NCS MULTISTAGE INC. v. NINE ENERGY SERVICE, INC.

Authored by: Jeremy J. Gustrowsky

A jury win for NCS Multistage against Nine Energy Service has been vacated, with the Federal Circuit rejecting two of the district court’s claim constructions and holding that a competitor’s earlier tool qualifies as prior art as a matter of law. The technology at issue is a “float tool” used in oil and gas drilling. U.S. Patent No. 10,465,445 describes a way to make it easier to push a long string of pipe (the “casing string”) to the bottom of a well by sealing off a section with a rupture disc, creating buoyancy that reduces drag. When the pipe is in place, pressure bursts the disc and restores the flow path. NCS accused Nine’s BreakThru Casing Flotation Device of infringing, and a Western District of Texas jury found infringement, rejected Nine’s invalidity defenses, and awarded damages.

The first construction to fall was “internal diameter.” The district court held that the term could refer to both a measured diameter across the width of the pipe and the inner surface running along its length. The Federal Circuit applied the familiar presumption that the same term used in different parts of a claim carries the same meaning, unless the specification or prosecution history clearly says otherwise. Neither did here. NCS pointed to statements made during prosecution distinguishing a prior art patent, U.S. Patent No. 5,479,986 (Gano), but the court found those statements worked equally well under a single, consistent definition. The correct meaning, the panel held, is a measured diameter across the width of the casing string. Even so, Nine did not win outright reversal of infringement, because a jury could still reasonably find that a small unsloped portion of the BreakThru device is parallel to that measured diameter.

The second construction to fall was “casing string,” which the district court defined as pipe “customarily ≥ 4.5 inches in outer diameter.” Nothing in the patent supports that size floor. The specification describes casing by what it does, not how big it is, and the few references to dimensions are permissive, noting that 4.5 inches is common “although other dimensions are possible.” That language is not enough to show the patentee acted as its own lexicographer or disclaimed anything. NCS relied on industry catalogs showing that most casing offerings meet or exceed 4.5 inches, but the court explained that extrinsic evidence cannot override what the specification plainly says. The size limitation mattered, because NCS used it at trial to argue that a competitor’s prior art tool was a tubing tool rather than a casing tool.

That competitor’s tool produced the most significant holding in the opinion. TCO Group AS sold a TDP-PO tool to Apache in August 2012, before the February 2013 priority date. NCS argued that its own earlier private sale of an AirLock device to a single customer, Tundra, in July 2012 triggered the grace period safe harbor in 35 U.S.C. § 102(b)(1)(B), which knocks out later disclosures if the inventor had already “publicly disclosed” the subject matter. Relying on its 2024 decision in Sanho Corp. v. Kaijet Technology International, the Federal Circuit disagreed. A private sale does not automatically put the public in possession of an invention. The AirLock went to one buyer, arrived in a sealed black tube that would have to be cut open to inspect, and the accompanying technical documents were marked confidential. No reasonable jury could call that a public disclosure, so the Apache sale and Apache’s subsequent use are prior art.

Rather than declaring the claims invalid outright, the court sent the invalidity question back for a new trial. NCS had additional arguments for why the TDP-PO tool does not invalidate the claims, and the panel could not be confident the jury’s verdict rested only on those alternative theories. The court also declined to reach Nine’s challenge to the construction of “disengage from sealing engagement” and its objection to the damages expert’s failure to apportion portfolio licenses, since both issues will be affected by the new trial.

Nine did lose one point. The district court struck documents and testimony about TCO’s communications with Maersk Qatar, which surfaced two days before fact discovery closed. Nine argued that producing material inside the discovery window makes it timely by definition, but the Federal Circuit found no authority for that rule and plenty of reason to reject it. Nine had known from the start of the case that the TDP-PO tool mattered, and the witness who described the Maersk sales efforts was Nine’s own CEO. Waiting years to subpoena TCO left the opposing side no meaningful chance to respond, and striking the late material was within the district court’s broad discretion. The practical lesson for litigants is twofold: an early private sale is a risky foundation for a grace period defense, and diligence in discovery is measured by more than the calendar.