IN RE: MAGNUM OIL TOOLS INTERNATIONAL, LTD., Appellant
from the United States Patent and Trademark Office, Patent
Trial and Appeal Board, in No. IPR2013-00231.
Nathaniel St. Clair, II, Jackson Walker LLP, Dallas, TX,
argued for appellant. Also represented by John Martin
Jackson, Christopher J. Rourk.
L.R. Sawert, Office of the Solicitor, United States Patent
and Trademark Office, Alexandria, VA, argued for intervenor
Michelle K. Lee. Also represented by Thomas W. Krause, Scott
Weidenfeller, Michael Sumner Forman.
Newman, O'Malley, and Chen, Circuit Judges.
O'Malley, Circuit Judge.
Energy Group, LLC filed a petition for inter partes
review ("IPR") of U.S. Patent No. 8, 079, 413 (the
"'413 patent"), owned by Magnum Oil Tools
International, Ltd. ("Magnum"). The Patent Trial
and Appeal Board ("Board") instituted review and
issued a final written decision holding all challenged claims
of the '413 patent obvious under 35 U.S.C. § 103.
Subsequently, McClinton and Magnum settled their dispute over
the '413 patent and other patents not at issue here.
Magnum now appeals the Board's judgment regarding the
'413 patent. The Director of the U.S. Patent and
Trademark Office ("PTO") intervened in the appeal
pursuant to 35 U.S.C. § 143. For the following reasons,
'413 patent is directed to technology in the field of oil
drilling through use of hydraulic fracturing, commonly known
as "fracking." Fracking is a technique used to
extract natural gas and oil from natural shale formations.
During the fracking process, a hole known as a
"wellbore" is drilled into the earth. Then, a fluid
mixture is injected down the wellbore into the shale at high
pressure to release the gas or oil.
plugs divide the wellbore into separate sections so that
different sections of the wellbore may be fracked at
different times. A setting tool is used to insert the
downhole plugs into their appropriate positions in the
wellbore. The body of the plug is then secured in place via
the radial expansion of "slips" and "malleable
elements" that contact the sidewalls of the wellbore.
The expanded plug forms an airtight barrier, blocking
movement of liquid or gas around the plug. See
'413 patent, at col. 8, l. 46–col. 9, l. 13.
setting tool can connect either to the top of the plug facing
the opening of the wellbore ("top-set"), or to the
bottom of the plug ("bottom-set"). The '413
patent teaches a bottom-set plug in which the setting tool
fits through a hollow passageway in the body of the plug and
attaches near the bottom of the plug. See id. at
col. 9, ll. 29-46. The setting tool exerts an axial force
upward on the body of the plug while a "setting
sleeve" exerts an axial force downward on the plug. The
resulting axial compression causes the plug to set in place
via radial expansion. Id.
the downhole plug is set, the setting tool must be disengaged
from the plug and extracted from the wellbore. The '413
patent at issue describes a mechanism for releasing the
setting tool from the downhole plug. Id. at col. 3,
'413 patent teaches the use of an insert having a
"lower shear or shearable mechanism" for releasing
a setting tool. '413 patent, at col. 2, ll. 54-56. The
patent teaches that the insert is placed within the plug body
and contains both shearable and nonshearable threads. The
inner threads connected to the setting tool shear when
exposed to sufficient stress, but the outer threads connected
to the plug body do not shear. The stress level required to
shear the shearable threads is lower than that required to
dislodge the plug body, so that the setting tool may be
released without dislodging the plug from its set position.
Id. at col. 2, ll. 59-63. Figure 1A of the '413
patent depicts the claimed insert:
'413 patent has twenty claims, three of which are
independent (claims 1, 7, and 17). All of the claims of the
'413 patent recite that the "shearable threads"
of the release mechanism are part of an insert that is placed
within the central bore of the plug. Claim 1 of the '413
patent is representative, and is reproduced below in its
1. A plug for isolating a wellbore, comprising:
a body having a first end and a second end;
at least one malleable element disposed about the body;
at least one slip disposed about the body;
at least one conical member disposed about the body; and
an insert screwed into an inner surface of the body
proximate the second end of the body and adapted to receive a
setting tool that enters the body through the first end
the insert comprises one or more shearable threads
disposed on an inner surface thereof;
the insert has a passageway extending therethrough;
the one or more shearable threads are adapted to engage the
setting tool; and
the one or more shearable threads are adapted to deform to
release the setting tool when exposed to a predetermined
axial force, thereby providing a flow passage through the
insert and the body.
'413 patent, at col. 13, l. 57-col. 14, l. 7 (emphasis
Overview of the Prior Art
Board instituted IPR based on the following three primary
references: U.S. Patent Application Publication No.
2007/0151722 to Lehr et al. ("Lehr"); U.S. Patent
No. 4, 437, 516 to Cockrell ("Cockrell"); and U.S.
Patent No. 4, 595, 052 to Kristiansen
("Kristiansen"). J.A. 8. In its petition for
institution, McClinton had also relied on a reference known
as the Alpha Oil Tools Catalog (1997), "Standard Frac
Plug" ("Alpha"). J.A. 136-38. Specifically,
McClinton argued that both Alpha and Lehr disclose downhole
plugs that include the standard features of a typical
downhole plug and all the limitations of claim 1 except for
(1) shearable threads on the inside of an insert that shear
in response to a predetermined axial force; and (2)
non-shearable threads on the outside of the insert that screw
into the inner surface of the plug body. Compare
J.A. 98-100 (Alpha), with J.A. 115-18 (Lehr).
Board declined to institute IPR based on Alpha, instead
instituting IPR based on the primary reference Lehr in view
of Cockrell and Kristiansen. Alpha is nonetheless relevant to
this appeal because Magnum focuses its arguments on