[00:00:02] Speaker 05:
The first case for argument this morning is 172126, seed drill, Americas versus Trans-Ocean.

[00:00:18] Speaker 00:
Mr. Reed.

[00:00:19] Speaker 00:
May it please afford.

[00:00:21] Speaker 00:
I'd like to begin by addressing the board's findings on anticipation in this case.

[00:00:28] Speaker 00:
The board's finding

[00:00:29] Speaker 00:
that the Lund structure, if it were located within 20 meters of the seabed, could reach the seabed is, in fact, a finding of anticipation in this case.

[00:00:39] Speaker 00:
It is.

[00:00:40] Speaker 00:
Because these are apparatus claims.

[00:00:43] Speaker 00:
Where we think the board went wrong was its continued analysis where it faulted Lund and found it deficient because Lund didn't have an expressed disclosure of reaching the seabed with the second hoist.

[00:00:57] Speaker 00:
Or they didn't have, in the board's words, a scenario where it could be reached.

[00:01:01] Speaker 02:
Did you ever present evidence that the Lund patent can operate on a dual ship that's within 20 meters of a seabed?

[00:01:08] Speaker 02:
You made arguments about implicit disclosure.

[00:01:11] Speaker 02:
Did you ever present evidence, specific evidence of that?

[00:01:15] Speaker 00:
We presented evidence of that.

[00:01:16] Speaker 00:
We had testimony from Robert Schaff, and I believe that's mentioned in the reply brief, that you could reach the seabed.

[00:01:24] Speaker 00:
He testified, for one thing, that he had been on ships that the drilling deck was located within 20 meters of the seabed.

[00:01:34] Speaker 05:
Well, so you put over evidence the board found your evidence was insufficient.

[00:01:39] Speaker 00:
It did.

[00:01:40] Speaker 00:
And it did because it found that there really wasn't a teaching that you could lower the tubulars to the seabed from the second drilling hoist of Lund.

[00:01:50] Speaker 00:
And the error in that is,

[00:01:52] Speaker 00:
that it doesn't matter.

[00:01:53] Speaker 00:
The LUN structure, the board found that the LUN structure, if you located it within 20 meters of the seabed, could reach the seabed, and that's sufficient for anticipation under the in-ray Schreiber rule.

[00:02:05] Speaker 00:
So even if LUN doesn't say locate this within 20 meters of the seabed, you know, it still anticipates because it's a claimed use.

[00:02:13] Speaker 00:
Just like in in-ray Schreiber, the popcorn container lid that was issued there, you know, the prior art showed it on an oil can,

[00:02:21] Speaker 00:
There was no mention in the prior art that, hey, you could also use this.

[00:02:24] Speaker 01:
How do we know that Lund was ever used in these shallower waters within the 20 meters?

[00:02:31] Speaker 00:
Your Honor, I don't believe that.

[00:02:32] Speaker 01:
I mean, this is anticipation.

[00:02:35] Speaker 01:
It's a factual finding about what the reference discloses.

[00:02:38] Speaker 01:
And the boards read it one way.

[00:02:40] Speaker 01:
You want to read it the other way.

[00:02:42] Speaker 01:
But it seems just as likely, or maybe not just as likely, but possible that Lund

[00:02:47] Speaker 01:
was never used in shallow waters within 20 meters.

[00:02:51] Speaker 01:
And if that's the case, then it wouldn't anticipate, right?

[00:02:54] Speaker 00:
Well, I would disagree with that, Your Honor.

[00:02:55] Speaker 00:
I mean, it's not the point that one ever had to have been used in 20.

[00:02:59] Speaker 00:
Maybe it was never used in 20 meters of water.

[00:03:02] Speaker 00:
The point is it was capable of being used within 20 meters of water.

[00:03:07] Speaker 00:
So just like in Ray Shriver.

[00:03:09] Speaker 01:
That doesn't sound like enough to me to show that it actually disclosed this element.

[00:03:17] Speaker 00:
The claimed element here is a derricks with a first draw works, second draw works, and a transfer mechanism.

[00:03:24] Speaker 01:
That structure is disclosed.

[00:03:25] Speaker 01:
That can go to the seabed.

[00:03:26] Speaker 01:
I understand you don't want us to find that the seabed is kind of having any patentable weight.

[00:03:32] Speaker 01:
But if we disagree with you on that, then Lund has to explicitly show that it could go to the seabed, or it has to be inherent in Lund.

[00:03:42] Speaker 01:
And it doesn't explicitly show that.

[00:03:45] Speaker 01:
I think you agree with that.

[00:03:46] Speaker 01:
And I think your argument is that it has to inherently do that if it's placed within 20 meters.

[00:03:53] Speaker 01:
But we don't ever know if it could be placed within 20 meters.

[00:03:58] Speaker 00:
It has to be inherently capable of doing that.

[00:04:02] Speaker 00:
And there's no reason why the lunge structure couldn't be placed within 20 meters.

[00:04:07] Speaker 00:
That was never challenged that for some strange reason you couldn't mount it.

[00:04:11] Speaker 00:
20 meters from the seabed.

[00:04:13] Speaker 00:
The board in this case found that if Lund were placed within 20 meters, it could reach the seabed with a second hoist.

[00:04:20] Speaker 00:
And that should be sufficient, because it goes to capability.

[00:04:27] Speaker 00:
It doesn't have to disclose it directly.

[00:04:29] Speaker 00:
If it were a method, if these were method claims, and they said a method for lowering tubulars to the seabed, and Lund shows what it shows using the second hoist to connect

[00:04:40] Speaker 00:
strings of tubulars together.

[00:04:42] Speaker 00:
It could be that you could perform that method without ever going to the seabed.

[00:04:46] Speaker 00:
And so if it was a claimed method to go into the seabed, we would probably agree with the board's analysis.

[00:04:53] Speaker 00:
But here, there's no doubt.

[00:04:54] Speaker 00:
This can go 20 meters below the deck.

[00:04:59] Speaker 00:
If it were 20 meters from the seabed, it could reach the seabed.

[00:05:03] Speaker 00:
It doesn't matter whether it was ever actually done.

[00:05:05] Speaker 00:
That's the lesson from Henry Schreiber.

[00:05:08] Speaker 02:
On looking at 24 of your blue brief, and you say that the patents in suit must anticipate under the rule that that which infringes if it's later would anticipate if it's earlier, did anyone ever argue that a device using the one prior patent would infringe?

[00:05:31] Speaker 00:
Would it infringe?

[00:05:32] Speaker 00:
Yeah.

[00:05:33] Speaker 00:
I don't know that we ever argued that it would infringe, Your Honor.

[00:05:37] Speaker 00:
Would it be impossible?

[00:05:39] Speaker 00:
It would be possible to infringe, yes.

[00:05:41] Speaker 02:
Well, but there's no dispute Lund issued before the patents in suit, right?

[00:05:46] Speaker 02:
Right.

[00:05:47] Speaker 02:
So it couldn't possibly infringe.

[00:05:50] Speaker 00:
Well, it would anticipate.

[00:05:53] Speaker 00:
So like I said, we think everything is answered in the in-ray Shriver case.

[00:06:02] Speaker 00:
We do.

[00:06:03] Speaker 00:
We don't think that Lund has to actually say go to the seabed.

[00:06:06] Speaker 00:
It just has to show something that's capable of it.

[00:06:08] Speaker 00:
And it would be capable within 20 meters.

[00:06:14] Speaker 00:
So with that, let me turn.

[00:06:16] Speaker 00:
Are there any further questions on anticipation?

[00:06:20] Speaker 00:
We just think that the court kind of confused a method claim versus an apparatus claim when it analyzed this.

[00:06:29] Speaker 00:
Onto obviousness.

[00:06:34] Speaker 02:
In this case, there's no doubt that... Transocean presents a list of additional, since we're going to obviousness, a list of additional evidence it presented in this case that wasn't present in the other Transocean case discussing secondary considerations.

[00:06:53] Speaker 02:
That's at 26 of the Red Brief.

[00:06:56] Speaker 02:
Do you contest that the PTAB in this case considered not only the prior Transocean evidence,

[00:07:03] Speaker 02:
also this additional evidence in making its determination?

[00:07:06] Speaker 00:
In making its determination?

[00:07:08] Speaker 00:
Uh-huh.

[00:07:08] Speaker 00:
It wasn't very clear from what the, in my read of the PTAB's decision, whether they considered it or gave it a great deal of weight.

[00:07:18] Speaker 00:
That evidence was sort of presented just as is.

[00:07:21] Speaker 00:
There was no expert testimony.

[00:07:23] Speaker 00:
There was no sponsoring witness.

[00:07:24] Speaker 00:
It was nothing like that.

[00:07:25] Speaker 00:
It was just simply a list of documents that were provided by Transocean.

[00:07:30] Speaker 00:
The PTAB's decision focused on certain documents that I guess it found more relevant than others.

[00:07:37] Speaker 00:
As to that list of documents that you're referring to, I really don't know exactly what the PTAB did with it unless they discussed it, expressing their opinion.

[00:07:47] Speaker 02:
Are there any SAS issues in this?

[00:07:50] Speaker 00:
SAS, I'm sorry.

[00:07:51] Speaker 02:
The Supreme Court's SAS Institute regarding potentially uninstituted claims or grounds.

[00:08:00] Speaker 00:
I don't believe so, Your Honor.

[00:08:08] Speaker 00:
All the grounds that we wanted instituted were, in fact, instituted.

[00:08:13] Speaker 00:
So as to obviousness, Seedral believes that the evidence of obviousness is just overwhelming here, and it can't be outweighed by any amount of secondary considerations in this case.

[00:08:25] Speaker 00:
I mean, it's not really in dispute that these were all familiar elements.

[00:08:30] Speaker 00:
that they're assembled in known methods, that they are used.

[00:08:34] Speaker 04:
Well, how does this differ from Transocean 2, then?

[00:08:37] Speaker 00:
It differs greatly from Transocean 2.

[00:08:39] Speaker 04:
In terms of the prima facie case of obviousness?

[00:08:43] Speaker 04:
The secondary considerations are even arguably stronger here.

[00:08:47] Speaker 04:
They're not weaker here than they were in Transocean 2.

[00:08:50] Speaker 00:
No, I disagree with that.

[00:08:51] Speaker 00:
I think they're much weaker here than they were in Transocean 2.

[00:08:54] Speaker 00:
Much weaker.

[00:08:54] Speaker 00:
Because?

[00:08:55] Speaker 00:
Well, for one thing, in Transocean 2,

[00:08:59] Speaker 00:
they presented the patentee, the plaintiff, presented seven categories of secondary considerations.

[00:09:08] Speaker 00:
In this case, they presented many of the same categories.

[00:09:11] Speaker 00:
But here, they were rejected.

[00:09:13] Speaker 00:
And probably the biggest one is their expert witnesses.

[00:09:17] Speaker 00:
In TransOcean 2, the jury heard from two expert witnesses dealing with commercial success on things like increased day rates and things like this.

[00:09:26] Speaker 00:
All of that evidence was rejected

[00:09:29] Speaker 00:
when it was submitted here.

[00:09:30] Speaker 00:
In this case, the board specifically found that TransOcean's evidence, that their experts were not credible, that they were contradicted by the evidence available, and that their analysis was flawed.

[00:09:45] Speaker 00:
It wasn't even considered here.

[00:09:47] Speaker 00:
So you can take that whole section of commercial success that was present in the TransOcean 2 case, and it's gone.

[00:09:54] Speaker 00:
Do you contest?

[00:09:55] Speaker 02:
My regulation is that

[00:09:59] Speaker 02:
the competitors in the field said initially, this won't work, and effectively ridiculed it, and eventually said, in some fashion, we need to adopt this.

[00:10:15] Speaker 02:
Is that a fair summary?

[00:10:16] Speaker 00:
I do not believe that's a fair summary, John.

[00:10:19] Speaker 00:
I think that what happened here was, if you look at the evidence for what you're suggesting, whether there was industry skepticism,

[00:10:28] Speaker 02:
Here, there was no- I'm looking at JA 129 and 30 specifically.

[00:10:37] Speaker 00:
I don't have that in front of me, Your Honor.

[00:10:40] Speaker 00:
What specific are you referring to?

[00:10:57] Speaker 00:
Well, in any event, while I'm waiting for this, the board in this case specifically found that- I'm sorry, 6129.

[00:11:08] Speaker 02:
6129.

[00:11:10] Speaker 00:
That's a JA?

[00:11:12] Speaker 00:
That's the appendix site?

[00:11:13] Speaker 00:
Yes, sir.

[00:11:14] Speaker 00:
What I have is the appendix site.

[00:11:25] Speaker 00:
So you're citing to the board's

[00:11:27] Speaker 00:
The board's decision?

[00:11:29] Speaker 02:
I'm signing to an article which begins, dual activity drilling turns in 20 to 40 percent time saving.

[00:11:37] Speaker 01:
6129 in the appendix.

[00:11:39] Speaker 00:
Okay.

[00:11:40] Speaker 00:
6129.

[00:11:41] Speaker 00:
I don't have that right in front of me.

[00:11:43] Speaker 01:
You didn't bring the joint appendix with you?

[00:11:45] Speaker 00:
I brought it on a laptop, your honor, and I don't have it instantly available.

[00:11:49] Speaker 00:
So my apologies for that.

[00:11:50] Speaker 01:
Have you ever heard of the red bird with you when you don't have a copy of the joint appendix in front of you?

[00:11:55] Speaker 00:
You know, Your Honor, that's a good point, and the next time I will make sure that I have an appendix.

[00:11:59] Speaker 00:
But I do know what you're talking about.

[00:12:03] Speaker 00:
And the problem with efficiency arguments in this case is that there was no expert testimony to put them in any kind of context.

[00:12:12] Speaker 00:
As we pointed out, when the board rejected the expert testimony in here, you can analogize the findings on efficiency to the findings on, say,

[00:12:25] Speaker 00:
uh... market share you know there's the to just simply say that you have five million sales doesn't say anything for secondary consideration purposes there's case law that we cited in our brief that in order to have it you've got to make sure that it's in context five million sales by itself doesn't mean anything unless you place it in the context of market share unless you place it in the context of you know uh... increase sales unless you place it in the context of like this do you deny that

[00:12:55] Speaker 02:
that rig designs previously that claimed dual drilling capabilities without the pipe transfer ability in deep water drilling were either never built or didn't achieve commercial success?

[00:13:17] Speaker 00:
We don't have any evidence that they were built with the pipe transfer

[00:13:23] Speaker 00:
mechanism.

[00:13:24] Speaker 00:
There were certainly dual rig designs.

[00:13:27] Speaker 00:
And we believe that they must have had some way of transferring pipes, of course.

[00:13:32] Speaker 00:
But whether they were commercially successful or not, we think that they were successful.

[00:13:38] Speaker 00:
For example, we presented evidence in here of the Chevron S-59 rig.

[00:13:42] Speaker 00:
That was an actual rig that was used in the industry.

[00:13:47] Speaker 00:
And it goes back to the 1960s, and it had the dual drilling capability.

[00:13:53] Speaker 00:
It doesn't specifically show in the reference that we have that it had the pipe transfer means.

[00:13:58] Speaker 00:
But there's no reason to think an actual rig that was existing and in use from the 1960s was not commercially successful.

[00:14:08] Speaker 00:
We don't think the board had sufficient evidence in front of it to make findings as to the commercial success of these rigs, and they existed.

[00:14:17] Speaker 04:
OK, you're well into your rebuttal, so why don't we hear from the other side?

[00:14:20] Speaker 00:
Then at this point, I'll sit down.

[00:14:22] Speaker 00:
Thank you.

[00:14:38] Speaker 03:
May it please the court.

[00:14:41] Speaker 02:
Do you agree with the PTAB and the C-drill that claim 30 of 781 is representative?

[00:14:49] Speaker 03:
Yes, for most of the issues before the court today.

[00:14:52] Speaker 02:
Do you agree that London and Horn together teach all the elements of the patent ensued and then a motivation to combine exist?

[00:15:02] Speaker 03:
Personally, no.

[00:15:02] Speaker 03:
But for the purposes of this appeal today, that is assumed.

[00:15:08] Speaker 02:
OK.

[00:15:08] Speaker 02:
Seagrill argues in the reply brief that your expert testified at JA 8354 that he had been on rigs that had 30 to 40 feet between the seabed and the drill floor.

[00:15:22] Speaker 02:
And that's sufficient to find Lund's tubular members would reach the seabed floor.

[00:15:30] Speaker 02:
What's your response to that?

[00:15:32] Speaker 03:
First, as pointed out by Council, it was raised first time in the reply brief, not in the opening brief, and so it should be considered waived.

[00:15:39] Speaker 03:
If considered, that description never ties the 30 to 40 feet to any particular type of rig, much less the rig in Lund.

[00:15:48] Speaker 03:
The evidence of the rig in Lund is it is consistent with the type of operation that would have a drill floor suspended above another level of equipment where the wellhead and other equipment would be, and then suspended above the sea by an air gap.

[00:16:02] Speaker 03:
There is no testimony or evidence of in the Lund situation of what that distance would be if it would ever be within the capabilities of a light Lund preparation voice.

[00:16:13] Speaker 02:
Do you have a case site that lets us rely on secondary considerations in prior cases like TransOcean 2?

[00:16:23] Speaker 02:
Save me some work.

[00:16:24] Speaker 03:
There is a general principle.

[00:16:26] Speaker 03:
starry decisis.

[00:16:27] Speaker 02:
I understand, but do you have a case side for me?

[00:16:29] Speaker 03:
No, other than what we put in the briefs related to the general concept, but no to the specific facts in this case, we do not have a spot-on decision.

[00:16:40] Speaker 03:
But the general concept is the same in that here we have essentially the same patents, same prior combinations, and we have the same record.

[00:16:50] Speaker 03:
We have the same subset of record that was considered in the first transaction.

[00:16:54] Speaker 02:
Is there any evidence on record on

[00:16:56] Speaker 02:
how far your patent's tubular string can be lowered below the, beyond the 20 meters, claimed in Lund?

[00:17:06] Speaker 02:
In Lund?

[00:17:07] Speaker 03:
Yeah.

[00:17:08] Speaker 02:
Beyond that.

[00:17:09] Speaker 03:
Beyond that.

[00:17:09] Speaker 03:
There is none within Lund.

[00:17:11] Speaker 03:
Lund itself... No, no.

[00:17:13] Speaker 02:
Is there any record on how far your patent's tubular strings can be lowered beyond that 20?

[00:17:21] Speaker 03:
There is discussion generally that these are operating in offshore, which means typically in offshore, if you have something that is used with drilling, it not only needs to go through that air gap and through the waters, which are usually hundreds or thousands of feet, but then it goes into the well itself and typically go down thousands of feet into the earth.

[00:17:45] Speaker 03:
And so the capabilities between a drilling draw works and a preparation hoist

[00:17:51] Speaker 03:
are known in the industry.

[00:17:52] Speaker 03:
It was the reason why Lund described the two differently and differenced by capabilities.

[00:17:58] Speaker 03:
And even when you look at the drawings in Lund, the drilling draw works is much larger than the draw works used for the preparation hoist, a structural difference.

[00:18:07] Speaker 02:
In the red brief, you say the PTAB improperly relied on certain evidence because the exhibits weren't properly

[00:18:19] Speaker 02:
explained in proper detail by C. Drill.

[00:18:22] Speaker 02:
Give me a little bit more on that argument.

[00:18:25] Speaker 02:
Are you arguing harmless error because you're not cross-appealing the PTAB's decision or what?

[00:18:34] Speaker 03:
The PTAB went against its own rules in relying on evidence that was not fully described.

[00:18:41] Speaker 03:
In this situation, it's not necessary for this court to reach a conclusion one way or the other on that issue.

[00:18:48] Speaker 03:
to affirm the decision below.

[00:18:50] Speaker 03:
To affirm the decision, the court is able to look at the entire record.

[00:18:55] Speaker 03:
And that's one thing that CDREL would have this court focus on, just the facts that were found by the board as supporting non-obviousness.

[00:19:04] Speaker 03:
But in a review for substantial evidence, this court is empowered to canvas the entire record, including all of the facts that were either discounted or ignored by the board in this decision.

[00:19:19] Speaker 05:
What about N-ray Schreiber?

[00:19:21] Speaker 05:
You argue, I assume, that it is distinguishable from the case here.

[00:19:26] Speaker 03:
Correct.

[00:19:27] Speaker 05:
Also.

[00:19:28] Speaker 03:
So N-ray Schreiber is used to say that it's an intended use that it's capable of.

[00:19:38] Speaker 03:
The difference is that, well, first, Schreiber with respect to intended use and capability, usually intended use is directed towards the

[00:19:49] Speaker 03:
invention as a whole, not necessarily an element that we're focused on here in a combination.

[00:19:55] Speaker 03:
The question is really is whether to the seabed is a functional limitation of structure.

[00:20:00] Speaker 03:
And many of the claims here, and this gets to the difference between which claims are representative, many of the claims here are means plus function, which statutorily, the to the seabed is a functional limitation that will be used to define the structure.

[00:20:13] Speaker 03:
And the other term, advancing tubulars, tubular advancing station,

[00:20:18] Speaker 03:
board specifically construed that as equipment capable of going to the seabed.

[00:20:23] Speaker 03:
So again, it is a functional limitation that will help define the structure.

[00:20:28] Speaker 03:
That is one of the differences between that and TRIBOR.

[00:20:31] Speaker 03:
Another difference is another factual issue that this board may rely on and was used by the board to distinguish LUND from the present invention.

[00:20:41] Speaker 03:
And that is the intervening structure, a point that's hardly raised, hardly mentioned in the briefing.

[00:20:46] Speaker 03:
by seed drill and wasn't addressed here today.

[00:20:50] Speaker 03:
As evidence was presented by TransOcean's expert and its references, Lund describes having structure that may prevent it from even going 20 meters.

[00:20:59] Speaker 03:
That structure is the wellhead and equipment that sits on a platform.

[00:21:03] Speaker 04:
Does the board rely on that fact?

[00:21:04] Speaker 03:
It did.

[00:21:05] Speaker 03:
Do you know where?

[00:21:07] Speaker 03:
It does so.

[00:21:20] Speaker 03:
In its very first analysis on page 26 and 27, it goes through and talks about how Patna provided evidence regarding structures that are above the water that would prevent it from going down to the water, much less the seabed.

[00:21:43] Speaker 03:
And based upon that, it found that one was describing interference with structures above the waterline.

[00:21:49] Speaker 03:
or on the rig itself.

[00:21:53] Speaker 05:
So this isn't an inherently case, it's a failure to prove case, right?

[00:22:00] Speaker 03:
Well, this is an inherently case, but it is incumbent upon Sea Drill to be able to prove, to convince the board, that the preparation hoist in Lund would necessarily reach the sea bed in its normal operations.

[00:22:15] Speaker 03:
In its normal operations, as described in Lund,

[00:22:17] Speaker 03:
and supported by the testimony of TransOcean's expert, there would be intervening structure that would prevent it from reaching the water, much less the seabed.

[00:22:27] Speaker 03:
CEDRIL has never explained how that intervening structure would be avoided, and hasn't provided any examples or evidence to that.

[00:22:37] Speaker 03:
So the board was left with the only evidence before it of intervening structure that would prevent it from going to the seabed, which prevents

[00:22:47] Speaker 03:
procedural for meeting its burden of showing that it necessarily goes to the C-bit in its normal operation.

[00:22:55] Speaker 01:
Can I take you back to obviousness?

[00:22:57] Speaker 03:
Yes.

[00:22:57] Speaker 01:
I mean, I know we affirmed a finding of no invalidity in transition two, but that's a different standard, right?

[00:23:05] Speaker 01:
I mean, in there, they had to meet a clear and convincing standard.

[00:23:08] Speaker 01:
Here, we're just on a preponderance standard, so it should be easier to show obviousness.

[00:23:13] Speaker 01:
Why can't, even if we accept your secondary consideration,

[00:23:16] Speaker 01:
we find that this is just obvious as a matter of law, because these are really two very close, strong references that disclose every single thing.

[00:23:26] Speaker 01:
It's not a five or six reference case.

[00:23:28] Speaker 01:
You don't need to come up with ordinary creativity to combine them or reach out to things.

[00:23:34] Speaker 01:
Everything is in them, and they're from the same exact sphere.

[00:23:38] Speaker 01:
Why doesn't that meet a preponderant standard of showing invalidity here?

[00:23:43] Speaker 03:
Certainly.

[00:23:45] Speaker 03:
Burden of proof does not affect this court's review for substantial evidence.

[00:23:51] Speaker 01:
Sure, but obviousness is ultimately a question of law.

[00:23:54] Speaker 01:
Correct.

[00:23:55] Speaker 01:
So we get to review that de novo.

[00:23:57] Speaker 01:
And that's what I mean.

[00:23:59] Speaker 01:
We don't have to upset the board's findings of commercial success and the like.

[00:24:05] Speaker 01:
We can accept them.

[00:24:06] Speaker 01:
But we can still determine that this is such a strong, prima facie case of obviousness that

[00:24:13] Speaker 01:
even accepting this secondary evidence doesn't overcome it.

[00:24:18] Speaker 01:
Given the strength of these references and the minimal advance over the prior art made by this patent, why isn't it just obvious?

[00:24:28] Speaker 03:
Chair, addressing that final issue, there is, within the court's finding of objective evidence of non-obviousness, a weighting factor that the weight of that

[00:24:42] Speaker 03:
is stronger than the weight of the prima facie case.

[00:24:46] Speaker 03:
And so that is an issue that the court looks at for substantial evidence to support.

[00:24:52] Speaker 03:
And the burdens of proof do not affect it.

[00:24:53] Speaker 01:
Well, I'm not so sure that I agree with that.

[00:24:55] Speaker 01:
I mean, I think you're suggesting that we can't overturn that unless we find a lack of substantial evidence.

[00:25:02] Speaker 01:
But we clearly can accept commercial success and still find, just as a matter of law,

[00:25:09] Speaker 01:
a skilled artist would have found this obvious based upon the references alone.

[00:25:16] Speaker 01:
It could be so obvious that you could have made hundreds of millions of dollars, which clearly isn't in the record, but still the advance was so minimal that it would have been obvious at the time.

[00:25:29] Speaker 01:
We can do that, right?

[00:25:33] Speaker 03:
Not in this case.

[00:25:35] Speaker 01:
Why not?

[00:25:35] Speaker 03:
There is evidence of almost a hundred million dollars

[00:25:39] Speaker 03:
in royalties collected on licensing of this invention.

[00:25:43] Speaker 03:
There is evidence.

[00:25:45] Speaker 01:
Where is that?

[00:25:45] Speaker 01:
I mean, the board didn't seem to rely on that in its commercial success analysis.

[00:25:51] Speaker 03:
That is for the licensing aspect, which the board discounted because it felt that the litigation tainted it.

[00:25:58] Speaker 01:
Well, if the board didn't think the evidence is reliable, certainly we're not going to rely on it, or I'm not going to rely on it.

[00:26:06] Speaker 01:
In this case, you're able to.

[00:26:08] Speaker 01:
Well, you're arguing to me.

[00:26:10] Speaker 01:
But again, you're not addressing the premise of my question, which is I accept the board's findings on commercial success.

[00:26:17] Speaker 01:
You can amplify them.

[00:26:18] Speaker 01:
I don't think they're particularly strong findings.

[00:26:20] Speaker 01:
I don't think there's particularly strong evidence of commercial success.

[00:26:24] Speaker 01:
But set that aside.

[00:26:26] Speaker 01:
Assume it's the best commercial success, best secondary considerations we've ever seen.

[00:26:33] Speaker 01:
Even if that's true, if the references, the two references are so close and the advance over the prior art is so minimal, why wouldn't we still find it obvious?

[00:26:46] Speaker 03:
That's why we have secondary considerations because hindsight.

[00:26:51] Speaker 01:
So you're basically telling me any time a fact finder makes a finding of non-obviousness based on secondary considerations,

[00:27:00] Speaker 01:
we can't disregard, not disregard, but we can't say, despite that, it's still obvious as a matter of law.

[00:27:07] Speaker 03:
Under a substantial review, if they meet a threshold level, if they meet a threshold level of a nexus to the invention, and they show that the industry, as the board found here, move the industry.

[00:27:18] Speaker 01:
So your position is, let me just make sure I'm clear, is if there's a finding of secondary considerations, there's a nexus in all that, the trial quarter, the fact finder makes that finding,

[00:27:30] Speaker 01:
that we're prevented, as an appellate court, on a legal issue that's entirely de novo from deciding it's obvious as a matter of law.

[00:27:37] Speaker 02:
And are you conceding obviousness?

[00:27:40] Speaker 03:
I'm not.

[00:27:42] Speaker 03:
In that conceding, the prima facie case is strong.

[00:27:45] Speaker 03:
And that's not an argument that's been made by Cedro.

[00:27:48] Speaker 03:
Well, it has been shown by Cedro here.

[00:27:50] Speaker 03:
There were arguments below to indicate that why it wasn't strong.

[00:27:54] Speaker 05:
But wait, we kind of slid through this in your discussions with Judge Hughes.

[00:27:58] Speaker 05:
But did you say that the weighing of the prime official case in secondary considerations, that that's a question of fact rather than a question of law?

[00:28:07] Speaker 05:
And if so, do you have any case to support that conclusion?

[00:28:11] Speaker 03:
In the Samsung v. Apple case, there is implicit within there that there is the weight of the evidence is generally considered a fact issue.

[00:28:24] Speaker 03:
And it is difficult to disturb.

[00:28:26] Speaker 05:
I don't recall what you're referring to, but you just started by saying implicit.

[00:28:31] Speaker 05:
So does that mean that they said it's a question of fact, or that they did not say it's a question of fact?

[00:28:39] Speaker 03:
I do not recall the specific language.

[00:28:42] Speaker 03:
But in that case, similar to this, where you have fact findings that have to be assumed from the decision below,

[00:28:52] Speaker 03:
it makes it very difficult to overturn it as a matter of law.

[00:28:57] Speaker 03:
There may be the case, but this is not the case.

[00:29:00] Speaker 03:
It certainly is the case, is much easier to do when there are not as many or as significant of secondary considerations in the case.

[00:29:09] Speaker 03:
But in a case like this, as in the TransOcean 2 case noted, it's very rare that we have a record with this extensive

[00:29:19] Speaker 03:
evidence of non-obviousness.

[00:29:21] Speaker 01:
Well, the record's a little different, though.

[00:29:22] Speaker 01:
The board threw out most of the evidence that you relied on in transactions, too.

[00:29:26] Speaker 03:
In reviewing an agency decision, you look at not only the facts relied on by the board, but the entire record.

[00:29:35] Speaker 03:
So the record before this court includes those facts that the board ignored.

[00:29:40] Speaker 01:
You have to convince us that the board was incorrect in throwing it out, though.

[00:29:45] Speaker 03:
No, when looking for substantial evidence.

[00:29:48] Speaker 05:
We can rely on evidence that's not in the record that wasn't allowed in the record?

[00:29:54] Speaker 03:
It was in the record.

[00:29:55] Speaker 03:
It was presented to the board.

[00:29:57] Speaker 04:
And the board didn't rely on it?

[00:29:59] Speaker 03:
And we have cited it.

[00:30:01] Speaker 03:
Yes, and we have cited it here.

[00:30:02] Speaker 03:
There was other things that we did not cite, but we cited a number of things in our record that were not specifically addressed or relied upon by the board.

[00:30:12] Speaker 03:
And that provides additional evidence this board can rely upon.

[00:30:17] Speaker 03:
Granted, the evidence that was cited by the board is more than enough to affirm the decision.

[00:30:22] Speaker 03:
We have competitors' internal memos that are praising either the tying it directly to the patents or the commercial embodiment with the dual activity feature that the record indicates is shorthand, at least in the context of these memos, to the invention itself, praising it

[00:30:41] Speaker 03:
giving it value, indicating it's a must-have feature that must be incorporated because of customer demand.

[00:30:48] Speaker 03:
That is the essence of objective evidence of non-obviousness.

[00:30:53] Speaker 03:
And based upon that... Time?

[00:30:57] Speaker 03:
Yes.

[00:30:57] Speaker 05:
Final thought?

[00:30:59] Speaker 03:
No, that's my final thought.

[00:31:00] Speaker 05:
Thank you.

[00:31:00] Speaker 03:
Thank you.

[00:31:14] Speaker 00:
May it please the Court?

[00:31:18] Speaker 00:
I just have a couple of responses to that.

[00:31:21] Speaker 00:
On the issue of whether you could reach the seabed from Lund, we think that it's pretty clear.

[00:31:29] Speaker 00:
The argument here that to the seabed function is purely functional.

[00:31:35] Speaker 00:
It doesn't change the structure of the draw works first.

[00:31:38] Speaker 00:
And as counsel pointed out, that, yeah, some of these claims are in means plus function format.

[00:31:44] Speaker 00:
And in means plus function format, the means is still claiming a structure.

[00:31:48] Speaker 00:
And what the court, what the board found was that that structure was a draw works.

[00:31:54] Speaker 00:
Simply put, a draw works.

[00:31:56] Speaker 00:
And that claim construction is not on challenge in this appeal.

[00:32:00] Speaker 00:
The second preparation of waste, which is what it's called in Lund, has a draw works.

[00:32:05] Speaker 00:
So a draw works is a draw works.

[00:32:07] Speaker 00:
That's an anticipatory structure.

[00:32:10] Speaker 00:
So even if we give weight to the seabed stuff, if you put that structure within 20 meters of the seabed, then you could reach the seabed.

[00:32:20] Speaker 00:
Arguments about things like air gaps, there's no air gaps in the claims.

[00:32:25] Speaker 00:
Council said you have to look at the claim as a whole, the invention as a whole.

[00:32:28] Speaker 00:
Well, the invention as a whole is essentially a derrick, a first draw works, a second draw works, a transfer means arranged on a drill floor.

[00:32:37] Speaker 00:
That's the invention as a whole.

[00:32:39] Speaker 00:
That invention as a whole is described in Lund, and you could certainly locate it in a location where it could reach the seabed.

[00:32:47] Speaker 00:
So I think that argument that has to be a bigger draw works.

[00:32:52] Speaker 00:
I mean, how much bigger would it have to be?

[00:32:54] Speaker 00:
I think all those arguments really just don't comport with the record here.

[00:33:02] Speaker 00:
As far as the normal operations, the normal operations of Lund is to raise and lower

[00:33:07] Speaker 00:
a series of pipes with the draw works.

[00:33:10] Speaker 00:
That's the normal operation.

[00:33:12] Speaker 00:
So in 20 meters of water under its normal operation, it could go to the seabed.

[00:33:17] Speaker 00:
It's to say that, well, it's going to hit something, or there's going to be something in the way.

[00:33:22] Speaker 00:
That's not part of the normal operations described in one.

[00:33:25] Speaker 00:
So it appears I'm out of time.

[00:33:28] Speaker 05:
So if there's any questions.

[00:33:29] Speaker 05:
Thank you.

[00:33:29] Speaker 05:
Thank both sides and the case is submitted.