Court Opinion

ID: 4322198
Source: CourtListenerOpinion
Date Created: 2018-10-18 15:00:42.160592+00
Date Added: 2024-06-11T14:46:04.711914
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

LIQUIDPOWER SPECIALTY PRODUCTS INC., FKA
   LUBRIZOL SPECIALTY PRODUCTS, INC.,
                Appellant

                           v.

   BAKER HUGHES, A GE COMPANY, LLC, FKA
      BAKER HUGHES INCORPORATED,
                   Appellee
            ______________________

                      2018-1141
                ______________________

    Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2016-
00734.
                 ______________________

               Decided: October 18, 2018
                ______________________

    EDWARD R. REINES, Weil, Gotshal & Manges LLP,
Redwood Shores, CA, argued for appellant. Also repre-
sented by DOUGLAS WAYNE MCCLELLAN, Houston, TX;
ELIZABETH WEISWASSER, New York, NY.

    HERBERT D. HART, III, McAndrews, Held & Malloy,
Ltd., Chicago, IL, argued for appellee. Also represented
by AARON BARKOFF, PETER LISH, GEORGE WHEELER.
2        LIQUIDPOWER SPECIALTY PRODUCTS v. BAKER HUGHES

                 ______________________

 Before PROST, Chief Judge, MOORE and HUGHES, Circuit
                        Judges.
MOORE, Circuit Judge.
     LiquidPower Specialty Products Inc. (“LSPI”) appeals
the final written decision on inter partes review of the
Patent Trial and Appeal Board holding claims 8–10 of
U.S. Patent No. 8,022,118 unpatentable for obviousness
over U.S. Patent No. 6,015,779 (“Eaton”), a publication
titled “The Chemistry of Alberta Oil Sands, Bitumens and
Heavy Oils” (“Strausz”), and U.S. Patent No. 4,983,186
(“Naiman”). 1 Because the Board erred by failing to weigh
LSPI’s objective evidence of nonobviousness, we vacate
and remand.
                      BACKGROUND
     The ’118 patent relates to high molecular weight drag
reducing polymers for use in heavy, asphaltenic crude oil
(“HAC”). ’118 patent at 1:8–12. Independent claim 10 is
illustrative and recites:
    10. A method comprising:
    introducing a drag reducing polymer having a sol-
    ubility parameter of at least about 17 MPa1/2, into
    a pipeline, such that the friction loss associated
    with the turbulent flow through the pipeline is re-
    duced by suppressing the growth of turbulent ed-
    dies, into a liquid hydrocarbon having an
    asphaltene content of at least 3 weight percent
    and an API gravity of less than about 26° to
    thereby produce a treated liquid hydrocarbon
    wherein the viscosity of the treated liquid hydro-

    1  Liquid Power does not appeal the Board’s decision
holding claims 1–7 and 11 unpatentable on other grounds.
LIQUIDPOWER SPECIALTY PRODUCTS v. BAKER HUGHES           3

   carbon is not less than the viscosity of the liquid
   hydrocarbon prior to treatment with the drag re-
   ducing polymer;
   wherein the drag reducing polymer has a solubili-
   ty parameter within 4 MPa1/2 of the solubility pa-
   rameter of the liquid hydrocarbon and the drag
   reducing polymer comprises at least about 25,000
   repeating units, and wherein a plurality of the re-
   peating units comprise a heteroatom, wherein the
   heteroatom is selected from the group consisting
   of an oxygen atom, a nitrogen atom, a sulfur atom
   and/or a phosphorus atom and wherein the drag
   reducing polymer has a weight average molecular
   weight of at least 1×106 g/mol and
   the drag reducing polymer is added to the liquid
   hydrocarbon in the range from about 0.1 to about
   500 ppmw.
    Baker Hughes, a GE Company, LLC, petitioned for in-
ter partes review, arguing claims 8–10 would have been
obvious over Eaton in view of Strausz and Naiman. The
Board held that the claims would have been obvious in
light of this combination. It found a person of ordinary
skill in the art would have determined which of Naiman’s
polymers would be soluble in Eaton’s Bow River crude oil
based on their known solubility parameters and then
would have used Naiman’s polymerization process to
prepare that polymer. It found substituting Eaton’s
polymers with Naiman’s would have been a substitution
of one known drag reducing polymer for another with the
predictable result of reducing drag in a pipeline. It de-
clined to consider LSPI’s objective evidence of nonobvi-
ousness because it found that LSPI did not establish a
nexus to the claimed invention.
   LSPI timely appealed. We have jurisdiction under 28
U.S.C. § 1295(a)(4)(A).
4        LIQUIDPOWER SPECIALTY PRODUCTS v. BAKER HUGHES

                       DISCUSSION
    We review the Board’s legal determinations de novo
and its factual findings for substantial evidence. In re
Van Os, 844 F.3d 1359, 1360 (Fed. Cir. 2017). Obvious-
ness is a question of law based on underlying facts. Arctic
Cat Inc. v. Bombardier Recreational Prods. Inc., 876 F.3d
1350, 1358 (Fed. Cir. 2017). The obviousness inquiry
requires consideration of the four Graham factors: “(1) the
scope and content of the prior art; (2) the differences
between the claims and the prior art; (3) the level of
ordinary skill in the art; and (4) objective considerations
of nonobviousness.” Id. These are questions of fact. Id.
                            A.
     LSPI argues the Board’s finding that the combination
of Eaton, Strausz, and Naiman discloses “introducing a
drag reducing polymer . . . into a pipeline, such that the
friction loss associated with the turbulent flow through
the pipeline is reduced by suppressing the growth of
turbulent eddies, into” HAC (“the drag reduction limita-
tion”) is not supported by substantial evidence. The
Board relied on Naiman’s disclosure that its polymers are
drag reducing and testimony establishing that Naiman
discloses polymers that would have been soluble in
Eaton’s Bow River crude oil, a type of HAC, to find that
Naiman’s polymers would have reduced drag in HAC.
J.A. 1614 at 2:18–24; J.A. 1616 at 5:21–52; J.A. 2371–73
at ¶¶ 54–57. We hold that substantial evidence supports
this finding.
                            B.
    LSPI argues the Board’s finding that there would
have been a motivation to replace Eaton’s polymers with
Naiman’s polymers to reduce drag in Bow River crude oil
with a reasonable expectation of success is not supported
by substantial evidence. It argues Naiman’s polymers
would have poisoned the catalyst used during Eaton’s
LIQUIDPOWER SPECIALTY PRODUCTS v. BAKER HUGHES            5

polymerization process. This argument is unpersuasive
because the Board found that a person of ordinary skill in
the art would have used Naiman’s polymerization process,
not Eaton’s, to prepare the polymer. The Board relied on
the testimony of Baker Hughes’ expert, Dr. Epps, who
testified that a person of ordinary skill in the art would
have understood that Naiman’s polymerization process
was less limited and less expensive compared to Eaton’s,
would have considered Naiman’s polymers an advanta-
geous replacement, and would have expected Naiman’s
polymers to be an effective drag reducing agent in Bow
River crude oil. J.A. 1665–67 at ¶¶ 108–111; J.A. 1671 at
¶ 121. We hold that substantial evidence supports this
finding.
                            C.
    “The objective indicia of non-obviousness play an im-
portant role as a guard against the statutorily proscribed
hindsight reasoning in the obviousness analysis.” WBIP,
LLC v. Kohler Co., 829 F.3d 1317, 1328 (Fed. Cir. 2016).
As one of the four Graham factors, objective indicia must
be considered in every case where present. Arctic Cat,
876 F.3d at 1358.
    LSPI argues multiple objective indicia support nonob-
viousness, including long-felt but unsolved need, failure of
others, skepticism of experts, unexpected results, industry
praise, commercial success, copying, and acquiescence to
an injunction. The Board declined to consider LSPI’s
objective evidence because it found that LSPI did not
establish it was entitled to a presumption of nexus. The
Board’s reasoning is not entirely clear, but we need not
determine whether the presumption applies because there
was extensive direct evidence of nexus and arguments
related thereto presented by LSPI. J.A. 876–99. To the
extent that the Board made a fact finding that LSPI failed
to establish nexus for its objective evidence, we conclude
6        LIQUIDPOWER SPECIALTY PRODUCTS v. BAKER HUGHES

that this fact finding is not supported by substantial
evidence.
    For example, LSPI submitted ample support estab-
lishing nexus for its objective evidence related to the
commercial products of LSPI, Baker Hughes, and
Flowchem. For LSPI’s product ExtremePower, it submit-
ted evidence of commercial success driven by the claimed
features of the ’118 patent, including its ability to reduce
drag in HAC. J.A. 883–84; J.A. 2865–82. It also submit-
ted evidence that ExtremePower was recognized in the
industry as a pioneering technological breakthrough.
J.A. 882–83; J.A. 2864–65. There is no evidence in the
record that this commercial success or industry praise
was due to any unclaimed features of the product. LSPI
also submitted evidence detailing how its competitors
copied drag reducing agents from the ’118 patent to
develop their own products that practice the claimed
methods. J.A. 884–99; J.A. 2882–86. By tying the evi-
dence to these commercial products that are designed and
marketed to reduce drag in the flow of HAC through a
pipeline, LSPI has put forth enough evidence to establish
a nexus to the claimed invention.           J.A. 884, 896;
J.A. 2881–85.
     LSPI also submitted evidence that there was a long-
felt but unsolved need for improvements to the transpor-
tation of heavy crude oils through a pipeline. J.A. 876–79;
J.A. 2859–61. It submitted evidence that competitors
Baker Hughes and Flowchem recognized this problem but
failed to develop a drag-reducing agent that was effective
in heavy crude oils. J.A. 879–80; J.A. 2861–63. It sub-
mitted evidence that, prior to the ’118 patent, those in the
industry, including Baker Hughes, were skeptical that
heavy crude oils could be drag reduced. J.A. 880–81;
J.A. 2863–64. It submitted evidence that the ’118 patent
produced unexpected results and industry praise.
J.A. 881–82; J.A. 2864–65. Finally, it submitted evidence
that Flowchem entered into a stipulated injunction ac-
LIQUIDPOWER SPECIALTY PRODUCTS v. BAKER HUGHES          7

knowledging that claims 8–10 of the ’118 patent are valid
and enforceable. J.A. 899; J.A. 3744–51. The Board
therefore erred by failing to consider the objective evi-
dence in its obviousness determination.
   We have considered LSPI’s other arguments and find
them unpersuasive.
                      CONCLUSION
    Substantial evidence supports the Board’s findings
that the prior art discloses the drag reduction limitation
and that a person of ordinary skill in the art would have
been motivated to combine the prior art with a reasonable
expectation of success. But because substantial evidence
does not support the Board’s finding that LSPI failed to
establish nexus, the Board erred in not weighing LSPI’s
objective evidence of nonobviousness. Accordingly, we
vacate its decision and remand. On remand, it is up to
the Board to consider the amount of weight to give this
evidence.
               VACATED AND REMANDED
                         COSTS
   No costs.