Varco Canada Limited v. Pason Systems Corp.

Varco Canada Limited v. Pason Systems Corp.
Court (s) Database
Federal Court Decisions
Date
2013-08-12
Neutral citation
2013 FC 750
File numbers
T-436-05
Decision Content
Date: 20130812
Docket: T-436-05
Citation: 2013 FC 750
BETWEEN:
VARCO CANADA LIMITED
VARCO, L.P.
WILDCAT SERVICES, L.P. and
WILDCAT SERVICES CANADA, ULC
Plaintiffs/
Defendants by Counterclaim
and
PASON SYSTEMS CORP. and
PASON SYSTEMS INC.
Defendants/
Plaintiffs by Counterclaim
PUBLIC VERSION OF THE
CONFIDENTIAL REASONS FOR JUDGMENT
TABLE OF CONTENTS
Para.
I. Introduction......................................................................................................... 1
A. Parties/Patent Ownership............................................................................ 7
B. Nature of Problem to be Solved................................................................. 21
II. History of Invention............................................................................................ 34
A. Introduction................................................................................................ 34
B. Credibility................................................................................................... 35
C. Testing........................................................................................................ 44
(1) First Test............................................................................................ 47
(2) Second Test....................................................................................... 51
(3) Third Test........................................................................................... 54
III. Bates Letter and File........................................................................................... 67
IV. Pason Invention................................................................................................... 96
V. Issues................................................................................................................... 143
VI. Analysis............................................................................................................... 144
A. Claim Construction..................................................................................... 144
(1) Legal Principles.................................................................................. 148
(2) Person of Ordinary Skill.................................................................... 158
(3) “ONLY” re changes in drilling fluid pressure (Claims 1, 11
and 14)............................................................................................... 164
(4) Inverse Relationship – Mandatory (Claims 1 and 11)....................... 173
(5) Selecting Automatic/Manual (Claim 14)........................................... 182
(6) Other Claims Construction Issues..................................................... 189
B. Infringement............................................................................................... 206
(1) Claim 1............................................................................................... 209
(2) Claim 11............................................................................................. 232
(3) Claim 14............................................................................................. 241
(4) Inducement........................................................................................ 250
(5) Infringement by Exportation............................................................. 257
C. Validity of Patent....................................................................................... 267
(1) Anticipation – Prior Art..................................................................... 268
(a) Brett/Warren Paper................................................................... 273
(b) Le Compte Patent..................................................................... 279
(c) The Hobhouse Patent (#3,550,697).......................................... 285
(2) Anticipation – Prior Use.................................................................... 289
(3) Obviousness (Absence of Inventiveness).......................................... 309
(4) Inutility.............................................................................................. 324
(5) Overbreadth....................................................................................... 339
D. Deemed Abandonment............................................................................... 341
(1) US Proceeding................................................................................... 345
(2) Re: European Proceeding.................................................................. 365
(3) Determination.................................................................................... 377
E. Conclusion.................................................................................................. 381
VII. Remedies............................................................................................................. 383
A. Overview.................................................................................................... 383
B. Expert Witnesses........................................................................................ 386
C. Accounting for Profits................................................................................ 395
D. Calculation of Pason Profit......................................................................... 411
E. Proper Approach to Disgorging Profit........................................................ 416
F. Alternative Remedies................................................................................. 427
(1) Damages............................................................................................ 428
VIII. Costs.................................................................................................................... 471
IX. Conclusion........................................................................................................... 472
* * * * * *
PHELAN J.
I. INTRODUCTION
[1] This action relates to the infringement of Canadian Patent No. 2,094,313 [the 313 Patent], the rights to which are held by the Plaintiff, Varco L.P. The 313 Patent relates to the braking function in automatic drilling systems used principally in the petroleum industry. The Patent is more particularly focused on automatic drilling systems used in drilling rigs to regulate the release of a drill string during the drilling of a borehole.
[2] The Defendants, Pason Systems Corp. and Pason Systems Inc. [collectively “Pason”], both individually and collectively, make and rent in Canada an automatic drilling system known as the Pason AutoDriller.
[3] The Plaintiffs claim that Pason infringes the 313 Patent by manufacturing, selling, renting and exporting the Pason AutoDriller as well as inducing Pason’s customers to use the Pason AutoDriller.
The Plaintiffs claim damages or an accounting of profits as well as punitive and exemplary damages.
[4] Pason denies infringement and attacks the validity of the Patent on almost as many grounds as it is conceivable to assert, including some novel twists on known grounds.
[5] In addition to the usual matters of a complex patent trial, this litigation was influenced by parallel or similar litigation in various US courts, but most particularly an action in the US District Court in Denver. The most striking influence was the seepage out of documents in the US processes which were relevant to the Canadian litigation. As a result, after final argument this litigation had to be re-opened, evidence taken in the United States and further arguments made on key aspects of this case.
For ease of understanding and consistency of findings, the “new evidence” is incorporated into these reasons as part of the narrative and analysis and not as a stand alone topic.
[6] The most relevant portions of the 313 Patent are attached as Schedule A to these Reasons.
A. Parties/Patent Ownership
[7] The Plaintiff Varco L.P. [Varco LP] is a limited partnership organized under the laws of Delaware, Maryland with its principal office and place of business in Houston, Texas.
[8] The Plaintiff, Varco Canada Limited [Varco Canada] is a corporation organized under the laws of Alberta, having its registered office in Edmonton, Alberta. It is a subsidiary of Varco LP.
[9] The Plaintiff Wildcat Services L.P. [Wildcat Services LP] is a limited partnership organized under the laws of Texas with a principal office in Cypress, Texas. The company and its subsidiary were acquired by Robert Prejean.
[10] The Plaintiff Wildcat Services Canada ULC [Wildcat Services ULC] is an unlimited liability company organized under the laws of Nova Scotia with its registered office at Halifax.
[11] Unless otherwise specified, the Plaintiffs are collectively referred to as Varco.
[12] The Defendant Pason Systems Inc. is a corporation organized under the laws of Alberta with its principal place of business at Calgary.
[13] The Defendant Pason Systems Corp. is also a corporation organized under the laws of Alberta with its principal place of business at Calgary. It is a wholly owned subsidiary of Pason Systems Inc.
[14] The Defendants are collectively referred to as Pason unless otherwise specified. Pason is a Canadian oilfield services company that specializes in developing software and hardware to improve the drilling process. It designs and manufacturers integrated systems for data acquisition, well site reporting, remote communications and internet information management.
[15] Pason’s two principal products, at issue in this litigation, are its Electronic Drilling Recorder [EDR] and the Pason AutoDriller.
[16] The 313 Patent was issued on August 24, 1999. The first owner, and the inventor of what is known as the Wildcat autodriller [Wildcat], was Bobbie Bowden [Bowden]. He did business, at the time, under the name Wildcat Speciality.
[17] On July 1, 2001, Bowden, doing business as Wildcat Specialty, assigned the Patent to Wildcat Services LP.
[18] On or about March 12, 2003, Wildcat Services ULC, a newly created wholly owned subsidiary of Wildcat Services LP, became a licensee of the Patent and took over the business of renting Wildcat Autodrillers in Canada.
[19] On June 30, 2004, Wildcat Services LP assigned the Patent to Varco LP as part of Varco LP’s purchase of all of Wildcat Services LP’s major assets. Thereafter, Varco Canada became a licensee of the Patent and the sole entity that rented Wildcat Autodrillers in Canada.
[20] Varco LP is the current owner of the 313 Patent.
B. Nature of Problem to be Solved
[21] The experts confirmed that there are basically three types of oil wells: 1) vertical wells which are drilled straight down; 2) directional wells which are drilled at an angle from vertical, and 3) horizontal wells – a type of directional well. The sketch below is an approximate visual representation of those wells.
Figure 1
(Red shading is Court’s notation of area of curve)
[22] Directional drilling became a popular method of drilling because it could increase the productivity of a well. Horizontal drilling increased starting in the late 1980s in part due to advances in technology, such as the downhole mud motor.
[23] In directional wells, the preferred method of rotating the drill bit was to use a downhole mud motor (rather than rotating the entire drill string).
[24] A downhole mud motor is affixed above the drill bit and drilling mud (a drilling fluid) is pumped inside the drill pipe from the top of the standpipe down to the mud motor and back to the top. The circulation of the drilling mud up and down the pipe causes the drill bit to turn and cut through the formation. The pressure of the drilling fluid provides the power to the mud motor. A schematic from Exhibit 521 shows the basics of the rotary bit with mud motor.
Figure 2
[25] The pressure of the drilling fluid is directly related to the amount of torque that the mud motor applies to the drill bit. The greater the drilling fluid pressure, the greater the torque on the bit – the cutting power. When contact with the formation is increased, there must be an increase in drilling fluid pressure to continue the drilling function. The change in pressure is measured by a pressure gauge on the standpipe at the surface of the rig.
[26] Vertical wells generally were drilled using weight on bit [WOB] as the basis to advance or retard the drill string. WOB is the amount of force between the drill bit and the formation being drilled. The increase in WOB allows the drill bit to drill into the formation – akin to the force used to push a home automatic drill into the drywall in one’s basement.
[27] In vertical wells, the WOB is proportional to the weight of the drill string (known as a “hook load”) as shown on the weight indicator in the driller’s console. In this type of well, the WOB is the hook load with the bit just off bottom minus the hook load while drilling where the formation takes some of the hook load.
[28] In the 1960s the drilling process of vertical wells was automated. These automatic drillers worked off the WOB readings and by release of the drill bit to engage the formation.
[29] While the term “release” is often used, it is synonymous with “brake”. Gravity would pull the bit down the vertical shaft, the driller would regulate the engagement of the bit with the formation by braking the drill to prevent further downward movement or releasing the bit to facilitate the downward movement.
There are a number of WOB autodrillers including “the Satellite” which was covered by a US patent in favour of J.E. Bowden, Bowden’s father – US Patent No. 3,265,359 [the 359 Patent].
[30] WOB worked well in vertical wells but were problematic for directional wells. Because of the curve in a directional well, part of the weight of the drill rested in the curve which distorted the WOB calculation. Therefore, without the functionality of WOB autodrillers , drillers in directional wells had to manually control the drill string brake in response to changes in drilling pressure.
[31] Drillers knew that, in directional wells, drilling fluid pressure generally related to the torque delivered by a mud motor which related to the contact force between the bit and the formation.
[32] For directional wells, drillers began to look at drilling fluid pressure to understand what the WOB might be in a directional well.
[33] Since autodrillers were generally more efficient, more precise and cost effective than manual drilling, there developed a need for an automatic drilling system that worked effectively in horizontal and directional drilling. The expert evidence which the Court accepts concludes that the 313 Patent was designed to address this need. The primary improvement of the invention described in the 313 Patent is the ability to automate the drilling process in directional wells using drilling fluid pressure in conjunction with WOB.
II. HISTORY OF INVENTION
A. Introduction
[34] The history of the invention and the patenting of the invention are largely told through Bowden. The history covers his own development of the device, the testing of it and the interactions with patent attorney/agents Donald Comuzzi and Marcus Bates. Some of the pertinent events will be described in other sections of these Reasons.
B. Credibility
[35] The Defendants take issue with Bowden’s story. Although they had little or no evidence from witnesses which challenged Bowden’s version, they have attacked Bowden’s credibility and consistency principally through circumstantial evidence, alternate interpretation of documents, and through cross-examination. They postulate a different theory of the case which essentially calls Bowden a liar, a fraudster and one who engaged in substantial skulduggery.
[36] The case for invalidity, other than the interpretative aspect of the patent, turns substantially on whether Bowden’s story is “more probable than not” as the civil burden of proof is sometimes described. The invalidity attack challenges Bowden on whether he publicly disclosed the invention more than one year before the patent filing date. It also challenges how Bowden went about the process of filing his US patent and Canadian patent applications.
[37] There is no doubt that there are gaps in Bowden’s version of the facts. His forgetfulness about events led this Court to re-open the trial so as to obtain the complete evidence of the US patenting process. Bowden’s recollection was subject to the frailties of memory influenced by the length of time between events and the time he had to testify either in this Court or in similar or related cases in the United States District Court and state courts in the USA.
[38] Bowden was “a marketer” for his invention and remained “a marketer” even on the witness stand. He also suffered from the not uncommon failing of seeing events in the most favourable light from his own perspective and dismissing less favourable matters as unimportant. However, he is not, at least in the evidence before this Court and in my opinion, any of the things of which the Defendants accuse him. At the end of the day, his story remained generally consistent, plausible and credible. While the Court approaches his evidence with caution, it generally accepts his version of events over the Defendants’ theory, in large part because the Defendants could only advance a theory (or theories) attacking Bowden’s evidence.
[39] The Defendants’ theory of the case on this point would require a finding that Bowden lied under oath in US and Canadian court proceedings, misrepresented facts to numerous people over an extensive period of time, even to the extent of possibly committing bankruptcy fraud in the United States. There is insufficient evidence to make that type of finding.
[40] Bowden had been around drilling rigs from his earliest years. His father was a driller who invented a WOB autodriller described in the 359 Patent, which was marketed as the Satellite driller. Upon returning from the US Navy where Bowden worked as a machinist’s mate, he returned to his father’s business.
[41] About 1971, Bowden formed his own company to distribute his father’s autodriller and to run his own business in the refurbishment of airfield instrumentation equipment.
[42] In late 1991 and early 1992, Bowden conceived of and built his first autodriller. He conceived the idea because he had seen drillers release the drill string in directional wells based on indications in a pressure gauge. Since his father had automated a driller using WOB in vertical wells, Bowden thought he could do something new – develop an autodriller for directional wells. This would necessitate using WOB and pressure to regulate the drilling function.
[43] Work on a prototype began in that period using his shop, his garage and spare parts he had from his work in the oil industry. By February 1992 he had built his initial prototype, but Bowden did not know if it would work on a rig or how it would function with a mud motor. He had no test facility of his own. The utility of the prototype needed to be confirmed through testing.
C. Testing
[44] The Patterson rig was owned by Union Pacific Resources Corporation [Union Pacific] or Patterson Drilling (the evidence is not clear) in the Austin Chalk area of Texas. Bowden asked Gene Finney, the Union Pacific drilling foreman, for permission to test his prototype. To secure permission, Bowden disclosed that his autodriller worked off both bitweight or pump pressure. There is no evidence that Bowden disclosed how the device was built or how it worked in any detail.
[45] The issue of whether Bowden disclosed his invention during the period when it was on the Union Pacific rigs is critical to the Defendants’ allegation of invalidity due to public disclosure.
[46] There were no confidentiality agreements or other forms of non-disclosure obligations created, but rig operators in this business would from time to time allow a product to be used on a rig before it was fully developed.
(1) First Test
[47] Initially Finney agreed to allow testing on one full well but required that at the end of testing, Bowden would have to remove the prototype.
[48] In the test drilling on the first well there were three employees of Patterson Drilling, the drilling contractor, and two employees of the mud motor company.
[49] It was Bowden’s testimony that he personally did all the drilling using the pressure mode, that he disconnected the pressure hoses when the drillers used the prototype in WOB mode and that he locked the prototype so no one could examine it when he was not on the rig to ensure that no one could examine the device.
[50] The testing on the first well occurred between February 19, 1992 and March 6, 1992. After the first test concluded, Bowden took the device off the rig and returned it to his shop where he made improvements to the device. A key change was the addition of a three-way switch to allow an operator to select pressure or WOB or a combination of both at the same time.
(2) Second Test
[51] Bowden then tested the device on a second well between March 15, 1992 and April 3, 1992.
[52] The test on the second well disclosed a problem with gas pockets which allowed the brake to be suddenly released, dropping the bit and damaging the motor.
Bowden addressed this problem by adding a wellhead pump pressure compensating valve. He also realized that he could set the pump pressure as the primary control and set WOB as the secondary control and then use the limiter to restrict the fall of the drill string in pressure pockets.
[53] Bowden was not allowed to test his device when the curve was drilled on the second device. The curve, as shown in Figure 1, is where the use of WOB drilling becomes problematic as earlier described. To Bowden this was a critical limitation of the test because drilling the curve was critical to directional drilling. Bowden felt that he had to do further testing to ensure that his device would work as he intended. Bowden did admit that by April 13, 1992, the device “was pretty well perfected”.
(3) Third Test
[54] Testing on the third well occurred between April 13, 1992 and April 27, 1992. Bowden was now allowed to drill the curve which he did successfully on April 20, 1992. In Bowden’s opinion this was the proof that the device worked and that testing was completed. On that same day Bowden and Finney agreed on a daily rental rate for the autodriller of $48. Finney, according to Bowden, offered to compensate Bowden for the use of the prototype during the testing phase although that had not been part of the original testing agreement.
[55] Thereafter Bowden started to build and market the autodriller through the summer of 1992.
[56] I have concluded that it was on April 20, 1992 that Bowden’s invention was finally proven and completed. Bowden was clear that until he could test the device in the curve, he could not know that he had invented a workable device that solved a problem no one else had solved. It is “20/20 hindsight”, not a convenient thesis for the Defendants, that the device was in all material respects complete at some prior date. However, the judgment of the inventor on this issue is an important factor. The concern Bowden had was significant; it was of substance, not merely form.
[57] Pason contends that Bowden had disclosed his invention prior to April 20, 1992. It suggests that there was prior disclosure to Finney, that Bowden had trained the Patterson drilling crew and the mud motor company directional drillers in such a manner as to disclose the invention; that Bowden was fully paid for the use of the autodriller during the “supposed” test phase; and that the testing was part of Bowden and his later associate Prejean’s business model of letting customers use the device for free for a period and then rent it backdated for the trial period if they liked it.
[58] While Bowden admitted that he told Finney and people on the rig generally what the device would do, he did not either tell them or show them how the device worked. He denied that he showed or explained the internal workings of the device.
[59] There was no evidence from either Finney or the drillers or anyone else that there was such prior disclosure. While the Defendants ask that the Court draw an adverse inference from the Plaintiffs’ failure to call these individuals, prior disclosure is the Defendants’ allegation to prove and they did not call those people either.
[60] It is not to say that Bowden’s story is trouble free. He outlined a scheme where he ran the rental payments in 1992 through a company called Lampo’s Steam Cleaning for obscure reasons of insurance and bookkeeping. This was an organization that Bowden claimed he knew nothing about, did not know who owned it, yet gave them approximately 20% of the rental revenue.
[61] As troubling as this evidence may be, it does not materially assist on the issue of prior disclosure. It does touch on Bowden’s own credibility, but not sufficiently for the Court to reject the core aspects of his evidence.
[62] Bowden’s device, the Wildcat, had a number of advantages. It was more efficient, reliable and cost saving than other drills. Even the Defendants’ own patent expert acknowledged its qualities.
[63] The Wildcat was commercially successful, growing from 40 Wildcats rented in 1999 to 500 by 2004.
[64] The business model for Wildcats was described as “try it for a few weeks. If you like it, then you pay for it”. This was the model used by Bowden and Prejean. Prejean started in sales and marketing the Wildcat eventually took over ownership of the company in 2001.
[65] Between 1999 and March 2003, the Wildcat was marketed and serviced in Canada by Alberta Gauge and Drillers Service Corp. Prejean formed Wildcat Services Canada ULC in March 2003 and bought out Alberta Gauge and Drillers Service Corp. The impetus for the “buy out” was Prejean’s concern for Alberta Gauge’s ability to market and Prejean’s plan to ramp up Wildcat rentals aggressively.
[66] Having put 50 Wildcats on rigs in Canada in 2003 and expecting to go to 100, such plans were impacted when the Defendants started deploying its Autodriller.
III. BATES LETTER AND FILE
[67] Before turning to Pason’s AutoDriller and maintaining a general chronological theme to this Background, it is necessary to address the above topic.
[68] To say that the Defendants’ claim Bowden to be a scoundrel, whose evidence is to be wholly rejected, is an understatement. The Defendants suggest that Bowden’s evidence is largely a fabrication. A critical aspect of its attack is that Bowden made public disclosure well prior to April 20, 1992 – even to the point of suggesting that Bowden had his invention in October 1991 and that the testing in March-April 1992 was really part of the business strategy of offering customers a free trial period after which they had to buy the product.
[69] As part of these alleged shenanigans, the Defendants contend that Bowden had received advice from a patent attorney (a patent agent in Canadian terms) Marcus Bates Sr [Bates] in a letter [Bates Letter] that his invention was not likely patentable because of prior art. They further alleged that Bowden hid the letter from his lawyer who prosecuted the patent application [Comuzzi] and failed to disclose the prior art to the US Patent and Trademark Office [USPTO] thereby committing fraud on the patent Office (a US legal concept much in debate) and otherwise engaging in inequitable conduct.
[70] The evidence surrounding the pre and post patent search in September 1992 to the filing of the patent application in April 1993 is at times confusing; both the oral evidence and document trail is missing critical parts.
[71] At the original trial, Bowden outlined a series of events starting with retaining Bates in September 1991 to do a patent search, having received the Bates Letter of September 1992, to having retained a patent lawyer Comuzzi in March-April 1993 to prepare the US patent application before the one-year grace period had expired. Most germane is that Bowden said that he had not described to Bates the invention or idea in any detail.
[72] At trial, the Bates Letter of September 1992 was produced. It identified 29 prior art references including Le Compte, Dillon and US Patent No. 3,223,183 to Varney [the Varney Patent]. The Bates Letter also contained a specific description of Bowden’s embodiment of invention and advice that based on the prior art, patentability was doubtful.
[73] While the Bates Letter was produced at trial, the whole of Bates Sr’s file concerning Bowden’s invention [Bates File] had never been produced in any of the related litigation in the US. It appears that all parties assumed that the Bates File was either lost or destroyed.
[74] After this trial had concluded and argument made, but prior to release of a decision, counsel for the Plaintiffs advised the Court that the Bates File had finally been located. Counsel also advised that Bowden, having now seen the file, informed that his recollection has been faulty and that the evidence before the Court was not entirely accurate. Of particular significance was the record of a meeting between Bates and Bowden at Bates’ airport home/office on June 19, 1992.
[75] As the Court was faced with admittedly inaccurate evidence on what the Defendants contended was critical evidence, the trial was re-opened to admit evidence disclosed by the Bates File.
[76] It was intended that both Bowden and Bates would given evidence in Austin. It turned out that Bates was unable to testify due to declining health and mental capacity. However, his deposition recorded on video taken in the parallel US Federal District Court was admitted in evidence. His son Bates Jr testified as to the authenticity of the file and deciphered some notations but had no other involvement in this matter.
[77] Bowden’s evidence in light of the Bates File was not particularly useful because he had no independent memory of the meeting on June 19, 1992. He confirmed that the meeting occurred because his son recalled going to Bates’ home/office – a trip made memorable to Bowden’s son because he had just received his driver’s licence.
[78] There is no doubt that the Bates File was genuine. It was detailed and well organized. I do not doubt that the notations reflect Bates’ understandings and perceptions as well as accurately reflect his own actions.
[79] With respect to Bates’ deposition evidence, there is greater reason to be cautious in accepting it as entirely accurate or complete. On April 11, 2011, when Bates gave his evidence, he had been suffering diminished mental capacity issues. Bates Jr said that Bates’ mental capacity was day-to-day but at the time of his deposition, it was a “good day”.
[80] Having reviewed the deposition evidence, it is clear that Bates was struggling with mental capacity issues in addition to the normal memory difficulties most witnesses have with events some time past – in this case almost 20 years. For example, he had trouble recalling his age or remembering that he lived at the Bates airfield in 1992 or that he had an office there.
[81] Bates had no specific memory of many of the key events of his interaction with Bowden and had obvious inaccurate memory of some events, such as believing that he had filed Bowden’s patent application.
[82] These obvious difficulties, which undermine the reliability of Bates’ evidence, were confirmed by medical advice. Within a month of his deposition, Bates was determined to lack medical/legal capacity due to memory loss and dementia. Within two months thereafter, he was diagnosed with significant progressive dementia affecting his memory, his behaviour, his reasoning and judgment. These difficulties were not new; his son referred to his father’s unusual behaviour as early as US Thanksgiving 2009.
[83] Against this sad state of affairs, I have little confidence in the accuracy of Bates’ testimony. However, his notes and documents in the Bates File have some reliability.
[84] These documents show that portions of Bowden’s evidence were inaccurate. He was in contact with Bates more frequently than just September 1991 when he suggested that the patent search was ordered. He had the meeting of June 19, 1992 at Bates’ home/office after which the patent search was ordered. The results of that search were reflected in the Bates Letter. The documents suggest that it was Bates who sent Bowden to Comuzzi because Bates did not have the time to prepare the patent application – rather than Bowden’s evidence that he got Comuzzi’s name from the Yellow Pages and that he had always wanted to use a lawyer.
[85] Bowden explains his current memory problems as stemming from his evidence in parallel US proceedings. His evidence in those proceedings was the basis of his Canadian evidence but he gave his US evidence when his wife was in the late stages of a terminal illness and he was travelling between Denver and his home to attend to his wife. He says that this stress caused his own confusion.
[86] The Defendants’ ask the Court to totally reject Bowden’s evidence because of its unreliability. While some of the problems of Bowden’s evidence have already been noted, what is striking from the documents is how consistent the Bates File is with the core of Bowden’s story.
• Bates’ notation of the June 19, 1992 meeting refers to the invention having been reduced to practice four months ago but that the first part was not public disclosure but testing. Four months from June 19 would be consistent with when Bowden began his testing. There was even a notation to the date of April 15.
• There was a reference to the fact that the patent application had to be filed “about next April” to avoid the statutory bar. It is unclear to what the bar refers, but most likely the one-year rule regarding public disclosure.
• Bates’ checklist (used in all his patent files and reflecting the results of a client interview intake) recorded that the idea was reduced to practice four months ago, that it was publicly disclosed two months ago and that the statutory bar is “about 10 months from now”.
These last two references are to April 1992 and April 1993 respectively.
[87] While none of the notations are particularly specific as to a day in April, they tend to point to the mid to latter part of April as the time of public disclosure and time for filing the patent application.
[88] In the Bates File there was a memo of March 8, 1992 from Bowden which describes the invention in patent-type language. Bowden had no recollection of it or the circumstances of its creation. There is nothing in the Bates File or its timesheet that assists. It is just one of the many gaps in the documentation.
[89] As a result of the re-opened trial and evidence that generally confirmed the core of Bowden’s story, the Defendants developed a new theory of Bowden’s evidence. The Defendants contend that Bowden had to rely on a date in late April 1992 because he had declared bankruptcy on April 7. Presumably if the invention had been developed then, the benefits of the patent would have accrued to his creditors.
[90] Other than this bare allegation of a motive for an April 19 date, the Defendants have produced no real evidence to support this latest theory. It is an allegation at least bordering on criminal conduct. The Court cannot accept this theory as a fact without more convincing evidence.
[91] Flowing from the re-opened trial, the Defendants raised a new event showing prior disclosure of Bowden’s invention. In October 1991 at Gonzales, Texas, there was a local parade. Bowden entered a float in the parade with an exhibit which consisted of a box on which were mounted some gauges and a decal with the name “Wildcat”.
[92] Bowden testified that the box was empty. It is impossible to conclude that the provision of an empty and unlocked box with some gauges and a decal contradicts the evidence that Bowden’s story of starting to work on the autodriller began in January 1992. Nor can I see how the empty box constitutes prior disclosure of the invention.
[93] In the end, the Bates Letter and Bates File did little to advance the Defendants’ defence. The evidence shows the frailties of Bowden’s memory and his tendency to put things in the most favourable light as referred to earlier in these Reasons. However, the re-opened trial evidence is more confirmatory than contradictory of Bowden’s narrative.
[94] To round out the facts, Bowden had advised Comuzzi why he did not think the prior art in the Bates Letter was relevant. In March 1993, Bowden again contacted Comuzzi and began to work with an associate, Chris Makay, on the patent filing. Comuzzi informed Makay of the prior art issue and the belief that it was not relevant. There is nothing to suggest, as the Defendants have, that Bowden tried to hide the prior art issue from Comuzzi or that somehow Bowden, Comuzzi and/or Makay planned to hide prior art from the USPTO.
[95] It is now appropriate to outline the circumstances of the Defendants’ device which is said to infringe the 313 Patent.
IV. PASON INVENTION
[96] Pason, which was incorporated in 1978, is a Canadian oil field services company that specialized in developing software and hardware for the drilling process. Jim Hill, President and CEO of Pason since 1987 when he acquired the company, was its chief corporate witness.
[97] As noted earlier, one of Pason’s principal products was the EDR, the system for all data capture and monitoring of the equipment at a rig site. It was introduced to the market in Canada in 1994.
[98] The EDR is a computer-based product which collects, stores and displays drilling rig data. It is connected to rig sensors to measure a variety of drilling parameters: WOB, speed, torque, drilling fluid pump rate, drilling fluid pump pressure, rate of penetration and others. The data is processed in a computer, displayed on the drilling rig floor, networked with other users at the well site, digitally stored and transmitted to an offsite office.
[99] The EDR was successful in Canada. It was employed on 90% of the active drill rigs in Canada by October 2003.
[100] By 1999, Pason had decided to develop an autodriller which could perform directional and horizontal drilling. Pason also knew that of the autodrillers in the market, only the Wildcat was designed for directional and horizontal drilling. The ability to control the drill using pressure as a parameter was a critical element of any Pason autodriller.
[101] As a result of patent searches, sometime in 1999 Pason became aware of Bowden’s patents both in Canada and the USA. Hill was informed that the Pason device could infringe the 313 Patent.
[102] Pason directed its attention at the Wildcat because it was the only autodriller that used WOB and pressure parameters as Pason intended its device to do. Toward that end, Pason set up on rigs using the Wildcat system to acquire data on its operation. Pason was benchmarking against the Wildcat particularly in respect of the use of pressure. It tested its device at places where Wildcats were installed to emulate the same results as the Wildcat.
[103] Pason’s emphasis on pressure as a parameter for horizontal wells was consistent with all of the industry evidence that the use of pressure as a parameter was essential for non-vertical drilling.
[104] In the course of its investigation, Pason retained the services of a Canadian patent agent Terry Leier. Leier was never called as a witness in this trial despite being alive and in Canada. The purport of his advice comes from such Pason witnesses as Hill and Holt (described later) along with letters of advice.
[105] Fairly summarized, Leier’s advice was:
• if the infringing device