`____________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
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`NIPPON SUISAN KAISHA LTD.,
`Petitioner,
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`v.
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`PRONOVA BIOPHARMA NORGE,
`Patent Owner.
`____________
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`Case PGR2017-00033
`Patent 9,447,360 B2
`____________
`____________
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`Record of Oral Hearing
`Held: September 27, 2018
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`Before CHRISTOPHER G. PAULRAJ, MICHELLE N. ANKENBRAND,
`and RICHARD J. SMITH, Administrative Patent Judges.
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`Case PGR2017-00033
`Patent 9,447,360 B2
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`APPEARANCES
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`
`ON BEHALF OF THE PETITIONER:
` STEPHEN B. MAEBIUS, ESQUIRE
` FOLEY & LARDNER LLP
` 3000 K Street, NW
` Suite 600
` Washington DC 20007
` (202) 672-5569
`
` DANIEL R. SHELTON, ESQUIRE
` FOLEY & LARDNER LLP
` 975 Page Mill Road
` Palto Alto, CA 94304
` (650) 251-1119
`
`ON BEHALF OF THE PATENT OWNER:
` MATTHEW S. GIBSON, ESQUIRE
` REED SMITH LLP
` 811 Main Street
` Suite 1700
` Houston, TX 77002
` (713) 469-3895
`
`
`
`
`The above-entitled matter came on for hearing on Thursday,
`September 27, 2018, commencing at 1:00 p.m., at the U.S. Patent and
`Trademark Office, 600 Dulany Street, Alexandria, Virginia.
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`P R O C E E D I N G S
` JUDGE PAULRAJ: Please be seated. Good afternoon,
`Counsel. This is the oral hearing in PGR2017-00033. The
`patent challenged in this proceeding is U.S. Patent
`9,447,360. I'm Judge Paulraj and we have two judges
`participating remotely today. On my left -- on the screen on
`my left you can see Judge Richard Smith. He's joining us
`from Texas. And on my right is Judge Michelle Ankenbrand.
`She's joining us from Delaware.
` As set forth in our trial hearing order, each side
`will have a total of 60 minutes to present their arguments.
`Since Petitioner bears the ultimate burden of proof of
`establishing unpatentability at least for the original
`claims, Petitioner will start their presentation first.
` We also have a motion to amend in this proceeding
`with two sets of proposed substitute claims. Petitioner may
`address the motion to amend as part of their initial
`presentation. Petitioner may reserve some time for rebuttal
`but no more than half of its allotted time. So no more than
`30 minutes in this proceeding.
` Patent Owner will be permitted to respond to
`Petitioner's arguments and Patent Owner may also reserve a
`brief sur-rebuttal, if requested.
` So I want to emphasize since we have two judges
`participating remotely that Judges Smith and Ankenbrand may
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`not be able to see exactly what is put up on the screen in this
`room, so please make sure you do identify any demonstratives
`or exhibits you are referring to by page numbers or column
`and line numbers. I understand Patent Owner's counsel has
`not given us any demonstratives. So to the extent that you
`are referring to exhibits or papers, please make sure what
`you're referring to is clear to the remote judges.
` With that, let's start with introductions. We'll
`start with Petitioner's counsel first.
` MR. MAEBIUS: Good afternoon. This is Steve
`Maebius from Foley & Lardner on behalf of Petitioner.
` JUDGE PAULRAJ: All right. Welcome, Mr. Maebius.
` MR. SHELTON: And this is Dan Shelton, also on
`behalf of Petitioner.
` JUDGE PAULRAJ: Thank you, Mr. Shelton.
` MR. GIBSON: Matt Gibson with Reed Smith on behalf
`of Pronova, Patent Owner.
` JUDGE PAULRAJ: All right. Thank you, Mr. Gibson.
` So Petitioner's counsel, since you'll go first, how
`much time would you like for your initial presentation?
` MR. SHELTON: We would reserve 30 minutes.
` JUDGE PAULRAJ: All right. Thank you. So I'll put
`that up on the screen and I think the light behind me will
`turn yellow when you have one minute left on your time. Are
`there any other preliminary matters we need to address before
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`we proceed? All right. Ready whenever you are, Counsel.
` MR. SHELTON: Can everyone hear me okay with this?
` JUDGE PAULRAJ: Yeah.
` MR. SHELTON: Okay. So thank you. My name is Dan
`Shelton again and I represent Petitioner Nippon Suisan Kaisha
`also known as Nisui. With me today is lead counsel Steve
`Maebius, and in the audience are two members from the
`Petitioner, Mr. Fujiwara and Dr. Okona. Today I'd like to
`briefly go through what I hope to talk about and then we'll
`get into the substance. So I would like to give a quick
`overview of the challenged patent just to confirm that the
`patent is PGR eligible and then go through the instituted
`grounds of indefiniteness, lack of novelty and obviousness.
`At the end, if there's time, we'll address the substitute
`claims in our initial time period.
` The ’360 patent is directed to processes for
`reducing the amount of undesired components and marine oil
`compositions. The marine oil composition products are
`produced by a process and the products that are intermediate
`and finals are also claims in this patent. The claims --
`let's look at claim 1.
` So claim 1 which we'll refer to quite a bit in this
`discussion is a process for reducing the amount of undesired
`components and there are three steps. First is providing a
`crude marine oil comprising certain components and those I'll
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`discuss in a moment. All of these components were common
`within commercially available crude marine oils. This crude
`marine oil is subjected to an aqueous fluid processing step
`which removes undesired hydrophilic components. Again, this
`is something that was well known in the art. Then the oil is
`subjected to a stripping processing step, basically a
`distillation which again was the well understood way of
`proceeding.
` JUDGE PAULRAJ: Mr. Shelton, I do want to remind
`you again to refer to the particular slides so the remote
`judges can participate, follow along.
` MR. SHELTON: Oh, okay. This is not up on the
`screen?
` JUDGE PAULRAJ: They do not --
` MR. SHELTON: (Inaudible).
` JUDGE PAULRAJ: They have access to the
`demonstratives but unfortunately they won't be able to see
`the demonstrative like that.
` MR. SHELTON: I'm sorry. My misunderstanding.
` JUDGE PAULRAJ: Sure.
` MR. SHELTON: This is slide 4 that I'm on.
` JUDGE PAULRAJ: All right. So if you could just
`briefly refer to the slide number for each slide that you do
`go to.
` MR. SHELTON: Okay. Understood.
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` So moving to slide 5, step A includes a crude
`marine oil. These crude marine oils normally contain the
`recited components that are in claim 1. The background of
`this patent discusses that crude oil products normally
`contain small amounts of hydrophilic components such as water
`soluble proteins, peptides, et cetera, and Patent Owner's
`expert said that crude marine oil in step A is a typical
`crude marine oil composition and that there's always some
`level of water, or other hydrophilic component that is in these
`oils.
` Looking at step B, the aqueous fluid processing
`step, there are patents, textbooks, articles all describing
`this as a typical standard processing step for the refining
`of marine oils. On this slide, referring to slide 6 now, on
`this slide is just one example of a crude oil at the top
`being subjected to hot water treatments, being subjected to
`degumming and removing hydratable compounds; fossils, lipids,
`proteins, transition metals. So this is not the only
`evidence that has been provided by Petitioner but it is one
`example of how routine an aqueous fluid processing step is
`and how well understood.
` Moving to slide 7, the third step in this is the
`distillation step and it includes a working component. So if
`you see in claim 1 the free fatty acid includes a working --
`it includes a working fluid. And the addition of a volatile
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`working fluid was again well understood in the art. The
`background of the ’360 patent refers to volatile working
`fluids in triglyceride oils as improving the distillation
`process and in fact the background refers to Breivik, which
`describes free fatty acids being used as internal free fatty
`acids that were originally present in the oils being used as
`the volatile working fluid.
` Moving to slide 8. So those are the three elements
`of claim 1. Claims 22 and 26 are compositions resulting from
`the claim 1 method. Claim 22 is a product by process, which
`essentially claims the composition at the end of the method
`recited in claim 1, whereas claim 26 is a product claim, which claims
`a product that is essentially made after step B but before
`the stripping processing step.
` This patent is available for PGR. This is a
`transition application and the priority document, it was pre-
`AIA but the actual filing of the non-provisional was not and
`in the institution decision this Board found that the record
`did not establish that original claims 22 and 23 were
`supported in the pre-AIA application.
` Since that decision there's been no additional --
`moving to slide 10. Sorry. Moving to slide 10, Patent Owner
`did not provide any additional evidence in support of benefit
`of priority after the institution decision. So it's the
`Petitioner's position that the original finding should stand.
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` Moving to slide 11. Briefly, there's one
`instituted ground for indefiniteness, a number for
`anticipation and then three for obviousness. We'll go
`through the first -- the indefiniteness and the anticipation
`individually and then discuss the unpatentable as non-obvious
`together as the Patent Owner has raised the same issues in
`each.
` First, with respect to --
` JUDGE SMITH: Before you go forward, is it
`Petitioner's position that water is an undesired hydrophilic
`component?
` MR. SHELTON: It is.
` JUDGE SMITH: Okay. Thank you.
` MR. SHELTON: Under the indefiniteness position,
`the broad -- there are a number of claims which include a
`broad and a narrower limitation within the same claim. And
`these are recited on slide 12. Looking at slide 13 quickly,
`each limitation imparts more than one scope of coverage for
`the same limitation. There was no evidence to support a
`different position and instead Patent Owner submitted
`substitute claims allegedly rendering this challenge moot.
` JUDGE ANKENBRAND: I have a question about that.
`So you say in the demonstratives that Patent Owner's
`substitute claims allegedly render the challenge moot. How
`does that square with what is in the Petitioner reply at page
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`3, which says -- which specifically addressing Ground 1 states
`that the ground of unpatentability is moot given amendment of
`these challenged claims by Patent Owner? So is it
`Petitioner's position that the ground is moot or that the
`ground is not moot?
` MR. SHELTON: I believe it's Petitioner's position
`that if the first set of amended claims is entered then it
`would be moot. However, the claims that are presently in the
`patent suffer. We maintain the position with respect to the
`current claims in the patent.
` JUDGE ANKENBRAND: Okay. And that's a position set
`forth originally in the petition and you didn't provide
`anything else in the reply, right? I think you just refer us
`back to the petition?
` MR. SHELTON: Correct.
` JUDGE ANKENBRAND: Okay.
` MR. SHELTON: There was nothing additional provided
`by Patent Owner to argue against. It was a statement that it
`would be moot upon entry of the amendment.
` JUDGE ANKENBRAND: Okay. Thank you.
` MR. SHELTON: Ground 2 in this case was not
`instituted and parties agreed not to institute at a later
`time as well. So when we move to Ground 3 on slide 14, this
`is the Doisaki reference, which was instituted as
`anticipating claims 1 through 7 and 11 through 26.
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` JUDGE PAULRAJ: Before we move to the prior
`grounds, is your indefiniteness argument as to at least the
`original claims premised on the broadest reasonable
`interpretation or -- I noticed you did cite In re Packard in
`your petition which is -- you know, it sets forth one
`standard when claims are assessed under the broadest
`reasonable interpretation. I want to know if your position
`would change if the office were to adopt a Phillips-style
`claim construction standard.
` MR. SHELTON: Our position would not change as
`recited by Dr. Shahidi in his declaration and as written out
`in the petition it's essentially impossible to tell whether
`or not the narrower limitations provide some sort of further
`restriction of the claim scope or whether the broadest
`limitation in there should provide claim scope. And under
`either broadest reasonable interpretation or a new standard,
`if so adopted, the result would be the same.
` JUDGE PAULRAJ: Okay.
` MR. SHELTON: Moving to slide 14. Doisaki
`anticipates the method claims and the -- well, method claims
`1 through 7, 11 through 21 and then the composition claims.
`In Doisaki, Example 4 and paragraph 35 both discuss the
`relevant disclosure and so in Example 4 we see a crude
`sardine oil which has an acid value, free fatty acid, meaning
`that there were free fatty acid, was washed with warm water
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`and subjected to short path distillation. It is Petitioner's
`position that the wash with warm water reads upon step
`B, the aqueous fluid processing, and then the short path
`distillation reads upon step C.
` Again, 35, paragraph 35 informs the person of skill
`and art that the feedstock oil was subjected to a degumming
`process as by washing with water. Now, a degumming process
`is to remove hydrophilic -- undesired hydrophilic components.
`That's what it is for as set forth in the references. And so
`Patent Owner's argument that somehow this -- the crude oil
`would not have undesired hydrophilic components is not
`supported by the addition of a degumming process.
` So moving to slide 15, the upper box is from the
`Patent Owner response and with respect to step A Petitioner
`has not demonstrated the undesired hydrophilic components are
`necessarily present in the crude sardine oil. And we
`highlight in slides 15, 16, and 17 three different points
`where in fact Petitioner believes that this has been
`demonstrated. First, it's well-known in the art, as the ’360
`patent explains, that crude oils normally contain a small
`amount of hydrophilic components. Okada shows -- Okada
`Exhibit 1021 shows evidence that despite extraction method
`there remains at least some protein in sardine oil. We show
`this as evidence that there may not -- even if there was some
`previous undisclosed step there would still -- the water wash
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`would still be on a component that had -- on oil that had
`undesired hydrophilic components.
` Degumming, as I mentioned briefly before, is for
`the purpose of removing hydrophilic components. Dr. Shahidi,
`Petitioner's expert, attested to this and stated that if
`there wasn't -- there had to be some reason for a degumming
`step or an aqueous fluid processing step. The reason --
`otherwise the step would be extraneous. Why would someone
`perform this step? And that purpose is to remove undesired
`hydrophilic components.
` JUDGE SMITH: Counsel, on that point, is there
`another reason to use an aqueous washing step other than
`removing the hydrophilic components?
` MR. SHELTON: None that has been presented by
`either side.
` JUDGE SMITH: Okay.
` MR. SHELTON: So I can think -- in an aqueous
`washing step the overwhelming -- the art that has been cited
`states that these are the types of things that are removed;
`proteinaceous compounds, transition metals, et cetera, and
`these are all undesired hydrophilic components.
` JUDGE SMITH: Another question I have on this issue
`of both a presence of the hydrophilic components in the
`marine oil and then the washing step is Patent Owner
`essentially argues that Petitioner has not established
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`inherency but it was not clear to me at least from your
`briefing that you were relying on a doctrine or theory of
`inherency. Is that correct, you're not relying on inherency?
` MR. SHELTON: I do not think that we are limiting
`ourselves to a doctrine of inherency, however in view of
`Patent Owner's position taken during this process we have
`directed the Board's attention to why this component would
`necessarily be present indeed for the reasons that we're
`discussing right now.
` JUDGE SMITH: Thank you.
` MR. SHELTON: So looking at slide 16, again this is
`a quote from Dr. Shahidi's declaration essentially stating
`that this step, the water wash step would essentially be
`extraneous if it had -- and would be a step that had no other
`apparent purpose. So this supports what we were just
`discussing.
` Looking at slide 17. Pulling from Patent Owner's
`expert's deposition transcript, Dr. Decker confirmed that
`these oils would have at least some hydrophilic components in
`them. So again, this is again getting at the inherency issue
`that was raised but not necessarily -- but the issue that was
`raised. Excuse me.
` Patent Owner also alleged that Petitioner failed to
`show that the undesired hydrophilic components were
`necessarily separated from the crude sardine oil by the water
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`wash step of Doisaki. This is slide 18 now. Excuse me.
`Again, Petitioner proposed a definition under BRI of
`undesired hydrophilic components as components within an oil
`that's solubilized with water when water is contacted with
`the oil. And so the hydrophilic components that were
`necessarily in the product would have been removed by a water
`washing step.
` Moving to slide 19. In addition to slide 18, 19,
`the water washing step would be expected to remove these
`trace undesired hydrophilic components because Doisaki
`discloses a process that is within the general parameters
`disclosed in the ’360 patent.
` Moving to page 20, Ground 4, the Breivik reference
`was set forth as anticipating claims 22 through 25 with the
`product by process claim and Patent Owner did not dispute
`this ground in its response.
` Moving to 21, Hata anticipates certain claims.
`Again, a lot of the same issues as before.
` JUDGE ANKENBRAND: I have a question really
`quickly.
` MR. SHELTON: Yes.
` JUDGE ANKENBRAND: Ground 4, are you then just
`resting on your petition with respect to Ground 4 because
`even if Patent Owner doesn't dispute the ground you still
`have the burden so you have to make your case?
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` MR. SHELTON: Understood. So, yeah, I would rest
`on that claims 22 through 25 are anticipated for the same
`reasons set forth in the petition and as stated in the
`institution decision.
` JUDGE ANKENBRAND: Okay. And I had one more
`question.
` MR. SHELTON: Sure.
` JUDGE ANKENBRAND: I know that these are -- these
`three claims, or four claims, are the subject of the motion
`to amend. In particular, I think Patent Owner has requested
`to cancel the claims. Is that your understanding as well?
` MR. SHELTON: Correct.
` JUDGE ANKENBRAND: Okay. Thank you.
` MR. SHELTON: Slide 21, Hata anticipates again the
`Patent Owner has -- the Petitioner maintains its position set
`forth -- the prima facie position set forth in the petition
`and instead takes this limited time to address the Patent
`Owner's arguments against Hata -- against the instituted
`ground specifically that Petitioner failed to show the crude
`oil sample in Hata necessarily contains the undesired
`hydrophilic components and that aqueous fluid processing step
`necessarily results in separation.
` Again, similar reasons as before with Ground 3.
`There's no other reason on the record to perform these types
`of steps. The expert has confirmed that this is --
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` JUDGE ANKENBRAND: I have another question. I'm
`sorry.
` MR. SHELTON: Yes, go ahead.
` JUDGE ANKENBRAND: I'm reading what you have up in
`the screen on slide 21 and, you know, the gist of it is that
`Petitioner has not shown that the step "necessarily results".
`When I see that language I think of inherency and I guess
`again this goes back to Judge Smith's question earlier, is
`your ground based on inherency that, you know, following all
`the steps of the Hata process you would necessarily get
`separation of the undesired hydrophilic components, or is it
`your contention that Hata expressly teaches that or at least
`what you're relying on in Hata, one of ordinary skill in the
`art would have understood that Hata expressly teaches that
`limitation?
` MR. SHELTON: Right. So it's -- Petitioner
`acknowledges that explicit -- that the, for example, the
`undesired hydrophilic components is not expressly stated as a
`contaminant. However, our position is that it necessarily would have
`been there, but also our position is that a person of
`ordinary skill in the art who reads this disclosure and sees
`that degumming step or sees an aqueous wash step, they know
`the purpose of why that is there. And as explained by
`Dr. Shahidi, the only reason such a step is to remove
`undesired hydrophilic components. So maybe a little bit
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`between your first and your third option, straddling -- or
`either one of those. So a person of ordinary skill would
`read this and understand that that component was there at the
`same time it is necessarily there. Okay.
` Okay. Moving onto slide 22, Ground 6, again
`Yamanouchi discloses a process that reduces the amount of
`undesired components in a marine oil composition. Here is a
`snippet from Yamanouchi, "Crude fish oil from sardines is
`again washed with water and dehydrated then using
`distillation device the distilled ingredients are obtained."
`So again, it is Petitioner's position that this water wash
`would be understood for what it is and for removing undesired
`hydrophilic components.
` Again, evidence supports -- moving onto slide 23.
`Evidence supports crude sardine oil having undesired
`hydrophilic components. From Dr. Shahidi, "Crude coastal
`sardine oil would have at least some undesired lipophilic
`components and undesired hydrophilic components.”
` JUDGE SMITH: So Counsel, back a little bit to the
`inherency issue. When it says at least some undesired
`hydrophilic components, so this is a little bit of I guess an
`awkward inherency type situation where you're basically
`saying that the product you're working on would inherently
`have -- and part of your argument is that it would inherently
`have these undesired hydrophilic components, but I'm curious
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`whether this is perhaps more akin to like a Titanium Metals
`situation where if you have -- because you are talking about
`a composition whether, you know, 99 percent of the marine
`oil, crude marine oil does have hydrophilic components and
`one percent doesn't, but are you suggesting perhaps that it's
`sufficient to establish an inherency to point to some process
`in which -- or some crude marine oil that would fall within
`that or -- you know, it seems to me that Patent Owner is
`arguing that all crude marine oil has to have undesired
`hydrophilic components? So it's a long question, but I'll
`let you answer it however you'd like.
` MR. SHELTON: Sure. I think we take a few
`different positions. First, based on the references that
`have been provided, the secondary references, the evidentiary
`references based on statements made by both experts our
`position is that there's at least some small amount of
`undesired hydrophilic material in a crude marine oil
`composition. Okay. On top of that, we offer all of these as
`103 as well in that even if that inherency position isn't met
`it would have been obvious to use a crude -- a commercially
`available crude marine oil or some crude marine oil that
`generally in all cases has an undesired hydrophilic
`component. So commercially available crude marine oil
`compositions have some small amount of proteinaceous material
`in them. There's no other reason -- well, that's the reason
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`that people do washing steps and people do these other steps
`and that's acknowledged throughout the art that these steps
`are to remove those components.
` So whether or not every single -- you know, take a
`trillion different oils and they all have it or whether or
`not it's some number right under a trillion out of a
`trillion, it's the fact that the commercially available --
`that these products, crude marine oils, have proteinaceous
`material. There's nothing special about the oil in step A of
`claim 1. I think that was on a slide earlier that Patent
`Owner's expert agreed that the oil composition of claim 1 is
`a typical commercially available crude marine oil.
` Okay. I would move then to slide 24. And the
`obviousness grounds were addressed together in the
`institution decision. The Patent Owner raises essentially
`the same argument against each ground. Even if the crude
`oil, as I mentioned just a moment ago, even if the crude oils
`in the primary references are insufficient to support an
`inherency rationale, it would have been obvious to use a
`typical crude marine oil under these procedures. So looking
`at the different procedures taught by various references,
`whether it be Hata or Yamanouchi or Breivik, one of ordinary
`skill in the art would have used -- could have used a typical
`commercial crude marine oil and they would have understood
`that that water washing step or that degumming step would
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`necessarily remove the hydrophilic components.
` There are also -- the art teaches use of aqueous
`fluid processing steps. I don't think that's in question.
`On slide 25, we recite six different procedures; degumming
`with water, degumming prior to distillation, degumming to
`remove proteinaceous compounds and metals, et cetera.
` Moving onto slide 26. A person would have been
`motivated to use this aqueous processing step. It's clear
`that adding a water washing step to, for example, Breivik,
`would have been nothing more than well-known procedures and
`it would have afforded a purer product for then distillation.
`And so this is something that was acknowledged in -- set
`forth in the petition and acknowledged in the institution
`decision.
` Moving onto slide 27. Other aspects of claims 1
`through 7 and 11 through 26 are not disputed by the Patent
`Owner and so I won't raise them here unless you have any
`specific questions about them. I would rather move to claims
`8 through 10 on slide 28.
` And so claims 8 through 10 discuss a sub-equimolar
`amount of base being used in the aqueous fluid processing
`step. Professor Shahidi explained why a person of ordinary
`skill in the art would have added this amount of base. And,
`for example, Breivik teaches a more preferred range of three
`to eight percent of free fatty acid and so if marine oil fell
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`outside this range a person would have been motivated to move
`within this range and the most obvious and common way of
`removing free fatty acid is using a strong base like sodium
`hydroxide.
` JUDGE PAULRAJ: Counsel, you're moving into your
`rebuttal time. You're free to use your time as you please.
` MR. SHELTON: Okay. I might use a few just to get
`through slides 8 through 10 (inaudible). So on page 29,
`Patent Owner's rationales are not supported by the record.
`The Patent Owner provides three different -- at least three
`different reasons. The use of native free fatty acids as a
`working fluid was not well characterized in the prior art;
`that Breivik does not reasonably suggest modification of free
`fatty acid content and that Doisaki teaches that the amount
`of FFA has no effect on the distillation process.
` Moving to slide -- that was on slide 29, this
`outline. Sorry.
` JUDGE SMITH: And so Counsel, before you move on --
` MR. SHELTON: Yeah.
` JUDGE SMITH: -- I do have some specific questions
`about Breivik and your reliance on Breivik.
` MR. SHELTON: Sure.
` JUDGE SMITH: One of which is that I'm not clear on
`the motivation at the time of the invention for a person to
`actually reduce the amount or determine the amount of FFA
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`basically at the time it's crude oil before you do the
`washing step to actually reduce the amount of the FFA. Is
`that -- I'm missing -- there's a dot there that's not
`connected for me --
` MR. SHELTON: Okay.
` JUDGE SMITH: -- in terms of Breivik and
`particularly when you get into the discussion of ratios
`because it seems to me part of the pertinent ratio would be
`the amount of FFA that you start with versus the a