[00:00:40] Speaker 04:
Okay, the next argued case is number 19, 1317.

[00:00:45] Speaker 04:
Rapid Completions LLC against Weatherford International LLC.

[00:00:50] Speaker 04:
Mr. Fahmy.

[00:00:51] Speaker 00:
Thank you, Your Honor.

[00:00:54] Speaker 00:
May it please the Court.

[00:00:54] Speaker 00:
I apologize.

[00:00:55] Speaker 00:
I'm getting over a bit of a cold, so if I'm not clear, please let me know and I'll try to speak up.

[00:01:01] Speaker 00:
Your Honors, the Board had no rational basis for concluding that the person of ordinary skill would have found it obvious to use the pump-open plug described by Halliburton

[00:01:10] Speaker 00:
at the end of the tubing string disclosed in Thompson.

[00:01:15] Speaker 00:
The board indicated that Thompson expressed the general desire to use a tailpipe plug other than the ones reported in the paper, the pump out plug and cycle plug, and the person of ordinary skill would consider Halliburton's pump open plug to be a good option.

[00:01:33] Speaker 00:
But that ignores Thompson's expressed recommendations in its paper that the tailpipe plug should actually be a disappearing plug

[00:01:41] Speaker 00:
to guard against the very kinds of failures that Thompson had experienced.

[00:01:46] Speaker 00:
They were due to Sherpin-based failures that also existed in the Halliburton pump-open plug.

[00:01:55] Speaker 00:
The board's decision doesn't explain why the person of ordinary skill would adopt just an option that was not recommended.

[00:02:05] Speaker 00:
And it was for a tailpipe plug that included the exact same kind of failure mechanism, the Sherpians,

[00:02:11] Speaker 00:
Thompson said, raised concerns of reliability.

[00:02:15] Speaker 00:
And absent that why, the board's conclusion of obviousness can't be regarded as a rational one.

[00:02:22] Speaker 00:
Your honor, as was pointed out at the board, the Halliburton pump open plug was intended for production, not fracturing.

[00:02:31] Speaker 00:
And the parties agree that the two are different.

[00:02:35] Speaker 00:
Furthermore, the Halliburton plug contained the same, as I say, failure mechanism, the shear pins,

[00:02:42] Speaker 00:
and therefore pose the same risk that Thompson had identified and said raised concerns of reliability.

[00:02:50] Speaker 00:
And the tailpipe plug that we're talking about is not just some, you know, afterthought.

[00:02:58] Speaker 00:
It's what Thompson called one of the most crucial elements of the tire completion system.

[00:03:06] Speaker 00:
Now, Halliburton

[00:03:07] Speaker 00:
in the catalog, advertise the exact kind of disappearing plug.

[00:03:11] Speaker 02:
One question, what is the difference between these different types of plugs?

[00:03:16] Speaker 02:
I think from the record I haven't understand, but if you could explain what you're talking about with respect to these different openings at the bottom of the

[00:03:27] Speaker 00:
I'll do my best to try and clarify that, Your Honor.

[00:03:31] Speaker 00:
I think it may be instructive if we look at the pages of the appendix.

[00:03:38] Speaker 00:
So the pump open plug is at appendix 2569.

[00:03:44] Speaker 00:
And my understanding is that, as is indicated in this page from the Halliburton catalog, this is a plug that holds pressure but can be pumped

[00:03:56] Speaker 00:
open, that is, would allow fluid to escape by basically applying an overpressure from the surface.

[00:04:05] Speaker 00:
And I think the way it does that is you see in the diagram there's something called a release pin.

[00:04:13] Speaker 00:
If there's an overpressure above that release pin.

[00:04:16] Speaker 02:
Yeah, that part I understand how it slips down and the opening appears.

[00:04:23] Speaker 02:
Right.

[00:04:24] Speaker 02:
Pump open plug, is that the bottom part?

[00:04:28] Speaker 00:
It's at the very end.

[00:04:30] Speaker 00:
It's the furthest thing down the well, as I understand it.

[00:04:35] Speaker 00:
And one of the differences on the next page, 2573, is the disappearing plug.

[00:04:43] Speaker 00:
And in this case, you see there's no pin.

[00:04:46] Speaker 00:
There's a salt plug.

[00:04:48] Speaker 00:
And as I understand it, that dissolves.

[00:04:50] Speaker 00:
over time in order to allow the fluid to go through.

[00:04:54] Speaker 00:
So that would be one of the differences.

[00:04:56] Speaker 00:
And I think that's probably the important difference.

[00:05:02] Speaker 00:
Your Honor, as I say, we see from the record that Halliburton advertised the exact disappearing plug that Thompson recommended using.

[00:05:12] Speaker 00:
That plug can be used to not only set production packers but, according to Halliburton, also isolation packers.

[00:05:20] Speaker 00:
as would be found in the fracturing arrangement.

[00:05:24] Speaker 00:
It was able to offer multiple pressure cycle capability, as is needed, and it reduced well risk.

[00:05:34] Speaker 00:
So in other words, it was the very type of plug that was promoted

[00:05:39] Speaker 00:
for meeting all the requirements that Thompson had and it would have been the rational choice for the person of ordinary skill.

[00:05:47] Speaker 00:
The person of ordinary skill would have applied common sense and adopted the plug that Thompson was recommending.

[00:05:57] Speaker 00:
To adopt the plug

[00:05:59] Speaker 00:
The pump open plug, as the board found, simply wouldn't comply with that common sense.

[00:06:07] Speaker 00:
It posed the same risks and it wasn't the one being recommended.

[00:06:11] Speaker 00:
And so because the board erred in the conclusion of obviousness, you should reverse on that basis.

[00:06:19] Speaker 00:
We also raised issues about the commercial success evidence that was produced by rapid completions.

[00:06:25] Speaker 00:
And Your Honor, that evidence... I mean, what about getting into the

[00:06:29] Speaker 02:
Don't we have a problem with the decision in the prior case in this court?

[00:06:37] Speaker 02:
Grant, it was without an opinion, I believe, but still, don't you run into a raised judicata collateral estoppel type of situation?

[00:06:47] Speaker 02:
On your second two issues about this and your claim with respect to the rebuttal evidence,

[00:06:54] Speaker 00:
Thank you.

[00:06:54] Speaker 00:
My colleagues have raised the issue of collateral estoppel, but I think it doesn't apply.

[00:07:01] Speaker 00:
In the prior case, dealing with the 774 pattern, the board, when it came to commercial success, said the evidence wasn't strong.

[00:07:11] Speaker 00:
Well, in order to reach that basis, they must have found that there was

[00:07:15] Speaker 00:
some evidence of commercial success and they would have considered it but here they completely disregarded the evidence of commercial success so we're really dealing with a different issue it's not a question of whether commercial success would have necessarily carried the day by itself the board simply disregarded the evidence and said it did not show evidence of commercial success and with regard to the idea of the

[00:07:44] Speaker 00:
failure of the board to permit the patent owner to submit an expert declaration along with its service line.

[00:07:52] Speaker 02:
This is in respect to the Kim and Abass evidence.

[00:07:53] Speaker 00:
Kim and Abass paper, yes your honor.

[00:07:56] Speaker 00:
In the 774 case, the issue that was raised was whether the board had shifted theories of obviousness.

[00:08:06] Speaker 00:
We're presenting a slightly different issue, not so much that the theory of obviousness was shifted, but that the board denied the opportunity for the patent owner.

[00:08:15] Speaker 00:
or the licensee in this case, to present fact-based evidence.

[00:08:20] Speaker 00:
They permitted argument, but no fact-based evidence in terms of the testimony.

[00:08:25] Speaker 00:
And the APA, Section 554B of 5 USC, requires that both fact and evidence be permitted in order to provide meaningful rebuttal.

[00:08:37] Speaker 00:
The whole purpose of the CER reply is to provide meaningful rebuttal for the patent owner so that they can, in fact,

[00:08:46] Speaker 00:
deal with any extra petition.

[00:08:48] Speaker 02:
You did have the right to, you were given the right to submit a Sir reply.

[00:08:52] Speaker 02:
Five pages, Your Honor, yes.

[00:08:53] Speaker 02:
And our cases do seem to support the proposition that that is adequate in the face of, in the kind of situation that you faced.

[00:09:04] Speaker 00:
Well, I actually disagree with you on that point, Your Honor.

[00:09:07] Speaker 00:
I think Genzyme says

[00:09:10] Speaker 00:
that the patent owner has to be given an opportunity to respond.

[00:09:14] Speaker 00:
But a response that is just argument in the face of new expert testimony commenting on a new reference, that's really no response at all.

[00:09:23] Speaker 00:
And in fact, the board criticized the patent owner in its written decision saying, we don't accept your argument.

[00:09:31] Speaker 00:
Well, you didn't give us the opportunity to submit anything other than argument.

[00:09:35] Speaker 00:
That can't be right.

[00:09:38] Speaker 00:
Your Honours, I'll reserve the remaining time, unless you have other questions.

[00:09:53] Speaker 04:
Thank you.

[00:09:53] Speaker 04:
Mr. Wilson.

[00:09:54] Speaker 03:
Thank you, Your Honours.

[00:09:55] Speaker 03:
May it please the Court.

[00:09:58] Speaker 03:
The rapid completion raises three issues, only one of which, as Judge Schall recognized, is newly before this Court.

[00:10:05] Speaker 03:
That's the motivation to combine the Halliburton pump open plug.

[00:10:08] Speaker 03:
The board relied on a series of evidence to support the idea that the Halliburton pump open plug could be combined with both Thompson and Yost, the multi-stage fracturing systems.

[00:10:21] Speaker 03:
First, the board relied on the fact that Thompson disclosed there are only two things this thing needs to do, this plug needs to do.

[00:10:27] Speaker 03:
It needs to hold pressure until it needs to open, and then it needs to open and expose a pathway for fracturing at the toe of the well, at the bottom of the well.

[00:10:37] Speaker 03:
The board said Halliburton discloses the pump open plug does precisely that.

[00:10:41] Speaker 03:
And so a person of ordinary skill in the art would be motivated to do it, to make that substitution.

[00:10:48] Speaker 03:
Now, rapid completion says there's a couple of problems with that.

[00:10:51] Speaker 03:
First, Thompson discourages the use of shear pins.

[00:10:56] Speaker 03:
That's not true.

[00:10:57] Speaker 03:
Thompson doesn't.

[00:11:00] Speaker 03:
What Thompson does is it says, hey, this is an area where we had some issues, even though we completed four wells successfully, stimulating and producing them.

[00:11:10] Speaker 03:
This is an area where there might be room for improvement in the future if we have to choose an area.

[00:11:17] Speaker 03:
A disappearing plug may be cost effective and reliable, but that's for the future.

[00:11:22] Speaker 03:
So what Thompson said is consider what's cost effective and reliable, and the board said the Halliburton pump open plug meets that.

[00:11:30] Speaker 03:
Substantial evidence supports the board's finding.

[00:11:32] Speaker 03:
In addition to that evidence, the board also relied on Overbee in Dr. Rao's testimony regarding the Overbee reference, which says when you're doing open hole multistage fracturing, use a pump open plug at the toe of the well in this precise application.

[00:11:50] Speaker 03:
They didn't say anything about that.

[00:11:51] Speaker 03:
They don't say anything about that.

[00:11:53] Speaker 03:
All they say is that the board didn't actually rely on that, but that's false.

[00:11:58] Speaker 03:
The board did at Appendix 50 and Appendix 175.

[00:12:01] Speaker 03:
You can read it in the board's opinions where it cites Dr. Rao's declarations.

[00:12:06] Speaker 03:
Paragraph 44 and 69 in the 1232 Declaration, and Paragraphs 44 to 45 and 70 in the 1236 Declaration, you will see Dr. Rao opining specifically on what Overbee teaches about using a pump-open plug at the toe of an open-hole multi-stage fracturing system.

[00:12:29] Speaker 03:
There's no response to that.

[00:12:30] Speaker 03:
That is substantial evidence supporting the board's conclusion.

[00:12:33] Speaker 03:
On the commercial success point,

[00:12:36] Speaker 03:
The board's findings really aren't heavily disputed here.

[00:12:43] Speaker 03:
I didn't hear any argument that they made a showing before the board that the claimed methods were used in any amount of sales.

[00:12:54] Speaker 03:
That's the failure that the board identified in their commercial success showing and there has been no

[00:13:00] Speaker 03:
No presentation before this court of any evidence of sales tied to the specific claimed method limitations.

[00:13:08] Speaker 03:
Why is that important?

[00:13:08] Speaker 03:
It's important because the stackfract system, the set of tools, are disclosed in the Thompson prior art reference.

[00:13:14] Speaker 03:
The only thing they can try and hinge patentability on is the use of those tools in a new environment, particularly an open hole horizontal well.

[00:13:23] Speaker 03:
Thompson used the same tools in a case hole well.

[00:13:27] Speaker 03:
So if they're going to show commercial success, they have to show commercial success in a specific well environment.

[00:13:33] Speaker 03:
They have made no showing of that.

[00:13:36] Speaker 03:
So the board's finding that they failed to show commercial success is supported by substantial evidence.

[00:13:42] Speaker 03:
On top of that, with respect to the collateral estoppel issue that Judge Shaw raised, the issues are precisely the same.

[00:13:49] Speaker 03:
In the board's opinion in the 774 IPR, which was previously appealed, the board said,

[00:13:55] Speaker 03:
We find that you have failed to show commercial success and we give it no way.

[00:13:59] Speaker 03:
It may be the precise same finding here.

[00:14:02] Speaker 02:
Does it make any difference that the language, that the claims of the 774 are a bit different from the claims of the 501?

[00:14:09] Speaker 02:
The 501 added some limitations.

[00:14:12] Speaker 03:
So it did, Your Honor.

[00:14:14] Speaker 03:
The limitations that it added are specifically with respect to the hydraulically actuated sliding sleeve.

[00:14:19] Speaker 03:
All that does is make it harder for

[00:14:22] Speaker 03:
rapid completions to show commercial success here.

[00:14:26] Speaker 03:
But the specific disputes with respect to their showing of commercial success were the same in both cases.

[00:14:33] Speaker 03:
In other words, they didn't show that the specific wells in which these tools were used were horizontal open-hole wells, when their own ads say they can be used in case-to-hole vertical wells.

[00:14:46] Speaker 03:
So I don't think that difference in claim language makes any difference, Your Honor.

[00:14:50] Speaker 03:
Finally, with respect to the APA violation, as counsel noted, the only thing the APA requires is notice and an opportunity to respond.

[00:14:58] Speaker 03:
They were given that.

[00:14:59] Speaker 03:
They were given a six-page cert reply, in fact.

[00:15:04] Speaker 03:
On top of the fact that they were given a six-page cert reply, they actually have not shown any harm from that violation.

[00:15:11] Speaker 03:
All of that evidence was submitted in the context of an argument on unexpected results.

[00:15:17] Speaker 03:
They have not appealed the board's finding of unexpected results, that they have failed to show unexpected results.

[00:15:24] Speaker 03:
So in the absence of appealing that specific finding, whether they get to submit more evidence can't possibly matter.

[00:15:30] Speaker 03:
And in fact, they haven't offered any indication of what type of expert testimony they would submit that would have changed that result.

[00:15:37] Speaker 03:
So I submit there is no harm.

[00:15:40] Speaker 03:
No APA violation, and even if there were, there is no harm.

[00:15:45] Speaker 03:
And if there are no further questions, I'll see you the rest of my time.

[00:15:52] Speaker 03:
Thank you.

[00:15:52] Speaker 04:
Thank you, Your Honor.

[00:16:00] Speaker 04:
Mr. Fahmy.

[00:16:01] Speaker 00:
Thank you, Your Honor.

[00:16:02] Speaker 00:
Let me address the points that Council has raised.

[00:16:06] Speaker 00:
With respect to the obviousness question,

[00:16:09] Speaker 00:
The court should be concerned with what a person of ordinary skill would have done, not what they could have done.

[00:16:15] Speaker 00:
And that's why merely being an option is not good enough in terms of the Halliburton pump-open plug.

[00:16:23] Speaker 00:
My colleague referred to the board's reliance on overbeat.

[00:16:28] Speaker 00:
Well, in fact, they never cite overbeat.

[00:16:30] Speaker 00:
The board's discussion of this begins on Appendix 49 and says that

[00:16:37] Speaker 00:
It's basing its decision on the fact that Thompson's indication of a desire to use a tailpipe plug different from a pump open or cycle plug provides the motivation to use a different plug that Halliburton's pump open plug would be the good option.

[00:16:54] Speaker 00:
On page 50 where it cites the declaration

[00:16:59] Speaker 00:
That was in connection with an expectation of success, and it's the declaration testimony, not the evidence that's cited.

[00:17:08] Speaker 04:
We're just talking about the sliding sleeve.

[00:17:12] Speaker 00:
Yes, Your Honor, the sliding sleeve.

[00:17:16] Speaker 00:
Okay.

[00:17:16] Speaker 00:
And as we say, simply being an option is not the proper test.

[00:17:21] Speaker 00:
It has to be what the person of ordinary skill would have done.

[00:17:26] Speaker 00:
Regarding the evidence of commercial success, the patent owner did submit reliable evidence, in fact.

[00:17:34] Speaker 00:
That was in the form of the declaration by the patent owner's CFO.

[00:17:41] Speaker 00:
And that declaration tied the vast majority of the company's revenue and profits to not just sales of the tools, but actually performance of the method.

[00:17:54] Speaker 00:
And the board agreed that

[00:17:57] Speaker 00:
the evidence that the patent owner had submitted showed that there were instances where these tools were used in the claim method and that should have given rise to the presumption of commercial success in favor of the patent owner but that presumption was never granted and as a result the petitioner was never required to even rebut the evidence as it should have been and finally there was harm

[00:18:24] Speaker 00:
in not allowing the patent owner to submit the expert testimony in sur-reply.

[00:18:30] Speaker 00:
The board, in this case, specifically relied on the Kim and Abass paper in its final written decision.

[00:18:39] Speaker 00:
In fact, they credited the testimony of Weatherford's expert because of the Kim and Abass paper, testimony that the patent owner was not allowed to rebut with its own expert.

[00:18:55] Speaker 01:
Where have we established a presumption of commercial success?

[00:19:00] Speaker 00:
The presumption of commercial success, Your Honor, I think comes out of PPC broadband.

[00:19:08] Speaker 00:
This court's opinion in PPC broadband cited in our papers.

[00:19:16] Speaker 00:
If there are no further questions, Your Honor, we urge you to reverse the Board's decision on obviousness or at a minimum send this case back so that the commercial success evidence can be properly considered.

[00:19:30] Speaker 04:
Thank you.

[00:19:30] Speaker 04:
Thank you.

[00:19:31] Speaker 04:
Thank you both.

[00:19:32] Speaker 04:
The case is taken under submission.