[00:00:00] Speaker 00:
We have two beginning PTAB cases.

[00:00:05] Speaker 00:
Liquid Power Specialty Products versus Baker Hughes, 2020, 2001, 2021, 2283.

[00:00:13] Speaker 00:
Mr. Reines.

[00:00:17] Speaker 04:
Thank you, Your Honor, and good morning.

[00:00:21] Speaker 04:
I'm appearing here on behalf of Liquid Power.

[00:00:24] Speaker 04:
For the second time, the board has

[00:00:27] Speaker 04:
disregarded extensive evidence of objective indicia that are decisive in this particular case.

[00:00:38] Speaker 04:
Let me be specific about that and talk about the errors.

[00:00:44] Speaker 04:
And I'm going to start, again, into the evidence.

[00:00:46] Speaker 04:
But on commercial success, that is a good, excellent example.

[00:00:50] Speaker 04:
The reason that commercial success was essentially disregarded in total, minimal,

[00:00:55] Speaker 04:
Wait.

[00:00:56] Speaker 00:
No.

[00:00:57] Speaker 00:
Mr. Reinus, these are fact questions.

[00:01:01] Speaker 00:
You've got a substantial evidence problem, and the board went through each of these one by one.

[00:01:09] Speaker 00:
How do you deal with that?

[00:01:12] Speaker 04:
Thank you, Rutter.

[00:01:13] Speaker 04:
Obviously, the first question that we all think of when we see this file

[00:01:16] Speaker 04:
The answer is that it's common for the federal circuit to look at the treatment of objective indicia by the board and other bodies and determine that in general it was disregarded and not given weight or was it treated as an afterthought.

[00:01:30] Speaker 04:
Leo Pharmaceuticals, I think all of you, your honors, have been on panels that have done exactly that.

[00:01:35] Speaker 04:
And if I could just give the commercial success example, because I'm keenly aware of the substantial evidence measure.

[00:01:42] Speaker 04:
What we have here is shifting the burden improperly, which is a legal error, and disregarding evidence, which is a legal error.

[00:01:49] Speaker 04:
And in PPG recently, this court overturned a case exactly that way, just as factually intensive.

[00:01:57] Speaker 04:
But let me give you on the commercial success, because I think, again, this is a perfect example.

[00:02:01] Speaker 04:
Nexus was undisputed.

[00:02:03] Speaker 04:
Normally, that's the hard one.

[00:02:04] Speaker 04:
This court actually found there was evidence, proof, of commercial success driven by the features of the 118 patent.

[00:02:10] Speaker 04:
Remarkable, coming into it.

[00:02:12] Speaker 04:
So commercial success was driven by the features of the 118 patent.

[00:02:16] Speaker 04:
This court already determined there was proof.

[00:02:19] Speaker 04:
Why did the board neglect that?

[00:02:23] Speaker 04:
They stated there wasn't enough proof that the actual

[00:02:26] Speaker 04:
extreme power product was successful commercially.

[00:02:30] Speaker 04:
I tried to be measured, but that is, I can only use the word, preposterous.

[00:02:35] Speaker 04:
The evidence in the record was from Baker that it commands very high margins, A3874.

[00:02:42] Speaker 00:
The board said that the donor does not provide any sales figures or evidence as to how EP sales relate to the overall DRA market.

[00:02:52] Speaker 04:
OK?

[00:02:53] Speaker 04:
And the heavy crude market too, it points out.

[00:02:57] Speaker 04:
The evidence we submitted showed that the potential market size for Baker coming into the market was over $200 million.

[00:03:03] Speaker 04:
That's an A3877.

[00:03:05] Speaker 04:
So we know it's at least the $200 million market, because there's undisputed evidence from Baker

[00:03:11] Speaker 04:
that says that that's at least what they thought they could get on day one with their competing things.

[00:03:15] Speaker 00:
You want us to do fact finding?

[00:03:17] Speaker 04:
No, I want you to say that if a product commands very high margins, has a price premium, is the only product in the market, and then, for example, your honor, Flowchem stated that it dominates the market.

[00:03:32] Speaker 04:
How could you dominate a market that's obviously millions of dollars and then say that's not success?

[00:03:38] Speaker 03:
another example is we put in evidence that there was twelve million gallons of it sold and that was widely recognized as a market leader unquestioned if someone didn't think that was true they could have got a case like in rate long though nineteen ninety six federal circuit uh... in that particular case the applicant came forward with sales of those uh... tennis racket hand grips and apparently it sold millions of them and uh... our court rules well

[00:04:08] Speaker 03:
You didn't provide enough context.

[00:04:11] Speaker 03:
Yes, you sold millions of these things, but what we don't have right now to evaluate the strength of those millions is what was the market looking like, to what extent did you

[00:04:25] Speaker 03:
grow the market or take over the market and so that is what was lacking there and so that's why in that particular case there wasn't that much weight given to the commercial success evidence and why isn't that very similar to what we have here where you're telling us millions of gallons were sold but we don't know year to year, we don't know market share, we don't know if this market

[00:04:52] Speaker 03:
Was that strong in terms of how much of a need there was at the particular time you started selling it?

[00:04:58] Speaker 03:
There's other pieces of evidence to fill out the picture that the board felt like was needed and seems consistent with the Huang opinion.

[00:05:08] Speaker 04:
Yeah, I mean, that excludes so much of the record here.

[00:05:11] Speaker 04:
So for example, conventional DNA products were not even compatible with heavy crude.

[00:05:16] Speaker 04:
So there was no other product prior to the extreme power.

[00:05:20] Speaker 04:
That's at A3954.

[00:05:22] Speaker 04:
That's their document.

[00:05:24] Speaker 03:
What about LP300, LP400?

[00:05:27] Speaker 03:
I was reading those marketing materials.

[00:05:31] Speaker 03:
Those are Liquid Power's other products that were on the market specifically for heavy crude.

[00:05:39] Speaker 04:
uh... well now they were generally for not heavy crewed and there was uh... a marketing document what it says no no the marketing documents as he can be used in heavy crewed heavier crewed or heavy crewed and that we design specifically for heavier types of crews what have you guys is different than and then on the back page design for use on heavy petroleum crude oil but there's a very good answer on that at twenty two eighty nine it at the at table four of the one when he pat itself there's a table

[00:06:09] Speaker 04:
that compares the performance of that exact LP300.

[00:06:13] Speaker 04:
It shows it's got no drag in heavy crude.

[00:06:16] Speaker 04:
And the product, the preferred embodiment, is showing 30% drag.

[00:06:23] Speaker 03:
OK, but I don't remember that being presented to the board below in your remand brief.

[00:06:30] Speaker 04:
I believe it was.

[00:06:31] Speaker 04:
It's in the patent itself.

[00:06:33] Speaker 03:
Right, but we can't expect the board to look at

[00:06:37] Speaker 03:
the topics you want to argue and then go back and read through everything in the record and try to find all the things that are consistent with the topic that you're identifying.

[00:06:47] Speaker 04:
I get it, but where I don't see this context argument is an adversary states that we're dominating the market due to our IP.

[00:06:57] Speaker 04:
That's an A3980 referring to our extreme power product.

[00:07:01] Speaker 04:
That's not success.

[00:07:03] Speaker 04:
We're commanding very high margins.

[00:07:06] Speaker 04:
That's not success.

[00:07:08] Speaker 04:
There's a price premium because we're the only product in the market.

[00:07:12] Speaker 04:
In fact, that quote is in 2013.

[00:07:14] Speaker 04:
Only product in the market is extreme power.

[00:07:17] Speaker 04:
Only product.

[00:07:18] Speaker 04:
Baker sees a need and customers are asking for it.

[00:07:21] Speaker 04:
I mean, can you really look at this overall thing and say they're not even showing that the product's successful?

[00:07:26] Speaker 00:
Again, you're asking us to be a fact finder.

[00:07:30] Speaker 00:
The board went through all of this.

[00:07:32] Speaker 00:
It said there was no long-felt need.

[00:07:34] Speaker 00:
The results were not unexpected.

[00:07:37] Speaker 00:
The industry praise was the praise of your client, not the industry?

[00:07:41] Speaker 04:
Yes, they went through everything and strained.

[00:07:43] Speaker 04:
And so I went through commercial success.

[00:07:45] Speaker 00:
Isn't that substantial evidence?

[00:07:48] Speaker 04:
No, it is not, because they disregard.

[00:07:50] Speaker 04:
I mean, on commercial success, I don't think you could demand more to show success than the evidence that I just gave you.

[00:07:55] Speaker 04:
12 million gallons, over $200 million market,

[00:07:58] Speaker 04:
that when they came in so we we we are only one in the market someone's coming in and they say they're going to get two hundred million in their first year that's not evidence that this is a substantial market is anyone serious that this isn't a substantial market we're the only product in it and we're commanding a very high margin because of that and we dominate the market

[00:08:17] Speaker 04:
I mean, if the panel's view is that that's not enough to carry our burden of showing success, that the product's successful, then I just respectfully disagree.

[00:08:25] Speaker 04:
But let me move on to some of the ones that your honor referenced.

[00:08:27] Speaker 01:
It's unexpected.

[00:08:28] Speaker 01:
Before you move on, was it one of the issues that the board felt that some of the evidence that was given, especially the testimony of one of the experts, had no foundation?

[00:08:43] Speaker 01:
That it did not have, it wasn't supported

[00:08:47] Speaker 01:
by invoices and things that we normally look at when we're looking for commercial success.

[00:08:52] Speaker 04:
Yeah.

[00:08:52] Speaker 04:
I mean, so if there was any contest about it, I could understand.

[00:08:56] Speaker 04:
It was a declaration under oath submitted by an executive of liquid power that stated that there was 12 million gallons sold at the relevant time, which is an enormous amount because it's just an additive.

[00:09:10] Speaker 04:
And there was no challenge to it.

[00:09:12] Speaker 04:
Yes, they disregard everything.

[00:09:13] Speaker 04:
There's some excuse for why they disregard it.

[00:09:16] Speaker 04:
If there's no challenge to that, that should be good enough.

[00:09:18] Speaker 04:
You don't need to put invoices and ledgers in.

[00:09:21] Speaker 04:
But let me go to unexpected results, because I think this is on probative value.

[00:09:25] Speaker 01:
But that's what the board is going to be looking for.

[00:09:27] Speaker 01:
That's what I'm looking for here.

[00:09:30] Speaker 01:
You can't just pull a number.

[00:09:32] Speaker 01:
and say this is the amount of sales that we have for this particular product.

[00:09:36] Speaker 04:
A business executive without contests from the other side?

[00:09:39] Speaker 01:
Oh, no.

[00:09:39] Speaker 01:
I want to see what this executive is relying on.

[00:09:43] Speaker 04:
All right.

[00:09:44] Speaker 04:
Well, like I said, I think I gave a massive amount of proof that the product was successful.

[00:09:49] Speaker 04:
If the conclusion of the panel is that that's not enough to say it's successful, then that's just a disagreement.

[00:09:54] Speaker 04:
But let's talk about unexpected results.

[00:09:56] Speaker 04:
Unexpected results are obviously important.

[00:10:00] Speaker 04:
The panel found, the board found that there was surprising effectiveness, but that the products that it was comparing it to, the prior products, the traditional DRAs that Baker said are incompatible with heavy crude, I gave you that site, unchallenged.

[00:10:18] Speaker 04:
They said, well, it's really a matter of degree, because

[00:10:21] Speaker 04:
They didn't work so great.

[00:10:23] Speaker 04:
There again, the patent shows the big difference between the patent and the prior art products.

[00:10:29] Speaker 04:
Not surprising.

[00:10:30] Speaker 04:
But in any event, it's undisputed.

[00:10:32] Speaker 04:
This is no fact.

[00:10:33] Speaker 04:
The challenge your honor gave me, which is a good one, doesn't apply.

[00:10:37] Speaker 04:
They said, yes, it's surprisingly more effective than the prior art.

[00:10:41] Speaker 04:
What else are they going to say on this record?

[00:10:43] Speaker 04:
But we're not counting it, because it's an improvement of degree, not an absolute improvement.

[00:10:49] Speaker 03:
As I understand the argument that was presented to the board by Liquid Power, it was premised on there were no DRAs that worked in heavy crude at all.

[00:10:59] Speaker 03:
And then the board took that argument and said,

[00:11:02] Speaker 03:
No, that's not true, because there's Eton, and there's LP300, LP400.

[00:11:07] Speaker 03:
And so what we have here is an argument that nothing worked before at all, and now we have this unexpected result that something worked, and something worked really well.

[00:11:20] Speaker 03:
But that's not true.

[00:11:21] Speaker 03:
It just worked better, most likely, than these things like Eton and LP300, LP400.

[00:11:28] Speaker 03:
And more to the point,

[00:11:29] Speaker 03:
when you're trying to make an argument that there's an unexpected result over something that already existed in the prior art, well, then you have to do a comparison against that prior art.

[00:11:40] Speaker 03:
And I don't see that particular comparison to the closest prior art being made in the briefing to the board.

[00:11:46] Speaker 03:
It's being made now in the briefing to the federal circuit.

[00:11:51] Speaker 03:
But before the board, I don't see the power asking the board to say, look at

[00:11:57] Speaker 03:
my properties and my results and compare them to what I'm identifying as the closest prior art and look at their puny results, this is truly unexpected, the magnitude of the difference between the two.

[00:12:10] Speaker 04:
It's already in the record, but it doesn't matter because the board found that it was surprisingly more effective than the prior art.

[00:12:17] Speaker 04:
And the argument that we waived it because we said that it was completely better and they said only

[00:12:23] Speaker 04:
a good bit better.

[00:12:24] Speaker 04:
They didn't say it was a trivial amount.

[00:12:26] Speaker 04:
They didn't minimize it.

[00:12:27] Speaker 04:
They said that it wasn't in the claim.

[00:12:29] Speaker 04:
I mean, this is legal.

[00:12:30] Speaker 04:
I mean, maybe no one wants this to go forward.

[00:12:33] Speaker 04:
But it is a legal argument.

[00:12:36] Speaker 04:
The reason they excluded that was not based on a waiver which doesn't work.

[00:12:40] Speaker 04:
We argued that it was much better.

[00:12:41] Speaker 04:
We argued that nothing did it.

[00:12:44] Speaker 04:
The truth of anyone reading the record knows that the conventional DRAs weren't even compatible with heavy crude, as Baker admitted.

[00:12:52] Speaker 04:
But the point here is they said, because the claims don't have an effectiveness quotient, it doesn't matter that it's surprising.

[00:13:00] Speaker 04:
And Your Honor, Judge Laurie, you know about the unexpected results just from all your career.

[00:13:08] Speaker 04:
And that's so important.

[00:13:10] Speaker 04:
And what they said is, well, it was surprisingly more effective, not surprisingly from nothing to zero.

[00:13:17] Speaker 04:
That's important.

[00:13:19] Speaker 04:
They also said, we have no predictive capability in the area.

[00:13:23] Speaker 04:
So Baker admitted, they looked at the patent, the patent that's at issue, and they said, we have no predictive capability in this area.

[00:13:33] Speaker 04:
It's an unpredictable area.

[00:13:35] Speaker 04:
You could say to me that's factual.

[00:13:37] Speaker 04:
It's disregarding evidence.

[00:13:39] Speaker 04:
And that's what case after case is.

[00:13:40] Speaker 04:
You can't do that.

[00:13:41] Speaker 04:
So it's an unpredictable area.

[00:13:42] Speaker 04:
This was in 2009, a couple years after the patent issued.

[00:13:45] Speaker 04:
It's pretty scary.

[00:13:49] Speaker 04:
surprising effectiveness, and the party that's making the argument had the prior art additive that they're saying you should use for heavy crude from the 1980s.

[00:14:00] Speaker 04:
They had it for decades, and they didn't use it until 2014.

[00:14:03] Speaker 04:
They say their 2014 product is based on a 1980s patent that they had, and that's their obviousness theory, yet they didn't use it when they could have had this pot of gold of commercial success that we all know actually happened.

[00:14:16] Speaker 04:
that they could have had, and the reason is, they said, we have no predictive capability in the area.

[00:14:21] Speaker 04:
We don't know what's going on.

[00:14:22] Speaker 04:
So unexpected results is strong, and it matters.

[00:14:27] Speaker 04:
If it's not predictable that porting something that was used for kerosene or something over into a heavy crude, if that's surprising, then that's not obvious.

[00:14:39] Speaker 04:
A long felt need, this court identified proof that there was hundreds of millions of barrels annually of heavy crude since the 1990s.

[00:14:46] Speaker 04:
There's a 2004 article that talks about the reason that heavy crude was smaller than the rest of the crude is because transportation is such a problem, because there was no drag-reducing agent.

[00:14:57] Speaker 04:
That's the Senseer article 83641.

[00:15:00] Speaker 04:
So there was a long felt need.

[00:15:04] Speaker 04:
And the board found that it was immaterial.

[00:15:08] Speaker 04:
Because the same relative efficiency thing.

[00:15:12] Speaker 03:
Well, I thought the board said they found other pieces of the record saying that at the time of the invention, 2006, you know, DRAs for heavy crude was still a market that was still out into the future.

[00:15:28] Speaker 03:
Someday in the future kind of a model.

[00:15:30] Speaker 04:
It was 2004, and that's the article I just cited.

[00:15:32] Speaker 04:
What the article from 2004 says is heavy crude, which is obviously we all know heavy crude's out there.

[00:15:38] Speaker 04:
Heavy crude is growing, a 25% increase in the last few years.

[00:15:45] Speaker 04:
And the problem with it is transporting it, because there's no effect of DRAs.

[00:15:51] Speaker 04:
So of course heavy crude wasn't a huge thing, because they didn't have a good DRA that worked.

[00:15:55] Speaker 04:
We solved the problem.

[00:15:56] Speaker 04:
And you're telling us we are passive-valid.

[00:16:00] Speaker 00:
As Your Highness, you're into your bottle time.

[00:16:02] Speaker 00:
You can continue or save it as you wish.

[00:16:04] Speaker 04:
You are very kind, Your Honor.

[00:16:05] Speaker 04:
I will sit and listen.

[00:16:07] Speaker 04:
Thank you.

[00:16:10] Speaker 00:
Mr. Leach.

[00:16:12] Speaker 02:
Good morning, Your Honor.

[00:16:13] Speaker 02:
It's me, police of court.

[00:16:15] Speaker 02:
These cases are really quite straightforward, as you pointed out.

[00:16:17] Speaker 02:
This is a substantial evidence issue.

[00:16:20] Speaker 02:
The board had one thing to do on remand, and that was to go through, consider the objective evidence, and determine how much weight to give it.

[00:16:29] Speaker 02:
It did that.

[00:16:30] Speaker 02:
It went through each objective indicia, described the evidence presented, and explained its reasoning, why in each case that was entitled to little weight.

[00:16:39] Speaker 02:
Now, LSPI does not challenge in either appeal that those findings lack support by substantial evidence.

[00:16:47] Speaker 02:
Instead, they simply want to spin their narrative again in hopes that you will buy the narrative and simply disregard all of the board's findings, which were to the contrary.

[00:16:58] Speaker 02:
Now, to address a couple things that we just heard, commercial success, one,

[00:17:05] Speaker 02:
LSPI cites to the PPC broadband case, and at the same time says, well, I don't know what else the board could be looking for.

[00:17:12] Speaker 02:
We couldn't demand more.

[00:17:14] Speaker 00:
How about the evidence aside from cases?

[00:17:18] Speaker 00:
He says commercial success was very clear, and the board disregarded some of the evidence.

[00:17:25] Speaker 02:
Well, I think the board found that commercial success was not very clear, and that's because there was essentially two main arguments presented to it.

[00:17:34] Speaker 02:
One, that it sold 12 million gallons.

[00:17:36] Speaker 02:
Now, our opponent just said, well, that's an enormous amount.

[00:17:40] Speaker 02:
But that's the problem.

[00:17:41] Speaker 02:
There's no evidence to show that's an enormous amount.

[00:17:43] Speaker 02:
And that's what the board said.

[00:17:45] Speaker 02:
We don't know if 12 million gallons is a lot or a little, because there's no market share.

[00:17:50] Speaker 02:
There's no revenue figures.

[00:17:53] Speaker 02:
There's none of the things that would typically be associated with commercial success.

[00:17:56] Speaker 03:
That's 12 million a year or over a span of time?

[00:18:00] Speaker 02:
You know, I'm not even sure, Your Honor.

[00:18:01] Speaker 02:
It was a single statement in their expert's opinion.

[00:18:05] Speaker 02:
And as the board pointed out,

[00:18:07] Speaker 03:
uh... it was lack foundation that's a sort of foundational evidence that i think the board would have appreciated uh... what about the fact that there was some statement in the record that described liquid power as the only supplier this uh... yes so i'm suggesting that they got all the market share

[00:18:30] Speaker 02:
Well, so first, I'm not sure that document was actually cited in the commercial success section.

[00:18:35] Speaker 02:
As you pointed out, LPI seems to have expected the board to have gone and collected any evidence that it may have cited for different things and essentially concocted their own commercial success argument.

[00:18:47] Speaker 02:
But as far as that document goes, I think at a certain time period, they may have been the only one in the market.

[00:18:55] Speaker 02:
But that itself does not mean that there was commercial success.

[00:19:00] Speaker 02:
And that's what the board essentially found is, yeah, look, we've got some evidence here.

[00:19:04] Speaker 02:
We've got evidence that they had high margins because they were the only one in the market.

[00:19:09] Speaker 02:
possibly do in part to their patent position.

[00:19:12] Speaker 02:
And we've got evidence of 12 million gallons.

[00:19:14] Speaker 02:
But that's all we have.

[00:19:15] Speaker 02:
And that alone is not enough for us to say to give the evidence of commercial success more than a little weight.

[00:19:26] Speaker 00:
If they're the only product in the market and they've got a significant amount of sales, isn't that commercial success?

[00:19:38] Speaker 02:
Well, I'm not sure if they had a significant amount of sales or not.

[00:19:41] Speaker 02:
And I think the board wasn't sure of that.

[00:19:44] Speaker 02:
We know they sold 12 million gallons.

[00:19:46] Speaker 02:
Was that to one customer?

[00:19:48] Speaker 02:
Was that one sale?

[00:19:50] Speaker 02:
There was none of the foundational evidence.

[00:19:52] Speaker 01:
There's no competing evidence that shows that that's not significant in the market.

[00:19:58] Speaker 02:
That's true.

[00:19:59] Speaker 02:
And for that, I want to point out the burden of production as far as evidence on the objective indicia lies with the patent owner.

[00:20:08] Speaker 02:
And Pat and the NLSPI has made some arguments that, well, it was somehow Baker Hughes' duty to come in and rebut this.

[00:20:16] Speaker 02:
And that's simply not the case.

[00:20:18] Speaker 02:
There's plenty of cases where the ruling was, look, we've got some evidence here, but it's just simply not enough.

[00:20:27] Speaker 00:
I guess your position is that on appeal here, it's not enough to have substantial evidence

[00:20:35] Speaker 00:
of, say, commercial success.

[00:20:38] Speaker 00:
But there is substantial evidence supporting the board's position that there wasn't.

[00:20:48] Speaker 02:
Absolutely correct, Your Honor.

[00:20:50] Speaker 02:
There was substantial evidence supporting the board's position that there was not.

[00:20:54] Speaker 02:
And it's consistent with many of the cases in this area, where

[00:20:58] Speaker 02:
Statements such as we sold X number of gallons without more context just simply isn't enough to be given a lot of weight.

[00:21:10] Speaker 03:
What about unexpected results?

[00:21:13] Speaker 03:
The board seemed to acknowledge that there are unexpected results, perhaps.

[00:21:20] Speaker 03:
A lot of unexpected results, and so for that reason it didn't accept the premise of

[00:21:27] Speaker 03:
liquid powers argument that there was nothing out there that had worked ever before and they were the first one ever to find a DRA for heavy crude and that was an unexpected result.

[00:21:38] Speaker 03:
Okay, so they rejected that argument.

[00:21:40] Speaker 03:
But nevertheless, they did seem to find unexpected results and then it's unclear to me whether they gave that finding any weight in the overall analysis of non-obviousness.

[00:21:54] Speaker 02:
Yes, so they do have a couple statements where they say, and in particular really regards this pretty scary and I mean it email document, it was actually Baker Hughes' position that that document appears to show some surprise, maybe as to degrees of drag reduction.

[00:22:13] Speaker 02:
LSVI vehemently argued against that, saying no, there's no evidence of that.

[00:22:18] Speaker 02:
Nothing worked before and here it worked.

[00:22:21] Speaker 02:
You mentioned now LSPI is trying to make that argument.

[00:22:25] Speaker 02:
And you even mentioned now they're saying, well, look, everything that worked before had puny results.

[00:22:30] Speaker 02:
And I'll point out, there's no evidence to support those statements.

[00:22:34] Speaker 02:
Throughout their reply briefs in these appeals, they say things like the prior art barely worked.

[00:22:39] Speaker 02:
And what's so ineffective is to be commercially useless.

[00:22:42] Speaker 02:
They don't cite anything to support that.

[00:22:44] Speaker 02:
They simply didn't present evidence as to here's our degree, here's the degree of the prior art.

[00:22:50] Speaker 02:
My opponent here just pointed to one test example in the patent specification on their LP300 example in one oil, one very heavy crude oil that showed 0% versus I believe it was 30%.

[00:23:03] Speaker 02:
That's simply one test.

[00:23:06] Speaker 02:
And as you pointed out, the board relied on marketing materials of that same product, LP300, that shows a graph here up to 50% drag reduction in heavy crude.

[00:23:18] Speaker 02:
They don't have any comparative data against the LP-400, which the board also pointed out, achieve drag reduction in heavy crude, and we have the same graph, up to 50%.

[00:23:27] Speaker 02:
They don't have any comparative data against their own CDR-102 flow improver, which has a similar graph and which says it's commercially effective at API gravities as low as 23.

[00:23:40] Speaker 02:
Your Honor, they didn't present evidence to the Board on the degree of drag reduction comparison, and they haven't done it here.

[00:23:46] Speaker 02:
They've just simply thrown out conclusory statements that the prior art barely worked, which are contradicted by the record in this case.

[00:23:55] Speaker 01:
With respect to praise and neckies and sort of indition, the Board found that there was no nexus, right?

[00:24:04] Speaker 01:
And even though we found on remand when the case came up to us before that there was nexus in this particular area, yet the board finds that there's no nexus.

[00:24:15] Speaker 01:
Is that not error?

[00:24:18] Speaker 02:
I don't believe the board found there was no nexus, Your Honor.

[00:24:21] Speaker 02:
You're referring to the praise they're handling?

[00:24:23] Speaker 01:
Praise, yes.

[00:24:25] Speaker 02:
So what the board found with respect to praise was that the main document that LSBI had been relying on

[00:24:32] Speaker 02:
was a little bit tricky.

[00:24:33] Speaker 02:
It was essentially notes taken by a Baker Hughes employee while attending a presentation of an LSPI scientist.

[00:24:42] Speaker 02:
We had to point out, yes, this is a Baker Hughes employee taking these notes, but it's very clear when you dig into it

[00:24:50] Speaker 02:
that he's just writing down what was said at this presentation uh... so essentially what the board found was this is self-praise this is this praises coming from lsp i'm not from uh... baker hughes as as they're contending i don't i don't believe that the nexus issue i think it's an issue of how much weight self-praise uh... should be entitled to and the board found not very much

[00:25:15] Speaker 02:
which again, no challenge as to whether or not that's supported by substantial evidence.

[00:25:21] Speaker 02:
So I don't believe they ignored Nexus in this instance.

[00:25:25] Speaker 02:
So the other argument that you heard was what we called the Neyman argument, which was essentially that Baker Hughes had the Neyman prior art, a heteroatom containing DRA for crude oil.

[00:25:39] Speaker 02:
for a decade and didn't use it.

[00:25:42] Speaker 02:
And therefore, they've argued that's somehow dispositive as to obviousness.

[00:25:46] Speaker 02:
Now again, that asks you to simply disregard all of the factual findings of the board, specifically those related to long need, long felt need, failure of others, and copying.

[00:25:58] Speaker 02:
This is what the board actually found, that the need did not exist for a long time and was rather a more recent need as the heavy crude market was expanding.

[00:26:08] Speaker 02:
specifically referring to Baker-Hughes emails that titled it the way of the future and a future relevant hydrocarbon source.

[00:26:15] Speaker 02:
So Baker-Hughes wasn't trying to get into this field.

[00:26:19] Speaker 02:
Then, with respect to evidence of failure, the board found that there was no evidence of failure, rather that there was no program in place at Baker-Hughes to develop a commercial product for heavy crude DRA.

[00:26:30] Speaker 03:
What about Mr. Reinus's chicken or the egg theory, which is that

[00:26:37] Speaker 03:
the heavy crude market was hampered by the fact that there wasn't an effective DRA, and that's why the market at that time was relatively small.

[00:26:51] Speaker 03:
But at the same time, people in the industry were asking for something like that, a DRA for heavy crude.

[00:27:01] Speaker 02:
A big part of that argument was based on an article, which is simply not, it's a mischaracterization of that article.

[00:27:07] Speaker 02:
That article talks about a number of things, the lack of a DRA being one of them.

[00:27:12] Speaker 03:
Is this the 2004 article Mr. Reines was talking about?

[00:27:15] Speaker 02:
It is.

[00:27:15] Speaker 02:
It also, I believe, specifically says that there are things in progress to get a better DRA.

[00:27:24] Speaker 02:
But it discusses lots of different issues with heavy crude.

[00:27:28] Speaker 02:
What the board found was that the heavy crude market was expanding.

[00:27:33] Speaker 02:
And LSPI may have gotten in at the beginning of a market.

[00:27:37] Speaker 02:
Baker Hughes didn't have interest.

[00:27:39] Speaker 02:
They had a couple people there that were sending emails saying, hey, we should get going.

[00:27:43] Speaker 02:
This is the way of the future.

[00:27:44] Speaker 02:
But there was no program in place until 2014.

[00:27:48] Speaker 02:
The documents that LSPI cites for failure, the board found, they talk about, let's start a program.

[00:27:54] Speaker 02:
Here's a preliminary idea for a program to develop such a product.

[00:27:58] Speaker 02:
It's not that there wasn't DRAs, there was.

[00:28:04] Speaker 02:
The board found the LP300 works, the LP400 works.

[00:28:07] Speaker 02:
It's simply that the market was expanding.

[00:28:10] Speaker 02:
Light crude, everybody wants to extract and pump light crude because it's the easiest.

[00:28:14] Speaker 02:
But as that dries up, you have to move toward heavy crude.

[00:28:17] Speaker 02:
That was what was happening at that time.

[00:28:21] Speaker 02:
Then as Baker Hughes

[00:28:23] Speaker 02:
did actually try and get interested around the 2014 timeframe and start to develop a program.

[00:28:28] Speaker 02:
What the board found is they actually successfully used their own patented technology, crediting the testimony of Dr. Epps, and that patented technology is in fact the Naaman patent.

[00:28:39] Speaker 02:
So this idea from LSPI that, well, Baker Hughes had the Naaman patent for 10 years and they really wanted

[00:28:44] Speaker 02:
a DRA for heavy crude when they were trying and failing and they could never get it to work is completely contradicted by the board's findings which is that it wasn't terribly interested in a heavy crude DRA until much later and that when it did in fact start a program it used the name and technology to develop a successful product.

[00:29:07] Speaker 03:
How close in structure and formulation are

[00:29:14] Speaker 03:
than what's disclosed in the Neiman patent that you're saying was used as the roadmap versus Polymer A in the 118 patent.

[00:29:23] Speaker 03:
Which arguably is very, very, very, very close to the product you developed.

[00:29:29] Speaker 02:
Yes, so the high percentage of the Baker Hughes product does in fact use a monomer that is in the LSVI specification.

[00:29:38] Speaker 02:
It also happens to be in the NAOCA reference.

[00:29:42] Speaker 02:
The key here is that when you come to polymer science, the fact that that monomer exists, even in a high percentage, doesn't make the products all that similar.

[00:29:53] Speaker 02:
The board went through a lot of testimony on this and credited the testimony of Dr. Epps, who's a very polymer scientist that really understands this stuff.

[00:30:02] Speaker 02:
What he said is,

[00:30:04] Speaker 02:
Naaman describes adding additional ingredients such as an amine and then doing some cross-linking.

[00:30:11] Speaker 02:
What ends up happening when you use that technology is you basically take your monomer and you are able to expand it out and get a product that functions much differently and sometimes much more effectively.

[00:30:27] Speaker 02:
Yes, the percentages of the monomer are high, but when you look at the polymer chemistry of all of this, the resulting products, even if the additional ingredients are at a low percentage, it is a very different product.

[00:30:41] Speaker 02:
And the board relied on extensive testimony from Dr. Epps to find that.

[00:30:45] Speaker 02:
And again, LSBI just simply hasn't challenged that those findings lack support by substantial evidence.

[00:30:51] Speaker 02:
They just want to tell a different story and hope that

[00:30:54] Speaker 02:
You'll ignore the board's findings and buy the narrative.

[00:30:59] Speaker 02:
With that said, Your Honor, unless there's any other questions, I'm happy to yield the rest of my time.

[00:31:04] Speaker 00:
Well, no one ever loses points by not using up all their time.

[00:31:10] Speaker 00:
Mr. Linus has four minutes plus.

[00:31:12] Speaker 04:
Thank you.

[00:31:14] Speaker 04:
I may lose points, Your Honor, because I think I'm going to use my time.

[00:31:18] Speaker 04:
I'd like to look at the evidence.

[00:31:21] Speaker 04:
At least, let's take one exemplary piece.

[00:31:23] Speaker 04:
I'm going to drag you through the appendix.

[00:31:25] Speaker 04:
But if we could look at A3877 in the 118 appeal, which is 2020-2001, if you don't mind.

[00:31:36] Speaker 03:
Could you say that number again?

[00:31:38] Speaker 04:
Sure.

[00:31:38] Speaker 04:
It's APPX3877.

[00:31:40] Speaker 04:
38?

[00:31:40] Speaker 04:
3877.

[00:31:40] Speaker 04:
3877.

[00:31:45] Speaker 04:
In the 118 appeal, which is the 2021 appeal.

[00:31:56] Speaker 00:
to tell us what's in it?

[00:32:00] Speaker 04:
So this is the document for their new program to justify their product.

[00:32:06] Speaker 04:
And it says, Phillips 66 Extreme Power is the only DRA capable of providing drag reduction in heavy crews at this time.

[00:32:14] Speaker 04:
So the idea that there's all these other things that are working well, when it's agreed there's one and only one that works, and then they justify it.

[00:32:22] Speaker 04:
And then below that,

[00:32:25] Speaker 04:
This is A3877, is the chicken and the egg point.

[00:32:30] Speaker 04:
What's the benefit of you having a competitor with extreme power actually having a heavy crude?

[00:32:35] Speaker 04:
So there'd be two in the marketplace.

[00:32:37] Speaker 04:
And it says, well, then people will be able to flow more heavy crude.

[00:32:41] Speaker 04:
Because if we can do this, that market will expand.

[00:32:44] Speaker 04:
Then it identifies over $200 million in market the first year that they're going to get if they can compete with us.

[00:32:52] Speaker 04:
Then it says,

[00:32:54] Speaker 04:
Baker, the profitability is Baker Hughes will be able to effectively compete within a market that is currently unattainable.

[00:33:04] Speaker 04:
This is all undisputed.

[00:33:05] Speaker 04:
It's their document.

[00:33:06] Speaker 04:
I understand substantial evidence, but we don't have to put our heads in the shell.

[00:33:13] Speaker 04:
What does that mean?

[00:33:16] Speaker 04:
May 2013.

[00:33:17] Speaker 03:
Yeah, 2013.

[00:33:18] Speaker 03:
OK, so this is about seven years after the priority date.

[00:33:21] Speaker 04:
Right, when they finally, yep, yep.

[00:33:23] Speaker 04:
And in fact, to the point that they weren't working on a program till then, in 2012, at A3906, they talked about they have no competitive product, but are continuing to work.

[00:33:33] Speaker 04:
So they were working on it.

[00:33:35] Speaker 04:
And there was letters asking them for it in 2006, 2009.

[00:33:41] Speaker 04:
But the point of it all is,

[00:33:43] Speaker 04:
council acknowledged virtually everything and see what the controversy he said it was an expanding market you heard it it was we came in first we created the market for the area ok thank you for acknowledging that happy to deny it we were successful they didn't have a program and they had the patent that supposedly the priority makes it obvious that's why this is decisive evidence of objective initiatives because they had the patent that that tells you

[00:34:12] Speaker 04:
that you can use DRA, but it teaches you not in heavy crude.

[00:34:16] Speaker 04:
And now it got ported over to heavy crude, and they waited 30 years.

[00:34:20] Speaker 04:
There was money on the table they could have made.

[00:34:23] Speaker 04:
Is it really, on the face of this record, can we say that it was a fair fact finding by the board, whether you want to call it disregard or burden shifting or substantial evidence, that they didn't want to get into it because they just didn't care about it?

[00:34:37] Speaker 04:
No, they wanted to get in the market, because it was hundreds of millions of dollars, which is why it's laughable that there's no success with the product.

[00:34:45] Speaker 04:
Extreme power.

[00:34:46] Speaker 04:
It's all over, littered throughout the documents.

[00:34:49] Speaker 03:
If the court were to go your way, what would you do about the statements in the marketing materials for LP300 and LP400, which make it pretty clear on its face that those products were made

[00:35:02] Speaker 03:
and designed for use with heavy crude.

[00:35:06] Speaker 04:
Which everyone agrees that there's no, even though they were for sale, that they're not for heavy crude and that there was no conventional heavy crude.

[00:35:14] Speaker 04:
But let's assume that those are out there.

[00:35:16] Speaker 04:
There's an agreement.

[00:35:17] Speaker 04:
What it says.

[00:35:20] Speaker 03:
Right.

[00:35:21] Speaker 04:
It says the marketing materials pitch for heavier oils.

[00:35:26] Speaker 04:
That's true.

[00:35:28] Speaker 04:
We have in the patent itself, which we did identify, because in fact, this court looked at the 118 patent and said the 118 patent shows unsurprising results.

[00:35:37] Speaker 04:
We're flowing to that table.

[00:35:39] Speaker 04:
How is it that we didn't do it?

[00:35:41] Speaker 04:
You did it.

[00:35:43] Speaker 04:
So clearly, there was improved performance.

[00:35:48] Speaker 04:
But the point on the degree of improvement is it was a surprising improvement.

[00:35:55] Speaker 04:
Of course it was.

[00:35:57] Speaker 04:
And they neglected it because they said the claims don't require that.

[00:36:00] Speaker 04:
And I haven't received any questions.

[00:36:02] Speaker 04:
I've got some spirited questions.

[00:36:03] Speaker 04:
But no one's saying that the claim has to require that it works great.

[00:36:08] Speaker 04:
That's not what's needed for unexpected results.

[00:36:12] Speaker 04:
It's just, wow, it's working great.

[00:36:15] Speaker 04:
They had the patent.

[00:36:16] Speaker 04:
They did no predictive capability in this space.

[00:36:20] Speaker 00:
Counsel, as you say, your red light is on.

[00:36:24] Speaker 00:
You have a final compulsory statement.

[00:36:27] Speaker 04:
I will be very brief, Your Honor.

[00:36:29] Speaker 04:
There are cases that come where the objective indicia are decisive.

[00:36:33] Speaker 04:
In the last few years, there's been a lot of neglect of them because they're not what the boards used to.

[00:36:39] Speaker 04:
This is the perfect vehicle to be clear that when you have rules of objective indicia on an important set of patents, that they should be respected.

[00:36:49] Speaker 04:
Thank you.

[00:36:49] Speaker 00:
Thank you, Counsel.

[00:36:50] Speaker 00:
The case is submitted.