IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`KERR MACHINE CO.,
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`Plaintiff,
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`v.
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`VULCAN INDUSTRIAL HOLDINGS,
`LLC, VULCAN ENERGY SERVICES,
`LLC, and CIZION, LLC d/b/a VULCAN
`INDUSTRIAL MANUFACTURING,
`LLC
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`Defendants.
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`§
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`CIVIL ACTION NO. 6:20-CV-200-ADA
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`JURY TRIAL DEMANDED
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`DEFENDANTS’ OPPOSED MOTION TO STAY LITIGATION
`PENDING THE OUTCOME OF THE PENDING
`POST-GRANT REVIEW PROCEEDING
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`WBD (US) 49726808v1
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`TABLE OF CONTENTS
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`A STAY IS UNIQUELY APPROPRIATE IN THIS CASE ...........................................................3
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`I.
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`II.
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`III.
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`IV.
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`Certification Pursuant To W.D. Tex. Local R. CV-7(i).......................................................3
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`All Of The ’070 Patent’s Claims Are Likely To Be Cancelled By The PTAB ...................3
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`Congress Specifically Created PGRs To Permit Early Patent Challenges
`Before Protracted Litigation Ensues ....................................................................................6
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`All Of The Traditional Factors Strongly Favor A Stay Here ...............................................8
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`A.
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`A stay will not unduly prejudice or tactically disadvantage Kerr ............................8
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`1.
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`2.
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`3.
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`4.
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`Vulcan filed its PGR petition almost immediately after
`Kerr filed this lawsuit...................................................................................8
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`Vulcan filed this motion soon after Vulcan filed its PGR petition ..............9
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`Staying this case now will avoid duplicating the most burdensome
`stages of the litigation ..................................................................................9
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`Kerr has many competitors in the fluid end industry ...................................9
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`This case is still in its very early stages .................................................................10
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`A stay will greatly simplify the issues in this lawsuit ............................................10
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`B.
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`C.
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`-i-
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`TABLE OF AUTHORITIES
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`Cases
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`RetailMeNot Inc. v. Honey Sci. LLC, C.A. No. 18-937-CFC-MPT,
`2020 WL 373341 (D. Del. Jan. 23, 2020) ................................................................................. 8, 10
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`SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348 (2018) ........................................................................... 10
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`SZ DJI Tech. Co. v. Yuneec Int'l Co., No. CV 16-0595-BRO (KKX),
`2016 WL 9114148 (C.D. Cal. Dec. 1, 2016) ................................................................................ 10
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`Tinnus Enters. LLC v. Telebrands Corp., No. 6:15-cv-551-RC-JDL,
`2017 WL 379471 (E.D. Tex. Jan. 24, 2017) ............................................................................. 8, 10
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`Statutes
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`35 U.S.C. § 311(b) .......................................................................................................................... 7
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`35 U.S.C. § 314 ............................................................................................................................... 7
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`35 U.S.C. § 315(b) .......................................................................................................................... 7
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`35 U.S.C. § 315(e)(1) ...................................................................................................................... 7
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`35 U.S.C. § 324(a) .......................................................................................................................... 7
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`35 U.S.C. § 324(c) .......................................................................................................................... 9
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`35 U.S.C. § 325(e)(2) ...................................................................................................................... 7
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`35 U.S.C. § 326(a)(11) .................................................................................................................... 9
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`Other Authorities
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`157 Cong. Rec. S1323-S1326 ..................................................................................................... 6, 8
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`Rules
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`W.D. Tex. Local R. CV-7(i) ........................................................................................................... 3
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`-ii-
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`The unique circumstances here are likely a case of first impression for the Court.
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`First, the sole asserted ’070 patent issued on March 17, 2020, and Kerr filed this lawsuit
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`two (2) days later. Defendants quickly determined that most of the claims of the ’070 patent are
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`unambiguously anticipated by each of three separate prior art references that had not been
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`considered by the USPTO, and all of the patent’s claims are very likely to be cancelled in their
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`entirety by the PTAB. For example, Claim 1 of the ’070 patent reads identically on Blume ’097:
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`Asserted ’070 Patent
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`Prior Art – Blume ’097 Patent
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`1. A method of manufacturing the fluid end assembly, comprising:
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`providing a housing having a first conduit extending therethrough, and a second conduit extending
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`therethrough that intersects the first conduit;
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`forming an endless groove in the housing such that the groove surrounds the second conduit;
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`positioning a seal within the groove;
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`installing a tubular sleeve within the second conduit such that at least a portion of the sleeve engages
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`with the seal;
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`installing a plurality of packing seals within the sleeve; and
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`installing a reciprocating plunger at least partially within the sleeve and the plurality of packing seals.
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`-1-
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`Ex. 1 (PGR Petition) at 10, 39-41, & 52-59.
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`Second, the pending PTAB proceeding is a relatively uncommon Post-Grant Review
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`(“PGR”), which is uniquely different from the far more routine Inter Partes Review (IPR)
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`proceedings. Because PGRs are only permitted shortly after a patent issues, Congress intended
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`for these just-issued patents to be reevaluated by the PTAB before “expensive litigation.”:
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`Ex. 2 (157 Cong. Rec. S1309, S1323-S1326) at S1309 & S1326 (emphases added). In addition,
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`the estoppel effects for PGRs are significantly broader than they are for IPRs. Thus, the policy in
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`favor of staying parallel litigation is considerably stronger for PGRs than for IPRs.
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`Third, all of the relevant factors support a stay in this case. The only accused product in
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`the case – the ICON EVO product – is no longer being manufactured or sold. Kerr will not be
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`-2-
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`prejudiced or suffer any tactical disadvantage if this case is stayed in view of the PGR proceeding.
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`This litigation is still at a very early stage: the parties have not completed any discovery or claim
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`construction, and the Court has not yet expended significant resources becoming familiar with the
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`asserted patent at issue. Further, the Western District of Texas is not a proper venue for two of the
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`Vulcan Defendants – Holdings and Manufacturing – each of which has filed a motion to dismiss.
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`And a stay will greatly simplify the issues and avoid duplication of effort here because the PGR
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`challenges all of the asserted ’070 patent’s claims.
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`A STAY IS UNIQUELY APPROPRIATE IN THIS CASE
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`I.
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`Certification Pursuant To W.D. Tex. Local R. CV-7(i)
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`Counsel for the parties have conferred in a good-faith attempt to resolve this matter by
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`agreement. Counsel for the parties were unable to resolve this matter because Kerr does not agree
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`with Vulcan’s proposed stay of this case.
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`II.
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`All Of The ’070 Patent’s Claims Are Likely To Be Cancelled By The PTAB
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`On May 26, 2020, about two (2) months after Kerr filed this lawsuit, Vulcan Manufacturing
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`filed a highly detailed PGR Petition with the PTAB, seeking cancellation of the entirety of Kerr’s
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`’070 patent at issue in this lawsuit. Ex. 1. The PGR petition brings to the PTAB’s attention three
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`entirely different sets of highly material prior art, none of which was considered by the patent
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`examiner during prosecution of the ’070 patent. Each set of previously unreviewed prior art
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`references discloses all of the claims of the ’070 patent – and Kerr concealed at least one highly
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`material reference in its possession from the patent examiner during the ’070 patent’s prosecution.1
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`The USPTO’s statistics reveal that the PTAB institutes review of the majority of the
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`1 Vulcan’s separate lawsuit against Kerr in the Southern District of Texas arises in part from Kerr’s
`inequitable conduct in prosecuting the ’070 patent.
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`-3-
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`petitions that it receives (about 60% of the 2,223 IPR and PGR petitions filed between January 1,
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`2019 and June 30, 2020). While that statistic, standing alone, may not routinely justify a pre-
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`institution stay, here the merits of the PGR petition are incredibly strong. As illustrated on page 1
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`above, the prior art Blume ’097 patent readily anticipates most of the claims of the ’070 patent,
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`including both of the patent’s independent claims (Claims 1 and 6) and 13 of the patent’s dependent
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`claims. See Ex. 1 at 7 & 52-68. The few remaining dependent claims are merely minor design
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`choices and would have been readily obvious to a person of ordinary skill in the art (“POSITA”).
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`See id. at 68-99.
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`Moreover, two additional prior art references each, standing alone, readily anticipate most
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`of the ’070 patent’s claims:
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`Asserted ’070 Patent
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`Prior Art – Whaley
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`endless groove/seal
`tubular sleeve
`plurality of packing seals
`reciprocating plunger
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`endless groove/seal
`tubular sleeve
`plurality of packing seals
`reciprocating plunger
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`Asserted ’070 Patent
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`Prior Art – Blume ’012 Patent
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`endless groove/seal
`tubular sleeve
`plurality of packing seals
`reciprocating plunger
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`endless groove/seal
`tubular sleeve
`plurality of packing seals
`reciprocating plunger
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`Ex. 1 at 100-118 & 148-165. And as with the Blume ’097 reference, the few remaining dependent
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`claims are merely minor design choices that would have been readily obvious to a POSITA. Id.
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`at 118-148 & 165-183.
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`As illustrated above, all three sets of prior art references disclose that (i) the endless grooves
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`and seals can be located within the housing, and (ii) the reciprocating plunger and plurality of
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`packing seals can be disposed within a tubular sleeve, the only two bases relied upon by the
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`USPTO to allow the ’070 patent to issue. See id. at 17. This is not a run-of-the-mill patent
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`infringement case in which the merits of the defendant’s patent validity challenge are nuanced and
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`obscure, and in which the Court needs to consider complicated and conflicting expert testimony
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`about what would have been obvious to a POSITA at the time of the claimed invention. Given the
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`strength of Vulcan Manufacturing’s validity challenge, it is very likely that the PTAB will institute
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`the PGR proceeding, and thereafter cancel all of the ’070 patent’s claims in their entirety. This
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`fact alone strongly favors a stay of this litigation while the PTAB conducts the PGR proceeding.
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`III. Congress Specifically Created PGRs To Permit Early Patent Challenges Before
`Protracted Litigation Ensues
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`Congress intended for newly-issued patents to be promptly reevaluated by the PTAB to
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`“allow invalid patents that were mistakenly issued by the PTO to be fixed early in their life, before
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`they disrupt an entire industry or result in expensive litigation.” Ex. 2 at S1326 (emphases added);
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`see Ex. 3 (153 Cong. Rec. E773-E774) at E774 (“In an effort to address the questionable quality
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`of patents issued by the USPTO, the bill establishes a check on the quality of a patent immediately
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`after it is granted . . . . The post-grant procedure is designed to allow parties to challenge a granted
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`patent through a[n] expeditious and less costly alternative to litigation.”) (emphases added).
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`Unlike an IPR, a PGR petition can only be filed within the first nine (9) months after a patent
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`issues. Here, the USPTO issued Kerr’s ’070 patent on March 17, 2020; Kerr filed this lawsuit two
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`-6-
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`days later on March 19, 2020; and Vulcan Manufacturing filed its PGR petition on May 26, 2020,
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`about two months thereafter and before any pleading (other than the Complaint) had been filed in
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`this lawsuit. The fundamental policy undergirding Congress’ creation of the PGR process strongly
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`supports staying this case. Indeed, the entire purpose of the PGR procedure would be wholly
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`frustrated if this lawsuit were not stayed.
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`Congress built in two measures to protect patent holders from potential abuse of the PGR
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`process. First, the statute imposes a higher barrier to entry: the PTAB may only institute post-
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`grant review when the petitioner “demonstrate[s] that it is more likely than not that at least 1 of
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`the claims challenged in the petition is unpatentable.” 35 U.S.C. § 324(a) (emphasis added).
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`Second, after the PTAB institutes review and issues its final written decision, a petitioner is
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`estopped from asserting in a civil action any ground “that the petitioner raised or reasonably could
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`have raised during that post-grant review.” 35 U.S.C. § 325(e)(2). These potential consequences
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`deter prospective petitioners from filing weak or marginal petitions for post-grant review.
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`By contrast, an IPR petition may be filed at any time – or within one year of being served
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`with a complaint for patent infringement – but only on the grounds that the patent is not novel or
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`is obvious in view of prior art. 35 U.S.C. §§ 311(b), 315(b). The threshold for instituting inter
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`partes review is also lower: the petitioner must demonstrate only that “there is a reasonable
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`likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in
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`the petition.” 35 U.S.C. § 314 (emphasis added). If the PTAB reviews and cancels the claims in
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`the IPR petition, the petitioners also are subject to narrower estoppel from asserting in a civil action
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`any ground “that the petitioner raised or reasonably could have raised during that inter partes
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`review.” 35 U.S.C. § 315(e)(1).
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`These significant differences reflect Congress’ intent to give the PTAB wide latitude to
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`cancel invalid patents that are challenged within 9 months of issuance through the post-grant
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`review process. By limiting PGR proceedings to a 9-month window, Congress balanced the policy
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`aims of ensuring that the USPTO issues only valid patents with the need to assure patent holders
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`they will soon have some repose for their patents. The short time frame available to file PGR
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`petitions evidences Congress’ desire that post-grant review should occur before patent disputes
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`“result in expensive litigation.” 157 Cong. Rec. S1326.
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`IV. All Of The Traditional Factors Strongly Favor A Stay Here
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`In evaluating whether to stay litigation in view of a pending PTAB petition, district courts
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`typically consider “(1) whether the stay will unduly prejudice the nonmoving party or present a
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`clear tactical disadvantage to the nonmoving party, (2) whether the proceedings before the court
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`have reached an advanced stage, including whether discovery is complete and a trial date has been
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`set, and (3) whether the stay will simplify issues in question in the litigation.” Tinnus Enters. LLC
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`v. Telebrands Corp., No. 6:15-cv-551-RC-JDL, 2017 WL 379471, at *2 (E.D. Tex. Jan. 24, 2017)
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`(internal citations omitted). All three factors weigh heavily in favor of staying this case.
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`A.
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`A stay will not unduly prejudice or tactically disadvantage Kerr
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`Courts examine four sub-factors in analyzing whether a plaintiff would suffer undue
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`prejudice if its case were stayed pending a petition before the PTAB: “(1) the timing of the request
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`for review; (2) the timing of the request for a stay; (3) the status of the review proceedings; and
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`(4) the relationship of the parties.” RetailMeNot Inc. v. Honey Sci. LLC, C.A. No. 18-937-CFC-
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`MPT, 2020 WL 373341, at *3 (D. Del. Jan. 23, 2020). All four sub-factors show that Kerr would
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`not suffer any undue prejudice or tactical disadvantage.
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`1.
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`Vulcan filed its PGR petition almost immediately after Kerr filed this
`lawsuit
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`The USPTO issued the ’070 patent on March 17, 2020; Kerr filed this lawsuit on March
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`19, 2020, served Vulcan Holdings on April 7, 2020, and Vulcan Manufacturing filed its PGR
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`petition on May 26, 2020, less than two months later. Vulcan Manufacturing’s alacrity in filing
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`its PGR petition demonstrates that it was not dilatory in pursuing PTAB review of the ’070 patent.
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`2.
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`This motion for stay is promptly filed.
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`Defendants filed this motion less than two months after Vulcan Manufacturing filed its
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`PGR petition and while this case is still in its preliminary stages. The timing of Defendants’
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`request for a stay also demonstrates that they do not have any dilatory or other improper motive.
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`3.
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`Staying this case now will avoid duplicating the most burdensome
`stages of the litigation
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`On June 11, 2020, the Board accorded Vulcan’s PGR petition a May 26, 2020 filing date.
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`Thus, Kerr may file its preliminary response by September 11, 2020, and the PTAB will issue its
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`institution decision by December 11, 2020. 35 U.S.C. § 324(c). Upon institution, the PTAB would
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`then issue its final written decision by December 11, 2021. 35 U.S.C. § 326(a)(11).
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`Proceeding with this litigation will result in significant duplication of effort and expense
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`of resources. Under the current joint scheduling order, Defendants will serve their invalidity
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`contentions on August 13, 2020, with the parties beginning to exchange terms and claims for
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`construction on August 27, 2020 – just two weeks before Kerr’s preliminary response to the PGR
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`petition is due. The Markman hearing is currently scheduled for December 3, 2020. However,
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`the PTAB will decide whether to institute review very shortly after the Markman hearing, by which
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`time the Court and the parties will have spent significant resources and time. Rather than proceed
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`with the PGR and this case in parallel tracks with similar deadlines, staying this case now will
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`promote judicial economy and simplify claim construction.
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`4.
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`Kerr has many competitors in the fluid end industry
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`Vulcan Manufacturing no longer makes or sells the accused ICON EVO product.
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`Therefore, Kerr will not suffer any alleged erosion of market share or further purported damages
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`during the pendency of the PGR proceeding. Any purported harm Kerr may have suffered has
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`already occurred and can be remedied through money damages, if any.
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`B.
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`This case is still in its very early stages
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`This case is in its infancy – there has been no expert or fact discovery, including
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`depositions, and the parties have not exchanged terms for construction or submitted their claim
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`construction briefs. As discussed above, granting a stay at this preliminary juncture will conserve
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`the resources of the Court and the parties by avoiding the most burdensome stages of the litigation.
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`See SZ DJI Tech. Co. v. Yuneec Int’l Co., No. CV 16-0595-BRO (KKX), 2016 WL 9114148, at *2
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`(C.D. Cal. Dec. 1, 2016).
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`C.
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`A stay will greatly simplify the issues in this lawsuit
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`Post-grant review can simplify or even dispose of this case completely because “[w]hen a
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`claim is cancelled [by the PTAB], the patentee loses any cause of action based on that claim, and
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`any pending litigation in which the claims are asserted becomes moot.” Tinnus Enters., 2017 WL
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`379471, at *2. The prospect for simplification is enhanced where, as here, the PGR petition is
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`compelling and “all of the litigated claims are undergoing administrative review” since this case
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`will be entirely moot if the PTAB cancels the ‘070 patent as requested. Id. (emphasis in original).
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`Once the PTAB institutes review, it must “address every claim the petitioner has
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`challenged.” SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1354–55 (2018). This means that “any
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`conclusion that the PTAB reaches will have a likely effect on litigation by limiting the arguments
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`[petitioner] can make regarding validity” due to the broad estoppel provisions applicable to
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`unsuccessful petitions for post-grant review. RetailMeNot, Inc., 2020 WL 373341, at *5. PTAB
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`review of the ’070 would massively simplify this case because, in all likelihood, all of the patent
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`claims will likely be cancelled, and therefore this case will be entirely mooted.
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`-10-
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`Respectfully Submitted,
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`REYNOLDS FRIZZELL LLP
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`By: /s/ Jean Frizzell
`Jean C. Frizzell
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`State Bar No. 07484650
`Federal ID: 14529
`Jeremy L. Doyle
`State Bar No. 24012553
`Federal ID: 24559
`Adi Sirkes
`State Bar No. 24117059
`Federal ID: 3513896
`1100 Louisiana Street, Suite 3500
`Houston, TX 77002
`Phone: (713) 485-7200
`Fax: (713) 485-7250
`jfrizzell@reynoldsfrizzell.com
`doyle@reynoldsfrizzell.com
`asirkes@reynoldsfrizzell.com
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`ATTORNEYS FOR DEFENDANTS
`VULCAN INDUSTRIAL HOLDINGS, LLC,
`VULCAN ENERGY SERVICES, LLC, AND
`CIZION, LLC d/b/a VULCAN INDUSTRIAL
`MANUFACTURING, LLC
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`CERTIFICATE OF SERVICE
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`I hereby certify that on July 31, 2020, a true and correct copy of the foregoing document
`was served electronically on all known counsel of record via CM/ECF.
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`/s/ Jean Frizzell
`Jean Frizzell
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`-11-
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