In Re: Smith International, Inc. , 871 F.3d 1375 ( 2017 )

United States Court of Appeals
for the Federal Circuit
______________________
IN RE: SMITH INTERNATIONAL, INC.,
Appellant
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2016-2303
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. 90/012,912.
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Decided: September 26, 2017
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JOHN R. KEVILLE, Winston & Strawn LLP, Houston,
TX, argued for appellant. Also represented by ANDREW
RYAN SOMMER, Washington, DC; RICHARD L. STANLEY,
Law Office of Richard L. Stanley, Houston, TX.
MAI-TRANG DUC DANG, Office of the Solicitor, United
States Patent and Trademark Office, Alexandria, VA,
argued for appellee Joseph Matal. Also represented by
NATHAN K. KELLEY, FRANCES LYNCH.
______________________
Before LOURIE, REYNA, and HUGHES, Circuit Judges.
LOURIE, Circuit Judge.
Smith International, Inc. (“Smith”) appeals from a de-
cision of the United States Patent and Trademark Office
(“the PTO”) Patent and Trial Appeal Board (“the Board”)
affirming the examiner’s rejections of claims 28–36, 39–
2 IN RE: SMITH INT’L, INC.
46, 49, 50, 79–81, and 93–100 1 of U.S. Patent 6,732,817
(“the ’817 patent”) in an ex parte reexamination. Ex parte
Smith Int’l, Inc., No. 2015-008323, 2016 Pat. App. LEXIS
3764 (P.T.A.B. Apr. 29, 2016) (“Board Decision”). For the
reasons that follow, we reverse.
BACKGROUND
This case primarily concerns what the word “body”
means in the context of the ’817 patent. Smith owns the
’817 patent, entitled “Expandable Underream-
er/Stabilizer,” which is directed to a downhole drilling tool
for oil and gas operations. ’817 patent Abstract, col. 1 l.
30. The ’817 patent describes an “expandable tool 500”
having “a generally cylindrical tool body 510 with a flow-
bore 508 extending therethrough” and “one or more
moveable, non-pivotable tool arms 520.” Id. col. 7 l. 67–
col. 8 l. 1, col. 8 ll. 9–10. A drilling tool described in the
’817 patent is shown below:
1 The Board’s decision at times omitted the rejec-
tions of claims 49 and 100.
IN RE: SMITH INT’L, INC. 3
Id. fig. 4.
The ’817 patent describes that “one or more pocket re-
cesses 516,” which “include angled channels 518,” are
“formed in the body 510” to “provide a drive mechanism
for the moveable tool arms 520 to move axially upwardly
4 IN RE: SMITH INT’L, INC.
and radially outwardly into the expanded position” in
response to a “[h]ydraulic force . . . due to the differential
pressure of the drilling fluid between the flowbore . . . and
the annulus.” Id. col. 8 ll. 4–5, 20–23, col. 9 ll. 36–39. As
the drilling fluid flows through the tool, “the piston 530
engages the drive ring 570,” “causing the drive ring 570 to
move axially upwardly against the moveable arms 520,”
which in turn causes “[t]he arms 520” “to move axially
upwardly in pocket recesses 516.” Id. col. 9 ll. 40–54. The
’817 patent also describes an “inner mandrel 560,” which
is “the innermost component within the tool 500,” and
which can be replaced by “a stinger assembly” “compris-
ing an upper inner mandrel,” “a middle inner mandrel,”
and “a lower inner mandrel.” Id. col. 8 ll. 36–37, col. 12
ll. 5–7. The ’817 patent was originally granted with 73
claims.
In 2012, Smith’s corporate parents, Schlumberger
Holdings Corp. and Schlumberger N.V. (together,
“Schlumberger”), sued Baker Hughes Inc. (“Baker
Hughes”) in the United States District Court for the
Southern District of Texas for, inter alia, infringement of
the ’817 patent. Baker Hughes requested ex parte reex-
amination of claims 28–37, 39–46, 49, and 50 of the ’817
patent. The PTO granted the request for ex parte reexam-
ination, which is the subject of appeal in this case.
In 2016, Smith also sued Baker Hughes in the United
States District Court for the District of Delaware for, inter
alia, infringement of the ’817 patent. Baker Hughes
petitioned for two inter partes review (“IPR”) proceedings
challenging certain claims of the ’817 patent, but the PTO
denied institution noting that the substantive overlap
between the IPR petitions and the reexamination on
appeal in this case favored denial of institution for rea-
sons of judicial economy. Baker Hughes Oilfield Opera-
tions, Inc. v. Smith Int’l, Inc., IPR 2016-01450, 2016 WL
8115502 (P.T.A.B. Dec. 22, 2016); Baker Hughes Oilfield
IN RE: SMITH INT’L, INC. 5
Operations, Inc. v. Smith Int’l, Inc., IPR 2016-01451, 2016
WL 8115503 (P.T.A.B. Dec. 22, 2016).
During the ex parte reexamination, Smith added and
cancelled claims 74–78 and 92, cancelled claim 37,
amended claims 28, 35, 36, and 43, added and amended
claims 82–84, 87, and 89–91, and added claims 79–81, 85,
86, 88, and 93–102. Claims 28, 43, and 93 are the inde-
pendent claims.
Claim 28, as amended, reads as follows:
28. An expandable downhole tool for use in a drill-
ing assembly positioned within a wellbore having
an original diameter borehole and an enlarged di-
ameter borehole, comprising:
a body; and
at least one non-pivotable, moveable arm
having at least one borehole engaging pad
adapted to accommodate cutting struc-
tures or wear structures or a combination
thereof and having angled surfaces that
engage said body to prevent said arm from
vibrating in said second position;
wherein said at least one arm is moveable
between a first position defining a col-
lapsed diameter, and a second position de-
fining an expanded diameter
approximately equal to said enlarged di-
ameter borehole.
J.A. 15–16 (emphases and line changes added).
Claim 43, as amended, reads as follows:
43. A method of underreaming a wellbore to form
an enlarged borehole and controlling the direc-
tional tendencies of a drilling assembly within the
enlarged borehole, comprising:
6 IN RE: SMITH INT’L, INC.
using a drill bit to drill the wellbore;
disposing a first expandable tool having at
least one arm including at least one bore-
hole engaging pad, the pad being config-
ured for underreaming directly above the
drill bit and the at least one arm having
angled surfaces that engage a body of the
first expandable tool;
using the first expandable tool to form the
enlarged borehole;
disposing a second expandable tool having
at least one arm configured for stabilizing
above the first expandable tool; and
using the second expandable tool to con-
trol the directional tendencies of the drill-
ing assembly within the enlarged
borehole;
wherein both the first expandable tool and
the second expandable tool operate be-
tween a collapsed position and an expand-
ed position.
J.A. 17–18 (emphasis and line changes added).
Claim 93 reads as follows:
93. An expandable downhole tool for use in a drill-
ing assembly positioned within a wellbore having
an original diameter borehole and an enlarged di-
ameter borehole, comprising:
a body defining an outermost diameter of
the expandable downhole tool when the
tool is in a retracted configuration; and
at least one non-pivotable, moveable arm
having at least one borehole engaging pad
adapted to accommodate cutting struc-
IN RE: SMITH INT’L, INC. 7
tures or wear structures or a combination
thereof and having at least one surface
that engages the body wherein the body is
configured to guide a direction of transla-
tion of the non-pivotable, moveable arm
along the at least one surface of the arm
and a surface of the body;
wherein said at least one arm is moveable
between a first position when the expand-
able downhole tool is in a retracted posi-
tion, and a second position defining an
expanded of the expandable downhole tool,
the second diameter being approximately
equal to said enlarged diameter borehole.
J.A. 25 (emphases and line change added).
The examiner allowed new claims 82–91, 101, and
102, and finally rejected claims 28–36, 39, 40, 42, 79–80,
93–98, and 100 as anticipated by International Publica-
tion No. WO 00/31371 (“Eddison”), claims 43–46, and 49
as obvious over Eddison in view of U.S. Patent 6,059,051
(“Jewkes”), and claims 28, 40, 41, 43, 50, 80, 81, 93, and
99 as obvious over Eddison, European Publication No.
EP 0 246 789 (“Wardley”), and Jewkes. Smith appealed to
the Board, and the Board affirmed all of the examiner’s
rejections.
8 IN RE: SMITH INT’L, INC.
Eddison, entitled “Downhole Tool with Extendable
Memebers,” is directed to a “downhole tool” “having
radially extendable members, such as an underreamer or
an expandable stabiliser.” Eddison at 1. A drilling tool
described in Eddison is shown below:
Id. fig. 1.
Eddison discloses a drilling tool having a “mandrel
16” that “extends through the body 18” and “provides
IN RE: SMITH INT’L, INC. 9
mounting for a cam sleeve 28,” which “cooperates with
three extendable members in the form of cutters 30
mounted in respective body ports 32.” Id. at 10. The
“mandrel” and “body” in Eddison move axially relative to
each other in response to the applied weight and fluid
pressure differences, and this relative axial movement
causes the cam sleeve to “push the cutters radially out-
wardly” or to “positively engage[] the cutters” to be “posi-
tively withdrawn.” Id. at 12–13. In particular, Eddison
teaches that its cam sleeve engages the cutters through
“dovetail profiles and slots on the cam sleeve 28 and the
cutters 30.” Id. at 14.
The Board affirmed the examiner’s interpretation of
the term “body” as a broad term that may encompass
other components such as “mandrel” and “cam sleeve,”
reasoning that only the term “body” is recited in the
claims without further limiting features and that the
specification neither defines the term “body” nor prohibits
the examiner’s broad reading of it. Based on this inter-
pretation of the term “body,” the Board affirmed the
examiner’s rejections based on Eddison. It concluded that
Smith’s additional arguments also fail because they rely
on an incorrect claim construction and the examiner’s
interpretation of other claim terms was reasonable.
Smith timely appealed. We have jurisdiction pursu-
ant to 28 U.S.C. § 1295(a)(4)(A).
DISCUSSION
Claims 28–36, 39–46, 49, 50, 79–81, and 93–100 are
on appeal. As all of them, either themselves or in their
parent claims, contain the term “body,” our decision
respecting the meaning of this term will be dispositive of
all of the claims. We therefore will not address secondary
arguments.
We review the Board’s legal determinations de novo,
In re Elsner, 381 F.3d 1125, 1127 (Fed. Cir. 2004), and the
10 IN RE: SMITH INT’L, INC.
Board’s underlying factual findings for substantial evi-
dence, In re Gartside, 203 F.3d 1305, 1316 (Fed. Cir.
2000). Substantial evidence is “such relevant evidence as
a reasonable mind might accept as adequate to support a
conclusion.” Id. at 1312 (quoting Consol. Edison Co. v.
NLRB, 305 U.S. 197, 229 (1938)). In reexaminations, the
Board gives claim terms their broadest reasonable inter-
pretation in light of the claim language and specification.
In re Yamamoto, 740 F.2d 1569, 1571 (Fed. Cir. 1984).
Anticipation is a question of fact that we review for
substantial evidence. REG Synthetic Fuels, LLC v. Neste
Oil Oyj, 841 F.3d 954, 958 (Fed. Cir. 2016). A patent
claim is anticipated “only if each and every element is
found within a single prior art reference, arranged as
claimed.” Summit 6, LLC v. Samsung Elecs. Co., 802 F.3d
1283, 1294 (Fed. Cir. 2015) (citing Net MoneyIN, Inc. v.
VeriSign, Inc., 545 F.3d 1359, 1369 (Fed. Cir. 2008)).
Obviousness is a question of law based on underlying
factual findings. In re Magnum Oil Tools Int’l, Ltd., 829
F.3d 1364, 1373 (Fed. Cir. 2016).
On appeal Smith challenges the Board’s construction
of “body” and anticipation and obviousness determina-
tions. We first discuss the Board’s claim construction.
In affirming the examiner’s rejections, the Board de-
termined that the term “body” is a “generic term such as
‘member’ or ‘element’ that by itself provides no structural
specificity.” Board Decision, 2016 Pat. App. LEXIS 3764,
at *4. The Board reasoned that although “the specifica-
tion describes the body as a discrete element separate
from other elements,” the specification does not “define[]
the term ‘body’” or “preclude the Examiner’s interpreta-
tion.” Id. (emphases in original). The Board also rejected
Smith’s argument that the person of ordinary skill in the
art would understand the term “body” as a distinct ele-
ment from other components, reasoning that Smith “has
not shown that the parts identified in the prior art as
IN RE: SMITH INT’L, INC. 11
bodies are so similar as to create a specific identity of
what a body is.” Id. at *4–5. The Board noted that the
claims “essentially recite only a body and the movable
cutting arms,” and other components, such as “a man-
drel,” are not recited in the claims. Id. at *5–6. Thus, the
Board reasoned that it was “perfectly reasonable” to
understand the term “body,” given its broadest reasonable
interpretation, as “the overall portion or portions of the
downhole tool that define the bore and may include one or
more other elements.” Id.Smith argues that the Board’s interpretation of the
term “body” as a generic term encompassing the drilling
tool’s internal components was unreasonable. Smith
contends that the specification consistently refers to and
depicts the body of the drilling tool as a component dis-
tinct from other separately identified components, such as
the “mandrel” or “piston” that reside inside the drilling
tool. In light of the consistent description of the body,
Smith urges that the term “body” should be interpreted as
an “outer housing.” Smith cites relevant references in the
art, including Eddison, to support its view that the term
“body” is understood in the art to mean a drilling tool’s
outer housing. Smith also urges that the Board’s inter-
pretation of “body” as a generic term renders the term
indistinguishable from “tool,” which is used in the specifi-
cation to denote the overall drilling tool.
The PTO responds that the Board correctly gave the
term “body” its broadest reasonable interpretation and
that substantial evidence supports the Board’s findings.
The PTO contends that the term “body” is reasonably
understood as “the main cylindrical portion of the device
that defines the central conduit.” Appellee’s Br. 19. As
such, the PTO urges that the “body,” “mandrel,” and “cam
sleeve” of Eddison “together meet the body limitation of
claim 28.” Id. The PTO argues that the Board correctly
reached its broad construction of “body” based on: (1) the
recitation of “a body” as a whole element in claim 28; (2) a
12 IN RE: SMITH INT’L, INC.
lack of recitation of “mandrel” in the claims; (3) a lack of
definition of “body” in the specification; and (4) a lack of
an established meaning of “body” in the art. The PTO
also urges that Smith’s proposed construction of the
“body” as an “outer housing” is not supported by the
specification.
We conclude that the Board’s construction of “body”
was unreasonably broad. Even when giving claim terms
their broadest reasonable interpretation, the Board
cannot construe the claims “so broadly that its construc-
tions are unreasonable under general claim construction
principles.” Microsoft Corp. v. Proxyconn, Inc., 789 F.3d
1292, 1298 (Fed. Cir. 2015) (emphasis in original). “[T]he
protocol of giving claims their broadest reasonable inter-
pretation . . . does not include giving claims a legally
incorrect interpretation” “divorced from the specification
and the record evidence.” Id. (citations and internal
quotation marks omitted); see PPC Broadband, Inc. v.
Corning Optical Commc’ns RF, LLC, 815 F.3d 747, 751–
53 (Fed. Cir. 2016).
It is true that some of the claims at issue recite a
broad term “body” without further elaboration on what
the term “body” encompasses. J.A. 15, 17 (claims 28 and
43). However, the remainder of the specification does not
use the term as a generic body. There is no dispute that
the ’817 patent specification consistently describes and
refers to the body as a component distinct from others,
such as the mandrel, piston, and drive ring. See Appel-
lee’s Br. 29–30. Therefore, the Board’s reasoning that
because the specification does not “in and of itself pro-
scribe the Examiner’s construction,” the examiner’s
interpretation was reasonable, Board Decision, 2016 Pat.
App. LEXIS 3764, at *4, was erroneous.
The correct inquiry in giving a claim term its broadest
reasonable interpretation in light of the specification is
not whether the specification proscribes or precludes some
IN RE: SMITH INT’L, INC. 13
broad reading of the claim term adopted by the examiner.
And it is not simply an interpretation that is not incon-
sistent with the specification. It is an interpretation that
corresponds with what and how the inventor describes his
invention in the specification, i.e., an interpretation that
is “consistent with the specification.” In re Morris, 127
F.3d 1048, 1054 (Fed. Cir. 1997) (citation and internal
quotation marks omitted); see also In re Suitco Surface,
603 F.3d 1255, 1259–60 (Fed. Cir. 2010).
The Board emphasized that the patentee here did not
act as a lexicographer, and that the specification neither
defines nor precludes the examiner’s reading of the term
“body.” Accordingly, the Board found that nothing in the
specification would disallow the examiner’s interpreta-
tion, rendering it “reasonable.” However, following such
logic, any description short of an express definition or
disclaimer in the specification would result in an adoption
of a broadest possible interpretation of a claim term,
irrespective of repeated and consistent descriptions in the
specification that indicate otherwise. That is not properly
giving the claim term its broadest reasonable interpreta-
tion in light of the specification.
Relying on the incorrect interpretation of the term
“body” as a generic term in the claims, the Board affirmed
the examiner’s arbitrary inclusion and exclusion of sepa-
rately described components to and from the term “body.”
It reasoned that although a body, a mandrel, and movea-
ble arms are all consistently identified and described
separately in the specification, the generic claim term
“body” includes some of the separately described compo-
nents, such as a mandrel, but not others, such as movea-
ble arms, solely because the “moveable arm” is recited in
the claims and the “mandrel” is not. See Oral Argument
at 15:16–46, In re Smith Int’l, Inc., No. 16-2303 (Fed. Cir.
Aug. 8, 2017),
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
16-2303.mp3 (applying this reasoning to a hypothetical
14 IN RE: SMITH INT’L, INC.
claim reciting other separate components of the tool but
not a mandrel). But, giving the term “body” such a
strained breadth in the face of the otherwise different
description in the specification was unreasonable.
The ’817 patent separately identifies and describes
various components of its drilling tool, such as the “body,”
“moveable arms,” “mandrel,” “piston,” and “drive ring,”
which do not support the Board’s broad reading of the
claim term “body.” See, e.g., ’817 patent col. 7 l. 63–col. 8
l. 67, col. 9 ll. 30–61. Furthermore, Eddison’s descriptions
of its own drilling tool distinguish and separately describe
its “body,” “mandrel,” and “cam sleeve.” See, e.g., Eddison
at 9–11. The PTO fails to point to any description of the
body that would support its strained construction of
“body,” and its urging that the term “body” in the ’817
patent claims corresponds to the “body,” “mandrel,” and
“cam sleeve” of Eddison is thus unsupported. We there-
fore conclude that the “body” in the ’817 patent claims is a
component distinct from other separately identified
components in the specification, such as the mandrel, and
cannot be understood to include the “cam sleeve” in
Eddison.
The Board’s findings regarding Eddison’s teachings
rest on its broad construction of “body,” which the parties
do not dispute. In particular, the Board relied on its
construction of “body” to find that Eddison teaches “at
least one non-pivotable, moveable arm . . . having angled
surfaces that engage said body” in claim 28 and corre-
sponding elements in other independent claims. Because
such findings depended on an incorrect claim construc-
tion, the Board’s findings of anticipation are not support-
ed by substantial evidence. Similarly, the Board’s factual
findings underlying its obviousness determination relat-
ing to the Eddison reference are also not supported by
substantial evidence. It is undisputed that Jewkes and
Wardley do not teach or render obvious the missing
elements discussed above. We therefore conclude that the
IN RE: SMITH INT’L, INC. 15
challenged claims of the ’817 patent are not unpatentable
as obvious over the combination of Eddison and the
additional references. The rejections of all of the appealed
claims are therefore reversed.
CONCLUSION
We have considered the remaining arguments, but
find them unpersuasive. For the foregoing reasons, the
decision of the Board is reversed.
REVERSED