28 LEXPERT MAGAZINE
|
MARCH/APRIL 2018
BIG SUITS
PACKERS PLUS ENERGY
SERVICES INC. V. ESSENTIAL
ENERGY SERVICES LTD.
DECISION DATE: DECEMBER 6, 2017
In four separate actions that were consoli-
dated before the Federal Court of Canada, a
number of service companies in the oil patch,
including Essential Energy Services Inc.,
Baker Hughes Canada Company, Weather-
ford International PLC and Resource Well
Completion Technologies Inc., successfully
invalidated a patent that claimed a well-
known system for fracturing known as the
"ball drop."
e ball-drop system provides a way of
fracturing a horizontal oil or gas well in
stages or segments to increase overall produc-
tion. With the rise of oil prices in the mid-
2000s it became very popular in the industry.
Between 2013 and 2015 the owner of the
patent, Packers Plus Energy Services Inc.,
and/or its licensee, Rapid Completions LLC,
brought a patent infringement action against
the four sets of defendants, arguing that their
sales of the ball drop system infringed the
Packers Plus patent.
Each of the defendants counterclaimed
on the basis that the patent was invalid. e
defendants' counterclaims on validity were
consolidated and heard together with an in-
fringement issue for one of the defendants,
Essential Energy, in a five-week trial begin-
ning in February 2017. e Federal Court's
Justice James O'Reilly found the patent to be
invalid on two separate bases (and, in the Es-
sential Energy case, not infringed). e first
ground of invalidity is anticipation by prior
use. Packers Plus had conceded that before
filing its patent, it had marketed and sold the
ball drop system to two oil-and-gas operating
companies, Enron Oil and Gas (EOG) and
Headington Oil. is would ordinarily pre-
vent an inventor from claiming that his in-
vention is novel, and therefore a patent would
be invalid. However, Packers Plus argued
that these disclosures were not "public dis-
closures" because they were confidential or
because they were for "experimental use."
e Court found that these defences were
not made out. Justice O'Reilly found that in
the process of marketing its version of the
ball-drop system, Packers Plus had disclosed
it at a meeting with EOG that included geol-
ogists, reservoir engineers, drilling engineers
and completion engineers, and possibly out-
side consultants. Although there had been
discussions about confidentiality with one of
the EOG representatives in advance, that dis-
cussion was "general and brief " and the Pack-
ers Plus representative, Dan emig, was not
certain whether confidentiality had been
discussed at the larger meeting. Although
some of the drawings provided to EOG were
marked "confidential," EOG and Packers
Plus had not entered into any written con-
fidentiality agreements, and the agreements
that existed did not address confidentiality.
Justice O'Reilly concluded that "Mr.
emig described to various people how
the ball-drop system worked and presented
them with detailed drawings of the tools and
methodology" and that "[n]umerous persons
were present at the well sites, observed the
tools and watched them being put to use."
He therefore held that based on the evi-
dence, while the confidentiality markings on
certain drawings represented Packers Plus's
"hope that the drawings would be treated as
secret," it was not sufficient to impose a duty
of confidentiality on the various individuals
who had learned about the ball drop system.
e Court also held that the evidence was
insufficient to establish that the sales were for
"experimental" use and therefore not public.
ere was no evidence that Packers Plus pro-
vided its customers with any discount, that it
had advised its clients that the work was ex-
perimental, or that it had prepared any report
of the results. As a result, the plaintiffs' argu-
ment that the disclosures were confidential
was rejected and the claims were held to be
invalid on the basis of anticipation.
Justice O'Reilly also found that the
claimed invention was obvious. e ball drop
system and its use in the North Sea had been
previously described a number of times in a
well-known industry journal. While Justice
O'Reilly accepted the plaintiffs' position that
the "inventive concept" of the claims was the
use of the ball drop system in an open-hole
wellbore, he nevertheless held that the claims
of the patent did not represent any "inventive
step" over the state of the art.
Although the plaintiffs attempted to
minimize these publications as not part of
the "common general knowledge," the Court
rejected this argument on the basis that the
test for obviousness compares the inventive
concept to the "state of the art," which is not
limited to only the "common general know-
ledge." e Court therefore held that the rel-
evant claims were obvious and invalid.
e case is important to Canada's oil patch
as the patent claimed a particular method of
fracturing which became very popular in oil-
and-gas formations in the mid-2000s, and
Packers Plus had been asserting its IP against
numerous industry players.
Anthony Prenol and Antonio Turco of
Blake, Cassels & Graydon LLP were coun-
sel for Essential Energy and Tryton Tools
Services Limited Partnership.
Dalton McGrath, Q.C., Michael O'Brien
and Sarah O'Grady of Blake, Cassels &
Graydon LLP were counsel for Baker
Hughes Canada Co.
David Madsen, Q.C., Evan Nuttall and
Leanne Desbarats of Borden Ladner Ger-
vais LLP were counsel for Weatherford and
Harvest Operations Corp.
Andrew Bernstein, Yael Bienenstock and
Leora Jackson of Torys LLP were counsel
for Resource, supported by Neil Kathol and
Laura Macfarlane from Field Law.
Robert MacFarlane, Joshua Spicer, Mi-
chael Burgess and Donald Cameron of Bere-
skin & Parr LLP were counsel for Packers
Plus Energy Services Inc. and Rapid Com-
pletions LLC in the cases against Essential
Energy, Weatherford and Resource.
Anthony Creber and William Boyer of
Gowling WLG were counsel for Packers
Plus Energy Services Inc. and Rapid Comple-
tions LLC in the case against Baker Hughes.
A LOOK AT THE RESOLUTION OF TWO SIGNIFICANT LAWSUITS FROM WESTERN CANADA: A DECISION OF THE FEDERAL COURT
SAW THE PATENT FOR A WELL-KNOWN SYSTEM OF FRACTURING INVALIDATED; AND ALBERTA'S COURT OF QUEEN'S BENCH
FOUND IN FAVOUR OF ENMAX IN ITS TERMINATION OF THE BATTLE RIVER POWER PURCHASE ARRANGEMENT.
