Magseis Ff LLC v. Seabed Geosolutions (Us) Inc.

Case: 20-1346 Document: 70 Page: 1 Filed: 07/29/2021

NOTE: This disposition is nonprecedential.

United States Court of Appeals for the Federal Circuit ______________________

MAGSEIS FF LLC, Appellant

v.

SEABED GEOSOLUTIONS (US) INC., Appellee

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 ______________________

2020-1346, 2020-1348 ______________________

Appeals from the United States Patent and Trademark Office, Patent Trial and Appeal Board in Nos. IPR2018- 00961, IPR2018-00962. ______________________

Decided: July 29, 2021 ______________________

JEFFREY COSTAKOS, Foley & Lardner LLP, Milwaukee, WI, for appellant. Also represented by RUBEN JOSE

Case: 20-1346 Document: 70 Page: 2 Filed: 07/29/2021 2 MAGSEIS FF LLC v. SEABED GEOSOLUTIONS (US) INC. RODRIGUES, Boston, MA.

JOHN R. LANE, Fish & Richardson P.C., Houston, TX, for appellee. Also represented by DANIELLE J. HEALEY, BRIAN GREGORY STRAND.

ROBERT MCBRIDE, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, for interve- nor. Also represented by THOMAS W. KRAUSE, WILLIAM LAMARCA, FARHEENA YASMEEN RASHEED. ______________________

Before MOORE, Chief Judge, LINN and CHEN, Circuit Judges. MOORE, Chief Judge. Magseis FF LLC appeals two final written decisions of the Patent Trial and Appeal Board holding that certain claims of U.S. Patent Nos. 8,228,761 and 8,879,362 would have been obvious. Seabed Geosolutions (US), Inc. v. Magseis FF LLC, No. IPR2018-00961, 2019 WL 5777754 (P.T.A.B. Nov. 5, 2019) (Board Decision); Seabed Geosolu- tions (US), Inc. v. Magseis FF LLC, No. IPR2018-00962, 2019 WL 5802500 (P.T.A.B. Nov. 6, 2019). Because sub- stantial evidence supports the Board’s fact findings, we af- firm. BACKGROUND The ’761 and ’362 patents are directed to an ocean bot- tom seismometer (OBS) for use in seismic exploration. ’761 patent at Abstract. 1 Seismic exploration generally involves sending an acoustic signal into the earth and using seismic receivers called geophones to detect “seismic reflections” from subsurface structures. Id. at 1:12–23, 32–37. The

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patents describe an OBS that is “self[-]contained such that all of the electronics are disposed within the case, including a multi-directional geophone package, a seismic data re- cording device, a power source and a clock.” Id. at 10:35– 38. The patents further describe the case as “disk-shaped,” i.e., “symmetrical about the [vertical] axis” and having “a very low height profile.” Id. at 10:4–9. Figures 1 and 2 below illustrate this shape:

Each independent claim of the ’761 and ’362 patents requires a “disk-shaped case” containing all components of an OBS. Claim 1 of the ’761 patent, for example, recites:

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¹. An ocean bottom seismic data collection system comprising: a. a disk-shaped case; b. at least one geophone disposed within said case; c. a clock disposed within said case; d. a power source disposed within said case; and e. a seismic data recorder disposed within said case. Magseis’ predecessor 2 sued Seabed Geosolutions (US) Inc. for patent infringement in the United States District Court for the Southern District of Texas. Seabed petitioned for inter partes review of claims 1–24 of the ’761 patent and claims 1–17 of the ’362 patent. The Board instituted review and held that all challenged claims, except claim 8 of the ’761 patent, would have been obvious. Magseis appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A). DISCUSSION We review the Board’s ultimate obviousness determi- nation de novo and its subsidiary factual findings for sub- stantial evidence. PersonalWeb Techs., LLC v. Apple, Inc., 917 F.3d 1376, 1381 (Fed. Cir. 2019). Relevant here, fac- tual findings underlying an obviousness determination in- clude: (1) whether a skilled artisan would have been motivated to modify the teachings of a reference, and (2) whether there is a nexus between secondary considerations

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of nonobviousness and the claimed invention. WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1327, 1332 (Fed. Cir. 2016). I. The Board held that claim 1 of the ’761 patent would have been obvious over Mattaboni 3 in combination with Sutton, 4 Schmalfeldt, 5 and Jones. 6 Board Decision, 2019 WL 5777754, at *10. 7 Magseis argues that a skilled artisan would not have been motivated to modify Mattaboni in view of Sutton, Schmalfeldt, and Jones. Substantial evi- dence supports the Board’s contrary finding. The Board found, and Magseis does not challenge, that Mattaboni discloses each claim limitation except “a disk- shaped case.” Mattaboni instead discloses a tall cylindrical case. Mattaboni at 2–3, 8. Mattaboni’s Figure 1, which labels the cylindrical case as a pressure case, is shown be- low:

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Substantial evidence supports the Board’s finding that a skilled artisan would have been motivated to modify Mat- taboni to use a disk-shaped case. As the Board found, Sut- ton discloses the desirability of a disk-shaped OBS case. See Sutton at 16–17 (“[A]n ocean bottom seismometer should be designed with . . . low height-to-base area ratio . . . and maximum symmetry about the vertical axis.”); see also id. at Abstract (stating that an OBS design should have “a low profile and . . . maximum symmetry about the vertical axis”). Sutton explains that low profile and sym- metry about the vertical axis decrease signal distortion from “cross coupling.” Id. at 17–18. Further, as the Board found, Schmalfeldt and Jones disclose disk-shaped OBS cases. See, e.g., Schmalfeldt at 7, Fig. 3; Jones at Abstract, Figs. 1–2. Magseis argues that Jones’ external fins and de- ployment system yield “an implausible system that no [skilled artisan] would seriously consider.” Appellant’s Br.

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40–41. However, the Board did not rely on Jones’ fins or deployment system, and obviousness does not require in- corporating all teachings of one reference into another. Al- lied Erecting & Dismantling Co. v. Genesis Attachments, LLC, 825 F.3d 1373, 1381 (Fed. Cir. 2016). The Board’s finding that Sutton, Schmalfeldt, and Jones would have motivated a skilled artisan to modify Mattaboni to incorpo- rate a disk-shaped case is thus supported by substantial evidence. Substantial evidence also supports the Board’s finding that Sutton does not teach away from combination with Mattaboni. Although Sutton states that “geophones must be separated” from an OBS’s other components, it also dis- closes that separating the geophone “may add some com- plexity, and possibly result in lower reliability than when everything is in one package.” Sutton at 18. Sutton elabo- rates that separating the geophone requires external ca- bling, which can cause several “problems.” Id. For example, cabling can “get caught under the OBS ballast and thus prevent the instrument’s return.” Id. Sutton therefore provides compelling reasons for combining OBS components in the same housing. There is evidence, moreover, that Sutton’s rationale for separating the geophone (i.e., to avoid distortion from the “necessarily massive package that contains power, elec- tronics, recording, and recovery equipment,” id.) was obso- lete at the time of the invention. Seabed’s expert testified that, by 2003, “solid-state memory was available, battery technology had improved significantly (allowing for the use of smaller, more energy dense batteries), and smaller ver- sions of the types of electronic components contained in OBS[s]. . . were available.” J.A. 1816 ¶ 69. Seabed’s expert further testified that, because of these improvements, “it was technically feasible to create OBS[s] with the types of components included in Mattaboni’s OBS, but in a low[-]profile, symmetrical form factor” in accordance with Sutton. Id. Magseis does not dispute that, in 2003, it was

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feasible to fit all OBS components in the same housing, as Mattaboni teaches, and still comply with Sutton’s design parameters. See Appellant’s Br. 36–37; Appellant’s Reply Br. 8–9. Accordingly, substantial evidence supports the Board’s finding that Sutton does not teach away from com- bination with Mattaboni. We do not agree with Magseis that the Board applied the wrong legal standard in finding that Sutton does not teach away. Magseis cites the Board’s statement that “Sut- ton cannot be read as stating that under no circumstances should other components be combined with the geophones.” Board Decision, 2019 WL 5777754, at *20. That statement, however, was in response to Magseis’ argument that Sut- ton “forbids” such combination. Id. The Board was not suggesting that, to teach away, a reference must state the claimed invention should never be attempted. In sum, substantial evidence supports the Board’s find- ing that a skilled artisan would have been motivated to modify Mattaboni to use a disk-shaped case, as Sutton, Schmalfeldt, and Jones teach. Substantial evidence fur- ther supports the Board’s finding that Sutton does not teach away from combination with Mattaboni. II. The Board found that Magseis failed to show a nexus between its evidence of secondary considerations and the claimed invention. Because substantial evidence supports that finding, the Board correctly rejected the evidence of secondary considerations. Evidence of secondary considerations must have a nexus to the claims. Fox Factory, Inc. v. SRAM, LLC, 944 F.3d 1366, 1373 (Fed. Cir. 2019). We presume a nexus when the evidence is tied to a specific product that is “co- extensive” with the claimed invention, for example, be- cause “the unclaimed features amount to nothing more than additional insignificant features.” Id. at 1373–74.

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Without the presumption, a patentee may establish nexus by showing the secondary considerations evidence is the “‘direct result of the unique characteristics of the claimed invention,’” id. (quoting In re Huang, 100 F.3d 135, 140 (Fed. Cir. 1996)), rather than a feature that was “known in the prior art,” Ormco Corp. v. Align Technology, Inc., 463 F.3d 1299, 1312 (Fed. Cir. 2006). Whether there exists a presumption of nexus or a nexus in fact are factual ques- tions. Fox Factory, 944 F.3d at 1373; WBIP, 829 F.3d at 1331–32. Substantial evidence supports the Board’s finding that the presumption of nexus does not arise here. 8 The Board found that the relevant products “comprise many more components than simply the [claimed] nodes.” Board Deci- sion, 2019 WL 5777754, at *27. For example, the Z700 sys- tem includes “a specialized ship with a node handler system,” and the Z3000 and ZXPLR systems include re- motely operated vehicles. Id. Magseis concedes that “the conduct of seismic acquisition surveys necessarily involves the use of vessels and remotely operated vehicles.” Appel- lant’s Br. 45. Magseis does not argue that those unclaimed components are insignificant. Accordingly, a reasonable trier of fact could find that the presumption of nexus does not apply in this case. Substantial evidence also supports the Board’s finding of no nexus in fact because the evidence of secondary con- siderations is not tied to the claimed invention’s unique characteristics. See Board Decision, 2019 WL 5777754, at *28–31. Regarding skepticism, Magseis concedes that the evidence of this secondary consideration is tied to

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“utiliz[ing] an internal geophone within the same case as the other components.” Appellant’s Br. 42–43; see also J.A. 4293 ¶ 175 (Magseis’ expert testifying that “skepticism arose from . . . including the sensor package in the same case as all the other components”). Magseis likewise con- cedes that its evidence of commercial success is due to “‘the manner in which [the invention] incorporates a geophone sensor into the same case as all other components of the system.’” Appellant’s Reply Br. 21–22 (quoting J.A. 4383– 84 ¶ 143). Because Mattaboni discloses that feature, the alleged skepticism and commercial success are irrelevant. Ormco, 463 F.3d at 1312 (“[I]f the feature that creates the commercial success was known in the prior art, the success is not pertinent.”). Magseis fails to argue or demonstrate that its other evidence of secondary considerations is linked to a unique characteristic of the claimed invention, as opposed to known features. See Appellant’s Br. 47–48 (vaguely arguing secondary considerations were tied to “the claimed inventions”). Accordingly, the Board’s fact finding of no nexus is supported by substantial evidence. CONCLUSION Substantial evidence supports the fact findings under- lying the Board’s holding that claims 1–7 and 9–24 of the ’761 patent and claims 1–17 of the ’362 patent would have been obvious. We therefore affirm the Board’s final written decisions. AFFIRMED

Footnotes

[1] The ’761 and ’362 patents share the same specifica- tion.

[2] Fairfield Industries Inc. transferred all relevant assets to Fairfield Seismic LLC, which changed its name to Magseis FF LLC. Appellant’s Br. 1 n.1.

[3] Mattaboni, Paul J., MITOBS: A Seismometer Sys- tem for Ocean-Bottom Earthquake Studies, MARINE GEOPHYSICAL RESEARCHES 3 (1977) 87–102.

[4] Sutton, George H., Optimum Design of Ocean Bot- tom Seismometers, MARINE GEOPHYSICAL RESEARCHES 9 (1987) 47–65.

[5] Schmalfeldt, Bernd, Explosion-Generated Seismic Interface Waves in Shallow Water, SACLANTCEN Report SR-71, July 1, 1983.

[6] U.S. Patent No. 6,951,138.

[7] We cite only the ’961 IPR decision because the ’962 IPR decision is substantively identical regarding the issues Magseis raises.

[8] Though not completely clear, we understand the Board to have found that the presumption does not arise because it found that Magseis’ products were not coexten- sive with the claims. See Board Decision, 2019 WL 5777754, at *27–28.