ION provides an update on the WesternGeco litigation

HOUSTON, Jan. 16, 2018 /PRNewswire/ -- ION Geophysical Corporation (NYSE: IO) today announced that the Supreme Court granted certiorari in the previously-reported lawsuit of WesternGeco L.L.C. v. ION Geophysical Corporation, agreeing to review the lower court's judgment for legal error on whether a patent holder can obtain lost-profits damages for use of ION's products outside of the United States.  We would like to take this opportunity to provide information about the case and its current status. 

WesternGeco sued ION and one of ION's customers for patent infringement in 2009.  In 2012, a jury issued a verdict in favor of WesternGeco and awarded WesternGeco damages for reasonable royalties and lost profits.  The lost-profits damages were based on the use of ION's products outside of the United States.  On appeal, ION argued that WesternGeco was not entitled to lost-profits damages for two reasons: one, that under applicable law, WesternGeco cannot recoup lost profits for the overseas use of ION's products by ION's customers; two, that lost-profits can only be recouped from a direct competitor, and that ION and WesternGeco are not direct competitors in this market. 

The United States Court of Appeals for the Federal Circuit agreed with ION on the first issue and, as a result, overturned the award of lost-profits damages.  Since the court decided in favor of ION on this first issue, it did not decide the second issue, which ION reserved the right to re-visit in the future. 

WesternGeco filed a petition for a writ of certiorari asking the United States Supreme Court to review the Court of Appeals' ruling, and on January 12, 2018, the Supreme Court granted WesternGeco's petition.  WesternGeco and ION will now submit briefs to the Supreme Court on the merits of the Court of Appeals' ruling.  We expect that the Supreme Court will hold oral argument in April 2018 and will issue a decision by the end of June 2018.  ION firmly believes in its legal position on this issue and that the Federal Circuit made the correct decision.  If the Supreme Court upholds the Court of Appeals' decision, the case will be over and ION will owe no further damages.

If the Supreme Court overturns the Federal Circuit's decision, the case will be remanded back to the Court of Appeals, at which point ION will present its second argument for eliminating the award of lost profits.

Other proceedings may have an impact on WesternGeco's ability to recover lost profits damages even if WesternGeco prevails in the Supreme Court.  ION was a party to a challenge to the validity of WesternGeco's patents by means of an Inter Partes Review ("IPR") with the Patent Trial and Appeal Board ("PTAB").  While the patent infringement lawsuit was pending on appeal, the PTAB invalidated four of the six patent claims that formed the basis for the jury verdict in this case.  WesternGeco appealed that decision to the Court of Appeals for the Federal Circuit, which is scheduled to hear oral argument on January 23, 2018.  If the Court of Appeals affirms the PTAB's invalidation of the patents, that may provide a separate ground for reducing or vacating any lost-profits award.  In addition, there may be additional bases for challenging the amount of any lost-profits damages, which remain to be litigated in further proceedings.

"We understand this is an important area of law for the Supreme Court to consider and we will continue to defend vigorously against WesternGeco's claims and the award of lost-profits damages," stated Brian Hanson, ION's President and Chief Executive Officer.  "We firmly believe our legal position is correct and we will advocate our position forcefully in the Supreme Court.  While we would like to see closure to this litigation as soon as possible, if the Supreme Court reverses the decision, we are confident about re-visiting our second argument at the Court of Appeals.  In addition, we believe the IPR process underway is also very positive for our legal position.  This is clearly a David and Goliath situation where a company like Schlumberger has the luxury of unlimited legal expenditure without having to rationalize the additional expense of continuing these proceedings.  In any case, if the Supreme Court does not put this issue to rest this year, we expect this lawsuit will continue for years, potentially beyond 2020." 

To learn more about the possible timing of these proceedings, visit iongeo.com/lawsuit.

About ION

ION is a leading provider of technology-driven solutions to the global oil and gas industry. ION's offerings are designed to help companies reduce risk and optimize assets throughout the E&P lifecycle. For more information, visit iongeo.com.

Contacts

ION (Investor relations)

Executive Vice President and Chief Financial Officer
Steve Bate, +1 281.552.3011
[email protected]

ION (Legal)

EVP, General Counsel & Corporate Secretary
Matthew Powers, +1 713.366.7226
[email protected]

The information herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may include information and other statements that are not of historical fact. Actual results may vary materially from those described in these forward-looking statements. All forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties. These risks and uncertainties include risks associated with the WesternGeco litigation and other related proceedings. We cannot predict the outcome of this litigation or proceedings.  For additional information regarding the WesternGeco litigation see our Form 10-Q for the quarter ending September 30, 2017, filed on November 2, 2017. Additional risk factors, which could affect actual results are disclosed by the Company in its fillings with the Securities and Exchange Commission ("SEC"), including its Form 10-K, Form 10-Qs and Form 8-Ks filed during the year. The Company expressly disclaims any obligation to revise or update any forward-looking statements.

SOURCE ION Geophysical Corporation

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