Fed Circ Oil Tech Patent Ruling Drills Down on Indefiniteness

Editor’s note: Authored by Lowell Mead, Dena Chen and Patrick Lauppe, this article was originally published in Law360.

A recent oil drilling patent case represents an unusual move for the U.S. Court of Appeals for the Federal Circuit. In the Jan. 12 Grace Instrument Industries LLC v. Chandler Instruments Co. decision, the Federal Circuit vacated the U.S. District Court for the Southern District of Texas' ruling that patent claims were indefinite and expressly construed the challenged claim term.[1]

Federal Circuit did not stop there — it remanded the case to the district court to consider whether the disputed term may still be indefinite in view of potential unresolved factual issues. In doing so, the Federal Circuit raised some important considerations for patent litigators.

On May 19, 2020, Grace filed a complaint in the Southern District of Texas accusing competitors Chandler Instruments, Chandler Engineering and Ametek Inc. of patent infringement. Grace accused Chandler's viscometers — i.e., devices for measuring the viscosity of fluids — of infringing claims of U.S. Patent No. 7,412,877.

The '877 patent discloses devices for testing the viscosity of oil drilling fluid — which is used to help clear debris during drilling — under the high pressure and temperature conditions at the bottom of a drill hole.

Prior art viscometers introduced measurement errors by adding pressurization fluid, which would mix with the drilling fluid during testing or require the use of a friction-causing seal.

The '877 patent purported to solve this issue by creating a buffer zone — a chamber above the viscosity testing chamber that was connected via a small opening. Drilling fluid is added until the testing chamber and part of the buffer zone is filled up.

Then, less-dense pressurization fluid is added to the buffer zone, where it sits on top of the drilling fluid like oil on water. With enough drilling fluid added, the pressurization fluid remains floating above the drilling fluid in the buffer zone even as the drilling fluid compresses — thereby keeping the testing chamber full of pure drilling fluid.

The '877 patent claims call the buffer zone the enlarged chamber.

During claim construction before the district court, Chandler argued the term enlarged chamber was indefinite as a term of degree with no baseline.

Grace disagreed, arguing that a person of ordinary skill in the art, or a POSITA, would have understood that the enlarged chamber must be big enough to hold enough drilling fluid to keep the pressurization fluid floating above the testing chamber when the drilling fluid was compressed.

U.S. District Judge Andrew S. Hanen of the Southern District of Texas agreed with Chandler, finding that "explaining something is large enough to do a certain task does not answer the question: larger than what? There is still no baseline from which to answer that question."[2]

On appeal, the Federal Circuit vacated the district court's ruling, finding that the enlarged-chamber language "does not require that chamber to be larger than some baseline object; rather it must be large enough to accomplish a particular function."[3]

The Federal Circuit construed "enlarged chamber" to mean "a chamber that is large enough to contain excess test sample prior to pressurization to prevent mixing of the test sample and pressurization fluid in the lower measurement zone when the test sample is pressurized to maximum rated pressure."[4]

But then the Federal Circuit did something surprising: It found that even though it had construed enlarged chamber, the question of whether this term was indefinite may not be resolved.[5]

The court raised several remaining issues for the district court on remand. The '877 patent claims recited an additional limitation for preventing mixing based on the density difference between drilling fluid and pressurization fluid — potentially casting doubt on the definiteness of enlarged chamber as construed.[6]

Further, the size of the enlarged chamber had to depend on how much a given drilling fluid compresses, which varies from fluid to fluid — potentially further muddying the waters.[7]

While the court acknowledged these points might involve new arguments on appeal, it instructed the district court to consider any argument of waiver.[8]

Additionally, the court noted that the district court had made no finding as to the identity of a POSITA — potentially "due to the parties' relative inattention to this factual issue."[9] The court suggested a POSITA definition may be informative as to indefiniteness on remand.[10]

In construing a claim term while keeping the door open to a further indefiniteness challenge, the Federal Circuit raised a new avenue for potential disputes on indefiniteness.

Typically, construing a disputed claim term resolves any indefiniteness challenge. But Grace v. Chandler provides an exception to that rule: Even after the Federal Circuit construed the disputed term, it still might be indefinite.

The Federal Circuit's opinion also raises some useful practice pointers for raising and opposing indefiniteness challenges. First, evaluate and properly present to the district court any factual evidence that may bear on indefiniteness.

The relevant evidence may include expert opinions, third-party texts and the patent itself — Grace v. Chandler points to potential fact- finding arising from an additional limitation recited in the claims.[11]

Fact-finding by the district court in claim construction also becomes important on appeal, where it is reviewed under the deferential clear error standard rather than de novo.[12]

Second, the POSITA determination may be important, even if only to prompt the district court to make an express ruling on a POSITA formulation that is not materially disputed.

Parties sometimes treat the POSITA definition as somewhat arbitrary and inconsequential — agreeing to a definition with the other side or arguing that any differences are immaterial. But in Grace v. Chandler, the Federal Circuit flagged that inattention to the POSITA determination could undermine a district court's ruling on indefiniteness.[13]

Finally, an express claim construction is not necessarily game over for indefiniteness. If an indefiniteness challenge can survive a Federal Circuit construction, then post-claim construction patent litigation may have just gotten a lot more interesting.

[1] Grace Instrument Industries v. Chandler Instruments Co., et al , No. 2021-2370, --- F.4th ----, 2023 WL 163980 (Fed. Cir. Jan. 12, 2023).

[2] Grace Instrument Indus. v. Chandler Instruments, No. 4:20-CV-1749, 2021 WL 2711987, at *5 (S.D. Tex. July 1, 2021).

[3] Grace, 2023 WL 163980, at *5.

[4] Id. at*8.

[5] Id. at*7.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Teva Pharms. USA v. Sandoz , 574 U.S. 318, 331–32 (2015).

[13] Grace, 2023 WL 163980, at *7.

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