Zero Spill Systems (Int’l) Inc. v. 614248 Alberta Ltd. (Lea-Der Coatings)

Zero Spill Systems (Int’l) Inc. v. 614248 Alberta Ltd. (Lea-Der Coatings)
Court (s) Database
Federal Court Decisions
Date
2013-07-18
Neutral citation
2013 FC 616
File numbers
T-279-07
Decision Content
Date: 20130718
Docket: T-279-07
Citation: 2013 FC 616
Ottawa, Ontario, July 18, 2013
PRESENT: The Honourable Mr. Justice Barnes
BETWEEN:
ZERO SPILL SYSTEMS (INT’L) INC.,
KATCH KAN HOLDINGS LTD.,
QUINN HOLTBY
and KATCH KAN RENTALS LTD.
Plaintiffs
and
614248 ALBERTA LTD.
dba LEA-DER COATINGS,
BILL HEIDE
dba CENTRAL ALBERTA PLASTIC PRODUCTS,
RAT PLASTIC LTD.
AND 1284897 ALBERTA LTD.
Defendants
AND BETWEEN:
614248 ALBERTA LTD. AND
1284897 ALBERTA LTD.
Plaintiffs by Counterclaim
(Defendants)
and
ZERO SPILL SYSTEMS (INT’L) INC.,
KATCH KAN HOLDINGS LTD.,
AND QUINN HOLTBY
Defendants by Counterclaim
(Plaintiffs)
AMENDED REASONS FOR JUDGMENT AND JUDGMENT
[1] This action concerns allegations of infringement of two Canadian patents bearing Letters Patent No. 2,258,064 (064 Patent) and Letters Patent No. 2,136,375 (375 Patent) and a Canadian Design Registration bearing registration no. 86793 (793 Design) all related to oil field fluid containment products in which the Plaintiffs claim an interest.
[2] The Plaintiff, Quinn Holtby, controls all of the corporate Plaintiffs and he is the inventor named in the 375 and 064 Patents. The Plaintiff, Zero Spill Systems (Int’l) Inc. (Zero Spill), is a non-exclusive licensee of the 793 Design and the 375 and 064 Patents. Katch Kan Holdings Ltd. (KKHL) is an assignee from Mr. Holtby of the 375 Patent and the 064 Patent. According to Mr. Holtby, Katch Kan Rentals Ltd. (KKRL) had been in the business of renting the patented products in the Canadian market but since the end of 2008 it has been dormant. This rental business was then taken up by Katch Kan Ltd. which is not a party to this litigation.
[3] The Plaintiffs allege that the Defendants, Bill Heide, doing business as Central Alberta Plastic Products (CAPP) and Rat Plastic Ltd. (collectively, the Heide Defendants) and the Defendant, 1284897 Alberta Ltd. carrying on business as Lea-Der Coatings, have infringed the 064 Patent and the 375 Patent by manufacturing and/or selling competing oil field fluid containment products. They also allege that the Heide Defendants have infringed on the 793 Design by making and selling a product that is substantially similar in appearance. The Plaintiffs seek declarations of validity with respect to the patents in suit and the 793 Design.
[4] The Heide Defendants assert only that their products do not infringe. Lea-Der Coatings asserts non-infringement and invalidity and has counterclaimed for declarations that the Canadian Patent bearing Letters Patent No. 2,136,375 (375 Patent) issued to Quinn Holtby and assigned to the Plaintiff, KKHL, Letters Patent No. 2,166,265 (265 Patent) issued to the Plaintiff, KKHL, and Letters Patent No. 2,258,064 (064 Patent) issued to Quinn Holtby and assigned to the Plaintiff, KKHL, are invalid.
[5] In the course of this action the Plaintiffs abandoned their allegation that the Defendants have infringed either the 265 Patent or Canadian Letters Patent No. 2,163,322 and the Plaintiffs’ action against the Defendant, 614248 Alberta Ltd., was settled.
General Background to the Asserted Claims
[6] The products that lie at the heart of this case are designed to capture fluids that either leak or are spilled during oil field operations. The 375 Patent claims protection for an upper containment tray that is attached to the top of the flow nipple of an operating drilling rig. The flow nipple is a pipe that extends upward from a ground level foundation to a point just below a drilling rig floor. The flow nipple houses the drill pipe or string that actually cuts the well hole. A flow nipple is typically of a split configuration to allow for ease of take-down if its removal is required. To assist with drilling, either a water or petroleum-based fluid is pumped into the well bore. The drilling fluid circulates back to the top of the well where it is diverted and filtered to remove debris. It is then returned to the well bore.
[7] From time-to-time it is necessary to remove the drill string from the well – often to replace the bit. When the string is pulled, the drill pipe sections are disconnected and stacked. This process typically results in the discharge of significant quantities of drilling fluid from the pipe. Unless this spillage is controlled, the rig crew gets “hosed” and the rig components are covered.
[8] Based on his personal experience as a rig worker, Mr. Holtby realized that the systems being used to control spillage and capture drilling fluid were inadequate. He came up with the idea of a light-weight canister that could be closed around two sections of drill pipe when they were disconnected. He patented this product and called it a “Kelly Kan”. The Kelly Kan protected the rig crew from being hosed and it directed the flow of drilling fluid through the well floor in the vicinity of the top of the flow nipple. The upper fluid containment tray that is the subject of the 375 Patent (the Katch Kan upper tray) was developed by Mr. Holtby in 1994 to capture the drilling fluid that was directed by the Kelly Kan through the well floor. The Katch Kan upper tray is designed with two interconnected plastic tray halves that, when brought together, also form a central collar that wraps around and is sealed to a steel flange that is welded to the top of the flow nipple. The sealing arrangement is telescopic in the sense that the tray can move axially relative to the flow nipple flange to accommodate some downward movement of the rig floor. Fluid captured in the tray flows directly back into the flow nipple where it can be recirculated.
[9] The 064 Patent describes a sectional fluid containment tray that is mounted lower on the central stack of an oil well. The purpose of the Katch Kan lower tray is to capture fluid falling from above and to drain it to storage. A lower tray would typically protect a larger area below the well and it might be shallower to account for space limitations.
[10] The Plaintiffs’ business model for their upper and lower containment trays is primarily based on extended rentals and not outright sales.
[11] The 793 Design was issued on May 28, 1999 by the Commissioner of Patents to KKHL for a fluid catchment tray or line pipe tray. The purpose of the line pipe tray is to horizontally support sections of drill pipe when they are being disconnected at ground level. When the pipe connection joints or unions are hammered open any escaping fluid is captured in the underlying tray cavity. Bellow is the Katch Kan line pipe tray as depicted in the 793 Design registration:
[12] The 265 Patent was published on June 29, 1997. The Plaintiffs no longer assert infringement of this patent but the Defendant, 1284897 Alberta Ltd., seeks a declaration of invalidity.
[13] The 265 Patent purports to claim a monopoly over a method of capturing and retaining fluid leaking from a wellhead and the apparatus for achieving that end. The claims describe an annular ring and an outer flange that is bolted to the central stack of a wellhead. A catch pan is attached and sealed to the outer flange of the annular ring. Fluids leaking from above are caught in the catch pan and drained away to storage. The 265 Patent contains no discussion about how the claimed invention differs from or improves upon prior methods for capturing leaking fluids on drilling rigs.
The Defendants and their Competing Products
[14] The Defendant, Bill Heide, carries on business under two business names – CAPP and Rat Plastic. CAPP is in the business of plastics fabrication using a rotational moulding process. Rat Plastic was initially an incorporated business but in 2012 Mr. Heide purchased the corporate assets and continued the business as a sole proprietorship. Rat Plastic is in the business of plastic welding.
[15] CAPP is the business entity that builds the line pipe trays that are alleged by the Plaintiffs to infringe the 793 Design. Rat Plastic produces upper and lower fluid containment trays that the Plaintiffs allege respectively infringe the 375 and 064 Patents.
[16] Sometime in 2005 Mr. Heide met Darrell Demers who, at that time, was employed by 614248 Alberta Ltd., then carrying on business as Lea-Der Coatings. Mr. Demers solicited Mr. Heide’s assistance in designing and building fluid containment trays for use on oil drilling rigs. The business concept was that Mr. Heide would supply these products to Lea-Der Coatings which would, in turn, sell the products to rig owners or operators. At that time, Mr. Heide was aware of the Katch Kan fluid containment trays and he knew they were patented. He undertook a patent search to ascertain the scope of the Katch Kan patents and then began to design prototype containment trays. By 2006 Mr. Heide was, through Rat Plastic Ltd., producing a commercially viable lower tray and by 2007 he was selling lower and upper trays to Lea-Der Coatings. At a later point Lea-Der Coatings took on another line of containment trays and Rat Plastic Ltd. began to sell its trays directly to customers. At the present time Rat Plastic wholesales its trays to Lea-Der Coatings (now the business name for the Defendant, 1284897 Alberta Ltd.) and it continues to sell directly to end-users.
[17] Mr. Heide testified that when he receives an order for an upper containment tray he will attend at the drilling site to determine what is required. This will involve a discussion with the rig manager about sizing and space limitations. He will then fabricate the tray to meet the customer’s requirements. The Rat Plastic upper tray is, nevertheless, a standard design. It is built in two half sections each with its own containment cavity. Each half tray has a matching arctuate indentation which, when brought together, form a centre opening to accommodate the passage of the flow nipple. The interior containment walls of each half tray abut to one another and they are held in close proximity by straps. There is no need for the tray halves to be sealed to one another because an overhanging flashing covers the gap between the trays and prevents fluid from leaking through.
[18] When the Rat Plastic upper tray halves are brought together, they also form a circular descending collar. The leading edge of the tray collar is inserted into an upstanding steel collar that is part of a flange that is welded in two pieces near the top the flow nipple (the flange collar). The flange collar has inner and outer walls that receive the tray collar. The inner wall has perforations that permit liquids falling into the cavity to flow into the top of the flow nipple.
[19] The fit-up of the Rat Plastic lower tray is somewhat similar in that it involves two self-contained tray halves with arctuate indentations that encircle the central pipe or stack of a drilling rig. The tray halves abut along the face of their inner walls and are held together by a turnbuckle. The tray halves are passively supported by a circular base plate welded to the flow nipple of the drilling rig and by straps attached to the overhead rig superstructure. An overhanging flashing blocks fluid leakage between the abutting tray walls. Each tray half contains its own drainage aperture which allows captured fluid to run-off into a storage container.
[20] All of the above features are depicted in a Rat Plastic installation guide [exhibit P28] which describes the method of fit-up of the upper and lower tray systems in the following way:
Existing Technologies are common in the field. Cumbersome, leak prone, and difficult to install.
We have a system that is easy to install and is leak free. The installation process is very simple. Once the flow tee is modified to incorporate our system, the Rig Hand can install a top tray in minutes, and a bottom tray can also be install [sic] in minutes.
Our System performs the task without the use of seals, directing the fluid into the Flow Tee where it belongs, not against seals where leakage is a common factor.
As there are no seals in our system, there is no need for tedious fitting and care, trying to make the seals work. A simple set in place, and the tray performs it’s task as it always should have.
[21] Typical installations of the Rat Plastic upper and lower trays are depicted in four photographs identified by Mr. Heide which form exhibit D19.
[22] Mr. Demers testified on behalf of 1284897 Alberta Ltd. carrying on business as Lea-Der Coatings. Mr. Demers was hired by Lea-Der Coatings in 1997 in a sales position. At that point Lea-Der Coatings was owned by the Defendant, 614248 Alberta Ltd., and it supplied traction matting for use on drilling rigs. In 2004 Mr. Demers was approached by Nabors Drilling and Precision Drilling to look at developing fluid containment trays for use on drilling rigs.
[23] Mr. Demers met Mr. Heide in 2005 at the Calgary Gas and Oil Trade Show and they discussed the idea of creating containment trays from moulded plastic. A few weeks later after consultation with Nabors Drilling, Mr. Heide developed the Rat Plastic prototype for an upper tray. According to Mr. Demers he relied upon Mr. Heide’s assurances that the Rat Plastic trays did not infringe on any existing patents.
[24] In the early stages of this business venture Lea-Der Coatings purchased Rat Plastic trays from Rat Plastic Ltd. and resold them to drilling rig operators and rig contractors. In early 2007 Mr. Demers, through 1284897 Alberta Ltd., bought the assets of 614248 Alberta Ltd. and continued under the business name of Lea-Der Coatings to purchase and sell Rat Plastic fluid containment systems.
[25] In 2008 Lea-Der Coatings took on an additional line of containment trays made from carbon fiber supplied by Stealth Environment Filtration Systems (Stealth Environmental). Those products were marketed under the trade name of “Stealth”. Stealth Environmental was subsequently purchased by Enviro Tek Manufacturing (Enviro Tek) which has continued to produce and sell the Stealth carbon fiber containment trays to Lea-Der Coatings. According to Mr. Demers when an order for a containment system is received, it will be referred to either Rat Plastic or to Enviro Tek. Thereafter, Mr. Demers is not involved with the identification of customer specifications or with the installation of the products.
[26] The business model of the Defendants is based on the sale, rather than rental, of their containment systems to oil rig operators or managers.
The Expert Witnesses
[27] The validity and infringement issues that arise in this case were addressed by three expert witnesses, namely, Anthony Wallace, James Seale and Brian Thicke. There is no disagreement among the parties about the essential qualifications of these witnesses, and their reports were tendered without objection. In my view all of these witnesses were qualified to testify to the issues in contention which were, in any event, neither highly technical nor fraught with special knowledge. A general summary of the key evidentiary points of controversy among these witnesses is set out below.
Anthony Wallace
[28] Anthony Wallace has many years of experience working in the oil drilling industry dating back to 1962. He has worked in various positions with several companies and in many locations. Included in this history is employment with Hudson’s Bay Oil and Gas as Chief Drilling Engineer and later with Gulf Canada as the Drilling and Completions Manager. He holds a B.Sc. in Chemical Engineering from the University of Birmingham and an MBA from the University of Calgary. He currently teaches as a Drilling Instructor at the Southern Alberta Institute of Technology and is the President of a consulting business providing oilfield operational, engineering, and training advice to other businesses around the world.
[29] Mr. Wallace authored several opinion reports on behalf of the Plaintiffs dealing with the construction, validity and infringement issues and responding to the opinion reports authored by Mr. Seale and Mr. Thicke.
[30] He testified that the 375 Patent claims include a telescopic annular seal that blocks the passage of fluid between the tray collar and the flow nipple (see p 400). As with the other expert witnesses he agreed that this was an essential feature of 375 Patent but he differed with them on whether the Defendants’ upper containment trays incorporated this feature.
[31] In comparing the 375 Patent with the Rat Plastic upper tray, Mr. Wallace saw some potential for telescopic movement. This was based on his belief that the Rat Plastic upper tray could be held up in the receiving flange collar by obtaining a friction fit between the tray collar wall and one of the walls of the flange collar (see p 435-436). According to Mr. Wallace this type of set up would create “some form of seal” (see p 438) and it would allow for some downward or telescopic movement of the tray. Nevertheless, he was not sure why the inner receiving wall of the flange collar required drainage holes in the presence of such a seal (see p 440).
[32] Mr. Wallace seemingly accepted the method of fit-up for the Stealth upper tray described by Mr. Kenworthy (see p 416) but he maintained that the tray would still be capable of some telescopic movement (see p 415). According to Mr. Wallace the 375 Patent reference to “telescopic” would be infringed by any movement of the Stealth tray resulting from compression of its sealing gasket.
[33] In construing the 064 Patent claims, Mr. Wallace recognized that a person of skill would understand the reference to mated edges to mean “two edges that are brought together to provide a single pan” but not necessarily joined with a tongue and groove arrangement (see p 447). A mated edge would, however, need to be leak-proof (see p 448).
[34] Mr. Wallace’s testimony about the several references in the 064 Patent to use on a completed oil well in conjunction with a Christmas tree was as follows:
Q And then the next element is that the tray be "adapted to be positioned around a christmas tree."
A Yes, sir.
Q What do you understand that term to mean in
the context of this patent?
A In normal oilfield terminology, the Christmas Tree would be the collection of valves that are installed after the rig is gone to control production. This patent clearly shows the tray installed in the BOP [blow out preventer] and within the BOP stack. And I've changed my mind about the interpretation of Christmas Tree. Terminology, I believe, in this particular case, means anything that's installed above the surface casing flange, either a BOP stack or a production tree.
Q And where would you find a BOP stack?
A On the drilling rig or on a service rig during completion. [p 448-449]
This opinion was enhanced by the presence of diagrams in the 064 Patent that depicted the patented lower tray in use within a blow out preventer (BOP) configuration not typically found in a classic Christmas tree on a completed oil well (see p 454).
[35] Mr. Wallace dealt with the fact that the Rat Plastic system employed two separate trays with abutting walls by pointing out that it achieved the same purpose as the 064 Patent by using two necessary tray sections that are brought together around a wellhead pipe (see p 457).
[36] In comparing the 793 Design to the CAPP line pipe tray, Mr. Wallace testified that they are “designed to achieve the same function to lift the pipe connections off the ground and provide a catchment area for any potential leaks” and “they look the same” (see p 469).
[37] According to Mr. Wallace the Defendants’ containment trays infringe either the 375 Patent or the 064 Patent and the CAPP line pipe tray infringes the 793 Design.
James Seale
[38] Mr. Seale is an engineer with professional experience in the design of drilling rigs. He was retained by the Heide Defendants to provide a professional opinion concerning the construction of the 375, 265 and 064 Patent claims. He was also asked to opine on whether the Rat Plastic upper and lower trays infringe the 375 and 064 Patents.
[39] Mr. Seale was not fully instructed about the correct approach to patent construction. In the result he simply pointed out the differences between the patent claims and the Heide Defendants’ products and he construed some of the claim language.
[40] One of the principal differences Mr. Seale noted between the Rat Plastic upper tray and the 375 Patent claims concerns the method of attachment of the tray to the flow nipple. The 375 Patent refers to a sealing arrangement that allows the tray to move telescopically in response to settlement of the rig. Mr. Seale’s report of March 31, 2011 [exhibit D20] distinguished this aspect of the 375 Patent from a fit-up of the Rat Plastic upper tray as follows:
The Rat Plastic “Top Tray” or “Upper Tray” uses a collar welded to the top of the flow nipple with the “Upper Tray” inserted into it in much the same manner as a funnel would be inserted into a jar to aid in filling it. This means that the Rat Plastic device does not seal to the flow nipple but relies on the Upper Tray being inserted into the collar to direct spilled fluid into the flow nipple.
[41] Under direct examination Mr. Seale explained this distinction in the following way:
A Well, I think the primary would be the -- the words “cylindrical interior sealing surface,” which is later said provides an annular seal and seals to the flow nipple. Now, the -- the Rat Plastic system, the top tray, which this -- this was -- this serves the same function, as I understand it, the Rat Plastic goes into an expanded collar on the top of the flow nipple, much as a funnel would go in a bottle, so it doesn’t seal, and it certainly doesn’t seal on an interior surface. The inner ring on that steel collar has many holes in it, so there’s not much point to sealing it anyway. [p 1323]
…
A The annular seal which would be -- okay, to quote, “cylindrical interior sealing surface, and secondly, providing an annular seal, thirdly, securing the annular seal to the flow -- to a flow nipple disposed below an opening in the drilling platform.” So that is describing a seal between the tray and the flow nipple, which doesn’t exist in the Rat Plastic product.
Q Okay.
A And that’s, again, repeated in, fourthly, positioning the semicircular indentations of both sides of the flow nipple with cylindrical interior sealing surface of the cylindrical collar engaging and being telescopically moveable. Again, the way the Rat Plastic is -- is built, it’s not -- not intended to be telescopic. It -- it sits in that collar and that’s what supports it.
Now, claim 2 is quite similar, and, again, it’s the-- the interior ceiling surface, I think, is -- is one of the keys to that one, which, again, doesn’t -- doesn’t exist in the Rat Plastic product. [p 1324]
…
Q Okay. All right. In claim 1, the -- the parts of the claim that refer to the annular seal start at line 15. It says, “secondly, providing an annular seal, thirdly, securing the annular seal to a flow nipple disposed below an opening in the drilling platform.” The description of providing an annular seal and securing an annular seal, what do those phrases teach us as we try to interpret this patent?
A Well, somehow there must be some way to provide a leak tight joint between the tray and the flow nipple, and as this product is configured, if there is not a seal there, then the -- the spilled fluid that’s caught will flow down the outside of the flow nipple, so it must be sealed to function. [p 1326]
[42] Under cross-examination, Mr. Seale rejected the suggestion that a type of seal could be obtained for the Rat Plastic upper tray by creating a tight friction fit between the plastic tray collar and the steel flange collar. He pointed out that this would create a “very poor seal because the fit would not be close enough to be a good liquid seal” (p 1356). When asked if the reference to an annular seal in the 375 Patent required perfection, he responded by saying that it implied “a fairly high level liquid tightness” (p 1356). With respect to the issue of tray movement, he acknowledged that there were ways to elevate the Rat Plastic upper tray above its usual resting point on the flange collar but he said this approach was not “inherent” in its design (p 1353).
[43] Mr. Seale found several differences between the 064 Patent claims and the Rat Plastic lower trays most notably:
(a) The 064 Patent claims refer to the apparatus being used on “a completed oil well”. The Rat Plastic lower tray was used on drilling rigs and not on production wells.
(b) The 064 Patent describes two tray halves that seal together at a “mating edge” whereas the Rat Plastic system employs two independent or self-contained trays that abut along their interior walls but do not mate or seal.
[44] Mr. Seale’s direct testimony was that the numerous references in the 064 Patent to the use of a tray on a “completed oil well” to be “positioned around a Christmas tree” meant that the scope of the claims was restricted to use on a production well and did not extend to use on a drilling rig. According to Mr. Seale, a Christmas tree is present on a completed well and not on a drilling rig. He also explained that the independent claims of the 064 Patent describe a single containment cavity formed by joining and sealing two tray halves. The Rat Plastic lower tray is constructed from two independent trays that abut along their interior walls but require no seal at the interface.
Brian Thicke
[45] Brian Thicke is the President of Anderson and Associates Consulting Engineers Inc. He is a professional engineer specializing in the field of mechanical engineering. He often consults with clients about product design and has provided advice in the area of patent infringement.
[46] Mr. Thicke was retained by 1284897 Alberta Ltd. to construe the claims of the 375 and 064 Patents and to consider whether the Rat Plastic and Stealth containment trays infringe those claims. He was also asked to compare the Plaintiffs’ patents to the prior art with a view to assessing the validity of the 375, 064 and 265 Patents. Of all of the expert witnesses Mr. Thicke provided the clearest and most compelling evidence.
[47] Like Mr. Seale, Mr. Thicke identified several differences between the 375 and 064 Patent claims and the Rat Plastic and Stealth upper and lower containment trays.
[48] According to Mr. Thicke, the primary differences between the 375 Patent claims and the Rat Plastic upper tray involve the absence of a seal between the tray and the flow nipple, the use of two independent trays and the method of attachment of the tray to the flow nipple. He pointed out that no purpose would be served by sealing the Rat Plastic tray collar to the flange collar because the system works as a funnel and an effective leak-proof seal could not be achieved in any event. He concluded on this point by saying that “there is no annular seal, there is no need for a sealing surface in the Rat Plastic design” (p 1552). With respect to the potential for downward movement of the Rat Plastic tray, Mr. Thicke stated:
Q All right. And the last point on Claim 1?
A "And permits axial movement to accommodate settlement of the drilling platform." Yes, it rests on top of a collar. The trays are put down, are installed on top of a collar. There is no potential for axial movement or telescopic movement between the Rat Plastic trays and the -- and the – and the flow nipple, let alone the seal that doesn't exist. [p 1552]
[49] Mr. Thicke made the same point in connection with the installation of the Stealth upper tray. After inspecting the complete Stealth upper tray exhibit, including its seal and mounting flange, he came to the opinion that it was designed to be fixed in place around the flow nipple and that it was not capable of axial movement. This point was made in the following exchange:
There's -- there's no possibility of any telescopic movement with this particular tray. It is confined by the bottom of the tray and by the flange on the bottom of the collar, it's held -- the seal is held in position so it can't move with the tray. And it can't move -- the seal can't move against the flow nipple either because the flange of the flow nipple fits in here, so there's no real movement allowed there. So that sliding movement that's required by the 375 patent isn't available here. [p 1559]
[50] According to Mr. Thicke the presence of any significant downward pressure on the Stealth upper tray would result in the loss of integrity of the annular seal.
[51] Mr. Thicke also identified differences between the Defendants’ lower trays and the claims of the 064 Patent. Once again, he noted that the 064 Patent described a single containment cavity created by sealing the mating edges of two tray halves whereas the Rat Plastic tray system incorporated two independent trays brought into an abutting but unsealed relationship. As with Mr. Seale, he observed that the 064 Patent claims covered the use of lower trays on a completed oil well or Christmas tree and would therefore not be infringed by the use of either a Rat Plastic or Stealth lower tray on a drilling rig.
Prior Art and Prior Use
[52] Divisible containment trays intended to capture liquids spilling or leaking from oil wells and, in particular, wellheads were known in the prior art. Such systems were also in use in Canada since at least the 1980s. An outline of the prior art can be found in the Gayaut Patent filed in the United States on January 3, 1995. In the background of that patent the problem and the history of how it had been addressed is described as follows:
It is of course important to minimize spillage of fluids around both land based and off-shore wells. The problem with regard to both types of wells is identical in that spilled well fluids can cause pollution. With off-shore wells, the fluids can pollute the water surrounding the well; with on-shore wells the soil around the well, and in some cases the ground water also, can be polluted. The problem is particularly present with oil and gas wells and other wells dealing with harmful and hazardous materials.
As a consequence of drilling and servicing wells, fluids containing hydrocarbons and other chemicals are released and spilled from the well casing. For example, during drilling, pulling drill pipe from the well bore can release drilling mud containing hydrocarbons and other chemicals. In the reworking of wells pulling production tubing from the wells can likewise spill liquids. While swabbing (cleaning out) wells, fluids can be forced to surface in large volumes, resulting in spills.
Minimizing spills around oil wells and the advantages of doing so have long been recognized. As early as 1871 inventions were patented for gathering the oil from well tubes as they are being withdrawn from the wells. The structures were called by various names including catchers, pans, basins, containers and the like, and all function to prevent spills. U.S. Pat. No. 113,638 to Dewey, issued Apr. 11, 1871 shows this technology is almost as old as oil wells. As the oil industry progressed, refinements were made in the devices for catching spilled fluids around a well. For example, U.S. Pat. No. 1,448,172 Wellensiek, issued Mar. 13, 1923 shows a spill catcher mounted on the outside of the oil well casing. In the 1924 patents to Schuyler, U.S. Pat. No. 1,507,628, a spill catcher is shown clamped on the outside of the casing. The spill catcher is formed in multiple sections with flanges and seals between the sections for ease in installation on and removal from the outside of the casing.
In off-shore applications such as the United States Patents to Roberts (U.S. Pat. No. 1,811,761, issued Jun. 23, 1931 and U.S. Pat. No. 1,867,030 issued Jul. 12, 1932) and to Grace (U.S. Pat. No. 2,077,044, issued Apr. 13, 1937), spill pans and structures located below the drill floor are shown for catching spilled liquids. The Roberts’ patent ‘761 describes utilizing a pump to remove the oil and drilling mud from the pan. Roberts’ ‘030 discloses pipe 46 and pump 47 for collecting the spilled liquids. The structure in the Grace Patent ‘044 has a compressible seal clamped around the casing (FIG. 7) and a drainpipe 38 connected to a suitable sump or pump to remove fluids from the catch basin.
The 1962 to St. John, U.S. Pat. No. 3,023,808 and the 1990 U.S. Pat. No. 4,949, 784, to Evans, shows structures mounted on the outside of the well. U.S. Pat. No. 5,121,794, to Hibdon, et al., issued Jun. 16, 1992 describes a structure that has a flange integrally formed in the bottom thereof so that it can be bolted into the well structure between a pair of opposed interfacing flange surfaces. U.S. Pat. No. 5,121,796 to Wigington, issued Jan. 16, 1992 shows a catch device which is bolted to a plate which is in turn welded to the outside of a piece of casing bolted into the well.
Thus the problem and many proposed solutions have existed.
[53] The Gayaut Patent describes an invention said to represent an improvement on the prior art. It refers to a sectional container or pan that can be loosely fastened and sealed around an existing wellhead pipe. The intent is to capture and divert fluids leaking from a wellhead. Under the detailed description of the invention, the containment pan is said to be suitable for use in conjunction with oil well casings, oil well pipes and other equipment attached to a well casing including BOPs. All that is required is a tubular section to which the tray collar can be affixed. Because of its sectional design, the device can be installed without any disassembly of the wellhead. It is typically mounted beneath the work floor of a well. A seal between the collar flange and the pipe to which it is attached is maintained with the use of a gasket. The method of attachment of the pan collar to the stand pipe is described in the following way:
The cylindrical flange is selected to be of a size to loosely fit around the exterior of common tubular members in place on existing wells. The annular gap or loose fit can be packed at the top with suitable gasket material (not shown) to form a seal or cap as shown in FIGS. 5 and 6 could be used. Alternatively, a splash assembly and/or skirt could be used with these embodiments.
By mounting the container of the present invention without physically bolting or connecting it to the well, the container can be rotated or moved about the tubular member to the proper position to avoid interfering with well operations. In addition, by providing a mounting which can fit around an existing oil well tubular member, disassembly of the well is avoided. In some cases the disassembly of the well itself to install the drip plan causes spills and pollution. These problems are avoided by use of the applicant’s spill container. In addition, the loose fitting assembly on an existing well tubular makes this invention more universal in that it is not required to exactly match a thread or flange bolt configuration.
[54] The Gayaut Patent then stipulates that the disclosure is illustrative only and that changes to the shape, size and arrangement of the parts are intended to be covered by the claims.
[55] The Schuyler Patent from 1924 also describes a system for capturing spillage from a production well. The Schuyler Patent concerns a sectional drip pan and a descending funnel mounted below the well floor and affixed to an oil standpipe with overlapping semi-cylindrical flanges sealed with rubber or packing. An aperture in the descending funnel permits the gravity outflow of captured fluid to a storage tank.
[56] The Arterbury Patent from 1991 similarly describes an interconnected two-part containment pan intended to capture fluids leaking from producing oil or gas wells, as do the Pearce Patent from 1993, the Norris Patent from 1994 and the Wigington Patent from 1992.
[57] Three witnesses were called on behalf of the Defendants to testify about the prior use of fluid containment systems, namely Robert Sawyer, Keith Wachter and Wayne Anderson. All of these witnesses gave consistent and uncontradicted testimony that upper and lower fluid containment systems were in common use on Canadian drilling rigs at least as early as the 1980s. These systems were custom-built to fit the rigs to which they were attached. The trays took many shapes and sizes. Some were single trays but, according to Mr. Sawyer, after the blowout of a Nabors rig at Lodgepole in 1984, the industry was required to split flow nipples and any accompanying tray attachments into two divisible sections. This was done to facilitate the takedown of the flow nipple in the case of a maintenance emergency.
[58] Keith Wachter testified on behalf of the Heide Defendants. He is employed by Savanna Drilling as a field superintendent and has responsibility for the management of a small fleet of drilling rigs. Before that he worked for Savanna as a rig manager. He has about 10 years of overall drilling rig experience including time spent as a driller with Nabors Drilling.
[59] Mr. Wachter testified that he was familiar with fluid containment systems used on drilling rigs including the systems offered by the Plaintiffs. He had worked on rigs where Katch Kan lower trays had been employed but he had never used one of the upper trays. According to Mr. Wachter, the companies he worked for usually custom-built their upper containment trays and attached them to the flow nipple by using half moon clamps and a rubber seal (called a Victaulic clamp). Under cross-examination Mr. Wachter said that on one occasion the rig contractor did not want to incur the expense of renting a Katch Kan lower tray. He said that he initially contemplated building a lower tray but opted to purchase a Rat Plastic lower tray instead.
[60] Robert Sawyer has extensive experience working on drilling rigs dating back to 1968. For a number of years he was a tool pusher (rig manager) for Nabors Drilling. In 1986 he became a field superintendent supervising several drilling rigs and in that capacity he has worked in British Columbia, Alberta and Saskatchewan. In 1997 he advanced to the position of drilling supervisor managing up to 20 drilling rigs from the Nabors office.
[61] Mr. Sawyer testified that he was aware of the use of fluid containment trays on drilling rigs as early as 1970. He described the early containment trays and their set-up in the following way:
Q Now, do you recall fluid containment trays in your experience?
A Yes, yes.
Q And just generally what sort of trays do you recall?
A Well, the early years -- the early years they were metal round, rectangle, square, trays that were -- that were built by a welder and put on the top of the flow nipple, drill nipple, around the drill nipple, whatever, to contain the fluid the -- off the rig floor where you made connections and stuff.
Q And did they -- were there upper trays and lower trays or --
A Yes, there was. There was some right underneath the table beams and some that were lower down on the blowout prevention stack.
Q And what period of time are you talking here?
A The first one I seen was in 1970, it was on Brinkerhoff Rig 40 in 1970, it was a round tray, it was about 37 inches round, two foot -- two and a half foot height.
Q Okay. And was that an upper tray?
A Yes, it sat inside the drill nipple.
Q It sat inside the drill nipple?
A Yeah.
[pp 1388-1389]
[62] Mr. Sawyer identified a series of photographs of custom-built upper containment trays that had been used by Nabors Drilling at least as early as the mid-1980s [see exhibit D5, pp 1001-1004; 1016-1021]. Each of those trays was formed from two tray halves joined and sealed either with abutting flanges or with a tongue and groove arrangement. All of these trays were attached to the top of the flow nipple either by a welded