What The Frack? Federal Court Of Appeal Reiterates Principle Of Claim Differentiation In Fracking Patent Dispute

On October 20, 2025, the Federal Court of Appeal (FCA) issued its decision in NCS Multistage Inc. v Kobold Corporation, 2025 FCA 187, granting NCS Multistage Inc.’s (NCS’) appeal of a Federal Court of Canada (FC) decision that found NCS infringed certain claims of Kobold Corporation’s et al. (collectively, Kobold’s) Patent No. 3,027,571 (the 571 Patent) for equipment used for hydraulic fracturing, commonly known as fracking.

The 571 Patent discloses subsurface sleeves designed to control the flow of fluid in fracking. The claims detail embodiments of the apparatus where there is a gap in the sleeve to allow fluid flow (the Gap Embodiment) and where a seal arrangement closes off the flow (the Seal Embodiment).

NCS’s appeal argues that the FC erred in:

1. construing certain claims of the 571 Patent,
2. finding certain claims of the 571 Patent were not invalid for obviousness double patenting as a result of misconstruing the claims, and
3. awarding lump sum costs of $1,800,000.

In its analysis of issue (i), the FCA found that the FC erred in construing the claims of the 571 Patent and misapplied the principle of claim differentiation. The FC concluded that Claim 12 of the 571 Patent encompassed only the Gap Embodiment of the sleeve, while Claim 13 was limited to the Seal Embodiment. However, the FCA noted that Claim 13 depends on Claim 12, so Claim 12 must necessarily encompass the Seal Embodiment as well. The FCA also found similar errors with respect to other claims of the 571 Patent.

Regarding issue (ii), NCS argued that the correct claim construction would result in the invalidation of certain 571 Patent claims for obviousness double patenting with Kobold’s Patent No. 2,856,830 (the 830 Patent). The FC was aligned with this argument, finding that certain Seal Embodiment claims in the 571 and 830 Patents may share the same inventive concept. Accordingly, the FCA remitted this issue to the FC for determination based on the corrected claim construction.

Lastly, for issue (iii), the FCA had procedural fairness concerns with the FC’s costs award and ultimately set it aside in favour of a lump sum of $621,820, plus disbursements and taxes.

Summary By: Amy Ariganello