Energy Heating, LLC. v. Heat On-the-Fly, LLC, No. 16-1559 (Fed. Cir. 2018)Annotate this Case
The patent is titled “Water Heating Apparatus for Continuous Heated Water Flow and Method for Use in Hydraulic Fracturing.” The inventor, Hefley, HOTF's founder, filed the earliest provisional application in 2009; the critical date for analyzing the on-sale and public-use bars under 35 U.S.C. 1023 is September, 2008. Before the critical date, Hefley and his companies performed on-the-fly heating of water on at least 61 frac jobs using the patented system and collected over $1.8 million for those services. Hefley knew that the patent process required that he file his application within one year of the first offer for sale or public use. Hefley did not disclose any of the frac jobs to the PTO. The patent issued in May 2012. Energy, HOTF's competitor, began using its accused process of heating water on frac jobs in 2012. Energy alleged that HOTF tortiously interfered with its prospective business relationship by alleging that Energy’s water heaters infringed a patent. The court granted Energy summary judgment. A jury found HOTF represented in bad faith that it possessed a valid patent, knowingly engaged in unlawful sales or advertising practices, and unlawfully interfered with Energy’s contractual rights and prospective business relationship. The court granted declaratory judgment against Hefley on inequitable conduct, finding that even if the prior frac jobs were experimental, they were focused on economic viability, not how to meet the claims of the patent. The Federal Circuit affirmed that the patent is unenforceable due to inequitable conduct and the findings of tortious interference but vacated the denial of attorneys’ fees.
The court issued a subsequent related opinion or order on July 19, 2018.