Excalibre Oil Tools Ltd v. Advantage Products Inc.

Excalibre Oil Tools Ltd v. Advantage Products Inc.
Court (s) Database
Federal Court Decisions
Date
2016-11-17
Neutral citation
2016 FC 1279
File numbers
T-1741-08, T-1946-09
Decision Content
Date: 20161117
Dockets: T-1741-08
T-1946-09
Citation: 2016 FC 1279
Ottawa, Ontario, November 17, 2016
PRESENT: The Honourable Mr. Justice Manson
BETWEEN:
EXCALIBRE OIL TOOLS LTD, EXCALIBRE DOWNHOLE TOOLS LTD, KUDU INDUSTRIES INC, CARDER INVESTMENTS LP, CARDER MANAGEMENT LTD AND LOGAN COMPLETION SYSTEMS INC
Plaintiffs
and
ADVANTAGE PRODUCTS INC, LYNNE P. TESSIER, JAMES L. WEBER AND JOHN P. DOYLE
Defendants
Docket: T-1946-09
AND BETWEEN:
ADVANTAGE PRODUCTS INC, LYNNE P. TESSIER, JAMES L. WEBER AND JOHN P. DOYLE
Plaintiffs
and
EXCALIBRE OIL TOOLS LTD, EXCALIBRE DOWNHOLE TOOLS LTD, KUDU INDUSTRIES INC, CARDER INVESTMENTS LP, CARDER MANAGEMENT LTD AND LOGAN COMPLETION SYSTEMS INC
Defendants
JUDGMENT AND REASONS
Table of contents
I. The Pleadings. 4
II. Summary of Results in these Actions. 8
A. Ownership of the Patents. 8
B. The ‘467 Patent. 9
C. The ‘734 Patent. 9
D. The ‘026 Patent. 9
E. Section 7(a) of the Trade-marks Act. 9
F. Remedies. 9
III. The Parties. 10
A. Background. 10
B. The Technology. 15
(1) Oil Production. 15
(2) Torque Anchors. 17
IV. The API Patents. 18
A. Canadian Patent No. 2,264,467 (the ‘467, or Jaw Patent). 18
B. Canadian Patent No. 2,373,734 (the ‘734, or Spring Patent). 21
C. Canadian Patent No. 2,386,026 (the ‘026, or Stop Patent). 22
V. API Fact Witness Evidence. 24
A. Lynn Tessier. 24
B. John Doyle. 27
C. Kerry Van Metre. 27
D. Kelly McGowan. 28
E. Jack Bootsman. 29
VI. Excalibre Fact Witness Evidence. 30
A. Michael Burton. 30
B. Colin Aldridge. 31
C. Kevin Kelm.. 32
D. Edward Moore. 33
E. Dan Echino. 35
F. James Esposito. 36
G. Leanne Wichmann Cohen. 37
H. Lisa Redhead. 38
VII. API Expert Witness, Dr. Robert Sorem.. 40
VIII. Excalibre Expert Witnesses. 41
A. Dr. Wooley. 41
B. Mr. Skoczylas. 45
IX. Claim Construction. 46
A. Relevant Dates. 46
B. The Person Skilled in the Art (POSITA). 48
C. Common General Knowledge. 49
(1) Relevant dates for considering common general knowledge as it relates to anticipation and obviousness – the claim date (priority documents). 49
(2) Common General Knowledge. 50
(3) Prior Art. 52
D. Claim Terms Needing Construction. 54
(1) Tubular. 54
(2) Housing. 55
(3) Casing-engaging wall 59
(4) “First Stop” and “Second Stop”. 61
X. Ownership of the API Patents. 64
XI. The Tests of the TorqStopperTM Torque Anchors. 64
A. Excalibre Parties testing at the C-FER Laboratories on July 30, 2014 and July 31, 2014. 65
B. Testing at the API Facilities on January 12, 2015. 68
C. Demonstrative Testing at C-FER on January 13, 2015. 70
XII. The Law – Principles of Utility, Anticipation, Obviousness, and Infringement. 71
A. Utility. 71
B. Anticipation. 72
C. Obviousness. 73
D. Infringement. 75
XIII. The ‘467 Patent. 77
A. Utility. 77
B. Infringement. 81
XIV. The ‘734 Patent. 85
A. Anticipation – ‘843 Burton Patent. 85
B. Anticipation – Prior Use. 86
C. Obviousness. 86
XV. The ‘026 Patent. 91
A. Utility. 91
B. Anticipation. 94
C. Obviousness. 94
D. Infringement. 96
XVI. Section 7(a) of the Trade-marks Act. 99
XVII. Remedies. 105
XVIII. Costs. 105
I. The Pleadings [1] Two actions are brought before the Court concerning the validity and/or infringement of a number of claims in three Canadian Patents, which are owned by Lynn Tessier (“Tessier”), James Weber (“Weber”), and John Doyle (“Doyle”): Canadian Patent No. 2,264,467 (the “‘467 Patent”); Canadian Patent No. 2,373,734 (the “‘734 Patent”); and Canadian Patent No. 2,386,026 (the “‘026 Patent”) (collectively, the “API Patents”).
[2] The plaintiffs in the patent impeachment action (T-1741-08), who are the defendants in the infringement action (T-1946-09), are the companies Excalibre Oil Tools Ltd. (“Excalibre Oil”), Excalibre Downhole Tools Ltd. (“Excalibre Downhole”), Kudu Industries Inc. (“Kudu”), Carder Investments LP and Carder Management Ltd. (together, “Carder”), and Logan Completion Systems Inc. (“Logan”) (collectively, the “Excalibre Parties”).
[3] The defendants in the patent impeachment action, and plaintiffs in the patent infringement action, are the companies Advantage Products Inc. (“API”) and MSI Machineering Solutions Inc. (“MSI Offshore”) , and the individuals Weber, Tessier, and Doyle (collectively, the “API Parties”). Former defendant to the patent impeachment action, and co-plaintiff in the patent infringement action, is the former company MSI Machineering Solutions Inc. (“MSI Alberta).
[4] In the first action, the Excalibre Parties assert that each of the API Patents is invalid: the ‘467 Patent because of inutility; the ‘734 Patent because of anticipation or obviousness; and the ‘026 Patent because of anticipation, obviousness and because claim 1 fails to recite a means to actuate the jaw and is, therefore, broader than the invention made and is inoperable. There is also a claim under section 7(a) of the Trade-marks Act, RSC, 1985, c T-13, wherein the Excalibre Parties assert that the API Parties damaged the Excalibre Parties’ business relations through false and misleading statements.
[5] In the second action, the API Parties against the Excalibre Parties assert that various versions of a torque anchor sold by the Excalibre Parties (the “CTA Torque Anchor”) infringe the API Patents.
[6] The API Patents all relate to a torque anchor tool designed to prevent the rotation of a rotary pump stator (or downhole tool) that is part of a Progressing Cavity Pump system (“PC Pump”) designed to extract oil from subterranean reservoirs (the “TorqStopperTM” torque anchors).
[7] The following issues are raised in the two actions:
Ownership of the ‘467 and ‘026 Patents
a. What is the legal effect of the assignments relating to the ‘467 and ‘026 Patents?
Patent Infringement and Validity
a. The ‘467 Patent:
b. What is the proper construction of claims 1 to 17 of the ‘467 Patent?
c. Is the tool recited in claims 1 to 17 of the ‘467 Patent inoperable and lacking utility, in that each of claims 1 to 17 fails to recite an essential and necessary feature for the tool to operate, namely:
i. each of claims 1 to 17 fails to recite a spring to bias the jaw outwardly?; and
ii. each of claims 1 to 17 is inoperable or lacks utility in that each of the claims fails to recite a stop to limit rotation or movement of the jaw?
d. Do any of the versions of the CTA Torque Anchor (i.e., versions 1 to 6, and the offset version) infringe claims 1 to 9 and 12 to 17 of the ‘467 Patent?
e. If infringed, who of the Excalibre Parties is liable for infringement of the asserted claims of the ‘467 Patent?
b. The ‘734 Patent:
f. Are claims 1 to 19 anticipated by US Patent 4,739,834 (the “‘843 Burton Patent”)?
g. Are claims 1 to 19 obvious in view of US Patent 4,699,224 (the “‘224 Burton Patent”); the ‘843 Burton Patent; US Patent 6,037,693 (the “‘693 Aldridge Patent); and/or the ‘467 Patent and prior public use(s) of tools embodying the ‘467 patented invention?
c. The ‘026 Patent:
h. Is claim 1 broader than the invention made, inoperable and lacking utility, in that claim 1 fails to recite the essential and necessary feature for the tool to operate, namely that the jaw be outwardly biased by means of a spring?
i. Are claims 1 to 7 anticipated by the ‘843 Burton Patent?
j. Are claims 1 to 7 obvious in view of the ‘224 Burton Patent, the ‘834 Burton Patent, the ‘693 Aldridge Patent, and/or the ‘467 Patent and prior public use(s) of tools embodying the ‘467 patented invention?
k. Do any of the versions of the CTA Torque Anchor (i.e., versions 1 to 6, and the offset version) infringe claims 1 or 2 of the ‘026 Patent?
l. If infringed, which of the versions and models of the CTA Torque Anchor infringe either claim 1 or 2?
m. If infringed, who of the Excalibre Parties is liable for infringement of claim 1 or 2 of the ‘026 Patent?
d. False and Misleading Statements
n. Did API or MSI Offshore through their solicitor make false and misleading statements, in letters referenced at paragraphs 25 to 27 of the Further Amended Statement of Claim in Court File No. T-1741-08, which tended to discredit the business goods or services of the Excalibre Parties, contrary to subsection 7(a) of the Trade-marks Act?
e. Remedies
o. Are the API Parties entitled to injunctive relief, declaratory relief, an Order for the delivery up of infringing products, and/or an election of profits from the Excalibre Parties?
p. Are the Excalibre Parties entitled to a permanent injunction restraining each of the API Parties from making representations to third parties, including customers and potential customers of the Excalibre Parties, that any of the Excalibre Parties’ CTA Torque Anchors infringe the claims of the API Patents?
q. Are the Excalibre Parties entitled to declaratory relief against the API Parties?
II. Summary of Results in these Actions A. Ownership of the Patents [8] The API Patents were validly assigned to Weber, Tessier, and Doyle.
B. The ‘467 Patent [9] The claims of the ‘467 Patent are valid; however, none of asserted claims 1 to 9 or 12 to 17 are infringed by any version of the CTA Torque Anchors.
C. The ‘734 Patent [10] The ‘734 Patent is invalid because claims 1 to 19 are obvious.
D. The ‘026 Patent [11] Claim 1 of the ‘026 Patent is invalid for inutility, because claim 1 is broader than any invention made or disclosed, and lacks utility. Claims 2 to 7 are valid; however, neither asserted claim 1 nor claim 2 is infringed by any version of the CTA Torque Anchors.
E. Section 7(a) of the Trade-marks Act [12] API made false or misleading statements tending to discredit the business, goods, or services of the Excalibre Parties, which caused damage to the business of the Excalibre Parties, contrary to section 7(a) of the Trade-marks Act.
F. Remedies [13] Given the findings on validity and infringement, the API Parties are not entitled to any of the relief sought. The Excalibre Parties are entitled to damages against API resulting from the misleading statements made, pursuant to section 7(a) of the Trade-marks Act, which are to be determined in a reference after trial.
III. The Parties A. Background [14] Excalibre Oil was an Alberta-incorporated company, who in the past distributed and sold CTA Torque Anchors (CTA stands for “Centralized Torque Anchor”). These CTA Torque Anchors were manufactured by the company Tebo Industries Ltd. (“Tebo”). Both Excalibre Oil and Tebo have been struck from the Alberta Corporate Register: Excalibre Oil on August 7, 2009; and Tebo on May 2, 2012. Presently, the business of both companies is being carried on by Excalibre Downhole.
[15] Excalibre Downhole is a company incorporated in Alberta, with an office at 5007-23 Avenue, S.E., Calgary, Alberta. From 2009 to 2012, Excalibre Downhole sold the CTA Torque Anchors manufactured by Tebo. Excalibre Downhole currently manufactures and sells, among other products, these CTA Torque Anchors.
[16] Kudu is a company incorporated in Alberta that manufactures and supplies artificial lift technologies, including PC Pumps. Since July 2007, Kudu has purchased CTA Torque Anchors from Excalibre Oil and, later, Excalibre Downhole, and sold them to the oil well servicing and operating industry.
[17] Carder Investments LP, formerly known as Tanroc Equipment LP, is a registered limited partnership in Alberta. Carder Management Ltd., formerly known as Tanroc Management Ltd., is a corporation incorporated in Alberta, which was at all material times the general partner of Carder Investments LP. Carder is in the business of selling downhole products to the oil well servicing and operating industry, particularly in Western Canada. Since July 2007, Carder has purchased CTA Torque Anchors from Excalibre Oil and, later, Excalibre Downhole, and sold these devices to the oil well servicing and operating industry.
[18] Logan, formerly known as Source Energy Tool Services Inc., is a company incorporated in Alberta that is in the business of selling downhole products to the oil well servicing and operating industry, particularly in Western Canada. In February 2011, Source Energy Tool Services Inc. amalgamated with Complete Oil Tools Inc., and began operating under the name Logan. Since July 2007, Logan has purchased CTA Torque Anchors from Excalibre Oil and, later, Excalibre Downhole, and sold these devices to the oil well servicing and operating industry.
[19] API is, and was at all material times, an existing company incorporated in Alberta. API designs and manufactures oilfield tools, including tools designed for PC Pumps. API sells torque anchors, in competition with the CTA Torque Anchor, under the trademark TorqStopperTM. API is, and has been at all material times, the Canadian licensee of the API Patents. From December 31, 2002 to January 16, 2014, API held a sublicense to the API Patents from MSI Alberta, who was the licensee of MSI Offshore. Since January 16, 2014, API has been licensed to make, use, and sell the subject matter of the API Patents, pursuant to a license granted by the current owners Weber, Tessier, and Doyle.
[20] Weber is listed owner of the API Patents and is, and was at all material times, a director and officer of API.
[21] Tessier is listed owner of the API Patents and is, and was at all material times, a director and a shareholder of API.
[22] Doyle is listed owner of the API Patents. Doyle was at one time an employee and part of management at API.
[23] MSI Alberta was a company incorporated in Alberta. It was struck from the Alberta Corporate Register on June 7, 2013. MSI Offshore is a company incorporated under the laws of the Turks and Caicos, a British Overseas Territory in the Caribbean, having a registered office c/o the Hallmark Trust Company, Tropicana Plaza, Leeward Hwy, P.O. Box 656, Providenciales, Turks and Caicos, British West Indies. Prior to January 16, 2014, when MSI Offshore assigned the API Patents to Weber, Tessier, and Doyle, MSI Offshore was recorded by the CIPO as the owner of the API Patents.
[24] The Excalibre Parties manufacture and/or sell CTA Torque Anchors. In July 2007, Tebo created Interim CTA Torque Anchor versions 1A and 1B. Excalibre Oil sold Interim CTA Torque Anchors from July 2007 to approximately April 2008. In or about April 2008, Excalibre Downhole created CTA Torque Anchors which were available in versions 2A, 2B, 3, 4, 5, and 6. Excalibre Downhole also created a single “offset” version of the CTA Torque Anchor, at the request of Kudu, for a specific Kudu customer (the “offset CTA Torque Anchor”).
[25] The different versions of the CTA Torque Anchor can be described as follows:
• Interim CTA Torque Anchor version 1A – a torque anchor with a tubular housing, having a single moveable slip and two rigid slips, spaced equidistant around the housing, and possessing “milled out” portions on both side of the moveable slip and a pad for stopping over-rotation of the moveable slip.
• Interim CTA Torque Anchor version 1B – a torque anchor similar to Interim CTA Torque Anchor version 1A, but possessing a pair of moveable slips placed vertically one above the other along a longitudinal axis of the torque anchor.
• CTA Torque Anchor version 2A – a torque anchor with a tubular housing, having a single moveable slip and two rigid slips, spaced equidistant around the housing, and possessing a singled “milled out” portion on one side of the moveable slip. The unmilled side of the moveable slip prevents over-rotation.
• CTA Torque Anchor version 2B – a torque anchor similar to CTA Torque Anchor version 2A, but possessing a pair of moveable slips placed vertically one above the other along a longitudinal axis of the torque anchor.
• Offset CTA Torque Anchor – a modified version 2A torque anchor, wherein the rigid slips are shorter than the moveable slip, causing the torque anchor to be decentralized in the casing.
• CTA Torque Anchor version 3 – a torque anchor with a tubular housing, having a single moveable slip and two rigid slips, spaced equidistant around the housing, where the moveable slip is mounted upon a mount block, which prevents the over-rotation of the moveable slip.
• CTA Torque Anchor version 4 – a torque anchor similar to CTA Torque Anchor version 3, but where the rigid slips include multiple holes such that the slips can be attached at different depths in the tool housing.
• CTA Torque Anchor version 5 – a torque anchor similar to CTA Torque Anchor version 4, but where the recesses for the rigid slips include steps to afford deeper threads for increased fastening strength.
• CTA Torque Anchor version 6 – a torque anchor similar to CTA Torque Anchor version 5, but where the moveable jaw has three teeth, rather than two.
[26] API has manufactured and sold different models of the TorqStopperTM torque anchors: the “T” series model, since on or about April 1999, which is an embodiment of the ‘467 Patent; the TS model, since on or about March 2000; the TN model, since on or about June 2001, which has an internal torsional spring and is an embodiment of the ‘734 Patent; and the TX model, since on or about March 2002, which has a stop feature and is an embodiment of the ‘026 Patent.
[27] In or about September 2006, Tebo (now Excalibre Downhole) created a single prototype torque anchor (the “Prototype”). On September 14, 2006, a third party distributor, Terra Alta, displayed the Prototype at the 13th Heavy Oil Symposium in Lloydminster Alberta. Although, the Prototype was never sold, it came to the attention of the API Parties.
[28] From July 2007 to about April 2008, Excalibre Oil and Excalibre Downhole sold approximately 320 Interim CTA Torque Anchors to Kudu, Tanroc (now Carder), and Source (now Logan). These Interim CTA Torque Anchors were then sold to various oil well completion companies in Western Canada, including Husky Energy Inc. (“Husky”) and Bronco Energy Inc. (“Bronco”).
[29] Between January and May of 2008, a number of customers and former customers of Kudu, Tanroc (now Carder), and Source (now Logan), including Husky and Bronco, received letters from Mr. Sean Goodwin (the “Goodwin Letters”), an Alberta lawyer representing API and MSI Offshore. In the letters, Goodwin expressly stated that “API holds three Canadian patents for anti-rotation tools implementing one jaw”; “API holds the first patent position in the world for single jaw anti-rotation tools which utilize a pivoting jaw for engaging the casing, jamming the tool against the casing and preventing rotation of the tool and equipment secured thereto”; and that API is the “sole authorized source [in Canada] of single jaw torque anchors utilizing a single jaw projecting from the tool's circumference”. Further, Goodwin alleged that should such customers purchase CTA Torque Anchors, they would be infringing API’s patent rights.
B. The Technology [30] The Excalibre Parties and the API Parties provided an agreed joint technical and background summary for understanding the API Patents, containing information which the parties submit would have been known by a person of ordinary skill in the art (“POSITA”) at the relevant times.
(1) Oil Production [31] Oil wells are borings into the subterranean reservoir that are designed to bring oil hydrocarbons to the surface, which often have a metal bore/casing, referred to as the wellbore casing, or casing, inside which production tubing moves the produced oil to the surface. If a reservoir lacks the pressure to force the oil to the surface, a pumping mechanism is deployed. One example of a pump used to produce oil is a PC Pump.
[32] A PC Pump consists of a helical rotor that turns within a double helix channel formed in an elastomeric stator, which is bound inside a steel tube. In an oil well application, a PC Pump is located deep down at the bottom of the well (“downhole”), and is attached to a drive unit mounted on a frame at the surface. The drive unit rotates a polished shaft, which is connected to a series of linked rods (the “rod string”) that extend downhole and drive the PC Pump.
[33] The PC Pump is a positive displacement pump. The rotor is coupled to and driven by the bottom of the rod string. A tube surrounds the rod string (the “tubing string”), and as the rotor is rotated, oil is pushed up through the PC Pump and tubing string to the surface of the well. At the surface, the tubing string is capped and sealed, and the oil is directed down a flowline.
Standard PC Pump System
(2) Torque Anchors [34] Most PC Pump systems operate such that the rotor turns in a clockwise direction. This rotation can cause vibration and reactive torque. The reactive torque (i.e., friction) in the system can cause the production tubing connections to become unthreaded. This can result in the loss of the PC Pump or the tubing string into the reservoir.
[35] Torque anchors (also known as anti-rotation devices or “no-turn” tools) are frequently used in PC Pump systems to prevent the unscrewing of the tubing string above the PC Pump. When a torque anchor is attached to the tubing string, above or below the PC Pump, the reactive torque that the PC Pump imparts on the production tubing is neutralized, and transferred to the wellbore casing, which is cemented within the wellbore. A torque anchor thereby prevents the pump stator and the tubing string from rotating in a counter-clockwise direction when the PC Pump is actuated, which prevents the unscrewing of the tubing string above the PC Pump.
[36] Both Parties agree that examples of prior art in the field of torque anchors include, but are not limited to, the torque anchors disclosed in: (1) Canadian Patent No. 1,274,470 (the “‘470 Patent”), which uses a cam-actuation system to actuate movable cam slips into a casing-engaging position; and (2) U.S. Patent No. 5,275,239 (the “‘239 Patent”, an embodiment of which is the “Obrejanu Tool”), which uses the rotation of an anchoring member to cause movable anchoring members to bite into the well casing, locking against further rotation.
IV. The API Patents A. Canadian Patent No. 2,264,467 (the ‘467, or Jaw Patent) [37] The filing date for the ‘467 Patent is March 5, 1999. It was published on September 5, 2000, and issued on February 26, 2002. The ‘467 Patent was invented by Tessier.
[38] A statement of the invention is set out on page 2 of the ‘467 Patent specification:
A simplified anti-rotation tool is provided, having only one moving part but which both prevents rotation and stabilizes that to which it is connected. In simplistic terms, the tool connects to a PC Pump or other downhole tool and upon rotation in one direction, causes a jaw to pivot radially outwardly from the tool housing to engage the casing wall and to arrest tool rotation. This action causes the tool housing to move oppositely and come to rest against the casing opposing the jaw. The tool housing and the downhole tool are thereby restrained and stabilized by the casing wall.
In a broad apparatus aspect, an anti-rotation tool comprises: a tubular housing having a bore and having at least one end for connection to a downhole tool and a jaw having a hinge and a radial tip, the jaw being pivoted at its hinge from one side of the housing, the jaw's pivot being offset from the jaw's center of gravity so that the jaw is pivotable upon rotation of the tool between a first position stowed against the housing for permitting movement within the casing, and a second position wherein the radial tip swings outwardly from the housing to engage the casing for arresting tool rotation and forcing the housing against the casing opposite the jaw.
[…]
Figure 2. (a) Figure 1(a) of the ‘467 Patent, schematic of the preferred embodiment of the ‘467 Patent—(1) housing, (2) bore, (5) jaw, (7) jaw’s hinge edge, and (11) radial tip of jaw; (b) Figure 3(a) of the ‘467 Patent, cross-section view of the preferred embodiment of the ‘467 Patent in the casing-engaging position—same numbering as Figure 1(a) where (6) indicates the casing of the well bore.
[39] The three independent claims are claims 1, 8, and 16:
• Claim 1:
A tool to prevent rotation of a downhole tool suspended in a wellbore casing comprising:
a. a tubular housing having a wall for engaging the casing and having at least one end for connection to the downhole tool; and
b. a jaw having a radial tip and which is pivoted from a point on the housing opposing the casing-engaging wall for varying the effective diameter of the tool, the jaw's pivot being offset from the jaw's center of gravity so that the jaw is pivotable upon rotation of the tool between
i. a first position stowed against the housing for minimizing the tool's effective diameter and permitting movement within the casing, and
ii. a second casing-engaging position wherein the radial tip pivots outwardly from the housing to increase the tool's effective diameter so that both the radial tip and the housing wall engage the casing for arresting tool rotation.
• Claim 8:
A tool to prevent rotation of a downhole tool suspended in a wellbore casing comprising:
a. a tubular housing having a wall for engaging the casing and having at least one end for connection to the downhole tool; and
b. a jaw having a hinge and a radial tip, the jaw being pivoted at its hinge from one side of the housing, the jaw's pivot being offset from the jaw's center of gravity so that the jaw is pivotable upon rotation of the tool between a first position stowed against the housing for permitting movement within the casing, and a second position wherein the radial tip swings outwardly from the housing to engage the casing for arresting tool rotation and forcing the housing against the casing opposite the jaw, the jaw having a profile and the tubular housing having a corresponding profile so that when stowed, the jaw only projects minimally from the housing, the jaw further being trapezoidal in shape having sloped top and bottom edges so that the jaw is caused to rotate to the stowed position if contacted with an obstruction in the wellbore during running in and tripping out.
• Claim 16:
A tool for stabilizing a downhole tool suspended in a wellbore casing comprising:
a. a tubular housing having a wall for engaging the casing and having at least one end for connection to the downhole tool; and
b. a jaw having a radial tip and which is pivoted from a point on the housing opposing the casing-engaging wall for varying the effective diameter of the tool, the jaw's pivot being offset from the jaw's center of gravity so that the jaw is pivotable upon rotation of the tool between
i. a first position stowed against the housing for minimizing the tool's effective diameter and permitting movement within the casing, and
ii. a second casing-engaging position wherein the radial tip pivots outwardly from the housing to increase the tool's effective diameter so that both the radial tip and the housing wall engage the casing, wherein the engagement of housing wall and the casing stabilizes the tool and the downhole tool.
B. Canadian Patent No. 2,373,734 (the ‘734, or Spring Patent) [40] The Canadian filing date for the ‘734 Patent is February 28, 2002. It has a US priority date of September 26, 2001. The ‘734 Patent was published on March 26, 2003, and issued on December 20, 2005. The ‘734 Patent was invented, and is currently owned, by Weber, Tessier, and Doyle.
[41] A statement of the invention is set out on page 2 of the ‘734 Patent specification. The general description of the tool is substantially the same as that of the ‘467 Patent specification, but with the following differences:
[…]
The jaw is pivoted at its hinge from one side of the housing, so that the jaw is biased so as to pivot outwardly to a first casing-engaging position, wherein the radial tip engages the casing, and the housing is urged against the casing opposite the jaw. The jaw is also inwardly pivotable to a second compressed position towards the housing to enable movement within the casing during tripping in and tripping out.
Preferably, the jaw is biased to the casing-engaging position by a torsional member extending through the hinge, which is rigidly connected to the housing at a first end and to the jaw at a second end. Compression of the jaw twists the torsional member into torsion which then acts to bias or urge the jaw outwardly again.
[…]
[42] There are two independent claims, claims 1 and 16:
• Claim 1:
A tool to prevent rotation of a downhole tool suspended in a wellbore casing comprising:
• a tubular housing having a wall for engaging the casing and having at least one end for connection to the downhole tool;
• a jaw having a radial tip and which is rotatable along an axis along a wall of the housing opposing the casing-engaging wall for varying the effective diameter of the tool; and
• a spring, acting between the jaw and the housing so as to bias the jaw outwardly to a first casing-engaging position wherein the radial tip is positioned outwardly from the housing to increase the tool's effective diameter so that the radial tip engages the casing and the housing wall engages the casing for arresting tool rotation and further, to permit a second compressed position wherein the jaw is temporarily compressed towards the housing for minimizing the tool's effective diameter and permitting movement within the casing.
• Claim 16
An improvement to a tool used to prevent rotation of a downhole tool suspended in a wellbore casing, the tool having a housing and at least one jaw having an edge which is pivotable at a hinge on the housing, the hinge having first and second ends pivotally connected to the housing, the improvement comprising:
• a torsional member having first and second ends;
• a first holder for pinning the first end of the torsional member to the housing; and
• a second holder pivotable with the jaw and for pinning the second end of the torsional member to the jaw so that when the jaw pivots towards the housing, the torsional member is twisted for biasing the jaw outwardly.
C. Canadian Patent No. 2,386,026 (the ‘026, or Stop Patent) [43] The Canadian filing date for the ‘026 Patent is May 13, 2002. It has a US priority date of September 26, 2001. The ‘026 Patent was published on March 26, 2003, and issued on January 16, 2007. The ‘734 Patent was invented, and is currently owned, by Weber, Tessier, and Doyle.
[44] A statement of the invention is set out on page 2 of the ‘026 Patent specification. The general description of the tool is substantially the same as the statement of the invention in the ‘467 Patent specification and the ‘734 Patent specification, but with the following differences:
[…]
Preferably, overextension of the jaw during assembly is prevented using cooperating stops in the jaw and the housing. In a broad aspect, a downhole tool comprises a tubular housing for suspension in a wellbore casing and having a wall which engages the wellbore casing and having at least one end for threaded connection to the downhole tool, a jaw having a radial tip and which is rotatable along an axis along a base of the jaw and along a hinge on the wall of the housing opposing the casing-engaging wall for varying the effective diameter of the tool, a first stop formed on the base of the jaw, and a second stop formed in the wall of the housing at the hinge. The first and second stops cooperate so as to limit maximum rotation of the jaw, while permitting the effective diameter of the tool to increase to a diameter greater than the casing.
[45] Independent claim 1 provides:
• Claim 1:
A downhole tool suspended in a wellbore casing comprising:
• a tubular housing for suspension in a wellbore casing and having a wall which engages the wellbore casing and having at least one end for threaded connection to the downhole tool;
• a jaw having a radial tip and which is rotatable along an axis along a base of the jaw and along a hinge on wall of the housing opposing the casing-engaging wall for varying the effective diameter of the tool;
• a first stop formed on the base of the jaw; and
• a second stop formed in the wall of the housing at the hinge, the first and second stops cooperating so as to limit maximum rotation of the jaw and to permit the effective diameter of the tool to increase to a diameter greater than the casing.
V. API Fact Witness Evidence A. Lynn Tessier [46] Lynn Tessier has a Bachelor of Applied Science in Mechanical Engineering, and a Master of Applied Science in Mechanical Engineering, both from the University of Waterloo. He is a Registered Professional Engineer, and a fellow of the Canadian Academy of Engineers. Between 1998 and 2002, Tessier was an Engineering Advisor for SKF Magnetic Bearings Inc. and was directly involved in the development of the API Patents. Currently, and at all material times, Tessier is/was a shareholder, director, and consultant for API.
[47] Tessier gave evidence that he was approached by Weber to design a torque anchor that was robust, simple to use and easy to manufacture. He also testified that the tool invented, the ‘467 TorqStopperTM torque anchor, was the “ultimate” in simplicity. Three versions of the ‘467 torque anchors were created by November 1999: (1) a ‘467 TorqStopperTM torque anchor with open bore; (2) a ‘467 TorqStopperTM torque anchor with closed-bore, which could be run above the PC Pump; and (3) a ‘467 TorqStopperTM torque anchor with horizontally oriented, banded extensions protruding from the opposite side the housing from the jaw, to enable the tool to be used with an oversized pump.
[48] By November 2000, Weber, Tessier, and Doyle (together, the “Inventors”) were designing, manufacturing, and selling versions of the ‘467 TorqStopperTM torque anchor with external, coiled springs added to bias the jaw. This spring was incorporated to help actuate the door of the closed-bore ‘467 TorqStopperTM torque anchor. The closed-bore necessitated that the door could not be milled from the body of the tool; therefore, it was lighter and did not set consistently downhole. In heavy oil, particularly, there would be “stiction” between the door and the housing of the tool, which would lead to difficulty getting the door open. Tessier admitted that the early TorqStopperTM torque anchors that incorporated the spring feature were retrofitted ‘467 torque anchors with coiled springs. He further testified that the Inventors subsequently moved to make the ‘734 torque anchors, which had an internal torsional member (also called a torsional spring), in order to protect the spring from acidic production fluids in the oil well.
[49] Tessier also stated that the Inventors were getting reports that the doors of both the ‘467 and the ‘734 TorqStopperTM torque anchors were prone to being damaged by the rough treatment of the tools by rig operators, who were assembling the TorqStopperTM torque anchors onto the production tubing. Rig operators often used the doors as a lever to thread the torque anchor onto the PC Pump or the production tubing up-hole, which would damage the door and could potentially result in the rig operator ripping the door from the housing. The evidence is that the Inventors of the ‘026 Patent solved this issue by adding a notch feature, called a “stop”, which made the door more robust by transferring the torqueing force to the housing.
[50] Counsel for the Excalibre Parties objected to Tessier testifying to the development of the patented tools, that is, the evolution of the TorqStopperTM torque anchors from the ‘467 TorqStopperTM torque anchors to the ‘026 TorqStopperTM torque anchors. After hearing submissions from the parties on this point, I decided that this evidence could be a factor when considering the question of obviousness (Sanofi-Synthelabo Canada Inc v Apotex Inc, 2008 SCC 61 at para 70 [Sanofi]) as stated by Mr. Justice Rothstein:
Another important factor [regarding obviousness] may arise from considering the actual course of conduct which culminated in the making of the invention. It is true that obviousness is largely concerned with how a skilled worker would have acted in light of the prior art. But this is no reason to exclude evidence on the history of the invention, particularly where the knowledge of those involved in finding the invention is no lower than would be expected of the skilled person.
[51] Tessier further stated that API touts the fact that the TorqStopperTM torque anchor decentralizes the downhole tool as a benefit of using the TorqStopperTM torque anchor, because it causes the tool to be pressed against the casing, which increases overall stability. He stated that it is his view that stability is a function of the overall length of contact (i.e. the contact between the casing, and the side of the TorqStopperTM torque anchor and the attached downhole tool).
[52] Finally, Tessier, in his capacity as a director of API, testified that Goodwin had been authorized by API to send the Goodwin Letters, which form the basis of the Excalibre Parties’ section 7(a) claim. He confirmed that API and MSI Offshore had directed Goodwin to send the following letters:
a letter to Kudu explicitly stating that the CTA Torque Anchor infringed the API Patents (the “January 18, 2008 Kudu Letter); a letter notifying Husky that single jawed torque anchors infringed the API Patents and advising Husky to determine the extent of their liability (the “January 16, 2008 Husky Letter); a letter advising Husky that API had been credibly informed that Husky was planning to source CTA Torque Anchors and warning them to review their exposure under Canadian patent laws (the “February 1, 2008 Husky Letter”); a letter advising Husky that they would be included in the present infringement action if they did not stop sourcing CTA Torque Anchors immediately (the “April 28, 2008 Husky Letter”); and a letter advising Bronco that they would be included in the present infringement action if they did not stop purchasing CTA Torque Anchors immediately (the “May 16, 2008 Bronco Letter”).
B. John Doyle [53] John Doyle is the Vice President, Manufacturing at General Magnetic International Inc. Doyle is a Master Machinist who originally trained at Sir James Farmer Norton & Co. Ltd. From 1998 to 2001, Doyle was employed by SKF/Revolve Mechanical Bearing as a mechanical designer/technologist. From 2001 to 2010, he was the Chief Designer/General Manager at API.
[54] Doyle testified that the Inventors tested a number of different ideas for the “stop” used in the ‘026 TorqStopperTM torque anchor before settling on the notches that are shown in figure 12(a) of the ‘026 Patent.
C. Kerry Van Metre [55] Kerry Van Metre is the Chief Operating Officer of Royal Well Servicing Ltd. In 2002, he was self-employed as a contractor to Petrovera Resources Limited, and in the business of servicing oil rigs. He testified that he had personally set many TorqStopperTM torque anchors and other torque anchors.
[56] Van Metre testified that he had never had any difficulty setting the open bore ‘467 TorqStopperTM torque anchor. Additionally, he testified that the setting protocol used in the API Tests (discussed below) was representative of the protocol that would be used on an oil rig, and that the protocol used in the 2014 C-FER Tests (discussed below) resulted in a turning speed that was slower than a typical turning speed used in the field. On cross-examination, Van Metre testified that generally the TorqStopperTM torque anchors used on the rigs, with which he was familiar, would set easily by turning the production tubing with a “fairly good snap”, but that sometimes you would have to make more than one attempt to ensure that the torque anchor set. I found him to be a credible witness.
D. Kelly McGowan [57] Kelly McGowan is the owner of Trilogy Oilfield Ltd., a company that rents oilfield tools and services oil wells in British Columbia, Alberta, and Saskatchewan. McGowan is a shareholder in API, and Trilogy has been in a b