In Re: Smith International, Inc.

United States Court of Appeals

for the Federal Circuit

______________________

IN RE: SMITH INTERNATIONAL, INC.,

Appellant

______________________

2016-2303

______________________

Appeal from the United States Patent and Trademark

Office, Patent Trial and Appeal Board in No. 90/012,912.

______________________

Decided: September 26, 2017

______________________

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