Co-authored by Delara Emtyazi (Student-at-Law)
In a decision issued October 20, 2025, the Federal Court of Appeal (per Walker J.A. with Stratas J.A. and Monaghan J.A. concurring) (“FCA”) held that the Federal Court (per McVeigh J) erred in construing the claims of Kobold Corporation’s (“Kobold”) Canadian Patent No. 3,027,571 (“‘571 Patent”) and as a result, erred in its conclusion regarding obviousness double patenting and patent validity. The FCA also found the Federal Court made an error in its determination of costs.
NCS Multistage Inc. v Kobold Corporation, 2025 FCA 187
Background
The parties, NCS Multistage Inc. (“NCS”) and Kobold, are competitors in the oilfield services industry, both providing specialized downhole equipment used in hydraulic fracturing. Each party owns patents relating to tools and sleeves used in oil well drilling.
In two actions heard together, the Federal Court dismissed NCS’s patent infringement action against Kobold and declared the asserted claims of NCS’s five patents invalid. The Federal Court further found certain claims of Kobold’s ‘571 Patent valid and infringed by NCS. Kobold was awarded lump sum costs in the amount of $1,800,000 plus disbursements. The lengthy Federal Court decision is discussed more in detail on our series of blogs, “Three Interesting Issues Raised in the NCS/Kobold Patent Action” found here: Part I, Part II and Part III.
Issues
NCS did not take issue on appeal with the decision that the asserted claims of its five patents were invalid. Rather, NCS argued on appeal that the Federal Court erred in construing the asserted claims of Kobold’s ‘571 Patent, and as a result, erred in concluding that the asserted claims were valid and infringed by NCS. NCS also argued that the Federal Court erred in its costs award.
Analysis
- Claims Construction (Claims Differentiation)
The key issue in the appeal was whether the asserted claims of the ‘571 Patent encompass only a gap embodiment (as found by the Federal Court) or both gap and seal embodiments.
Claim 12 of the ‘571 Patent was construed by the Federal Court to not include the “annular barrier seal” introduced in claim 13. The FCA held this was an error of law, as claim 12, from which claim 13 depends, must necessarily encompass, but is not limited to, the seal embodiment claimed by claim 13. The FCA stated that, as a matter of law, an independent claim must necessarily encompass the embodiments with and without any limitations introduced by a dependent claim.
The FCA also held, following Justice Locke’s guidance in Camso (2019 FC 255), that the limitations of a dependent claim are not to be read as limitations of the independent claim. Thus, it is an error to interpret an independent claim as excluding the limitations found in dependent claims.
As a consequence of these errors in construing claim 12, the Federal Court also erred in construing claim 16 (which ultimately depends on claim 12) as not including the seal embodiment contemplated by claim 13. As a matter of law, claim 16 must include the features and limitations of claim 12 on which it depends.
- Obviousness-Double Patenting
At the Federal Court, NCS argued the asserted claims of the ‘571 Patent were invalid for obviousness double patenting in light of Kobold’s Canadian Patent No. 2,856,830 (“‘830 Patent”). The Federal Court rejected NCS’s argument, holding that the asserted claims provided a potentially simpler solution and claimed a different inventive concept than the inventive concept of the claims of the ‘830 Patent.
The FCA held that the Federal Court’s obviousness-type double patenting analysis was necessarily flawed due to its error in construing the asserted claims of the ‘571 Patent. Specifically, the FCA said that the analysis requires the court to determine the inventive concept of the asserted claims and compare them to the inventive concept of the claims of the ‘830 Patent. Due to the error in construing the asserted claims, the FCA remitted the issue of double patenting back to the Federal Court for re-determination based on the correct construction of the asserted claims.
- Costs
The FCA held that the Federal Court erred when it awarded Kobold lump sum costs of $1,800,000. The FCA reasoned that NCS was denied procedural fairness since Kobold had requested significantly less in costs than it was ultimately awarded if it was successful at trial. The Federal Court had not provided NCS an opportunity to address the issue of whether Kobold should be awarded more costs than it had requested. As a result, the FCA set aside the Federal Court’s costs award and substituted the award with the amount originally requested by Kobold.
Conclusion
The FCA allowed the appeal, remitting the issue of obviousness-type double patenting of the asserted claims for back to the Federal Court. Kobold has 60 days to seek leave to appeal to the Supreme Court of Canada.