November 03, 2017
Torys represented Resource in successfully resisting a patent infringement action with a team that included Andrew Bernstein, Yael Bienenstock, Leora Jackson and Ed Fan.
On November 3, 2017 the Federal Court released its decision invalidating a patent that was the subject of four separate patent infringement actions that had been consolidated for the purposes of determining patent validity: Packers Plus Energy Service Inc. v. Essential Energy Services Ltd. et al.; Packers Plus Energy Services Inc. et al. v. Baker Hughes Canada Company; Packers Plus Energy Services Inc. et al. v. Weatherford International PLC et al.; and Packers Plus Energy Services Inc. et al. v. Resource Well Completion Technologies Inc. et al.
The 072 Patent claimed a particular method for fracturing rock formations in stages to increase production of oil and gas. Known in the industry as the “ball drop system,” with the rise of oil prices it became a popular method for fracturing in the mid-2000s. The tools used in the ball drop system were sold by a variety of service companies in the oil and gas industry. The patentee, an oil and gas service company called Packers Plus, sued a number of its competitors, including Resource, for patent infringement. The defendants successfully counterclaimed alleging that the patent was invalid. Justice O’Reilly of the Federal Court agreed with the defendants.
Justice O’Reilly first held that the patent was invalid because Packers Plus had marketed and sold the ball drop system to customers on at least two occasions before the patent was filed. Although the plaintiffs argued that these disclosures were not “public” either because they were made in confidence or because they were “experimental,” the court rejected those arguments on the facts. It found that in the circumstances, where Packers Plus’ customers were oil and gas operating companies, and the system had been disclosed to a variety of different people at those companies with no written confidentiality agreements, the disclosures were public. Moreover, the fact that certain drawing were marked “confidential” was insufficient to establish that the marketing, sale and use of the tools was all confidential. It also held that the evidence was insufficient to establish that the sales were fore “experimental” use and therefore not public.
The defendants were also successful in asserting the patent was invalid due to obviousness. The ball drop system and its use in the North Sea had been previously described in a well-known industry journal. However, while the prior art described use of the ball-drop system in “cased” wells (which were cemented after drilling) the patent taught use of the ball-drop system in a type of well called “open hole” (where the system is installed directly against the rock). In light of other publications in the industry which had described tools or systems that could be used to fracture open hole wells, or used in other open hole applications, the trial judge found that the claims were obvious inventive concept of the patent, i.e. use of the ball-drop system in an open hole, did not represent an advance over the state of the art, or was an obvious variation on prior art methods.
This was considered a significant win for the industry against Packers Plus, which had been asserting its IP against numerous different players in the oil and gas sector