Halliburton Energy Services, Inc. v. Grant Prideco, Inc.

                                                                   Southern District of Texas 
                                                                     ENTERED
                 IN THE UNITED STATES DISTRICT COURT         Seprembet 28, □□ 
                 FOR THE SOUTHERN DISTRICT OF TEXAS           eee   □□ 
                            HOUSTON DIVISION 
HALLIBURTON ENERGY SERVICES,              § 
INC.,                                     § 
                                         § 
      Plaintiff,                         § 
VS.                                       §   CIVIL ACTION NO. 4:23-cv-1789 
                                         § 
GRANT PRIDECO, INC., NOV, INC., et al,    § 
                                         § 
      Defendants.                        § 
                                         § 
                                  ORDER 
     Pending before the Court are three motions to exclude expert opinion and testimony. The 
first is National  Oilwell Varco,  Inc.’s  (“NOV”)  Motion to  Exclude the  Opinions of Anthony 
Matheny (“Matheny”). (Doc. No. 187). Plaintiff Halliburton Energy Services, Inc. (“Halliburton”’) 
filed a response in opposition,  (Doc. No.  209),  and NOV replied.  (Doc. No.  219).  Second is 
Halliburton’s Motion to Exclude the Opinions of Gordon Amold (“Arnold”). (Doc. No. 189). NOV 
filed a response in opposition, (Doc. No. 205), and Halliburton replied. (Doc. No. 224). Finally, 
Halliburton moved to exclude the opinions and testimony of Jeff Dodd (“Dodd”). (Doc. No. 190). 
NOV filed a response in opposition, (Doc. No. 204), and Halliburton replied. (Doc. No. 222). Each 
motion before the Court is GRANTED in part and DENIED in part as described below. (Doc. 
Nos. 187; 189; 190). 
  I.     Background 
     This  is  a  breach  of contract/royalty  payment  dispute  in  which  NOV  asserts  that  its 
Licensees—Halliburton,  Ulterra  Drilling  Technologies,  L.P.   and  Rockbit  International 
Subsidiaries,  LLC  (“Ulterra’),  and  Varel  International  Energy  Services,  Inc.  and  Varel 
International  Industries,  L.P.  (“Varel’)—owe  royalties  pursuant  to  license  and  cross-license 

agreements for the right to use certain drill bit technology. The Licensees each deny liability for 
royalties.  The  general  facts  and overarching  legal  arguments at  issue  in this  case  have  been 
extensively described in prior orders. As such, this order will not lay out the background beyond 
what is necessary for the analysis here. Since the Court is addressing three motions regarding three 
experts  that  include  predominantly  overlapping  issues,  the  Court  will  address  the  particular 
arguments and issues in each motion below. 
  IL.     Legal Standard 
     Federal Rule of Evidence  702  allows certain witnesses with specialized knowledge to 
testify about their opinions as experts at trial. FED. R. EviD. 702. Admitting expert testimony is not 
a decision a court takes lightly, as factfinders tend to place extra weight on expert opinions. See 
Daubert v. Merrell Dow Pharm., 509 U.S. 579, 589 (1993). Accordingly, courts serve an important 
gatekeeping role when assessing proffered expert testimony, striving to admit qualified, reliable, 
and relevant opinions but exclude unreliable and misleading “junk science.” Kumho Tire Co., Ltd. 
v. Carmichael, 526 U.S. 137, 141 (1999). 
     In Daubert, the Supreme Court announced several factors courts should consider when 
exercising their gate-keeping function under Federal Rule of Evidence  702,  and in making a 
preliminary assessment of whether the reasoning underlying expert testimony is scientifically valid 
and can properly be applied to the facts in issue. Daubert, 509 U.S.  at 593-98. These factors 
include: (1) whether the technique in question has been tested; (2) whether the technique has been 
subject to peer review and publication; (3) the error rate of the technique; (4) the existence and 
maintenance of standards controlling the technique’s operation; and (5) whether the technique has 
been generally accepted in the scientific community. Jd.

     “[W]hether Daubert’s specific factors are, or are not, reasonable measures of reliability in 
a particular case is a matter that the law grants the trial judge broad latitude to determine.” Kumho 
Tire, 526 U.S. at 153. Though the proponent of the expert testimony “need not satisfy each Daubert 
factor,” it has the burden of showing that the testimony is reliable. United States v. Hicks, 389 F.3d 
514, 525 (Sth Cir. 2004). 
  il.    Analysis 
           A.     Jeff C. Dodd 
     Halliburton moves to exclude the testimony and opinions of Dodd primarily on the grounds 
that his opinions are either untimely, or impermissible legal conclusions, or both. (Doc. No. 190 at 
9). According to Halliburton, the opinions disclosed in Dodd’s report are (1) one-sided summaries 
of the litigation that led to the Patent License based on second-hand information from another of 
NOV’s lawyer experts; and (2) summaries of how, in Dodd’s experience, contracts are negotiated 
and formed. Further, Halliburton argues that Dodd impermissibly expanded his opinions during 
his  deposition testimony to  include  opinions that,  (1) the  License Agreement is  a “package” 
license, (2) Halliburton owes royalties under the Patent License regardless of whether it practices 
any Licensed RH Patent, and (3) the Licensees must pay royalties until the last to expire of the 
Licensed RH Patents. (/d. at 9). 
     In response, NOV argues that Dodd’s testimony should not be excluded because he will 
“not parrot or summarize facts for the jury with no connection to his expertise” or testify “on the 
legal meaning of certain disputed terms in the license agreements.” (Doc. No. 204 at 7). In addition, 
NOV argues  that Dodd’s  opinions  regarding common industry practices  relating to  licensing 
agreements are relevant and helpful to the trier of fact. (/d.).

     The Court finds that much of Dodd’s report is merely a recitation of general principles 
governing patent license generally. See, e.g., (Doc. No. 190-5 at 16) (“Scope thus lies at the heart 
of any license.”). Dodd is certainly qualified to speak broadly about what license agreements are, 
and generally why and how they are used in business relationships involving intellectual property 
given his qualifications, breadth of experience, and academic scholarship on the topic. 
     Nevertheless, Dodd’s report contains numerous references to the License Agreement in this 
case  both as  an  example  of a general  principle,  and to  state  conclusively  what the  License 
Agreement requires. (Jd. at 17) (“Therefore, Halliburton received a nonexclusive, but worldwide, 
license to take enumerated sets of actions that somewhat varied by whether the actions were 
directed solely to Licensed Halliburton Drill Bits or to Leached PCD Elements or PDCs for the 
purpose of making such drill bits.”). Of further concern, Dodd’s deposition testimony involved 
opinions that go beyond the scope of his report. For example, Dodd opined that the licenses at 
issue  were  blanket  licenses  that  “cover  a  number  of  patents”  and  “what  would  go  into 
consideration” for the licenses based on his experience interpreting and writing licenses such as 
the ones at issue here. (Doc. No. 190-6 at 19). In addition, Dodd opines that “infringement is not 
made a condition on the ~ in the royalty clause .... The royalty provision which makes the net 
sales from licensed Ulterra drill bits the base for the royalty is not — that royalty provision is not a 
“covered  by”  royalty.  It  does  not  depend  —  it  does  not  state  infringement  or  validity  or 
enforceability as being a necessary condition for the payments of the royalty.” (/d. at 58). 
     The contract language at issue clearly speaks for itself and is the best evidence available. 
Absent a finding of ambiguity in the contract, interpretive opinions as to what the contract says 
are plainly legal conclusions that no expert will be permitted to opine on, regardless of his or her 
experience in interpreting or drafting similar agreements. That ruling does not necessarily preclude

any expert from mentioning the contract, but it does preclude any testimony that may be contrary 
to its terms. 
      Moreover, Dodd’s testimony regarding the general industry practices of entering license 
agreements, the different forms that various agreements, such as a license agreement, can take, and 
the  purposes  that  different  agreement  structures  can  serve  is  permitted.  Dodd’s  testimony 
regarding: (1) general legal principles of contract interpretation; (2) specific legal principles that 
should or could be applied in this case;  (3) the motivations of the parties in this case in the 
negotiation of the License Agreement; and (4) any opinions about the meaning of the License 
Agreement’s terms and provisions will not be permitted. Dodd likewise will not be permitted to 
opine on the legal history of the patents at issue in this case (beyond the general history of the 
patents) or the outcomes of prior litigation. 
      Finally, Dodd and all other experts will be confined to the topics discussed in their reports. 
Halliburton’s Motion to Exclude is therefore DENIED in part and GRANTED in part. (Doc. No. 
190). 
   B.  Gordon Arnold 
      Halliburton next moves to exclude Gordon Arnold on many of the same grounds that it 
sought to exclude Dodd. Arnold’s qualifications are based on his three decades of practice as a 
patent lawyer, including disputes——both before federal courts and the U.S. Patent and Trademark 
Office—patent prosecution, licensing, and policy work. (Doc. No. 205-2 at 5). He has testified in 
prior patent cases in the  Southern District of Texas, and he has authored numerous  scholarly 
articles in the area of patent litigation and licensing. (/d. at 64-68). 
      Primarily, Halliburton argues that Arnold has “no technical qualifications” and simply 
“interprets terms of the Patent License and applies his interpretation to the facts of this case to

offer legal conclusions.” (Doc. No. 189 at 9). NOV argues that Arnold was asked to opine on two 
main areas of the case. (Doc. No. 205 at 6). First, he was asked “‘to analyze facts relating to which, 
if any, of eleven US and foreign patents could meet the definition of ‘Licensed RH Patents’ set out 
in each of the three License Agreements at issue.” (/d.).  Second, he was asked “to review the 
various patent infringement lawsuits that NOV filed in the mid-2000s relating to the drill bit 
technology at issue here, and assess the parties’ positions and the posture of the cases before the 
settlements occurred (and the License Agreements were executed).” (/d.). 
     The Court agrees with Halliburton that Arnold is qualified to testify on some technical 
matters relating to the reading and structure of patents but he may not testify on whether patents 
are infringed by certain products because he is not skilled in the art of drill bit manufacturing or 
usage.' Further, Arnold may not testify to the conclusion that patents that are alleged to be Licensed 
RH Patents satisfy the License Agreement’s definition of Licensed RH Patents to the extent that 
definition includes technical expertise. Moreover, this sort of testimony would plainly constitute a 
legal conclusion. Nevertheless, the Court will permit Arnold to testify about how one would read 
a patent or patent application to determine the subject matter of the patent, what a priority date is, 
and how the Patent and Trade Office goes about the prosecution and application process, topics on 
which he is undoubtedly qualified for as a career patent attorney. 
     Likewise, Arnold may  present his  opinions  on how certain patents  may  relate to  one 
another-—such as what a “patent family” is—based solely on his review of the patents themselves. 
Importantly, however, he may  nof testify to the contractual  implications of certain patents or 
potential patent families to the extent that any such testimony purports to contradict the contract 

1  While Arnold has a degree in electrical engineering, electrical engineering is irrelevant to the 
patents in this case. Further, it is not clear that Arnold ever actually worked as an engineer, and there is 
certainly no evidence that he worked in any field of engineering related to the subject matter of the patents 
in this case.

language.  Finally, Arnold may testify  as to  what “anticipation” of a patent is,  and how it is 
determined. In the event that Arnold is asked to testify on whether specific patents anticipate other 
patents, the Court will consider the legal-or-factual nature of that examination on a question-by- 
question basis. 
     Further,  in the event that the Court finds the term “relating to” to be ambiguous,  and 
therefore requiring extrinsic evidence, the  Court finds that Arnold’s career in drafting license 
agreements, prosecuting patent applications, and litigating license agreement disputes qualifies 
him  to  testify  about  commercial  perspectives  on  drafting  license  agreements.  This  ruling  is 
qualified, however, by the warning that any opinions that cross the line into the likely intent of the 
License Agreement drafters in this case or that attempts to contradict any specific language will, 
in all likelihood, be deemed inadmissible if raised in a timely objection. 
     Finally, Arnold will not be permitted to provide expert opinions about the ownership, 
status, terms, or legal import of foreign patents. Nothing in Mr. Arnold’s professional experience 
evokes any  expertise in foreign patent law—he  also  confirms that his opinions were  formed 
through discussions with foreign lawyers about the law that is the subject of their expertise. See 
(Doc. No.  189-3 at 14-15) (“Q. Am I  correct that you do not hold yourself out as an expert in 
foreign law? A. (Arnold) You are correct... Q. Well, are you holding yourself out as an expert in 
determining the status of foreign patents? A. (Arnold) No.”). Without the requisite expertise in the 
substantive foreign patent law, Mr. Arnold cannot provide expert testimony on that law or the 
foreign patents in this case. 
     In sum, the Court will permit Arnold to testify about: (1) the general process of preparing 
and prosecuting  patent  applications;  (2)  the  parts  of a patent  and  how  to  gain  the  relevant 
information from the patent documents; and (3) to the extent the Court later deems relevant, the

general economic and commercial interests and perspectives that inform the drafting of licensing 
agreements. The Court will EXCLUDE any testimony on (1) the legal meaning of the terms in the 
License Agreement; (2) whether certain patents or patent claims are legally invalid because they 
are  anticipated;  (3)  any  opinion  that  was  later  disavowed  in  deposition  testimony;  and  (4) 
substantive patent law in foreign jurisdictions and the application of that law to the foreign patents 
at issue in this case.  In making these rulings, the Court assumes that these opinions were all 
properly  disclosed  pursuant  to  Rule  26(a)(2).  As  such,  Halliburton’s  motion  to  exclude  is 
GRANTED in part and DENIED in part. (Doc. No. 189). 
  C.  Anthony Matheny 
     NOV moved to exclude the opinions and testimony of Matheny on several grounds. The 
heart of NOV’s argument is that Matheny is  simply a lawyer offering impermissible contract 
interpretations and legal conclusions. (Doc. No.  187 at 7). More specifically, NOV argues that 
Matheny’s entire report constitutes improper, unreliable legal opinions which attempt to interpret 
the plain language of the relevant contracts, declare provisions “material” or “breached,” and 
analyze the effect of certain disputed Supreme Court precedents. (/d.). Based on these arguments, 
NOV asks the Court to exclude the following opinions: (1) the meaning of “Licensed RH Patents,” 
including the terms “ReedHycalog patents,” “related to leaching,” “claims priority,” as used in the 
Halliburton and Ulterra Licenses; (2) Matheny’s conclusion that royalties terminated in 2022 under 
the Licenses due to his interpretation of the “License to Cutter Manufacturer” provision of the 
License Agreements; (3) the “materiality” of confidentiality provisions or testify that there was a 
breach; (4) his interpretation of the “Most Favored Licensee” provision and opinion that there was 
a violation; (5) his interpretation of Supreme Court case Brulotte and its progeny; and (6) his 
testimony parroting the facts, lawyer arguments, or other experts’ opinions.

     In response, Halliburton argues that Matheny is a rebuttal witness offering opinions in 
response to NOV’s two lawyer-experts who opine on the very same impermissible grounds that 
NOV objects to as to Matheny. (Doc. No. 209 at  10). Interestingly, rather than truly rebutting 
NOV’s arguments as to why Matheny should be excluded, Halliburton simply argues that Matheny 
is anecessary rebuttal witness to the impermissible expert testimony NOV puts forth from Arnold 
and Dodd. As stated above, the Court has permitted some and excluded some of the opinions 
proffered by both Arnold and Dodd. As such, if properly disclosed under Rule 26(a)(2), the Court 
will permit Matheny to testify in rebuttal to the subjects that the Court has permitted NOV’s experts 
to testify to, and the Court will exclude any opinions from Matheny that extend beyond the scope 
of Arnold and Dodd’s testimony. Therefore, NOV’s motion is conditionally GRANTED in part 
and DENIED in part. 
  IV.    Conclusion 
     Based on the foregoing analysis, the Court DENIES in part and GRANTS in part NOV’s 
Motion to Exclude, (Doc. No. 187), and likewise contingently GRANTS in part and DENIES in 
part Halliburton’s Motions to Exclude. (Doc. Nos. 189; 190). By this order, the Court is not ruling 
on the potential relevance of any such testimony.
     Signed on this AL day of September, 2025. 

                                   Andrew S. Hanen 
                                   United States District Judge