Case: 20-1932 Document: 58 Page: 1 Filed: 09/16/2021
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
BAKER HUGHES OILFIELD OPERATIONS, LLC,
Appellant
v.
ANDREW HIRSHFELD, PERFORMING THE
FUNCTIONS AND DUTIES OF THE UNDER
SECRETARY OF COMMERCE FOR
INTELLECTUAL PROPERTY AND DIRECTOR OF
THE UNITED STATES PATENT AND TRADEMARK
OFFICE,
Intervenor
______________________
2020-1932
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2019-
00158.
______________________
Decided: September 16, 2021
______________________
KYRIE CAMERON, Patterson & Sheridan LLP, Houston,
TX, argued for appellant. Also represented by JOHN
HANSON BARR, JR.
PETER J. AYERS, Office of the Solicitor, United States
Case: 20-1932 Document: 58 Page: 2 Filed: 09/16/2021
2 BAKER HUGHES OILFIELD v. HIRSHFELD
Patent and Trademark Office, Alexandria, VA, argued for
intervenor. Also represented by THOMAS W. KRAUSE,
WILLIAM LAMARCA, FARHEENA YASMEEN RASHEED.
______________________
Before MOORE, Chief Judge, PROST and STOLL, Circuit
Judges.
MOORE, Chief Judge.
Baker Hughes Oilfield Operations, LLC (Baker), ap-
peals a Patent Trial and Appeal Board final written deci-
sion finding claims 1 and 7–23 of U.S. Patent No. 9,080,439
were anticipated and holding claims 1–23 would have been
obvious. Innovex Downhole Sols., Inc. v. Baker Hughes Oil-
field Operations, LLC, No. IPR2019-00158, 2020 WL
1862460 (P.T.A.B. Apr. 13, 2020) (Board Decision). We af-
firm-in-part, vacate-in-part, and remand for further pro-
ceedings.
I
The ’439 patent relates to a system for plugging a bore-
hole in an oil or gas well. The system comprises a deform-
able member and a tool operatively arranged to deform the
deformable member. ’439 patent at Abstract. The tool in-
cludes a disintegrable material so that it can later be
cleared from the flow path without the need for time-con-
suming and costly retrieval operations. Id. at 2:46–3:6.
The patent’s written description states that the tool “could
be any suitable tool or take any suitable form, e.g., a wedge,
swage, shoulder, cone, ramp, mandrel, etc.” Id. at 2:26–30.
Figure 1 below depicts an embodiment in which the tool
102 is a plug:
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BAKER HUGHES OILFIELD v. HIRSHFELD 3
Claim 1 recites:
1. A deformation system, comprising:
a deformable member having a first set of
dimensions; and
a tool within the deformable member hav-
ing at least a portion thereof operatively ar-
ranged to impart a deforming force to the
deformable member in order to deform the
member from the first set of dimensions at
which the deformable member is positiona-
ble with respect to a structure to a second
set of dimensions at which the deformable
member engages with the structure,
wherein at least the portion of the tool that
imparts the deforming force at least par-
tially comprises a disintegrable material
responsive to a selected fluid.
Innovex Downhole Solutions, Inc. (Innovex), petitioned
for inter partes review (IPR) of claims 1–23 of the ’439 pa-
tent. The Board instituted IPR, found claims 1 and 7–23
were anticipated by both U.S. Patent No. 5,709,269 (Head)
and U.S. Patent No. 7,168,494 (Starr), and held claims
1–23 would have been obvious over various combinations
of Head, U.S. Patent Pub. No. 2010/0139911 (Stout), U.S.
Patent Pub. No. 2011/0132143 (Xu), and U.S. Patent Pub.
Case: 20-1932 Document: 58 Page: 4 Filed: 09/16/2021
4 BAKER HUGHES OILFIELD v. HIRSHFELD
No. 2010/0294510 (Holmes). Baker appealed. Having set-
tled with Baker, Innovex withdrew from the appeal. The
Director intervened. We have jurisdiction under 28 U.S.C.
§ 1295(a)(4)(A).
II
The only issue Baker raises regarding the Board’s an-
ticipation finding is whether the Board erred in construing
the claim term “tool.” The Board construed this term as a
means-plus-function limitation and held that the corre-
sponding structure is “any suitable setting tool, a wedge, a
swage, a shoulder, a cone, a ramp, a mandrel, a plug, and
a dart.” Board Decision, 2020 WL 1862460, at *13. In the
alternative, the Board held that even if “tool” were not a
means-plus-function limitation, it would cover the same
structures. Id. at *14. The patent’s written description
supports the Board’s alternative construction. It states
that “tool 102 could be any suitable setting tool or take any
suitable form, e.g., a wedge, swage, shoulder, cone, ramp,
mandrel, etc.” ’439 patent at 2:26–30. It further states
that tool 102 can be “a plug or dart.” Id. at 2:34–37.
Baker’s argument that those structures are mere compo-
nents of tools, rather than tools themselves, is not persua-
sive. Because we discern no error in the Board’s
alternative construction, we affirm its determination that
claims 1 and 7–23 were anticipated, and we do not reach
whether “tool” is a means-plus-function limitation.
III
Baker next argues that the Board violated the Admin-
istrative Procedure Act (APA) by changing its position re-
garding obviousness without providing Baker reasonable
notice and an opportunity to respond. We review de novo
whether the Board’s procedures satisfy the APA, and we
set aside Board decisions that are “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with
law.” Sirona Dental Sys. GmbH v. Institut Straumann AG,
892 F.3d 1349, 1352 (Fed. Cir. 2018) (quoting 5 U.S.C.
Case: 20-1932 Document: 58 Page: 5 Filed: 09/16/2021
BAKER HUGHES OILFIELD v. HIRSHFELD 5
§ 706). The APA prohibits the Board from changing theo-
ries midstream without giving reasonable notice of the
change and an opportunity to present argument and evi-
dence addressing the new theory. Belden Inc. v. Berk-Tek
LLC, 805 F.3d 1064, 1080 (Fed. Cir. 2015). Because the
Board violated this principle, we vacate the Board’s obvi-
ousness determination as to claims 2–6. 1
Innovex’s IPR petition purported to assert three
grounds of invalidity. In Grounds 1 and 2, Innovex argued
claims 1 and 7–23 were anticipated by Head and Starr, re-
spectively. J.A. 148–49. In Ground 3, Innovex argued
claims 1–23 would have been obvious over any one of six
distinct combinations of prior art: (1) Head in view of Xu,
(2) Head in view of Holmes, (3) Starr in view of Xu, (4) Starr
in view of Holmes, (5) Stout in view of Xu, and (6) Stout in
view of Holmes. Id. Rather than analyze each proposed
combination separately, however, the petition wove to-
gether its arguments and evidence for all six combinations.
See, e.g., J.A. 206 (“[A skilled artisan] would have a reason-
able expectation of successfully fitting the teachings of
Head/Starr/Stout and Xu/Holmes together like pieces of a
puzzle.” (internal quotation marks omitted)).
In its decision to institute IPR, the Board reasoned that
Innovex showed a reasonable likelihood of success on
Grounds 1 and 2. Innovex Downhole Sols., Inc. v. Baker
Hughes Oilfield Operations, LLC, No. IPR2019-00158,
2019 WL 1749214, at *10, *13 (P.T.A.B. Apr. 15, 2019) (In-
stitution Decision). Regarding Ground 3, however, which
the Board construed as six separate grounds, the Board
made clear it was instituting solely because “an inter partes
review may not institute on less than all claims challenged
in the petition.” Id. at *14 n.5 (citing SAS Inst., Inc. v.
1 Having affirmed the Board’s decision finding that
claims 1 and 7–23 were anticipated, we do not reach the
Board’s obviousness determination as to those claims.
Case: 20-1932 Document: 58 Page: 6 Filed: 09/16/2021
6 BAKER HUGHES OILFIELD v. HIRSHFELD
Iancu, 138 S. Ct. 1348, 1359–60 (2018)). The Board ex-
plained that, by muddling those grounds together, Innovex
failed to “address with specificity any particular one of the
six combinations of references it proposes.” Id. at *14. For
example, the Board stated it was unclear “how the teach-
ings of each particular combination [of] references . . . are
mapped to the tool limitation.” Id. at *13. The Board fur-
ther explained that “Petitioner lumps its arguments to-
gether without clearly indicating why one of skill in the art
would modify one particular reference based on the teach-
ings of another particular reference.” Id. Accordingly, the
Board stated it would not “sift through [Innovex’s] argu-
ments and evidence in order to piece together its best ar-
guments for each of its proposed combinations of
references.” Id. at *14.
But in its final written decision, the Board did just that.
It devoted forty pages—the majority of its analysis—to
parsing the different theories that Innovex confusingly
lumped together in Ground 3. Board Decision, 2020 WL
1862460, at *32–49. The Board explained it “was able to
discern Petitioner’s obviousness arguments, even if the Pe-
tition was less focused than desirable.” Id. at *33.
We hold that the Board’s conduct violated the APA.
Despite instituting on Ground 3, the Board unequivocally
stated it would not “sift through [Innovex’s] arguments and
evidence in order to piece together its best arguments for
each of its proposed combinations of references.” Institu-
tion Decision, 2019 WL 1749214, at *14; see also id. at *14
n.5 (noting obligation under SAS to consider all challenges
in the petition). Under the circumstances, it was reasona-
ble for Baker to rely on the Board’s initial position. Other-
wise, in its Patent Owner Response, Baker would need to
use its allotted pages to rummage through Innovex’s peti-
tion “to divine an obviousness theory.” J.A. 528. Baker’s
sur-reply explains that Innovex’s attempt to detail its var-
ious obviousness combinations in its reply “comes too late
to rectify the initial lack of particularity.” J.A. 647.
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BAKER HUGHES OILFIELD v. HIRSHFELD 7
Moreover, in its sur-reply, Baker could not have offered
new evidence on the new theories. 37 C.F.R. 42.23(b) (“A
sur-reply . . . may not be accompanied by new evidence
other than deposition transcripts of the cross-examination
of any reply witness.”). Baker expressly requested an op-
portunity to address those theories and adduce new evi-
dence if the Board were inclined, contrary to its statements
in the Institution Decision, to “sift through” the arguments
and evidence in Ground 3. J.A. 649; Institution Decision,
2019 WL 1749214, at *14. 2 The Board ignored Baker’s re-
quest and, without prior notice, did what it said it would
not do, i.e., untangle the six separate obviousness theories
wound together in Ground 3. Although the Board did in-
stitute on Ground 3, as SAS required, given its statements
in the Institution Decision, it needed to provide Baker rea-
sonable notice of its changed position. See Belden, 805 F.3d
at 1080. Because the Board failed to do so, it violated the
APA.
The Director argues that Baker had notice of the six
obviousness combinations jumbled together in Ground 3.
The question, however, is not whether Baker had notice of
those combinations; it is instead whether Baker had notice
that the Board would delve into their substance after stat-
ing it would not. Under these unusual circumstances, the
Board needed to provide adequate notice and an oppor-
tunity for the submission of evidence regarding
2 Baker repeated this request at oral argument be-
fore us. Oral Arg. at 33:10–30, 34:05–36, available at
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20-
1932_09012021.mp3 (“We would’ve liked the opportunity
to have our expert offer opinions about those particular
new mappings that were offered by the petitioner and any
other evidence. There’s definitely a lot of evidence in the
art that may have shown why these combinations were not
susceptible to being combined . . . .”).
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8 BAKER HUGHES OILFIELD v. HIRSHFELD
obviousness. Accordingly, we vacate the Board’s decision
holding claims 1–23 would have been obvious. 3
IV
Because the Board did not err in construing the claim
term “tool,” we affirm its decision finding that claims 1 and
7–23 of the ’439 patent were anticipated. But because the
Board violated the APA in holding claims 2–6 would have
been obvious, we vacate that obviousness determination.
On remand, the Board must afford Baker an opportunity
to present additional arguments and evidence responding
to the obviousness theories on which the Board relied.
AFFIRMED-IN-PART, VACATED-IN-PART,
AND REMANDED
COSTS
No costs.
3 We do not determine, at this stage, whether Inno-
vex’s petition identified with particularity the evidence
supporting the obviousness combinations on which the
Board relied. See Intelligent Bio-Sys., Inc. v. Illumina
Cambridge Ltd., 821 F.3d 1359, 1369 (Fed. Cir. 2016) (“It
is of the utmost importance that petitioners in the IPR pro-
ceedings adhere to the requirement that the initial petition
identify with particularity the evidence that supports the
grounds for the challenge to each claim.”); SAS Inst.,
138 S. Ct. at 1356 (“[T]he petitioner’s petition, not the Di-
rector’s discretion, is supposed to guide the life of the liti-
gation.”).