Court Finds No Direct Infringement by Fracking Water Suppliers

In Energy Heating, LLC, et al. v. Heat On-the-Fly, LLC, et al., 13-cv-00010 (D. N.D.), the District Court for the District of North Dakota recently granted partial summary judgment of noninfringement for the Plaintiffs, who provide portable water heaters in North Dakota. Plaintiffs had brought a declaratory judgment action against Defendants, who had allegedly reported the suspected infringement of their patent to Plaintiffs’ customers.

For IP practitioners, this case highlights the current state of the law regarding infringement of method or system patent claims when multiple actors are involved.

The case relates to Defendants’ U.S. Patent No. 8,171,993 (“the ‘993 patent”), which claims a “method and apparatus for the continuous preparation of heated water flow for use in hydraulic fracturing,” or “fracking.” Fracking is a process of extracting hydrocarbons from a geological formation. This is achieved by pumping a mixture of heated water, chemicals, and sand into the formation, causing the formation to fracture. These fractures release oil or natural gas deposits into a surrounding well for collection. Before the ’993 patent, a common method of heating water for fracking comprised pumping source water into numerous tanks and heating each tank individually prior to the start of the fracking operations. However, in order to account for thermal loss, these tanks had to be overheated, incurring unnecessary expense. The ’993 patent addresses this shortcoming by providing continuously heated water during the fracking process. The patent teaches that water is heated by diverting a portion of the source water into a heating unit, where it is superheated. Then the heated water is combined with the remainder of the source water in a mixing mechanism and the newly heated mixture is finally pumped into the geologic formation.

Defendants’ claimed method of fracking is typically performed by three separate entities: a water transfer company, a water heating company and a pressure pumping company. In this arrangement, the water transfer company supplies cool water from a water source and sets up piping to transfer the water first to the heating company and then into the mixing tanks. The water heating company then heats the water to the desired temperature. Finally, the pressure pumping company combines the heated water with chemicals and pumps this mixture down into the formation.

Citing the Federal Circuit’s decision in Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301, 1307 (Fed. Cir. 2012), reported here the District Court ruled that “Because no single party has committed all the required acts necessary to constitute infringement the ‘993 patent’s method claims fail as a matter of law.” Likewise, because there was no agency, or equivalent, relationship between the Plaintiffs’ portable water heater business and the water transfer and/or pressure pumping companies, there could be no liability for direct infringement of the method claims.

The District Court also found that Plaintiffs did not directly infringe the apparatus claims of the ‘993 patent, citing the Federal Circuit’s decision in Centillion Data Sys., LLC v. Qwest Commc’ns Int’l, Inc., 631 F.3d 1279, 1283 (2011). There, the Court determined that a direct infringer may be a “user” defined as one who “put[s] the invention into service, i.e., control[s] the system as a whole and obtain[s] benefit from it.” Id. at 1284. Here, the District Court determined that Defendants’ claimed water heating system and apparatus involve components in the possession of multiple parties in a given fracking operation other than Plaintiffs. And, “[w]hile providing hot water is undoubtedly a key role in completion of the overall system, Plaintiffs never use the entire claimed system because they never put into service the mixing or pumping components. Supplying hot water for the pressure pumping company to use is not the same as using the system.” Similarly, the District Court found that Plaintiffs did not “make” the apparatus claims, so there was no liability for direct infringement of these claims.

The District Court did find a genuine of issue of fact as to whether Plaintiffs directly infringe Defendants’ system claim, and denied Plaintiffs’ motion for summary judgment with respect to this claim and a trademark-related claim.