Pason Ends IP War, Refocuses on Well Completions Innovation

CALGARY, AB – December 08, 2025 – Pason Systems Inc. (TSX: PSI) has drawn a line under a contentious and costly legal battle, announcing a settlement that ends all intellectual property litigation between its subsidiary, Intelligent Wellhead Systems (IWS), and rival Downing Wellhead Equipment, LLC. While the terms of the agreement remain confidential, the resolution removes a significant cloud of uncertainty that has hung over Pason’s ambitious push into the automated well completions market.

For investors and industry observers, the settlement is less about declaring a winner in the courtroom and more about a pragmatic pivot back to the marketplace. By extricating itself from a complex web of lawsuits and patent challenges, Pason can now fully deploy its resources toward innovation and growth in its highly strategic IWS division, a segment it fully acquired just under two years ago. The move signals a clear strategic priority: win with technology, not litigation.

The Anatomy of a High-Stakes Tech Dispute

The legal conflict between IWS and Downing was a multifaceted battle fought over the future of wellsite automation. The dispute wasn't a simple infringement claim but a series of aggressive legal maneuvers from both sides, centered on critical technology for hydraulic fracturing and wellhead control.

The core of the conflict involved competing visions for making well completions—the process of preparing a drilled well for production—safer and more efficient through automation. Downing, an Oklahoma-based specialist in pressure control technology since 1980, had secured key legal victories leading up to the settlement. In June 2025, the U.S. Patent Trial and Appeal Board (PTAB) sided with Downing, upholding all 38 claims of its foundational patent (U.S. Patent No. 11,560,770) for continuous hydraulic fracturing. This technology is designed to reduce equipment transition times and minimize personnel exposure on site, a crucial value proposition in modern energy extraction.

Just two months later, in August 2025, Pason's IWS faced another significant setback. A Texas federal court invalidated two of its primary wellhead control patents (U.S. Patent Nos. 11,274,520 and 11,608,708), ruling that they covered "abstract ideas." The judge determined the claims merely automated previously manual processes using generic computers, a decision that struck at the heart of IWS's patent portfolio.

However, the legal fight wasn't one-sided. IWS had initiated its own patent infringement litigation and, perhaps more critically, claims of trade secret misappropriation. IWS alleged that Downing had used its confidential information to develop its competing "Freedom Series" technology. Notably, the Texas court did not dismiss these trade secret claims, suggesting they held more legal merit than the patent assertions and likely provided IWS with crucial leverage in settlement negotiations. The confidential agreement announced today brings this entire complex and resource-draining saga to a close.

From Legal Bills to R&D Budgets

The most immediate impact of the settlement for Pason is financial clarity and the redirection of resources. Protracted, multi-front IP litigation is notoriously expensive, consuming not only cash for legal fees but also the valuable time and focus of senior management and technical experts. Ending this dispute allows Pason to stanch the bleeding of these costs and, more importantly, reinvest that capital and intellectual energy back into its business.

This is particularly critical for the Intelligent Wellhead Systems division. Pason signaled its deep commitment to this segment when it acquired all remaining shares of IWS on January 1, 2024, for a reported $88.2 million. The acquisition was a strategic bet on the growing demand for digital safety and efficiency workflows at the wellsite. IWS's flagship inVision Technology Platform—which integrates wellsite instrumentation and remote monitoring—is designed to reduce operating risk and improve uptime, a compelling pitch for operators focused on maximizing returns.

With the legal overhang removed, Pason can now accelerate the market penetration of the inVision platform without the threat of injunctions or the distraction of defending its IP. The settlement de-risks this key growth engine for investors, who can now evaluate the IWS segment based on its commercial and technological merits rather than its litigation prospects. While confidential settlements often involve financial payouts or cross-licensing agreements, the strategic benefit of a clear operational path forward is often the most valuable outcome. This allows the company's narrative to shift from legal risk management to technology-driven growth.

A Diversified Strategy on Firmer Ground

While the IWS dispute captured headlines, it's only one piece of the broader Pason Systems story. The company built its reputation as a global leader in data management systems for drilling rigs, providing the "digital backbone" for countless wellsite operations. The resolution of the IWS litigation helps solidify a key pillar of its diversification strategy, which extends beyond its traditional oil and gas base.

Pason has been methodically building a multi-faceted technology company. The 2024 full acquisition of IWS was a move to expand from its dominance in the drilling phase into the lucrative completions phase of a well's lifecycle. This vertical integration within oil and gas allows Pason to offer a more comprehensive suite of digital solutions to its customers.

Furthermore, Pason has looked beyond fossil fuels for future growth. Through its subsidiary Energy Toolbase Software (ETB), the company provides sophisticated software for developers in the solar power and energy storage industry. ETB's platform allows users to model the economics and performance of renewable energy projects, a market with significant long-term potential.

By settling the Downing litigation, Pason management has effectively stabilized a crucial growth segment, allowing the company to stand on three strong legs: its core drilling data business, the now-unencumbered well completions technology of IWS, and its forward-looking investment in the renewable energy sector via ETB. This diversified approach is designed to make Pason more resilient to the cyclical nature of the energy industry. With the legal battle in the rearview mirror, Pason is better positioned to execute this long-term strategy, demonstrating to the market that its focus remains squarely on building a durable, technology-forward enterprise across the entire energy landscape.