Halliburton Energy Services Inc v Smith International (North Sea) Ltd

I have before me cross-applications in this action in which the claimant is Halliburton Energy Services Inc. (“Halliburton”) and the defendants are Smith  International North Sea Limited, Smith International Inc. and Smith International Italia SPA. I  will refer to the defendants compendiously as Smith.

This application arises in an action which is due to come on for trial before Pumfrey J on 17 January of next year. It is not, however, the first dispute between these parties relating to the inventions which are the subject of the patents in suit in these proceedings.

Halliburton commenced proceedings in the United  States District Court of Tyler in Texas in September of 2002 under what I understand to be equivalent American patents to the two patents which are in issue in these proceedings. Full discovery was apparently given in that action after a  jury trial. A verdict was given in July of last year. That verdict was in favour of Halliburton and a significant sum by way of damages has been ordered to be paid to it by Smith.

Meanwhile, the current proceedings were commenced in January of this year. Notwithstanding what was clearly the very complicated nature of the inventions in suit, Halliburton chose to commence these proceedings in the Patent County Court, but that was at about the same time or just shortly after Smith applied in the High Court for an order for revocation of the two patents. The result has been that by orders of Pumfrey J and HHJ Fysh all the issues are now to be tried together in the High Court.

In the American proceedings Halliburton were assisted by specialist patent counsel and an expert. For present purposes all I need to say is that its patent counsel included Mr. Landis and Mr. Farley and one of the experts it had was a Mr.  James Hall. Mr.  Hall is also the expert who it wishes to rely on in these proceedings. Mr. Landis and Mr. Farley have also been added to the confidentialty club so that they can assist Halliburton in the pursuit of these proceedings.

As is normal in patent infringement actions nowadays, when a  defendant wishes to limit the scope of disclosure it produces a  product and process description. Such a  document has been produced here. According to a judgment by Pumfrey J given on 12 October this year, that is clearly a document into which Smith has put a great deal of effort. It was made available to Halliburton in the middle of this year. Notwithstanding that, Halliburton applied for full disclosure in relation to every single product, that is to say, drill bit, which might fall within the scope of the two patents in suit.

The matter came before Pumfrey J on 12 October. In a short and clear judgment the learned judge explained how it was undesirable to allow disclosure to get out of control and for that reason, after some discussion with counsel, he ordered that each party should select four drill bits which they would rely on as exemplifying their respective arguments of infringement and non-infringement. That selection of four bits each was to be preceded by Smith supplying Halliburton with a list of the bits which had been imported into this jurisdiction.

On the day that Pumfrey J made that order, that is to say, 12 October, Smith transmitted to Halliburton's solicitors, Bristows, a list identifying 134 bits which fell within the potential scope of the patents in suit. It now transpires that that list was not complete. As a  result of at least two further trawls by Smith, a  further 17 drill bits have been identified, which have been imported into the jurisdiction. In an ill-tempered witness statement by Mr.  Brown of Bristows, the suggestion was made that, as I understand it, the defendants willfully failed to disclose the full list of drill bits. I  have seen nothing which supports that suggestion. Smith say that the failure to disclose the additional 17 was accidental and I  accept that to be the case. In any event, the bulk of the drill bits which were imported into the jurisdiction were disclosed in accordance with the direction of Pumfrey J on 12 October. That means that the time for selecting four on each side should have been reached on 19 October.

Unfortunately Halliburton has not selected its four drill bits from the list, either as originally served on the 12 or as subsequently expanded. Instead it has asked for more and more information relating to each of the bits on the list and as to the identity of the designers of each of the bits, all of this being material which was not encompassed within Pumfrey J's order.

Of course, because there was no identification of the bits to be relied on, all the other steps in the timetable set by Pumfrey J for ensuring that this action is prepared in time for the trial on 17th January have been put at risk. Eventually Smith came to the conclusion it could not wait any longer and it brought the present application to court to require the Halliburton to make its selection of the four from the list within 24 hours.

On the other hand, Halliburton, sought effectively to go back to the position before Pumfrey J made his order on 12 October. In particular, the first three paragraphs of the order which Halliburton seeks today are as follows:

“(1)

The defendant shall provide a combined list of all drill bits that fall within the claimant’s amended particulars of claim including without limitation all bits imported into or offered for sale in the United Kingdom via the defendant's websites, including the identity of the design of such bits. As such this shall be verified as complete by a  proper officer of each defendant company.

(2)

All three defendants shall provide full documentary disclosure relating to the design of all listed bits within such period of time as the court shall direct, such disclosure to be verified as complete by a proper officer of each defendant company.

(3)

The claimant shall within 21 days of receipt of full and verified disclosure related to the design of all listed bits make its nomination of four drill bits and shall also disclose all documents arising from US discovery on which it seeks to rely".

This effectively means that there should be full disclosure in relation to each and every bit which Smith has imported into the jurisdiction. That is precisely what Pumfrey J thought he had avoided by making the order that he did on 12 October.

I  am not in any way satisfied that Halliburton have been under any difficulty whatsoever in selecting four drill bits on which to base their claim. I  have already referred to the fact that Mr. Landis and Mr. Farley, who had prime responsibility in the legal team in the US proceedings, are allowed to participate in these proceedings to advise Halliburton here. I  have also referred to the fact that Mr. Hall was the expert in the United States proceedings and that he is also the expert in these proceedings on behalf of Halliburton. Some 28,000 pages of documents were disclosed, as I understand it, in the US proceedings. Halliburton no doubt have a very deep understanding of how the defendants’ products are designed and manufactured and had that understanding even before Pumfrey J's order of 12 October. I  can see no reason at all why they should not be required to comply with the order of Pumfrey J, even if it is now one month late. I  will order that they shall nominate the four drill bits they rely on by 6pm on Tuesday, 9 October.

This then leads on to the question of inspection. Mr. Floyd QC, who appears for Smith, has asked for there to be inspection between 15 and 19 November, those being dates which Halliburton had said its relevant personnel are available. Mr. Thorley QC, who appears for Halliburton, has not sought to suggest that those dates are not ones which could be met by the relevant people on his team and I will order the inspection to take place on those dates.