US Synthetic Considering Challenge to Patent Ruling but Expects it to Have Limited Impact on Financial Results

Rhea-AI Summary

US Synthetic, a unit of ChampionX (Nasdaq: CHX), is considering an appeal after a U.S. International Trade Commission ruling deemed its patents for polycrystalline diamond materials as abstract ideas and patent ineligible. Despite this ruling, US Synthetic expects minimal impact on its financial results, estimating less than a 3% effect on its Drilling Technologies revenue. The company emphasizes its strong IP portfolio with over 450 patents and reaffirms its market leadership in polycrystalline diamond technology.

Positive

• US Synthetic has over 450 issued patents, providing a strong intellectual property portfolio.
• The company expects limited impact on financial results from the ITC ruling, less than 3% of revenues.

Negative

• The ITC ruling may challenge the enforceability of its patents, potentially affecting competitive advantage.

THE WOODLANDS, Texas, Oct. 05, 2022 (GLOBE NEWSWIRE) -- US Synthetic Corporation, a subsidiary of ChampionX Corporation (“ChampionX” or the “Company”) (Nasdaq: CHX), announced today that it is considering options, including a possible appeal, in response to a U.S. International Trade Commission (ITC) Final Determination that the claims of U.S. Patent No. 10,507,565 (“the ’565 patent”), U.S. Patent No. 10,508,502 (“the ’502 patent”), and U.S. Patent No. 8,616,306 (“the ’306 patent”) “are directed to an abstract idea, and, thus, are patent ineligible”. The company believes that this determination is based on an inaccurate interpretation of intellectual property law.  In addition, this is the only case of which we are aware holding that the claimed properties of a manmade material are patent ineligible as being an “abstract idea”.  Accordingly, while US Synthetic expects limited impact on its commercial operations or financial results as a result of yesterday’s decision, we believe this ITC Determination is unprecedented and improper according to current Federal Circuit case law and intellectual property statutes. US Synthetic business results are reported under the Drilling Technologies segment of ChampionX. US Synthetic estimates the potential annual impact to its revenues from this ruling to be less than 3% of Drilling Technologies revenues.

US Synthetic owns more than 450 issued United States Patents, including the ’565 patent; the ’502 patent, and the ’306 patent, which cover certain polycrystalline diamond materials and compacts.  Such polycrystalline diamond materials and compacts are commonly used in energy exploration and production.  US Synthetic’s patent rights preclude unlicensed third parties – including competitors, suppliers, and others from making, using, selling, importing, or engaging in development activities, such as prototype creation, testing, marketing and qualifying, that fall within the claims of any valid enforceable patent during its lifetime.

“We disagree with this decision and continue to believe in the strength of our intellectual property and the merits of our case against foreign competitors who are disregarding valid U.S. patents,” said Rob Galloway, president, US Synthetic Corp. “We intend to evaluate our options to challenge this decision. Regardless of this ruling, US Synthetic is the technology leader in polycrystalline diamond technology and products, and we believe the value we drive for our customers is a key differentiator for us in the marketplace. Our priority is to defend our innovations against infringement – particularly foreign products – for the benefit of our customers and shareholders.”

US Synthetic, which is the Drilling Technologies segment of ChampionX, offers innovative, top-quality polycrystalline diamond cutter (“PDC”) inserts, bearings, valves, and mining tools to help customers drill the world’s most demanding oil exploration and development projects, and for use in other industries. These highly specialized products are developed and produced based on more than 40 years of innovation and intellectual property development in material science applications.

About ChampionX
ChampionX is a global leader in chemistry solutions, artificial lift systems, and highly engineered equipment and technologies that help companies drill for and produce oil and gas safely, efficiently, and sustainably around the world. ChampionX's expertise, innovative products, and digital technologies provide enhanced oil and gas production, transportation, and real-time emissions monitoring throughout the lifecycle of a well. To learn more about ChampionX, visit our website at www.championX.com.

Investor Contact:
Byron Pope – byron.pope@championx.com – 281-602-0094

Media Contact:
John Breed – john.breed@championx.com – 281-403-5751

 

FAQ

What is the impact of the U.S. ITC ruling on ChampionX (CHX) patents?

The U.S. ITC ruling states that claims of three of US Synthetic's patents are patent ineligible, but the company expects the financial impact to be less than 3% of Drilling Technologies revenues.

How does the ITC ruling affect US Synthetic Corporation's operations?

US Synthetic believes the ruling will have limited impact on its commercial operations and continues to defend its intellectual property rights.

What is US Synthetic's stance on the ITC's decision regarding its patents?

US Synthetic disagrees with the ITC's decision, viewing it as an inaccurate interpretation of patent law and intends to evaluate options to challenge it.

What are the major products of US Synthetic under ChampionX (CHX)?

US Synthetic specializes in polycrystalline diamond cutter inserts, bearings, valves, and mining tools for oil exploration and other industries.