US AutoDriller Litigation Continues in Texas

CALGARY, Dec. 6, 2012 /CNW/ - Pason Systems Inc. ("Pason" or "the Company") (TSX: PSI) announced today that a new complaint has been filed in the ongoing patent dispute with the Company's primary competitor around the Company's automatic driller product (the "AutoDriller").  This recent complaint was filed in the Western District of Texas, Austin Division and is founded upon the same patent which has been the basis of extensive litigation between the Company and the plaintiff.  The complaint relates only to the Company's rental of its AutoDriller in the US market from March 2009 and will extend to cover rentals only until April 19, 2013 when the patent expires.

The plaintiff is not seeking any injunctive relief that would prevent Pason from continuing to market its AutoDriller.  As a result, this recent complaint will have no impact on the Company's operations.

Litigation between the Company and the plaintiff regarding the AutoDriller has been ongoing since 2003.  Numerous proceedings have taken place in both Canada and the US, all centering around the AutoDriller's alleged infringement of a patent owned by the plaintiff (the "144 Patent").  The original suit was filed in Colorado and included a jury trial in 2008 and subsequent bench trial in 2011, with a resulting judgment entered on June 18, 2012.  The Company has accrued US$19.4 million in its consolidated financial statements for that judgment, though it has appealed to the US Court of Appeals for the Federal Circuit, which appeal is pending but expected to be heard some time in the middle or later part of 2013.  That case relates only to the technology used in Pason's AutoDriller prior to March 2009.  After the jury trial in late 2008, the Company modified the technology used in its AutoDriller to distinguish it from the 144 Patent.

In 2005, the same plaintiff brought a parallel suit in the Federal Court of Canada based on the equivalent Canadian registration of the 144 Patent.  That Canadian equivalent patent also expires on April 19, 2013.  The Canadian case concluded in January 2012 though a judgment has not yet issued.  The Canadian litigation took place after Pason implemented its new technology, and as a result, the judgment will include an assessment of both versions of the AutoDriller technology, both before and after the March 2009 modifications.

This recent complaint the plaintiff filed in Texas alleges that the new AutoDriller technology infringes the 144 Patent.  The new technology was not yet implemented at the time of the 2008 jury trial in Colorado, and as a result, it was not considered in the case, nor will it be considered in the upcoming appeal.  Pason is confident that the modified technology in the AutoDriller does not infringe the 144 Patent and intends to vigorously defend that position in the Texas case.

Pason expected that the Canadian judgment would include sufficient reasons that the new technology in the modified AutoDriller does not infringe the 144 Patent, such that the plaintiff would not make this recent complaint.  However, due to the Federal Court of Canada's delay in issuing its judgment, the plaintiff was able to file this suit before any judicial consideration of the AutoDriller's new technology.  The Company remains optimistic that the Canadian judgment will include reasons why the new technology does not infringe the 144 Patent and those reasons will serve as a precedent to dismiss this recent complaint in Texas.

Pason Systems Inc.                                  
Pason Systems Inc. is a leading provider of instrumentation systems to land-based and offshore drilling rigs worldwide. The Company's rental solutions, which include data acquisition, wellsite reporting, remote communications, and web-based information management, maximize rig uptime, improve work efficiency, and minimize operating costs. Pason's common shares trade on the Toronto Stock Exchange under the symbol PSI.

Certain information regarding the Company contained herein may constitute forward-looking information under applicable securities law.  The words "anticipate", "expect", "believe", "may", "should", "will", "estimate", "project", "outlook", "forecast" or other similar words are used to identify such forward-looking information and statements.  Forward-looking statements in this document may include statements, express or implied, regarding the Company`s outlook as to the results of any appeals or post-judgment motions, and the result of this lawsuit on the Company`s operations.  These forward-looking statements are based upon various underlying factors and assumptions, including those with regards to the current state of the law surrounding patents, the state of the economy and the oil and gas exploration and production business, in particular; the Company's business prospects and opportunities; and estimates of the financial and operational performance of Pason.

Forward-looking information and statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking information and statements.  Risk factors that could cause actual results or events to differ materially from current expectations include, among others, changes to the relevant patent case and statutory laws, the ability of Pason to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits, the operating performance of Pason's assets and businesses, the price of energy commodities, competitive factors in the energy industry, changes in laws and regulations affecting Pason's businesses, technological developments, and general economic conditions.

Readers are cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur.  Such forward looking statements, although considered reasonable by management as of the date hereof, may prove to be incorrect and actual results may differ materially from those anticipated.  Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

Additional information on risks and uncertainties and other factors that could affect Pason's operations or financial results are included in Pason's reports on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com or through Pason's website www.pason.com).  Furthermore, the forward looking statements contained in this news release are made as of the date of this news release, and Pason does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by securities law.

 

SOURCE: Pason Systems Inc.

For more information about Pason Systems Inc., visit the Company's website at www.pason.com or contact:

Marcel Kessler 
President and CEO
403-301-3400
[email protected] 

David Elliott
Chief Financial Officer
403-301-3441
[email protected]