Canada: A Roadmap For IP Protection Strategies For Oil And Gas Technologies

Owing to the depletion of existing resources and geopolitical factors, participants in the energy marketplace are searching for alternatives to crude oil originating from the Gulf states. This is further incentivizing the exploration for and development, production and upgrading of untapped oil and gas resources, especially unconventional reserves. Much of the production and upgrading is enabled by technology development. As new competitors are attracted to participate in the commercial exploitation of oil and gas resources, competitive pressures increase, and it becomes increasingly important to aggressively protect intellectual property associated with new technologies that are being developed.

There is no one-size-fits-all solution as it relates to the intellectual property protection strategy for oil and gas technologies. Depending on the technology's role within the value chain, different considerations apply.

At the risk of oversimplifying the analysis, it may be helpful to treat oil and gas service companies differently from producers/operators when evaluating applicable intellectual property protection strategies. Approaching this analysis by distinguishing between service companies and producers is, perhaps, not surprising, given the difference in: (i) the competitive marketplace within which they operate, (ii) the nature of the technology solutions being developed, and (iii) the risks/rewards associated with the technology hurdles being overcome. In fact, each of these factors informs the direction the intellectual property protection strategy takes.

Oil and gas service companies

Service companies generally develop technology to address problems of oil and gas producers in upstream operations. Service company technologies can include drilling technologies as well as technologies relating to well completion, service and maintenance.

Solutions to these problems demand "thinking-on-your-feet" ingenuity, and are based on years of know-how developed through practical application. Typically, these solutions yield immediate and fairly significant commercial rewards, thereby rendering it easier to justify the initial investment in research and development. As such, technology development is occurring at a relatively fast pace, and it is important to keep informed of competing service companies' patenting activities to avoid tripping over their patents and attracting patent infringement liability.

Apart from addressing customers' immediate problems, some of the larger service companies are also undertaking fundamental research. This includes research into new materials for sand control and coiled tubing, hydraulic fracturing fluids and rheology of fluids transport.

Patents vs. trade secrets

The intellectual property vehicle of choice for service companies is more likely to be patent protection rather than trade secret protection. This is because it is more difficult to control information flow, and maintain trade secrecy, when technology is exploited on the behalf of multiple customers and at multiple properties.

For smaller service companies, there is another reason why patent protection is preferable—such companies may be hoping to be acquired by larger service companies. Such potential purchasers are likely to discount the purchase price in cases where the service company's technology is being protected as a trade secret. This is because the technology's value is dependent on whether the target service company has successfully protected the trade secret, and this may be impossible to determine with any certainty.

Relevance of start-ups and non-practising entities

It is difficult for an inexperienced start-up to jump into the oil and gas service marketplace with an important technology advancement. Such a business would lack the benefit of insight into customers' problems, which is usually gained through years of experience and an intimate relationship with the customer. Accordingly, commercially meaningful innovation may prove difficult. Further, without a track record and customer relationships, it would be difficult for such start-up organizations to find customers for their technology. Such organizations would therefore face significant commercial risks.

Given such risks, inexperienced start-ups in this marketplace are rare. New technologies, and associated intellectual property rights, are unlikely to be created from this kind of market participant.

Although a consideration relative to their potential threat level vis-à-vis producers (more on this below), non-practising entities ("NPEs") are less likely to be significantly relevant to service companies. NPEs are business organizations that own patents for technologies they have no intention to use for commercial purposes. Because NPEs do not make, use or sell technologies, they cannot be sued for patent infringement. As such, when an NPE claims for patent infringement versus an oil and gas company, the NPE is invulnerable to counter-assertion threats by the allegedly infringing producer. This further exacerbates the power imbalance beyond what is typically present in a patent dispute between marketplace competitors.

NPEs typically acquire intellectual property rights of failing or failed companies. Start-ups, although perhaps inherently vulnerable to business failure, are unlikely to provide fertile ground for service company-relevant intellectual property, for the reasons discussed above. With respect to patents of more mature yet failing service companies, these are more likely to be acquired by a competing service company rather than an NPE. This is because the competing service provider is better positioned than an NPE to enjoy economic benefits from actually using the intellectual property protected technology and, therefore, able to pay a higher price for these assets.

Even so, NPEs cannot be completely ignored. Service companies should be alert to business failures and intellectual property that may become available for acquisition as a result of such business failures, if only to render it unavailable to NPEs.

Responses to increased competitiveness

Due to the lucrative nature of this business, additional market participants are likely to be attracted to this industry, and intellectual property protection strategies are likely to shift. As the number of market participants increases, the risk of becoming ensnared in a competitor's patent increases, and it becomes even more important to police competitors' patenting activities to avoid patent infringement liability.

The increased competitiveness further dictates a more aggressive intellectual property protection strategy. As the number of competitors increases, it becomes more difficult to maintain competitive advantages in the marketplace based on first-mover advantages and service quality. Under these circumstances, it is likely there will be an increase in patenting service company technology as well as enforcing such patents. By patent-protecting developed technology, the service company secures a tool to block imitating competitors, and thereby preserves competitive advantage in the marketplace. Even with the mere existence of patent protection, competitors become "chilled" from developing imitative technology, for fear of triggering a patent infringement claim.

From a defensive perspective, it also becomes preferable to patent-protect technology, as opposed to protecting it as a trade secret. By choosing to protect developed technology with a patent, rather than as a trade secret, an earlier-developing service company avoids becoming vulnerable to a competitor's future patent that is granted covering the same technology (in some jurisdictions, such as Canada, trade secret technology does not function as prior art versus later independently developed technology, such that the later developing patentee can enjoy valid patent protection and assert it versus an earlier-developing competitor when the earlier-developing competitor has maintained the technology as a trade secret).

Also from a defensive perspective, it is worthwhile to grow a patent portfolio. Growing a patent portfolio facilitates cross-licensing arrangements. As well, the organization is better positioned to counter-assert patent rights in response to a patent infringement claim by a competitor. By being able to counter-assert patent rights, the organization is in a better negotiating position to exact a settlement of the patent infringement claim on more favourable terms.

Oil and gas producers

Producers have relatively robust research and development departments, focussed on new technology development in upstream, midstream and downstream operations. Producers generally do not develop technologies related to drilling or well completion, service or maintenance, but there are instances of overlap with service company technology development. For example, ExxonMobil has been active in developing multistage fracturing technology.

Patents vs. trade secrets

When deciding between patent protection and trade secret protection, trade secret protection is generally a relatively more realistic option for producers than for service companies. Producers are better able to control third-party access to information, and are thereby better at preserving secrecy and rendering infringement detection by competitors more difficult. This is because their technology is being deployed on property the producers have exclusive rights to develop. It is much easier to control access to information on one's own leasehold interest in property, for example, than someone else's.

Having said that, with increasing collaboration, employee mobility, and the risk of mandatory information disclosures to regulatory authorities during project approvals, trade secrets may be difficult to maintain, even for producers. If the technology is commercially significant, producers must also be mindful that competing producers may be attracted to independently develop the same technology. Once developed, the trade-secret-protecting producer has no control over the later-developing producer's behaviour.

The later-developing producer may choose to disclose or, even worse, patent such technology. So in the extreme, the trade-secret-protecting producer is vulnerable to a patent infringement claim by a later-developing producer who independently develops the same technology. This patent infringement risk is only exacerbated as the industry's appetite for patent protection increases. To sum up, the risk for early expiry of trade secret protection, coupled with the patent infringement risk, materially discounts the trade secret protection strategy option for producers.

Collaborations and start-ups

Recently, oil and gas producers have begun collaborating and sharing technology developments. A good example of this is oil and gas producers participating in COSIA (Canada's Oil Sands Innovation Alliance). COSIA facilitates developing, capturing and sharing technologies directed at improving the environmental performance of oil sands production. The long-term success of these and other collaborative relationships depends on succinctly defining intellectual property rights from the outset.

Start-ups appear to occupy a role of conducting fundamental research and developing technologies that industry may put to commercial use. This is especially the case for developing potentially disruptive extraction or upgrading technologies at universities, where academic freedom encourages testing of blue-sky hypotheses. Recent examples of oil and gas technologies being developed by start-ups include in-situ solvent-based oil sands extraction technology (N Solv Corporation), solvent extraction of bitumen from mined oil sands (Switchable Solutions Inc.) and heavy oil upgrading technology (Well Resources Inc.).

Start-up-based technology developments generally require an oil and gas producer to validate the technology (e.g., pilot plant testing). Failing that, it is unlikely the technology development will be accepted. This is because of the natural reluctance to risk upsetting an existing, economically successful operation by deploying an unproven new technology. As well, the general nature of the technology may dictate the participation of a producing company.

For potentially disruptive technologies (e.g., a novel oil sands extraction process) where development carries significant risk, and the rewards are not necessarily immediate, an alliance with a producer almost seems mandatory. Such alliance results in more substantial resources being made available to fund the research and development and also results in the sharing of risk.

As a necessary incident to creating this relationship, intellectual property rights, and the extent to which they can be exploited by the interested parties vis-à-vis one another must be contractually addressed before such rights are created. Otherwise, the parties' expectations may be thwarted, and the relationships may unravel.

Threats from non-practising entities

Intellectual property strategies may also shift if non-practising entities begin assuming ownership of oil and gas technology patents.

Given the potential economic rewards, NPEs are more likely to become prominent in the oil and gas space, and especially become a threat to producers. This is because of the relatively greater relevance of start-up-developed technology within this space that, once orphaned, can potentially be acquired by NPEs. NPEs can take the form of academic institutions or start-ups, who develop technologies and secure patent protection, but never successfully deploy them (whether unintentionally or not) to industry ("orphaned technologies"). They can also take the form of patent accumulators, who accumulate patents covering such orphaned technologies.

To pre-empt NPEs, producers may need to more closely monitor relevant start-ups and develop relationships with them. As well, producers may need to behave like NPEs by looking out for and purchasing orphaned technologies. Apart from running the table on NPEs, producers can further protect themselves from NPEs by biasing their intellectual property protection strategy towards patent protection. In doing so, producers mitigate the risk of being sued for patent infringement by an NPE in relation to trade secret technology whose use by the producer pre-dates the NPE patent.

Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global legal practice. We provide the world's pre-eminent corporations and financial institutions with a full business law service. We have more than 3800 lawyers based in over 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity, are members ('the Norton Rose Fulbright members') of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal services to clients.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Canada LLP
Norton Rose Fulbright Canada LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Canada LLP
Norton Rose Fulbright Canada LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions