Drilling Fluid Makers Battle in Court


Rivals in the offshore drilling fluids market, Niche Products and MacDermid Offshore Solutions, settled a U.S. lawsuit in which the former accused the latter of lying to mutual customers about its products formulations. Litigation continues in the United Kingdom, where Niche is based and MacDermids products are manufactured.

The lawsuit, filed by MacDermid in August 2012 in the U.S. District Court of Southern Texas, alleged that Niche Products ran a smear campaign against MacDermid using trade secrets acquired by a former MacDermid employee.

MacDermid, which is based in Waterbury, Conn., has manufacturing and sales departments in the U.K. Lancashire, U.K.-based Niche has a subsidiary in Houston.

Both companies sell hydraulic fluids for subsea production control systems – Niches brand is Pelagic and MacDermids is Oceanic. The water- and ethylene glycol-based fluids also contain lubricant and corrosion inhibitor additives.

Niche claims that MacDermid substantially changed the formulation of Oceanic HW 443, a product that it has sold for more than 20 years, to comply with REACH [the European Unions Registration, Evaluation, Authorization and Restriction of Chemicals regulation] in 2009-2010.

Although MacDermid told customers it did not change the products chemical or performance properties, Niche said it ran comparative tests on the two versions of Ocean HW 443 and found that the original contained tertiary sulphonamide as its primary corrosion inhibitor, while the new version substituted a secondary sulphonamide.

In May 2012, Niche sent out a report detailing its findings to the two companies mutual customers. While Niche admitted in court that the two products have the same chemical composition, it argued that they have different structures, and therefore different chemical properties.”

MacDermid issued a rebuttal to the report to its customers in June 2012, stating that although it altered the Oceanic HW 433 formulation to comply with REACH, the product had not been materially changed. According to court documents, the rebuttal addressed that a specific competitor released misleading information, but did not name Niche.

Four weeks after MacDermid filed the lawsuit in the U.S., Niche sued MacDermid in the U.K.s Patents Country Court, claiming that MacDermid lashed out against Niche in its rebuttal, and interfered with Niches customer relationships.

U.S. District Judge Melinda Harmon issued a stay in the case in the fall of 2013, to allow parallel litigation to play out in the Patents County Court in the U.K. Harmon addressed the U.K.s Royal Courts, saying that the issue is not complex, but will require additional tests and knowledge of the performance of hydraulic fluids and its additives.

At the heart of this dispute is a simple question – whether Oceanic HW 433 v2 is materially different from Oceanic HW 433. If yes, then Niche are right, and if no, then MacDermid are right, she wrote in a May 2013 letter.

On Sept. 23, Niche and MacDermid filed a joint motion to dismiss the U.S. case, indicating that the companies had settled out of court and would each pay its own legal fees.

According to court documents, Judge Harmon stated that it was more appropriate that the case play out in the U.K., where MacDermids Oceanic HW 433 product is manufactured and marketed specifically for the EU.

Indeed, the origins of this dispute lie in England, and the allegations of activities in the U.S. are not substantial enough to justify the extraordinary remedy of enjoining the parties from litigating in the English courts, the order said. On the contrary, if anything, the balance of factors tilts in favor of that forum over this one.

As of Sept. 30, the U.K. lawsuit was still in litigation.

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Regulations    Regulations Specs & Testing