Honolulu Oil Corporation v. Halliburton Halliburton v. Honolulu Oil Corporation 8212 1939

• Decision Date: 17 April 1939
• Docket Number: 479,Nos. 466,s. 466
• Citation: 83 L.Ed. 980,59 S.Ct. 662,306 U.S. 550
• Parties: HONOLULU OIL CORPORATION, Limited, et al. v. HALLIBURTON et al. HALLIBURTON et al. v. HONOLULU OIL CORPORATION, Limited, et al. Argued March 3—6, 1939
• Court: U.S. Supreme Court

306 U.S. 550

59 S.Ct. 662

83 L.Ed. 980

HONOLULU OIL CORPORATION, Limited, et al.

v HALLIBURTON et al.

HALLIBURTON et al.

v. HONOLULU OIL CORPORATION, Limited, et al.

Nos. 466, 479.

Argued March 3—6, 1939.

Decided April 17, 1939.

Messrs. A. W. Boyken, of San Francisco, Cal., and A. J. Hill, of Los Angeles, Cal., for Honolulu Oil Corporation.

Messrs. Leonard S. Lyon and William H. Davis, both of Los Angeles, Cal., for Erle P. Halliburton et al.

Mr. Justice BUTLER delivered the opinion of the Court.

This suit presents questions of validity and infringement of Patent No. 1,930,987 applied for February 10, 1926 by Simmons and, after assignment, issued October 17, 1933, to Halliburton. It is for a method and apparatus for testing productivity of formations encountered in oil and other deep wells drilled by the rotary method.

The writs were granted, on petition of defendants Honolulu Oil Corporation, Ltd. et al. and cross-petition of plaintiffs Halliburton, et al., to review a decree¹ of the circuit court of appeals for the ninth circuit holding that the method claims are valid and infringed and to that extent reversing a decree² of the district court of southern California holding that the method and apparatus claims are invalid.

There was an earlier suit for infringement of the same patent brought by these plaintiffs in the federal court for the eastern district of Texas against other defendants. That court sustained the patent and found it infringed. The circuit court of appeals for the fifth circuit reversed.³ It held the method claims invalid for lack of invention and that, while the apparatus claims may define a simplifying improvement upon which a combination patent might rest, the apparatus was not of such character as to be infringed by the accused tool of defendants.

In recent years rotary drilling has been widely used in sinking deep oil wells. Boring is done by rotation of a bit attached to a steel pipe which when so used is called a 'drill stem.' A smaller bore, called 'rat-hole', sometimes precedes, and is reamed out to obtain, the full size hole. To aid operation, drilling fluid (mud-laden water) is pumped into the upper end of the drill stem and escapes into the well at high velocity through holes in the bit. It rises through the space between the pipe and the earth walls of the well and carries to the surface cuttings made by the bit. It holds back and seals the penetrated formations. Hydrostatic pressure of the drilling fluid is very great and the fluid in a penetrated formation will not flow into the well unless it is under greater pressure. It is often desirable to secure a sample of the fluid within a stratum in the bottom of the well without removing the drilling fluid. The patent in suit is for a method and apparatus intended to accomplish that purpose.

The method claims are 8 and 18. Claim 8 is as follows: 'A method of testing the productivity of a formation encountered in a well containing drilling fluid, which includes lowering an empty string of pipe into the well through the drilling fluid to adjacent the formation, the pipe carrying a packer⁴ and having a valved inlet at its lower end which is closed while the pipe is being lowered, setting the packer above the formation to seal off the drilling fluid from the formation, opening the valved inlet after the packer is set to permit cognate fluid⁵ from the formation to enter the pipe, closing the valved inlet against the entrance of fluid from the well by movement of the pipe, raising the pipe so closed to remove an en trapped sample and the packer from the well.' Claim 18 is printed in the margin.⁶

The apparatus claims in suit are 9 to 17 inclusive and 19. Claim 15 is typical: 'Apparatus for testing the productivity of a formation encountered in a well containing drilling fluid, comprising a singe empty string of pipe to be lowered into the well through the drilling fluid to adjacent the formation to be tested, a packer lowered into the well by said string of pipe for sealing off the drilling fluid from the formation to be tested, said packer adapted to be positively pressed against the walls of the formation to seal off the same, means at the lower end of said string of pipe to receive fluid from said formation including an inlet opening into said pipe below said packer and a valve structure for controlling the inlet, said value structure having a relatively stationary part connected to the packer and a relatively movable part connected to the pipe.'

Sustaining the claims in suit, the district court for eastern Texas found: Plaintiffs have a large business under the patent in suit. Prior to the discovery there was no apparatus or method in use for testing productivity of formations in wells containing drilling fluid except by putting in a casing and removing the fluid. This patent first disclosed testing apparatus and method requiring only a single string of pipe.

In this suit the trial court found: The Franklin Patent No. 263,330, dated August 29, 1882, anticipates both the method and apparatus covered by the patent in suit. The use of a packer is necessarily implied from the language of the Franklin patent. Without one, that device could not perform the functions attributed to it. Plainly, it may be used as a tester; for by its use the contents of the producing stratum, sealed off from the rest of the well and unimpeded in its entry into the rat-hole by pressure of the rotary mud, can be brought undiluted to the surface by a mechanism almost duplicating that shown by the patent in suit. A packer to separate one stratum of the oil well from another is old in the art.

And it also found: The Cox Patent No. 1,347,534, dated July 27, 1920, and the Edwards Patent No. 1,514,585, dated November 4, 1924, substantially disclose the method and device claimed in the patent in suit. The object of these patents, like that of the one in suit, was to ascertain productivity of the stratum being drilled. There was no actual commercial use of the device disclosed and claimed in the patent in suit. It was impractical, due to difficulty in operating at increased length. The inventor himself was employed to devise improvements in the valve structure. If valid at all, the patent must be restricted to its precise form. The method claims are invalid for want of invention. In important respects, defendants' devices differ in operation from the device disclosed and claimed by the patent in suit; they are not infringements of it.

And that court decreed that as to all claims in suit, the patent is invalid.

The opinion of the circuit court of appeals for the fifth circuit considers the questions of invention here involved. In substance, it says:

Method claim 18, taken as typical, assumes familiar apparatus and claims a monopoly on a new use of the old apparatus to achieve a result in a better way. That apparatus includes a single string of pipe lowered into the well, a packer on the string, and a valve at the lower end. These simple and well-known elements are to be used by lowering the pipe into the well with the valve closed against the drilling fluid until the packer is set, then by opening the valve to admit cognate fluid below the packer, then by closing the valve so as to prevent the drilling fluid from entering when the packer is released and the pipe drawn up with its contents. No novelty and certainly no invention can be claimed for the method.

Packers and pipes with valves in them have long been in use to get what is below the packer free from what is above and without removing what is above. Whether a large quantity from a finished well or a simple sample from an unfinished well does not materially alter the method. Water has always been encountered in oil wells; the drilling fluid is only very muddy water voluntarily put and kept in the well for special reasons. Expansible and removable packers with pipes through them to reach the oil, gas, or other desired fluid beneath and rat-hole packers set by the weight of the pipe pressing them down and removable by simply lifting them are shown in earlier patents.⁷

The simplicity of the method in suit along with all its operations, was reasonably disclosed in the old patent to Franklin. There is the single pipe with a packer mentioned, but function esteemed to familiar as to need no emphasis, capable of being lowered into and withdrawn from a well, with the entrance into or escape from the pipe to be controlled by a valve operated from above while the pipe is lowered or withdrawn. The importance of Franklin to this method claim is that he describes the use of a packer on a single string of pipe with a valve in the pipe in the very operation of putting them in and taking them out of the well. Franklin discloses a packer. Evidently one must be used for without it oil would not flow through the pipe as desired and there would be no use of the valve to control the flow. The packer is necessary to prevent escape of gas and to build up pressure to make the oil flow.

Franklin did not intend to get a sample by raising the pipe, but intended to keep from getting a sample by making the valve a leaky one that would let the contents escape as the pipe is raised. He expected to get what was below by natural flow just as Simmons, applicant for the patent in suit, says that is to be preferred. It would be no invention to substitute a valve that would not leak for one that was intended to and does leak on withdrawal. It would be no invention to use the Franklin device to sample a well instead of using it to flow the well. Especially after the disclosure of Cox and Edwards in the art of testing by sample taken through the drill stem with their somewhat complicated devices, recurrence for this new use to what is in substance the simple apparatus of Franklin ought not to be the foundation for the broad method claims here put forth. While perhaps not anticipated, they involve no such invention as entitles to...