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GeoDynamics, Inc. v. Dynaenergetics US, Inc.

United States District Court, E.D. Texas, Marshall Division

December 21, 2017

GEODYNAMICS, INC., Plaintiff,
v.
DYNAENERGETICS US, INC., ANDERSON PERFORATING SERVICES, LLC, and TONG PETROTECH INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          ROY S. PAVNE UNITED STATES MAGISTRATE JUDGE.

         In this patent and trademark case, the Court will now consider Defendants' Motion for Attorneys' Fees and Expenses [Dkt. # 187]. Defendants seek fees and expenses from Plaintiff GeoDynamics under 35 U.S.C. § 285 and 15 U.S.C. § 1117.[1] After full briefing and argument on the motion, the Court will DENY the motion as to the patent claims but GRANT the motion as to the trademark claims.

         I. BACKGROUND

         Plaintiff GeoDynamics sells its CONNEX-branded charges for use in oil-field perforation, and contends use of those charges is a commercial embodiment of certain claims of U.S. Patent 9, 080, 431. Am. Compl. [Dkt. # 21] at 1-2. Defendant DynaEnergetics also sells charges for oil-field perforation, which are branded as DPEX. Id. at 2. Defendant Anderson Perforating provides oil-field perforation services using shaped charges, such as the CONNEX- and DPEX-branded charges at issue. Defendant Tong Petrotech imports the perforating carriers-the conveyances for delivering the charges to the proper depth within a well-used by Anderson. Tong has an ownership interest in third-party API Holdings, LLC, which owns Anderson.

         In September 2015, GeoDynamics sued Defendants for patent and trademark infringement. Compl. [Dkt. # 1]; see also Am. Compl. [Dkt. # 21]. GeoDynamics alleged direct and indirect infringement by Defendants of Claims 1-3, 5-6, and 8 of the '431 Patent (the Asserted Claims) resulting from use of DynaEnergetics's DPEX-branded shaped charges. Am. Compl. [Dkt. # 21] at 4-10. GeoDynamics also alleged infringement of its federally registered word mark REACTIVE (U.S. Regis. No. 3, 496, 381) by DynaEnerget-ics in connection with selling its DPEX charges. Id. at 11-13.

         The '431 Patent relates to a method for explosively perforating a well casing and the surrounding formation in balanced or near-balanced pressure conditions-that is, when the pressure within the wellbore is the same or nearly the same as the pressure of the surrounding formation. '431 Patent at 1:16-19; id. at 2:54-66 (describing the characteristics of underbalanced and overbalanced conditions). Rather than perforating a casing and the surrounding location with a conventional shaped charge, the '431 Patent teaches use of reactive shaped charges that create a first conventional explosive event to perforate the tunnel and a second reactive explosive event caused by an exothermic intermetallic reaction. That reaction eliminates a zone of reduced permeability in the tunnel, called the “crushed zone, ” caused by the compaction of debris resulting from the first explosive event. See Id. at 1:66-2:2. That, in turn, obviates the need to create an underbalanced condition prior to perforation to clear the debris, and also increases production capability relative to the prior-art shaped charges. Thus, the key claim limitations at issue are (1) whether users of the accused DPEX charges perforate the wellbore “without changing the pressure condition of the wellbore to a more underbalanced condition, ” id. at 11:18-19, and (2) whether “the second [reactive] explosive event eliminat[es] a substantial portion of [the] crushed zone and clear[s] debris from within [the] perforation tunnel, ” id. at 11:27-29.

         After two trials, Defendants prevailed on all issues. In March, a jury found Defendants did not directly or indirectly infringe the '431 Patent, the Asserted Claims were invalid as anticipated and obvious, and GeoDynamics's 2007 and earlier sales of its CONNEX-branded charges triggered the on-sale bar. Jury Verdict [Dkt. # 158]. In April, after a one-day bench trial, the Court found REACTIVE generic and ordered its federal trademark registration canceled. Judgment [Dkt. # 180].

         Defendants now move for their fees. First, Defendants contend GeoDynamics's patent infringement validity positions were baseless. Defs.' Motion [Dkt. # 187] at 4-16. Second, Defendants contend GeoDynamics improperly included Tong in the lawsuit. Id. at 16- 18. Finally, Defendants contend GeoDynamics's trademark infringement claims were baseless. Id. at 18-20.

         II. APPLICABLE LAW

         A “court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. An exceptional case, though rare,

is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances.

Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756, (2014) (footnote omitted); see Id. at 1757 (explaining that “a district court may award fees in the rare case in which a party's unreasonable conduct-while not independently sanctionable-is nonetheless so ‘exceptional' as to justify an award of fees”). In weighing the evidence, the district court may consider, among other factors, “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case)[, ] and the need in particular circumstances to advance considerations of compensation and deterrence.” Id. at 1756 n.6 (internal quotation marks and citation omitted); see also Id. at 1758 (explaining that a § 285 attorney fee award is appropriate “when the losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons” (internal quotation marks and citation omitted)). An exceptional case determination must find support in a “preponderance of the evidence.” Id. at 1758. See also Baker v. DeShong, 821 F.3d 620, 624 (5th Cir. 2016) (merging Octane Fitness's definition of “exceptional” into 15 U.S.C. § 1117(a) and holding “an exceptional case is one where (1) in considering both governing law and the facts of the case, the case stands out from others with respect to the substantive strength of a party's litigating position; or (2) the unsuccessful party has litigated the case in an ‘unreasonable manner'”).

         III. DISCUSSION

         A. GeoDynamics's Patent ...


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