Différends et enquêtes|5 juillet 2013
Federal Court validates Varco Canadas autodriller patent
Torys acted as counsel to Varco Canada with a team that included Sheila Block, Grant Worden, Peter Wilcox, Justin Necpal, Sarah Whitmore and Rose Lombardi.
On July 5, 2013, after a lengthy and comprehensive judgment, the Federal Court decided in favour of Varco Canada Limited (Varco) in Varco Canada Limited et al. v. Pason Systems Corp. et al., 2013 FC 750.
The issue in Varco centered on the validity of the company's patent for an automatic drilling system, used in the oil and gas industry for 'directional' and 'horizontal' drilling of oil and gas wells, and the infringement of that patent by Pason Systems Corp. (Pason). Varco's revolutionary invention automated and optimized the directional drilling process by controlling the rate of penetration of the drill pipe on a drilling rig, using parameters such as drilling fluid pressure and force on the drill bit.
In 2003, just as Varco was entering the U.S. and Canadian markets with its innovative product, Pason began aggressively marketing its own competing product, which Varco alleged (and the trial judge later agreed) Pason had developed based on data it had acquired from the Varco device. The trial judge found that had Pason not brought its autodriller product to market, Varco would have been able to service the entire Canadian market and grow its business to meet the rapidly expanding demand for such products. As it was, Pason had managed to capture nearly the entire market with its infringing device, to substantial commercial success. Significantly, the trial judge also found that Pason had proceeded with its autodriller against the warnings of its lawyers that its device risked infringement of Varco's patent, unless Pason could establish that the patent was invalid.
In 2005, Varco sued Pason in both Canada and the United States for patent infringement. Pason counter-claimed, alleging that the patent was invalid. As Justice Phelan noted in his July 5th decision, Pason attacked the validity of Varco's patent on "almost as many grounds as it is conceivable to assert."
One of the principal factual issues in the case, and the focus of a motion which resulted in a portion of the trial being re-opened, was the inventor's credibility, particularly as it related to his story of how he applied for his patent in Canada and the US. Pason argued (unsuccessfully) that the patent was invalid because the inventor had disclosed the inner workings of the device more than a year before the filing date of the patent, when the invention was tested in the field at a third party well site.
Following a three week trial that involved numerous fact and expert witnesses, as well as two motions by Pason to re-open the trial after closing submissions were made, though before judgment was rendered, Justice Phelan held Varco's patent to be valid and infringed.
In the result, Justice Phelan awarded Varco an equitable compensation of $53 million to the date of trial (substantially more on estimated updated figures), representing the disgorgement of all of Pason's profits, including profits made on rentals in other countries. Other relief included a permanent injunction, delivery up of the infringing products and pre- and post-judgment interest.
The Court has delayed the injunction for 90 days and ordered costs at the highest scale, in accordance with Federal Court tariffs. According to the docket, the parties are discussing a global settlement so there may not be any appeal from this decision.
The Court's decision can be found on IPPractice.ca.
The issue in Varco centered on the validity of the company's patent for an automatic drilling system, used in the oil and gas industry for 'directional' and 'horizontal' drilling of oil and gas wells, and the infringement of that patent by Pason Systems Corp. (Pason). Varco's revolutionary invention automated and optimized the directional drilling process by controlling the rate of penetration of the drill pipe on a drilling rig, using parameters such as drilling fluid pressure and force on the drill bit.
In 2003, just as Varco was entering the U.S. and Canadian markets with its innovative product, Pason began aggressively marketing its own competing product, which Varco alleged (and the trial judge later agreed) Pason had developed based on data it had acquired from the Varco device. The trial judge found that had Pason not brought its autodriller product to market, Varco would have been able to service the entire Canadian market and grow its business to meet the rapidly expanding demand for such products. As it was, Pason had managed to capture nearly the entire market with its infringing device, to substantial commercial success. Significantly, the trial judge also found that Pason had proceeded with its autodriller against the warnings of its lawyers that its device risked infringement of Varco's patent, unless Pason could establish that the patent was invalid.
In 2005, Varco sued Pason in both Canada and the United States for patent infringement. Pason counter-claimed, alleging that the patent was invalid. As Justice Phelan noted in his July 5th decision, Pason attacked the validity of Varco's patent on "almost as many grounds as it is conceivable to assert."
One of the principal factual issues in the case, and the focus of a motion which resulted in a portion of the trial being re-opened, was the inventor's credibility, particularly as it related to his story of how he applied for his patent in Canada and the US. Pason argued (unsuccessfully) that the patent was invalid because the inventor had disclosed the inner workings of the device more than a year before the filing date of the patent, when the invention was tested in the field at a third party well site.
Following a three week trial that involved numerous fact and expert witnesses, as well as two motions by Pason to re-open the trial after closing submissions were made, though before judgment was rendered, Justice Phelan held Varco's patent to be valid and infringed.
In the result, Justice Phelan awarded Varco an equitable compensation of $53 million to the date of trial (substantially more on estimated updated figures), representing the disgorgement of all of Pason's profits, including profits made on rentals in other countries. Other relief included a permanent injunction, delivery up of the infringing products and pre- and post-judgment interest.
The Court has delayed the injunction for 90 days and ordered costs at the highest scale, in accordance with Federal Court tariffs. According to the docket, the parties are discussing a global settlement so there may not be any appeal from this decision.
The Court's decision can be found on IPPractice.ca.