A Private Sale Does Not Constitute a Public Disclosure Under § 102(B)(1)(B)

NCS MULTISTAGE INC., NCS MULTISTAGE, LLC V. NINE ENERGY SERVICE, INC.

Before Reyna, Hughes, and Cunningham. Appeal from the United States District Court for the Western District of Texas

Summary: A private sale does not constitute a public disclosure under § 102(b)(1)(B).

NCS Multistage (“NCS”), an oilfield services provider, accused Nine Energy Service’s (“Nine”) BreakThru Casing Flotation Device of infringing claims of NCS’s patent related to a float tool used in the oil and gas industry to assist with inserting a long pipe into a wellbore. The jury returned a verdict in favor of NCS, finding that Nine had directly and indirectly infringed the asserted claims, that the claims were not invalid, and that NCS was entitled to damages. The district court entered final judgment and Nine appealed.

The Federal Circuit vacated the district court’s judgment. The court rejected the district court’s constructions of “internal diameter” and “casing string.” The term “internal diameter” was improperly construed because a claim term is presumed to carry the same meaning throughout a claim unless the specification or prosecution history clearly establishes otherwise, and here the intrinsic evidence was not clear that the term should have different meanings in different portions of the claims. The court also held that the lower court improperly limited the term “casing string” to certain sizes, as the specification contained no clear size restriction.

The Federal Circuit also held that NCS’s 2012 sale of its Airlock device to a third party did not qualify as a public disclosure under § 102(b)(1)(B) that would prevent subsequent third-party sales from qualifying as prior art. NCS’s sale was not a public disclosure because NCS privately sold the device to one customer in a sealed black tube that had to be cut open, the technical manual was labeled confidential, and there was no evidence that the public could discern the claimed features. Thus, the competitor’s later sale of its TDP-PO tool and use of that device was prior art.

Finally, the Federal Circuit upheld the district court’s exclusion of testimony and documents concerning the other sales of the TDP-PO tool that were disclosed two days before the close of fact discovery, as Nine had long known the relevance of these documents and their late disclosure deprived NCS of a meaningful opportunity to address them.

The Federal Circuit vacated the district court’s judgment of infringement, no invalidity, and damages, and remanded for a new trial.

Editor: Sean Murray