Duhn Oil Tool, Inc. v. Cooper Cameron Corp.

• Citation: 818 F.Supp.2d 1193
• Decision Date: 30 September 2011
• Docket Number: No. 1:05–cv–01411–OWW–GSA.,1:05–cv–01411–OWW–GSA.
• Parties: DUHN OIL TOOL, INC., Plaintiff, v. COOPER CAMERON CORPORATION, Defendants.
• Court: U.S. District Court — Eastern District of California

818 F.Supp.2d 1193

DUHN OIL TOOL, INC., Plaintiff,

v.COOPER CAMERON CORPORATION, Defendants.

No. 1:05–cv–01411–OWW–GSA.

United States District Court, E.D. California.

Sept. 30, 2011.

Edward Richard Schwartz, Pasadena, CA, James M. Whitelaw, Joseph Edward Thomas, Kerri Ann Rich, William J. Kolegraff, Thomas Whitelaw and Tyler LLP, Irvine, CA, for Plaintiff.

Charles J. Rogers, Michael J. Guthrie, Thomas L. Warden, Conley Rose, P.C., Houston, TX, Marcus Natale Dibuduo, Mark D. Miller, Sierra IP Law, PC, Fresno, CA, Fields Alexander, Joe W. Redden, Beck Redden and Secrest, L.L.P., Houston, TX, Manish B. Vyas, Cameron International Corporation, Houston, TX, for Defendants.

MEMORANDUM DECISION REGARDING MOTIONS FOR ENTRY OF JUDGMENT, MOTION FOR JUDGMENT AS A MATTER OF LAW

OLIVER W. WANGER, District Judge.

I. INTRODUCTION.

Plaintiff Duhn Oil Tool, Inc. proceeds with a patent infringement action against Defendant Cooper Cameron Corporation. On February 2, 2011, a jury found Defendant liable for infringement and contributory infringement. (Doc. 668). The jury also found several of the patent's claims invalid and returned an advisory verdict on Defendant's counterclaim for inequitable conduct.

On February 9, 2011, the parties filed motions for entry of judgment. (Docs. 675, 676). The court heard the parties' motions on February 11, 2011 and requested briefing on a dispute between the parties regarding the scope of the jury trial. The parties submitted briefing on the jury issue on February 28, 2011. (Docs. 681, 682). The parties submitted proposed findings of fact on March 7, 2011. (Docs. 685, 686). The parties proposed findings are based on their respective positions regarding the scope of they jury's verdict.¹

II. FACTUAL BACKGROUND.

Duhn Oil Tool, Inc. (“Duhn Oil” or “Plaintiff”) and Cooper Cameron Corporation (“Cameron” or “Defendant”) are manufacturers of wellhead systems and components for the oil and gas industry. Cameron is a former purchaser of Duhn Oil wellhead components, including Duhn Oil's W2 tubing heads and W92 casing heads. Cameron purchased Duhn Oil components for resale to end users.

In 1996, Duhn Oil obtained a patent for a device it named the “Quicklock Drilling Flange” (“QDF”), a drilling flange capable of being quickly attached to a wellhead assembly. Duhn Oil's QDF is designed to be secured to the casing head of a wellhead assembly by lock screws that engage a groove cut in the body of the drilling flange. Use of lock screws to secure wellhead components in the manner disclosed in Duhn Oil's QDF patent is a standard method for securing wellhead components in the oil and gas industry.

In or about February 2001, Cameron employee John Rogers called Rex Duhn, Duhn Oil's president, and requested development of a wellhead isolation tool for Barrett Resources, an end user of Duhn Oil's products. Rogers conveyed that Barrett Resources desired a “frac mandrel” that would permit Barrett Resources to continue using Duhn Oil's existing wellhead components, including the W2 tubing heads, W92 casing heads, and lock screws. A frac mandrel is a wellhead isolation tool designed to protect a well's hydrocarbon production components from pressures entailed by fracturing operations, which exceed the pressure rating of conventional production components. Fracturing operations stimulate an existing well's production by introducing abrasive material into the well's producing regions at high pressure in order to create pathways for hydrocarbon extraction. The frac mandrel Rex Duhn set out to create after speaking to John Rogers ultimately culminated in United States Patent No. 6,920,925 (“ '925 Patent”).

After his conversation with John Rogers, Rex Duhn began working on an extension of Duhn Oil's QDF system that would provide Barrett Resources with a frac mandrel compatible with Duhn Oil's W2 and W92 products. However, the single set of lock screws employed in Duhn Oil's original QDF device proved to be insufficient for retaining the frac mandrel in a tubing head under high pressure. Rex Duhn sought assistance from Robert Meek, Duhn Oil's chief engineer. Ultimately, a secondary flange with a second set of lock screws was conceived that rendered the frac mandrel functional under the extreme pressures generated by the fracturing process.

Rex Duhn sent preliminary design drawings to John Rogers in order to obtain feedback from Rogers and Barrett Resources. Rogers provided suggestions that Duhn Oil endeavored to incorporate into the design. Final design drawings for a “QDF frac mandrel” were completed in May, 2001 and Duhn Oil began marketing the QDF frac mandrel to end users. Rogers left Cameron and joined Duhn Oil in May, 2001 to begin marketing Duhn Oil's QDF frac mandrel. Rogers was terminated from Duhn Oil in 2005 for cause.

The '925 Patent

Duhn Oil filed a provisional patent application for its QDF frac mandrel on February 19, 2002 listing Robert Meek and Rex Duhn as inventors. On February 19, 2003, Duhn Oil filed application number 10/363,070 (“070 Application”), which claimed priority to the provisional patent application filed in 2002. On May 16, 2003, Duhn Oil submitted a Petition to Make Special requesting expedited review of the '070 Application. The Petition to Make Special stated that Cameron was infringing at least some of the claims disclosed in Duhn Oil's patent application.

The Examiner initially rejected Duhn Oil's patent application as anticipated by prior art. In response, Duhn Oil added a clause to claim 1 referred to by the parties as “the wherein clause.” The wherein clause is critical to the parties respective claims. Duhn Oil's application matured into United States Patent No. 6,920,925 (“the '925 Patent”), entitled “Wellhead Isolation Tool,” on July 26, 2005. The '925 Patent is comprised of 88 claims.

The '925 Patent teaches a casing head coupled to a wellbore and a tubing head mounted over the casing head. The tubing head has a first radial flange extending from it at an upper end. A generally elongate annular member (the frac mandrel) is suspended concentrically within the tubing head and aligned with a production casing suspended below in the wellbore. The frac mandrel has a second radial flange extending from it. In some embodiments, the first flange extending from the tubing head and the second flange extending from the frac mandrel are fastened together.

All claims at issue in this action depend from claim 1 of the '925 Patent. Claim 1 specifies a wellhead assembly having various components as follows:

1. A wellhead assembly comprising:

• a casing;

• a first tubular member mounted over the casing;

• a first tubular member flange extending from the first tubular member;

• a generally elongate annular member (“frac mandrel”) suspended in the first tubular member, said annular member having a first end portion extending above the first tubular member and a second end portion below the first end portion;

• a secondary flange extending from the frac mandrel; • a plurality of fasteners fastening the secondary flange to the first tubular member flange; and

• a production tubular member aligned with the frac mandrel, wherein an axial force acts on the generally frac mandrel and is reacted in both the first tubular member flange and the secondary flange.

Claim 1 identifies the components either by their location and/or their functionality. For example, the production tubular member is aligned with the annular member in such a way that an axial force acts on the annular member and such force is reacted in the first tubular member flange and the secondary flange to which it is attached.

The court has interpreted the critical “wherein” clause of claim 1 as follows:

[The “wherein” clause] requires that the wellhead assembly be in an environment where there is an axial force present and acting on the frac mandrel. Given that an axial force is present and acting on the frac mandrel, the wherein clause imports the functional limitation that said axial force be reacted in both the first tubular member flange and the secondary flange. The clause does not require that an axial force be applied by a user nor does it specify a method as to how the force is provided.

This “wherein” clause also requires a “dual load path”—which means that there must be an independent force path (engagement) between the claimed “elongate annular member” (e.g., a “frac mandrel”) and each of the two claimed flanges, which are the “first tubular member flange” (e.g., the upper flange of a “tubing head”) and the “secondary flange.” These two separate independent force paths (engagements) must each have contact with the frac mandrel, which provides for a transmission of the axial force from the elongate annular member to the first tubular member flange, and a separate transmission of the axial force from the elongate annular member to the secondary flange.

(Doc. 660 at 75).

The Parties' Claims

Duhn Oil asserts that Cameron's Time Saver Wellhead (“TSW”) frac mandrel infringes claims 2, 3, 5, 19, and 29 of the '925 Patent. Each of these claims depend from claim 1 and includes the “wherein” clause. Duhn Oil seeks damages and injunctive relief.

Cameron seeks a declaration that the '925 Patent is invalid for obviousness and anticipation. Cameron's obviousness claim is based on two prior art references: (1) U.S. Patent No. 6,289,993 (“'993 Patent”); and (2) a 1994 Catalogue (“'94 Catalogue”) describing an “MTBS Tubing Hanger” offered for sale by Cameron. The '993 Patent is one of the U.S. Patents listed in the References Cited section of the '925 Patent. The '94 Catalogue was not before the Examiner.

Cameron also asserts that the '925 Patent is unenforceable due to Duhn Oil's inequitable conduct. Specifically, Cameron contends that Duhn Oil committed inequitable conduct by failing to name John Rogers as an inventor and by failing to disclose the '94 Catalogue to the Patent Office. Cameron also asserts that Rex Duhn is...