I have before me a disclosure application in an action to revoke a number of patents in the name of the Defendant (“EMGS”) in the field of controlled source electromagnetic surveying (“CSEM”).

In his witness statement prepared for the purposes of this application, Mr. Bennett, who is a solicitor instructed by EMGS, says this:

EMGS’s case, underlying to some extent all three patents, is that the use of CSEM to discriminate between oil and water in subsea reservoirs involved invention. They say that prior to the inventions of the patent in suit the use of CSEM for this purpose was limited to academic surveys. Its applicability to oil was not or not commonly appreciated.

Schlumberger’s case is that each of the patents is either not new or lacks an inventive step. The claimants are a holding company only. The Schlumberger group is, as explained by Mr. Bennett again, a large multinational group of companies that was founded in 1927 and describes itself as “the world’s leading oilfield services company supplying technology, information solutions and integrated project management that optimise reservoir performance for customers working in the oil and gas industry”. It includes a number of subsidiaries, including companies called WesternGeco and AGO (formerly AOA).

I shall come to the specific categories of documents sought, but, broadly speaking, the defendant seeks disclosure of documents recording attempts by companies within the Schlumberger group to develop or evaluate electromagnetic methods of exploring subsea reservoirs and reactions of relevant persons within the Schlumberger group to

The approach to this type of disclosure in a patent case has recently been examined in Nichia v Argos[2007] EWCA Civ 741; [2007] FSR 38. In that case, a case concerning a patent for Christmas tree lights, the judge had refused to make any order for disclosure at all. The majority of the Court of Appeal considered that such a blanket approach was wrong. They held that a blanket refusal of this type of disclosure could lead to unmeritorious claims being advanced: see, in particular, Pill LJ at [85] to [88]. The Court of Appeal held that such disclosure should be granted but that the scope of the relevant search should be proportionate to what was at stake and what might result from the search: see, for example, Rix LJ at [72] to [74]. They did not exclude the possibility that such disclosure could be refused altogether. Ways should be explored of making a search, if any, fit the requirements of the individual case. I approach this application with those principles in mind.

There is no dispute that this is a very big case in which there is a lot of money at stake. The size of the market is touched on in paragraphs 13 to 16 of Mr. Bennett’s witness statement. Mr. Floridia (an officer of WesternGeco, a Schlumberger company) has said on a previous application that he believes CSEM is a key part of the future of surveying. Industry projections in 2004 suggested that CSEM revenues would approach $1 billion in three to four years.

The application requires the claimant to search the records of other companies within the Schlumberger group such as WesternGeco and AGO, who are not parties to the action. There is no application before me for disclosure directly against those third parties. Companies are not within the jurisdiction and it would appear, therefore, that there is no scope for applications for third party disclosure under the appropriate provision of Part 31.

CPR Part 31.8 provides as follows:

For this purpose a party has or has had a document in his control if –

it is or was in his physical possession

he has or has had a right to possession of it; or

he has or has had a right to inspect or take copies of it.”

It is worth noting that a party has or has had a document in its control if it has or has had the right to inspect or take copies of it.

The way in which disclosure in this case has thus far proceeded is as follows: The parties exchanged disclosure lists on 24^th September 2007. Schlumberger’s list contained no documents at all, although they later disclosed a single document related to the publication of a pleaded citation. The claimant’s disclosure statement states that searches were carried out at the “claimant’s facilities” and that the searches were also conducted of files of “employees of the claimant”. The search was limited to documents between 2^nd February 1998 and 28^th July 2005 on the usual basis.

The defendants asked for an explanation and they received a letter dated 4^th October 2007 from Freshfields, who are the solicitors instructed by Schlumberger. In paragraph 2 of the letter they say this: “Our client carried out searches of its corporate files at the following facilities in Sugar Land and Houston, Texas”, and it then sets out the addresses of four facilities in Texas. The letter continues:

The personal files of the following individuals were also searched:

Jeff Griffin (an attorney at Schlumberger WesternGeco);

Charlotte Copperthite (an attorney at Schlumberger Ltd.);

James Kurka (an attorney at Schlumberger Technology Corp.); and

Jim Brady (a technical officer at Schlumberger WesternGeco).”

Later in the letter they say this:

Subject to the caveat in this last paragraph, it is clear that the search which had been conducted of what the disclosure statement had called “the claimant’s facilities” and of the “files of the claimant’s employees” had been done without reference to the specific group company. The files of three different companies were being examined, albeit limited at that stage to patent attorneys and a single technical officer. Plainly, that was being done with the consent of the companies concerned.

Paragraph 6 of Dr. Watts’s second witness statement served with this application makes it plain that he decided, in conjunction with Mr. Griffin and Mr. Brady, on the

Mr. Silverleaf QC, who appeared for Schlumberger, relies on the speech of Lord Diplock in Lonrho v Shell[1980] 1 WLR 627. In that case it was sought to obtain disclosure from the foreign subsidiaries of a party. The case concerned the old Rules of the Supreme Court, Ord. 24, but nothing turns on that. In order for the documents to be obtained, it was suggested that the party as a shareholder of the relevant company could procure the board of another company to exercise its power to alter the articles of association of each of the subsidiaries so as to entitle the shareholders to take copies and inspect the documents.

Lord Diplock said at 635 at G that the word “power” in the then Ord. 24 “looks to the present and the past, not to the future”. He said this:

At 636 F he said this:

In Lonrho v Shell, therefore, there had been no prior consent to the inspection and copying of documents. What was suggested was that, by taking certain steps, those documents would be brought within the power of the party.

Mr. Silverleaf emphasises the words “without the need to ask for the consent of anyone else”. He says that in this case Schlumberger Holdings need to ask the subsidiaries for permission to search for documents. He relies on some evidence of Mr. Griffin, who is the managing intellectual property counsel at WesternGeco, described as an affiliate of the claimant. In paragraph 4 he says this:

I accept that the mere fact that a party to a litigation may be able to obtain documents by seeking the consent of a third party will not on its own be sufficient to make that third party’s documents disclosable by the party to the litigation. They are not within his present or past control precisely because it is conceivable that the third party may refuse to give consent. But what happens where the evidence reveals that the party has already enjoyed, and continues to enjoy, the co-operation and consent of the third party to inspect his documents and take copies and has already produced a list of documents based on the consent that has been given and where there is no reason to suppose that that position may change? Because that is the factual situation with which I am confronted here In my judgment, the evidence in this case sufficiently establishes that relevant documents are and have been within the control of the claimant. I should emphasise that my decision does not turn in any way on the existence of a common corporate structure. My decision depends on the fact that it appears from the evidence that a general consent has in fact been given to the claimant to search for documents properly disclosable in this litigation, subject only to the caveats contained in paragraph 4 of Mr. Griffin’s witness statement concerning corporate acquisition documents and unreasonably onerous requests.

There can be little doubt that the Schlumberger group has been heavily involved in research into undersea surveying methods for oil. Mr. Bennett says in paragraph 10 of his witness statement:

These facts, coupled with the statement by Mr. Floridia on an earlier application that the patents “lay claim to products and processes already well established by the time the patents were filed,” has led EMGS to seek disclosure of documents relating to the categories to which I now turn.

The request as modified by the defendants and produced for the purposes of the hearing before me reads as follows:

Documents that are or have been in the control of those businesses that are in common ownership with the Claimant (including WesternGeco LLC and AOA Geomarine

the attempts by the members of the Schlumberger Group named in paragraph 2 above to develop or evaluate methods to identify the nature of sub-sea reservoirs using electromagnetic methods; and

the reactions of the staff of the members of the Schlumberger Group named in paragraph 2 above to:

‘Sea Bed Logging (SBL), a new method for remote and direct identification of hydrocarbon filled

‘Remote detection of hydrocarbon filled layers using marine controlled source electromagnetic sounding’ Eidesmo et al, EAGE 64th Conference, Florence, 27-30 May 2002;.

‘Remote sensing of hydrocarbon layers by seabed logging (SBL): Results from a cruise offshore Angola’ Ellingsrud et al, The Leading Edge, October 2002;

their participation in the study giving rise to that

Publication of the Defendant's inventions in published applications for EP 1256019, EP 1309887 and GB 2399640 (and their equivalents in other jurisdictions).

a schedule setting out in relation to those companies identified in paragraph 2 above, which of those companies did in the period 2 February 1998 to 28 July 2005 inclusive, use, develop or evaluate any method for carrying out a survey using a CSEM to either (a) search for a hydrocarbon reservoir, or (b) determine the nature of a submarine or subterranean reservoir; and in each case identifying the relevant company and the method concerned.

A schedule identifying all prior products and processes referred to in paragraph 2 of the first statement of Aaron Gatt Floridia made herein on 12th July 2007 as being ‘products and processes already well established by the time the patents were filed’, and all documents which will be relied upon at trial as evidencing the same.

In relation to the paper ‘Recent and future developments in marine acquisition technology: An unbiased opinion’ by Nick Moldoveanu of Schlumberger, in so far as they relate to the discussion in the final paragraph of page 12:

drafts of the paper;

internal communications discussing the comments in the final paragraph of page 12;

preparatory materials.

The following documents relating to Schlumberger

documents relating to the assessment of each Target's technology for identifying the nature of sub-sea reservoirs using electromagnetic methods;

information memoranda or similar documents prepared by AOA Geomarine Operations Inc or WesternGeco LLC or their respective owners or advisers in connection with their proposed disposal to Schlumberger Group and relating to each of those Targets' technology for identifying the

documents relating to the assessment of EMGS' patents and patent applications concerning

Documents stating technical reasons relevant to the decision by Arnold Orange Associates to incorporate AOA Geomarine Operations Inc to commercialise controlled source electromagnetic techniques for identifying the nature of sub-sea reservoirs.”

Mr. Burkill QC asked for the documents in this category or, alternatively, for a schedule in accordance with paragraph 2A.

Mr. Silverleaf says that his clients accept that they did not at any time before 14^th August 2002, two years after the priority date of the second patent, use, develop or evaluate any method for carrying out a survey using CSEM.

The obviousness attacks on the first two patents all start from documents disclosing CSEM. Unusually, there is no attack pleaded based on common general knowledge alone. The issue at the trial on the basis of the pleadings as they stand will be whether it is obvious to go from such disclosures as there were in the pleaded prior art to methods which fall within the claims of those patents.

It seems to me that, if Schlumberger had been, within the four-year window provided under the rules, involved in considering CSEM and working out whether and, if so, how it might be applied to hydrocarbon detection, then documents of the kind sought would be of relevance and in a case of this magnitude ought to be disclosed. But, subject to proper confirmation from a responsible officer within the Schlumberger group of what Mr. Silverleaf has said, it appears that Schlumberger were not so involved. For what it is worth and I express no view about it at this stage, EMGS will be able to make such forensic use of that fact as they think appropriate at the trial.

The order in paragraph 2.1 goes wider, however, and seeks equivalent documents in respect of any electromagnetic method. It seems to me that, once one knows that Schlumberger were not even evaluating CSEM, there is nothing of relevance to be gained from knowing precisely what else it was they were doing.

The third patent in suit has a later priority date and is the basis for inserting the later date of 28^th July 2005 in this category. That patent relates to a combination of seismic and CSEM methods. One of the first two patents is prior art to it. The broad question is likely to be whether a method combining the two approaches was obvious. It seems to me that whether or not Schlumberger were evaluating or practising CSEM in that period is unlikely to assist on the determination of that question.

So I would order a schedule to be prepared as asked for by paragraph 2A(i) of the draft order, supported by a statement of truth by a proper officer but limited to the cutoff date of 14^th August 2002.

Paragraph 2A(ii) asks for an order identifying the products and processes already “established” by the time the patents were filed to which Mr. Floridia refers in the passage of evidence which I have already mentioned. It also asks for all documents which will be relied upon at trial to establish the proposition.

Mr. Silverleaf has explained that Mr. Floridia’s statement was intended to mean no more than “documents relating to CSEM had been published, in particular the pleaded prior art”.

I must say, for my part, the innuendo of what was said seemed to me to go a little further than that, but in the light of the statement Mr. Silverleaf has made it seems pointless to make an order under this head. EMGS will know, when they receive the expert evidence in this case, exactly how far the claimants are able to prove that the claim to the products and processes was well established.

This category seeks the reactions of staff of members of the Schlumberger group to:

The basis for this application is the usual one. Those who say a patent is obvious in litigation should be faced with their own contemporaneous reaction: for it is obviousness in ignorance of the invention which is important and not obviousness with the benefit of hindsight. If they said at the time, “How on earth did they think of that?”, it can cut across the opinions of experts all expressed with the benefit of hindsight.

I accept, in principle, that material of this type is potentially relevant, but the scope of this request is, to put it mildly, rather broad. Mr. Silverleaf says that Schlumberger have over 76,000 employees and searching for material of this nature would be too burdensome, having regard to any potential value.

As presently drafted, it is, in my judgment, hopelessly wide, even with the preamble requiring only a proportionate search to be made. I would have reacted more favourably to a narrower order.

Dr. Watts, in paragraph 20 of his second witness statement, says that, if a search is to be ordered, it should be limited to a reasonable search of the records of AGO, limited to documents from and records of senior technical and managerial staff of AGO, including a particular employee Lisl Lewis, relating to their reaction to the publication of the ’019 and ’888 patents and containing their views as to the inventiveness of the alleged inventions in those patents coming into existence in the period 2^nd February 1998 to 14^th August 2002.

I think Dr. Watts’s approach in suggesting a more limited category is a sensible one. It is exactly the approach which Rix LJ had in mind in Nichia. Subject to two points, I think this represents the type of order which I should make. First, as we are dealing with the reaction to the invention and not efforts to make it, I think the order should include not only documents of AGO (which include AOA) but WesternGeco as well. Secondly, I think the cut-off date in this case is too early for the same reason. The Angola Papers were published between March and October 2002. I think the cut-off date should be June 2003.

Finally, I should say that, by phrasing the order in the way suggested by Dr. Watts, I am not suggesting that reactions to the Angola Papers in so far as they embody the inventions of the patents in suit should be excluded from the search, nor the participation in the study giving rise to that paper. All reactions to the inventions embodied in those two patents seem to me to be of potential relevance.

I can take these together. There was no acquisition of WesternGeco and so that stands deleted. As to AOA, Mr. Bennett explains what happened there in paragraphs 40 and 41 of his witness statement as follows:

As to Schlumberger’s attempt at acquisition of EMGS, Mr. Bennett explains the position in paragraph 54 and 55 of his witness statement as follows:

The rationale behind these applications is that Schlumberger, showing no interest in CSEM before the priority date, reacted enthusiastically to the commercialisation of CSEM by wanting to be part of it and trying to purchase companies involved in it. I am not persuaded that EMGS have much to gain from this point beyond the bare facts which they have already been able to point out. A decision to purchase or attempt to purchase companies is, as Mr. Silverleaf submits, likely to be a largely commercial one. In any case, it seems to me that these documents fall within the category of documents where the companies concerned would be likely, on Mr. Griffin’s evidence, to withhold their consent. I, therefore, make no order under paragraphs 4 and 5.

There remains a question as to the appropriate order to make in the light of the proposed surrender of certain patents on which I anticipate counsel would have agreed a draft order.