Ion Slides After Losing $105.9 Million Verdict: Houston Mover
ION Geophysical Corp. fell the most in a year after it was told to pay $105.9 million for infringing patents owned by Schlumberger Ltd. (SLB)’s WesternGeco unit over equipment that provides underwater seismic data.
Ion, an oilfield services provider, fell 88 cents or 11 percent to $6.89 in New York Stock Exchange composite trading, the biggest one-day drop since Aug. 8, 2011. Earlier, it fell as much as 16 percent.
A federal jury in Houston yesterday said Ion should pay a royalty of $12.5 million and compensate WesternGeco $93.4 million for its lost profits. The jury also found that the infringement was intentional, so WesternGeco can ask for the damage award to be increased. It also can seek an order blocking Ion from further use of the invention.
The four-week trial targeted Ion’s DigiFin lateral-streamer control system. Houston-based Ion said it would take “immediate steps to pursue all available legal options to overturn the verdict,” according to a company statement.
Oil companies pay more than $15 million for surveys to determine the likelihood of underwater oil or gas pockets. The surveys are done using streamers that pick up sound waves and stretch six miles behind a survey boat.
WesternGeco pioneered technology more than a decade ago for ways to control where the streamers are positioned to get better images and consistent results, said Gregg LoCascio of Kirkland & Ellis in Washington, who represented WesternGeco in the trial.
The verdict “reaffirms our commitment to protect the technological innovation and advancement in our Q-Marine Products,” WesternGeco President Carel Hooykaas said in a statement.
WesternGeco filed its complaint in 2009, claiming that Ion’s marine seismic-streaming steering devices infringed its patents. Ion, which denied infringing the patents and challenged their validity, said in its annual report it has accused WesternGeco of trying to restrict competition in the market for marine seismic surveys.
“We respect the legal process but remain convinced that WesternGeco’s patents are invalid and that we do not infringe,” Ion Chief Executive Officer Brian Hanson said in the statement. “We developed our own technology utilized in DigiFin and in fact have our own patents covering DigiFin and other inventions related to lateral steering.”
DigiFin sales account for about 3 percent of projected revenue for the year. Hanson said the verdict would have minimal impact on revenue in the second half of the year. Ion has sufficient inventory for customers through this year and would make operational changes to ensure that DigiFin remains available to customers over the long term, he said.
Schlumberger, based in Houston and Paris, is the world’s largest oilfield-services provider.
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