Federal court strikes down patent claim by fracking company

The Federal Court of Canada has ruled against a Calgary-based oil and gas services company ensuring there is no monopoly on a fracturing technology used in horizontal drilling and well completion systems in the sector.

Federal court strikes down patent claim by fracking company
BLG lawyer David Madsen says the decision from the federal court is a win for the defendants because ‘a big portion of what they did was practicing this methodology.’
The Federal Court of Canada has ruled against a Calgary-based oil and gas services company ensuring there is no monopoly on a fracturing technology used in horizontal drilling and well completion systems in the sector.

The judgment struck down a claim by Packers Plus Energy Services Inc. to a patent entitled “Method and Apparatus for Wellbore Fluid Treatment” to have exclusive rights to the method commonly known in the industry as open-hole, multi-stage ball drop fracturing system.

“What’s interesting from my perspective is the result and effect on the oil patch,” says David Madsen, partner in the corporate commercial litigation group at Borden Ladner Gervais LLP, which represented Weatherford, Weatherford International PLC., Weatherford Canada Ltd., Weatherford Canada Partnership and Harvest Operations Corp. 

Packers Plus had filed a patent infringement lawsuit against Weatherford and Harvest Operations. Weatherford is one of the world's largest multinational oil and natural gas service companies.

There were in fact four different lawsuits and four different sets of defendants consolidated for the purposes of the patent validity trial.
  
The judgment issued Dec. 6 is also a victory for Essential Energy Services Ltd. and Tryton Tool Services Limited Partnership, Baker Hughes Canada Company, Resource Well Completion Technologies Inc. and Resource Completion Systems Inc. — all companies that Packers Plus had sued for patent infringement in other actions over the same technology.

“It’s a huge win for all of those defendants because a big portion of what they did was practicing this methodology. What we have is a patent that is invalidated. As a result, there is no monopoly and lots of free competition in the market place,” Madsen says.

Had it gone the other way, there was a real risk some of those companies might have gone out of business as there would have been an injunction preventing any of the other oil field service companies from practicing the method or something similar to it — something pretty much all of them are doing.

Madsen points out that there would have been a large damages award and, perhaps more importantly, Packers Plus wasn’t just pursuing the service companies — Harvest Oil is an exploration and production company and Packers was seeking disgorgement of their profits for all of the increased hydrocarbon recovery that Harvest had enjoyed as a result of using the technology. 

“One would expect that had they found success they would have pursued other exploration and production companies,” says Madsen. “That would have had a dramatic effect on the industry.”

In December 2015, Packers Plus scored a victory over Canuck Completions Ltd. when the Federal Court of Canada ruled in its favour in a patent infringement lawsuit filed against the competitor in 2013. Packers was awarded $7.7 million in damages and $495,000 in costs in that case.

Madsen points out, however, that in that case while there was a judgment there was no decision on the merits.

“What was interesting is once the court heard the facts of the case, not only did it find the patent was invalid because it was obvious, the court also found that Packers Plus had publicly disclosed the alleged invention more than a year before they applied for the patent which in itself invalidated the patent,” says Evan Nuttall, partner and head of patent litigation in BLG’s Calgary office.

Nuttall says “a lot of leg work” went into finding out what Packers Plus had done more than a year before the patent was applied for.

“If we could show, as we did, that the patent had been publicly disclosed that is grounds alone for invalidating,” says Nuttall.

Packers Plus can appeal to the Federal Court of Appeal within 30 days. 

Robert MacFarlane, partner with Bereskin & Parr LLP who represented Packers Plus, declined comment indicating the “case is ongoing.” 

Packers Plus general counsel Tracey Beaudoin did not return a call from Legal Feeds.

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