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
`
`
`
`
`
`
`
`
`
`

`

`Case IPR2016-01506
`Patent 7,861,774
`
`CERTIFICATION OF SERVICE
`
`
`
` The undersigned hereby certifies that the foregoing document was
`
`
`
`served electronically via e-mail in its entirety on the following counsel of record
`
`for Petitioner:
`
`Mark T. Garrett (Lead Counsel)
`Eagle H. Robinson (Back-up Counsel)
`NORTON ROSE FULBRIGHT US LLP
`mark.garrett@nortonrosefulbright.com
`eagle.robinson@nortonrosefulbright.com
`
`
`
`Date: February 14, 2017
`
`
`
`
`
`
`
`
`
`
`
` /Hamad M. Hamad/
`
`Hamad M. Hamad, Reg. No. 64,641
`
`
`
`

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