Prior Use by Inventor Anticipates Patent

Packers Plus Energy Services Inc v Essential Energy 2017 FC 1111 O’Reilly J
            2,412,072

The technology embodied in Packers Plus’ 072 patent relates to a method for fracking by selective transmission of fluids to different segments of a wellbore by way of a tubing string consisting of a series of packers and ports which can be operated independently [8]. Yesterday’s post discussed O’Reilly J’s holding that the patent was not infringed. Today’s post discusses his holdings that it was invalid as anticipated and for obviousness.

Confidentiality

The anticipation holding presents a classic cautionary tale regarding public disclosure prior to filing. It turned on the fact that the patentee, Packers, had itself used the invention in the field in the fall of 2001, more than one year before the Canadian filing date [65ff]. That use was not really disputed [82]. Rather, Packers argued that the use was not anticipatory, under 28.2(1)(a), either because it was used in circumstances in which all the recipients of the information were required to keep it confidential, or because it came within the experimental use exception [64].

Though there were some indicia of confidentiality, ultimately the confidentiality argument failed on the facts. As I read it, what happened is that in the fall of 2001, Packers, which was already established in the oil-field service industry as a provider of down-hole tools, was asked by a client to do a job in a gas well. Mr Themig, one of the inventors and a principal in Packers, came up with what seemed to be a pretty good solution. The client agreed, and it was implemented. It was only after the fact that Mr Themig began to appreciate just how good a solution it really was, and Packers ultimately set the wheels in motion to apply for a patent. My sense is that in this industry, each hole and every job is a bit different, so it was not out of the ordinary for a high-end firm such as Packers to devise a solution that was strictly novel, in the sense of being tailored to the particular job. That of course does not mean that every solution is patentable, and it is perhaps for that reason that Mr Themig did not take all the steps necessary to make it sufficiently clear that the use of the method was to be considered confidential. It seems to me that the one year grace period afforded under the Canadian Patent Act is intended to address this type of situation. In some industries inventions are products of a patent-oriented lab, but in others they emerge from practical innovators in the field, and in the latter case it is not always reasonable to ask a person to keep patent law requirements in mind while trying to solve a problem for a client. The grace period responds to that problem; but the grace period is necessarily limited and in this case the inventor did not proceed to filing quickly enough.

Experimental Use

The experimental use argument turns on the question of what it means for a use to be “experimental.” In some cases, such as clinical trials of a drug prior to commercialization, the answer is clear, but in the case, the use itself was commercial.

There is a limited, but growing body of case law in Canada holding that “that experimental use in order to bring the invention to perfection, does not constitute public use”: 2014 FC 436 [119]. This means that if the use in the Enron fields was experimental, it would not anticipate even if not confidential. The experimental use exception is particularly important where maintaining confidentiality is impractical, as was perhaps true in this case. For example, in Conway v Ottawa Electric Railway Co., (1904), 8 ExCR 432, 442, the invention was a snow-plow for clearing street car tracks. An important feature of the plow as compared with the prior art was that it was adapted so as to accommodate the irregularity of real street surfaces. Consequently, it was only possible to develop the invention by experimenting in public, and this fact was relied on by the court in holding the experiments did not destroy novelty.

In this case O’Reilly J held that the experimental use exception did not apply. He noted that a company conducting an experiment “would have specifically informed the operator, offered a discounted price, prepared a summary of the work to be conducted, tested alternative theories, ensured that a senior company representative was present on site, and prepared a detailed analysis of the results” [89] While Mr Themig may have considered the work to be field trials “there is no corroboration of that perception in any of the documents the parties exchanged during the relevant time period, evidence that one would reasonably expect to find in relation to a true experiment. While Mr Themig may have believed that the system he proposed to EOG and Headington was somewhat novel, had some concerns about whether it would work, and encountered some issues getting the equipment into the well, his subjective belief is not enough to prove that the information he disclosed was in furtherance of an actual experiment” [111].

O’Reilly J’s decision suggests that commercial use is not necessarily inconsistent with experimental use, though he did not directly so hold, and the point remains open in principle. Note that one relevant factor was that the inventor did not request a discount. The implication is that charging full price demonstrates a confidence in one’s product that is inconsistent with an experiment. More generally, the decision implies that an objective test is applied to determine whether something is an experiment. This raises an interesting question as to what it means for something to be an experiment. Do the objective indicia, such as a discount, make the act an experiment? Or do subjective indicia, such as uncertainty in the mind of the inventor, make the act an experiment, with objective evidence required for reasons of certainty? For example, would it be an experiment if Mr Themig had confided to a colleague or friends that he was very uncertain whether the method would work, but didn’t want to offer a discount in case it did work? In any event, that is a fine distinction which doesn’t really arise on the facts here. The facts suggest that Mr Themig did not offer a discount because he was confident the method would work, albeit perhaps with some tinkering in the field. That is consistent with the O’Reilly J’s holding that the invention was obvious. 

Obviousness

I must admit that I found the obviousness analysis a bit difficult to follow, in large part because O’Reilly J focused initially on identifying the inventive concept, even though that was disputed. This is contrary to the Lord Justice Jacob’s point in Pozzoli [2007] EWCA Civ 588, [19] that “if a disagreement about the inventive concept of a claim starts getting too involved, the sensible way to proceed is to forget it and simply to work on the features of the claim,” which was recently emphasized by the FCA in Ciba Specialty Chemicals v SNF 2017 FCA 225. The general problem with starting with the inventive concept when it is disputed, is that if the inventive concept is not correctly identified the invention may be erroneously held to be obvious. That may happen if elements of the claimed invention which are novel and potentially inventive are excluded from the inventive concept. Presumably when the parties agree on the inventive concept, this is not a real risk. In this case, while the inventive concept was disputed, O’Reilly J adopted the patentee’s characterization of the inventive concept [147], not the defendant’s, and so there was presumably no real risk of an under-inclusive definition of the inventive concept.

O’Reilly J held that “the inventive concept of the relevant claims of the patent is the use of the ball-drop method in an open-hole wellbore” [147]. He concluded on the facts that it was obvious. As to the so-called Beloit question, “if the invention was obvious, why did no one else come up with it?” O’Reilly J suggested that

the critical factor for the success of the patented method was neither the design nor the components; it was the quality of the wellbore into which it was introduced. As it turned out, the ideal formation is shale. With the rise of prices for oil and gas in the 2000s, interest grew in fracturing shale and the method described in the '072 patent was used with great success.

That is, the problem of allowing selective communication to different segments of an open-hole wellbore in a shale formation had never been squarely presented before the rise of fracking, and the patentee had simply been one of the first to come up with the obvious solution to a novel problem.