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Halliburton loses software patent appeal in UK

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England's Court of Appeal has upheld a ruling that two software-related patents were invalid. Oil giant Halliburton's attempts to patent in the UK a software system for designing drill bits has failed.

The company has been in dispute in the US and Europe over the drill bit designing software, and won its US case. There it sued Smith International, a competitor which is also from Texas, for infringement of patents it held in the software system.

A Texas court awarded Halliburton $41m in damages in the US case, but in the UK the High Court found that Halliburton's patents were poorly drafted and Smith won the case.

Following that ruling, Smith and Halliburton came to a private settlement over the technology, but Halliburton went on with its appeal in relation to one of the two technologies at issue, a 'force balancing' patent. Following the settlement Smith did not take part in the appeal.

In the US the courts found that Smith had infringed the patents in its use of similar designing software and ordered that it remove certain functions from its software.

The English court took a rigorous approach to analysing the patents and found that it did not adequately describe the system it sought to patent. In order to be valid a patent must describe a process so completely that a person who knows that subject area must be able to replicate it using only the contents of the patent.

The High Court found that Halliburton's patent did not do that, and the Court of Appeal has now agreed. Justice Jacob ruled that the patent was missing vital details, contained wrong equations, demanded a higher level of expertise than allowed and that it relied on material external to the patent, and therefore was not a valid patent.

Defending the trial judge's conclusions, Jacob wrote that building a system using the patent would involve a lot of work, "work which would be 'agony', work which in part would be enough to justify publication in a peer-reviewed scientific publication. That seems ample enough material for him to decide that the invention was not disclosed clearly and completely enough for it to be performed by a person skilled in the art".

The patents involved relate to the design of oil-drilling bits which penetrate rock in particular ways. This is a highly technical area and the patent on appeal was one which was designed to balance the forces of three drill heads.

The patent failed to give a vital piece of information related to the activity of two parts of the drill, the bit and the cone. The patent does not outline what the ratio of the bit speed to the cone speed is, which the trial judge had found was essential to the operation of the drill.

A failure to impart such vital information, affirmed the Appeals Court ruling, means that a person skilled in the area would not be able to recreate the invention, and thus that patent must fail.

The judge also found that a vital equation contained within the patent was wrong. "Once the fundamental assumption for the modeling is shown to be wrong, one would expect the model so based to be useless," said Jacobs. "If garbage is put in, you would expect it to come out: the evidential onus must lie on anyone who wants to show otherwise."

Taking these elements together, Jacobs said that "it is hardly surprising the Judge found [the patent] insufficient".

Halliburton had argued that some information which would make it possible to replicate the invention was contained in a separate academic document, which Halliburton said should be taken to form part of the patent.

Jacobs disagreed, saying that that assumption could not be made. "A patent is supposed to teach people how to perform the invention," he said. "If necessary information is not actually in the patent, then the skilled person must be given a clear unambiguous direction of where to get it. He cannot be expected to find such a direction buried in acknowledgements of the prior art."

Jacobs upheld the original court's decision and refused Halliburton leave to appeal on certain of the facts of the case, which it had applied to do.

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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