Case 4:18-cv-04094 Document 1 Filed in TXSD on 10/29/18 Page 1 of 16

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

FORUM US, INC. §

§
Plaintiff, §
§
§
v. § CIVIL ACTION NO. 4:18-cv-4094
§
PROGEVITY OILFIELD SYSTEMS, §
LLC d/b/a PROGEVITY SOLUTIONS, §
LLC §
§
Defendant.

PLAINTIFF FORUM US, INC.’S ORIGINAL COMPLAINT

Plaintiff Forum US, Inc. (collectively, “Plaintiff” or “Forum”) complains and alleges as

follows against Defendant Progevity Oilfield Systems, LLC d/b/a Progevity Solutions, LLC

(“Defendant” or “Progevity”):

I. PARTIES

1. Plaintiff Forum US, Inc. (“Forum”) is a corporation organized under the laws of

the State of Delaware with its principal place of business at 10344 Sam Houston Park Dr., Suite

300, Houston, Texas 77064-4666.

2. Defendant Progevity is an Oklahoma limited liability company. While the

Oklahoma Secretary of State website lists Progevity’s principal place of business as 1501 S

Elwood Ave, Tulsa Oklahoma 74119, upon information and belief Progevity’s actual principal

place of business is 4602 W 51st St., Tulsa, Oklahoma 74107. Progevity may be served via its

registered agent, Value Champion, LLC at 1501 S Elwood Ave, Tulsa, Oklahoma 74119.

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II. JURISDICTION AND VENUE

3. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1338(a)

and (b), 1367(a) and 15 U.S.C. § 1121(a). This suit arises under the patent laws of the United

States, including 35 U.S.C. §§ 271 and 292, and substantially related claims. This suit also arises

under the false advertising laws of the Lanham Act, 15 U.S.C. § 1125. On information and belief,

the parties are citizens of different states and the amount in controversy exceeds $75,000, exclusive

of interest and costs.

4. This Court has personal jurisdiction over Progevity. Upon information and belief,

Progevity has used, sold, or offered for sale infringing products into this District and into the State

of Texas. Further, upon information and belief Progevity has distributed brochures in this District

and in the State of Texas that falsely advertise that Progevity has issued U.S. patents covering its

infringing products.

5. Venue is proper pursuant to 28 U.S.C. §§1391(b)(2) and (c)(2) and 28 U.S.C. §

1400(b). Moreover, the same patent and technology at issue have already been before the

Honorable Judge Lee Rosenthal in Multilift Wellbore Tech. v. ESP Completion Techs., LLC, Civil

Action No. H-17-2611. In that case, Judge Rosenthal held a lengthy in-person technology tutorial

and a day long claim construction hearing, which culminated with a judicial ruling that construed

all of the claim terms there were in dispute. See Multilift Wellbore Tech. v. ESP Completion Techs.,

LLC, Civil Action No. H-17-2611, 2018 WL 925062, 2018 U.S. Dist. LEXIS 25630, at *55 (S.D.

Tex. Feb. 16, 2018).

III. FORUM’S REVOLUTIONARY AND PATENTED SANDGUARD™

TECHNOLOGY

6. Forum is a provider of well services and products that enhance the abilities of

artificial lift systems in the oil and gas industry, such as downhole pumps.

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7. On September 13, 2016, the United States Patent and Trademark Office (“PTO”)

duly and legally issued U.S. Patent No. 9,441,435 (“the ‘435 Patent”), entitled “Downhole

Apparatus and Method” after fair and full examination. A copy of the ‘435 Patent is attached hereto

as Exhibit A. The ‘435 Patent was invented by Andrew Leitch and assigned to Multilift Wellbore

Technology Limited (“Multilift UK”). Multilift UK granted its subsidiary, Multilift Welltec, LLC

(“Multilift US”), an exclusive license to the ‘435 Patent on October 3, 2017. On September 1,

2018, Multilift US merged into Forum and the ‘435 Patent was assigned to Forum by Multilift UK

As such, Forum is the sole owner of the ’435 Patent and no other entity is licensed under the patent,

which means Forum is the only entity in the United States with the right to make, use, sell, offer

for sell, or import any product, or to practice any method, embodying the invention of the ‘435

Patent.

8. The ‘435 Patent provides a self-cleaning solution to the problem of sand building

up on top of the pump in a production well. Prior to the invention of the ‘435 Patent, sand buildup

was a serious problem for operators and service providers in shale formations. Shale wells are

primary candidates for multi-zone fracking, which is the process of high-pressure injection of

“fracking fluid” into multiple sections or zones in the lateral part of the well. This creates cracks

in the formation that make it easier for the oil in the formation to escape. These fracking fluids

contain sand or other solid particles called “proppants,” which quite literally prop the fractures in

the formation open. While most wells include some amounts of proppant, shale wells include

significant amounts of injected proppant due to the number of producing zones in the long lateral

sections. Injected sand can create major problems for a downhole pump during the production

phase of the well, as explained in reference to Figures 1A to 1C below.

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FIG. 1A FIG. 1B FIG. 1C

(Normal Pumping) (Pump Shutdown) (Pump Restart)

9. As shown in Figure 1A, during the production phase a downhole pump is used to

pump fluid out of a well through production tubing. As shown, the pump creates enough pressure

to carry the fluid and solid particles to the wellhead at the top of the well and through flowlines to

a gathering station.

10. In a perfect world, a downhole pump would not shut down until production of fluids

from the well is complete. In the less-than-perfect real world, downhole pumps shut down several

times over the life of a well for any number of reasons. For example, an electrical power outage

(storms or downed power lines) is one possible reason a pump may shut down. As shown in Figure

1B, when a shutdown occurs the fluid and solid particles that are in the production tubular begin

to flow downwardly by gravity towards the pump, until the fluid level equalizes. When the fluid

stops flowing, the solid particles in the fluid continue to flow downwardly by gravity through the

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fluid toward the pump. These particles begin to accumulate on or in the pump, building up until

they form a plug.

11. As shown in Figure 1C, when the pump starts up again it operates at higher flowrate

and lower pressure as it attempts to clear the solid plug that has formed. Sometimes, the pump can

clear the plug and normal operations resume for a time. However, the burden of clearing the plug

puts a strain on the pump, which may greatly reduce the pump lifespan. Other times, the pump is

unable to clear the plug. This causes the pump to fail.

12. Under any scenario, once the sand forms a plug, the well operator will bear

significant costs. A cost that will always occur is the cost of having to stop production to address

the plug. Additionally, there is the added cost of running fishing tools down to flush out the plug,

removing a failed pump, and/or buying and installing a new pump. All of these scenarios have the

added expense and problems associated with production downtime, such as having to physically

dispatch employees and heavy-duty equipment to the well site to actually fix the problem. In the

event of a pump failure, the cost of replacing the pump can run into the hundreds of thousands of

dollars when all costs are considered. For these reasons, well operators consider sand plugging a

serious problem that they desperately try to avoid.

13. The technology disclosed and claimed in the ‘435 Patent completely solves the sand

plug problems described above. Forum makes and sells a product branded as the Multilift

SandGuard™, which embodies the invention claimed in the ‘435 Patent. As shown in Figure 2

below, the SandGuard is assembled into the production string of a well, above a pump. The

SandGuard has a (1) body in the form of an outer tubing or housing; (2) an upper and lower

opening; (3) first flow path formed in a vented inner tube; (4) a second flow path formed in an

annulus around the inner tube; and (5) a flow diverter.

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FIG. 2

The operation of the SandGuard is explained in reference to Figures 3A to 3C below.

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FIG. 3A FIG. 3B FIG. 3C

(Normal Pumping) (Pump Shutdown) (Pump Restart)

14. During normal pumping operation (FIG. 3A), 1 fluid and entrained sand flow

upwardly into a lower opening of the SandGuard. The upward flow then splits into two flow paths.

The first flow path is through the inner tubular with a flow diverter (in the form of a ball valve) at

the top. The second flow path is through the annular space surrounding the inner tubular.

1
The ‘435 Patent describes operation of an embodiment of the invention during normal pumping operation in reference
to Figure 1A of the patent. See ‘435 Patent at 6:27-45 (“In FIG. 1A, the apparatus 10 is shown in a production
phase….”)

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15. When the pump shuts down (Fig. 3B), 2 the fluid and entrained solids begin to flow

downwardly through the production tubing by gravity. The solids are diverted into the second flow

path by the flow diverter, which closes when the pump is shut down because of the absence of

upward flow. This prevents solids from collecting in the first flow path and on the pump, and

instead allows them to collect in the second flow path. While the inner tube has vents or slots, they

act as a filter device to help prevent sand flow from entering the first flow path from the second

flow path.

16. When the pump restarts (FIG. 3C), 3 the upward flow through the first flow path

induces flow in the second flow path through the small vents in the inner tubular. This induced

flow, as well as the flow out of the top of the first flow path around the diverter, helps progressively

carry solid particles out of the second flow path and out of the top of the tool. In this way, the

SandGuard provides exactly the same benefit described in the ‘435 Patent; it prevents solids from

collecting on the downhole pump and ingenuously allows for self-cleaning so that the SandGuard

can be used for multiple shutdowns.

17. Forum has, at all relevant times, marked the SandGuard™ with the ‘435 Patent

number. Multilift U.S. began selling its original iteration of the SandGuard™ in 2015. Customers

in the oil and gas industry are especially careful about introducing new technologies into downhole

wells, because a single technical mishap can cause enormous amounts of damage. For that reason,

it took significant effort, time, and expense on the part of Multilift U.S. to educate potential

customers about the technology underlying the SandGuard™ and to convince them that the

2
The ‘435 Patent describes operation of an embodiment of the invention when the pump shuts down in reference to
Figure 1B of the patent. See ‘435 Patent at 6:46-7:3 (“FIG. 1B shows a shutdown phase of the hydrocarbon
production system.”).

3
The ‘435 Patent describes operation of an embodiment of the invention during the pump restart phase in reference
to Figure 1C of the patent. See ‘435 Patent at 7:4-23 (“FIG. 1C shows a subsequent production phase, after operation
of the downhole pump has been resumed.”)

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technology is reliable, effective and safe to install in their wells. Since Multilift U.S. was able to

earn market acceptance, the SandGuard™ has been an enormously successful tool that accounted

for over 75% of Multilift U.S.’s overall revenue from 2015 to 2018 and continues to account for

roughly the same percentage of Forum’s overall sales from its Multilift division. The SandGuard™

is, for lack of a better word, the “prized jewel” of Forum’s Multilift division and it has achieved

unparalleled industry recognition. For example, “Electrical Submersible Pumps Manual: Design,

Operations, and Maintenance” by Gabor Takacs, PhD. identifies the patented SandGuard™ as the

only solution in the industry that completely eliminates the problem of sand flow back and

plugging. See Ex. B.

IV. PROGEVITY’S INFRINGEMENT

18. Defendant Progevity makes, sells, and offers for sell a product line it calls the

SANDefender™. The SANDefender™ product line includes three different products, the ESP

SANDefender™ (for use with electrical submersible pumps) (Ex. C at 1-2, Ex. D), the PCP

SANDefender™ (for use with a progressive cavity pumps) (Ex. C at 3-4), and the Rod Lift

SANDefender™ (for use with rod lift pumps) (Ex. C at 5-6). The ESP, PCP and Rod lift versions

of the SANDefender™ will collectively be referred to as the “Accused Products.”

19. Each of the Accused Products operates using the same fundamental principles as

the SandGuard™ and poaches the technology protected by the ‘435 Patent. Each of the Accused

Products is adapted to prevent downward flowing sand from plugging a pump when the pump is

shut down and allow for self-cleaning upon pump restart. The Accused Products accomplish this

by redirecting downward flowing solid particles, such as sand, into a second flow path. The

collected solids are isolated from the pump, thereby preventing the solids from plugging or

otherwise substantially impeding the pump. When the pump starts up again, the upward flow of

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fluid through a first flow path induces flow in the second flow path to help carry the collected solid

particles out of the second flow path, thereby self-cleaning the tool so that it is clear to collect

solids during the next pump shutdown. These principles of operation are exactly the same as those

covered by the claims of the ‘435 Patent and embodied in Forum’s own SandGuard™.

V. PROGEVITY FALSELY ADVERTISES THAT IT HAS A PATENT ON

FORUM’S TECHNOLOGY

20. In addition to its wholesale copying of the SandGuard™, Progevity also falsely

advertises that its Accused Products are covered by its own United States patents. For instance, in

an ESP SANDefender™ brochure Progevity represents that it has “Patents Granted.” See Exhibit

D. However, upon information and belief, Progevity has no United States patents directed towards

the SANDefender™ line. Thus, it appears that Progevity is falsely representing that it has issued

patents on Forum’s patented technology when Progevity in fact does not.

21. Additionally, Progevity has publicly advertised its desire to displace Forum from

the market using its own patented technology against it. For example, on the website

[Link], Progevity specifically identified “Forum Energy Technologies” and its “ESP sand

fall back tool” as the sole competitor for sales of the SANDefender™ product line. Ex. E. As such,

through this website publication Progevity is expressing its desire to displace the SandGuard™,

which is the “ESP sand fall back tool” referenced.

VI. CAUSES OF ACTION

COUNT 1
(INFRINGEMENT OF U.S. PATENT NO. 9,441,435)

22. Forum re-alleges the facts recited in Paragraphs 1 through 21, inclusive, as if fully

set forth herein.

23. The ‘435 Patent is valid and is presumed valid under 35 U.S.C. § 282.

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24. Progevity has, during the term of the ‘435 Patent, engaged in making, using,

selling, offering for sale, and/or importing Accused Products in the United States. Progevity’s acts

directly infringe one or more claims of the ‘435 Patent pursuant to 35 U.S.C. § 271(a), as each

Accused Product clearly meets each and every element of at least claim 1 of the ‘435 Patent when

installed in a well. For example, Progevity has publically represented that it has engaged in field

trials of the Accused Products (Ex. E), which when performed would necessarily result in each

and every element of at least claim 1 being assembled into one unit by Progevity and at least each

and every element of at least claim 18 being performed by Progevity.

25. Moreover, every installation and use of the Accused Products by a Progevity

customer is an act of direct infringement under 35 U.S.C. § 271(a). When the Accused Products

are installed in a well by a customer, the customer assembles an apparatus that meets each and

every element of at least claim 1 of the ‘435 Patent. When the Accused Products are used by a

customer, the customer necessarily performs each and every step of at least claim 18 of the ‘435

Patent.

26. Progevity has actively induced infringement of Forum’s ‘435 Patent pursuant to 35

U.S.C. § 271(b) by instructing its customers to use the Accused Products in a manner that infringes

at least claims 1 and 18 of the ‘435 Patent. For example, Progevity’s website includes graphical

depictions that show customers how the Accused Products are designed to be assembled and

function. See Ex. C. When the Accused Products are assembled as instructed, the customer

necessarily infringes at least claim 1 by building a unit that satisfies each and every element of that

claim. When the Accused Products are used as instructed, the customer necessarily infringes at

least claim 18 by performing each and every step of that claim. Upon information and belief,

Progevity has had knowledge of the ‘435 Patent and that installation and use of the Accused

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Products would result in infringement of one or more claims of the ‘435 Patent. For example, at

least before the filing of this Complaint, Progevity was aware of Forum’s SandGuard™ as

indicated in Progevity’s public identification of the SandGuard™ as the only product that

competes with the Accused Products. See Ex. E. The SandGuard™ is clearly marked with the ‘435

Patent, and Forum’s website and brochures state that the SandGuard™ is protected by a U.S.

patent. To the extent Progevity does not have prior knowledge of the ‘435 Patent or that its

customer instructions lead to direct infringement, Progevity now has said knowledge and, thus,

any further direct infringement by Progevity’s customers give rise to a finding of inducement

against Progevity.

27. Progevity has also contributorily infringed the ‘435 Patent pursuant to 35 U.S.C. §

271(c) by selling Accused Products to its customers. The Accused Products constitute a material

part of the invention of the ‘435 Patent and are not a staple article or commodity of commerce

suitable for substantial noninfringing use. Upon information and belief, Progevity’s customers

install and use the Accused Products and, thus, directly infringe at least claim 1 of the ‘435 Patent.

Upon information and belief, Defendant Progevity has had knowledge of the ‘435 Patent and that

the Accused Products are especially made or especially adapted for use in an infringement of the

‘435 Patent. For example, at least before the filing of this Complaint Progevity was aware of

Forum’s SandGuard™ as indicated in Progevity’s public identification of the SandGuard™ as the

only product that competes with the Accused Products. See Ex. E. The SandGuard™ is clearly

marked with the ‘435 Patent, and Forum’s website and brochures clearly state that the

SandGuard™ is protected by a U.S. patent. The Progevity products have no non-infringing uses.

Progevity’s own documents prove it had prior knowledge of the U.S. Patent but, in the

disingenuous chance that Progevity claims it does not have prior knowledge of the ‘435 Patent,

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Progevity now has knowledge and, thus, any further direct infringement by Progevity’s customers

give rise to contributory infringement.

28. Progevity’s infringement of the ‘435 Patent has been and continues to be

intentional, willful, and without regard to Forum’s rights.

29. Forum is suffering irreparable harm from Progevity’s infringement of the ‘435

Patent. Forum has no adequate remedy at law and is entitled to an injunction (preliminary and

permanent) against Progevity’s continuing infringement of the ‘435 Patent. As the only competitor

to Forum, any commercial activity by Progevity irreparably harms Forum, even if no sales are

made. Unless enjoined, Progevity will continue its infringing and damaging conduct.

30. Additionally, Forum has suffered monetary damages as a result of Progevity’s

infringement. Any sales of Progevity’s infringing product have displaced Forum’s sales of its

patented SandGuard™ and, therefore, Forum is entitled to lost profits but in no event less than a

reasonable royalty.

COUNT 2
(FALSE ADVERTISING UNDER 35 U.S.C. § 1125(a))

31. Forum re-alleges the facts recited in Paragraphs 1 through 30, inclusive, as if fully

set forth herein.

32. Progevity has, in connection with the Accused Products, used in commerce words

or terms, false or misleading descriptions of fact, or false or misleading representations of fact, by

falsely stating that its Accused Products are the subject of “Patents Granted” in its marketing

literature. Defendant Progevity’s false statements were made in commercial advertising or

promotion and misrepresent the nature, characteristics, or qualities of Progevity’s goods, including

the Accused Products. For example, Progevity’s false representations misrepresent that the

Accused Products are protected by United States patents, when they are not.

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33. Progevity’s acts have caused Forum harm by misleading Forum customers and

potential customers into believing that Progevity has a patent on Forum’s patented technology

and/or that Forum products may infringe Progevity’s intellectual property, even though no such

intellectual property exists. Even if Progevity has made no sales of its infringing products, Forum

has suffered and will continue to suffer injury to its business, reputation, and goodwill as Progevity

continues to misrepresent that its Accused Products are patented when they are not. Pursuant to 15

U.S.C. § 1117, Forum is entitled to recover, subject to the principals of equity, (1) Progevity’s

profits from the Accused Products, (2) any damages sustained by Forum, and (3) the costs of the

action.

COUNT 3
(FALSE PATENT MARKING UNDER 35 U.S.C. § 292)

34. Forum re-alleges the facts recited in Paragraphs 1 through 33, inclusive, as if fully

set forth herein.

35. Progevity has marked, affixed, or used in advertising, in connection with its

unpatented Accused Products, the words “Patents Granted,” which falsely indicate that the

Accused Products are patented in the United States. Upon information and belief, Defendant

Progevity includes this false language for the purpose of deceiving the public into believing that

Progevity has patents on its Accused Products when it does not.

36. Forum has suffered a competitive injury as a result of Progevity’s false patent

marking and is entitled to damages adequate to compensate it for the injury.

VII. JURY DEMAND

37. Forum asserts its right under the Seventh Amendment to the U.S. Constitution and

demands, in accordance with Federal Rule of Civil Procedure 38, a trial by jury on all issues so

triable.

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PRAYER FOR RELIEF

Forum prays for the following relief:

a. That the ‘435 Patent be adjudged infringed by Progevity under all applicable

provisions of Title 35, United States Code;

b. That Progevity, including their officers, directors, employees, agents, and all

those acting in concert with either of them, be enjoined, pursuant to 35 U.S.C.

§ 283, from all future activities infringing the ‘435 Patent, including making,

using, selling, or offering for sale the claimed subject matter of the ‘435 Patent;

c. That Progevity be required to prepare and deliver to the Court a complete list

of entities to whom either of them has sold or offered for sale any product that

infringes the ‘435 Patent;

d. That Progevity be ordered to account to Forum for all sales, revenues, and

profits derived from its infringement of the ‘435 Patent, pursuant to all

applicable provisions of Title 35, United States Code;

e. That this Court award Forum actual and compensatory damages resulting from

Progevity’s infringing activities, together with prejudgment and post-judgment

interest and costs, as provided by 35 U.S.C. § 284; and

f. That Forum be awarded, subject to the principals of equity, (1) Progevity’s

profits from the Accused Products, (2) any damages sustained by Forum, and

(3) the costs of the action, due to Progevity’s false advertising.

g. That Forum be awarded damages adequate to compensate Forum for

Progevity’s false patent marking; and

h. That Forum be awarded its costs of court and such other relief in equity and at law

to which it may be entitled.

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October 29, 2018 Respectfully submitted,

/s/ William C. Slusser

William C. Slusser
Attorney-in-Charge
Texas Bar No. 18514500
S.D. Texas I.D. No. 1068
Norton, Rose, Fulbright US LLP
Fulbright Tower
1301 McKinney, Suite 5100
Houston, TX 77010-3095
Telephone: (713) 651-5500
Facsimile: (713) 651-5246
[Link]@[Link]

J. David Cabello
Texas Bar No. 03574500
S.D. Texas I.D. No. 3514
Stephen D. Zinda
Texas Bar No. 24084147
S.D. Texas I.D. No. 1,692,382
Blank Rome LLP
717 Texas Avenue, Suite 1400
Houston, TX 77002
Telephone: (713) 228-6601
Facsimile: (713) 228-6605
dcabello@[Link]
szinda@[Link]

ATTORNEYS FOR PLAINTIFF

FORUM US, INC.

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