UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`HUNTING TITAN, INC.
`
`Petitioner
`
`v.
`
`DYNAENERGETICS EUROPE GMBH
`
`Patent Owner
`____________
`
`Case: PGR2020-00080
`Patent No. 10,472,938
`
`____________
`
`DECLARATION OF THILO SCHARF
`
`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 1 of 16
`
`
`_____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`HUNTING TITAN, INC.
`
`Petitioner
`
`v.
`
`DYNAENERGETICS EUROPE GMBH
`
`Patent Owner
`____________
`
`Case: PGR2020-00080
`Patent No. 10,472,938
`
`____________
`
`DECLARATION OF THILO SCHARF
`
`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 1 of 16
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`
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`I, Thilo Scharf, being over the age of 18 and competent to make the
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`declarations herein, do hereby declare that:
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`1.
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`I am the Product Line Director of Systems at DynaEnergetics Europe
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`GmbH (“DynaEnergetics”), and I have held this role since 2017. I joined
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`DynaEnergetics as a Customer Support Manager in 2011 before becoming a
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`Product Line Manager in 2014. In my roles as Product Line Manager and now as
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`Product Line Director, I have overseen the development of new products for
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`DynaEnergetics, including the DynaStage® system, all the way from conception of
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`the product to designing the product and ultimately launching the product into the
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`marketplace. I also meet with DynaEnergetics’ customers and industry groups in
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`the United States.
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`2.
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`DynaEnergetics introduced their DynaStage® perforation gun system
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`during the Offshore Technology Conference (OTC) in May 2014.
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`3.
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`The DynaStage® system (shown below, as introduced in 2014) is
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`DynaEnergetics’ fully Plug and Go™ perforating system. The DynaStage® system
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`is designed to greatly reduce the industry’s most common failure points and
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`elevate users’ safety while simplifying and streamlining operations. For example,
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`the DynaStage® system reduces gun assembly and disassembly times,
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`maintenance, and risk of misfire.
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 2 of 16
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`Ex. 2009 at 1.
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`4.
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`The DynaStage® system was a top-down redesign of conventional
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`perforation guns and associated wellbore perforating operations.
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`5.
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`Conventional perforation guns required meticulous, manual assembly
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`of perforation gun components and wiring of electrical and ballistic connections
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`necessary for relaying signals to and through the gun. Assembling the components
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`included, among other things, positioning a highly-engineered and machined metal
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`charge tube containing explosive shaped charges within a gun carrier, and wiring
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`the electrical and making the ballistic connections used to relay electrical
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`detonation signals and detonate the shaped charges. Assembly and/or wiring was
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`performed on-site, due to, for example, transportation regulations prohibiting
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`transporting products in a manner that might result in accidental detonation of
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`explosive components.
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 3 of 16
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`6.
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`For example, the excerpts below, from Petitioner’s own Gun Loading
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`Manual (Ex. 2004) and User Manual (Ex. 2005), illustrate and describe, in
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`Petitioner’s own words, just one portion of the complicated assembly and wiring
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`configurations and procedures that conventional perforating systems required when
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`DynaEnergetics launched the DynaStage® system, and still require.
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`Ex. 2004 at 14.
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`Ex. 2005 at 40, 43.
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 4 of 16
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`7.
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`As shown in the images above, when assembling the perforation gun
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`string, wiring had to be manually manipulated and connected to other wires via a
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`small port in the top of the tandem sub. Such subs were reusable components since
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`they isolated adjacent guns and were not destroyed by explosions of the guns. This
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`port in the sub was also used to manually wire (i.e., by hand) all of the
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`connections, including connecting a “signal” line wire to a selective perforation
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`switch and/or to a detonator.
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`8.
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`In a conventional perforation gun, it is not uncommon for ground
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`wires to be manually wedged on or in between threaded pieces, wrapped around an
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`end of an outer gun carrier, or wrapped around an existing screw or retainer nut.
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`Without a reliable ground wire connection design, the electrical connection might
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`become damaged, unstable/ intermittent or fail outright upon assembly and / or
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`conveying/ running of the perforation gun. In addition, when a wired detonator is
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`used it must be manually connected to the ground wire and upon connecting
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`perforation gun components by, e.g., threaded connections that require relative
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`rotation between the components, the ground wire may become twisted, crimped,
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`pierced, ripped away from electrical components, etc.
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`9.
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`The above “Installing the ControlFire® switch into tandem subs”
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`portion of Petitioner’s User Manual (Ex. 2005 at 43) is typical of the complex
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`wiring instructions for conventional wired perforating gun systems, and that is just
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 5 of 16
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`for the tandem sub connections between guns. An actual gun/tool string that is
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`deployed in the wellbore may further include a number of different components—
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`such as a top connector to a wireline, a bottom connector/tool for terminating the
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`gun/tool string, other wellbore tools such as plugs, etc.—and each component
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`typically requires its own procedures. Ex. 2005 at, e.g., 43 (“Installing the
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`ControlFire® switch into a bottom gun (no plug),” “Installing the ControlFire®
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`switch into a bottom gun (with plug): FOR PLUG-SHOOT APPLICATIONS,
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`THERE WILL BE TWO ControlFire® SWITCHES BELOW THE BOTTOM
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`GUN: ONE FOR THE BOTTOM GUN AND ONE FOR THE IGNITER TO THE
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`SETTING TOOL.”), 44 (“Connecting a bottom gun to a plug-shoot adapter”). The
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`above Figures 47 and 48 from Petitioner’s User Manual (Ex. 2005 at 43), and
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`model assembly from Petitioner’s Loading Manual (Ex. 2004 at 14) illustrate the
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`confusing array of wires that a user would see and need to coordinate with the
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`wiring instructions during the wiring procedures.
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`10.
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`In addition, the above excerpts are directed to wiring procedures for
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`electrical feedthrough connections and do not include the additional wiring
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`procedures required to arm the gun to actually detonate. Ex. 2004 at, e.g., 45-48.
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`11. The collection of free wires, component parts, and complicated wiring
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`instructions shown above and, generally, in Petitioner’s own user documents, e.g.,
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`Ex. 2004, 2005, contribute significantly to component failure and human error that
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 6 of 16
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`can render guns inoperable and potentially dangerous either within or outside of
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`the well and the time and (specialized) labor-intensive processes that delay
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`wellbore operations and drive costs up for operators and service companies.
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`12. The above Figure 40 from Petitioner’s User Manual (Ex. 2005 at 40)
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`also illustrates the fixed shaped charge phasing aspect that limits conventional
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`perforating gun systems with conventional, machined metal charge tubes.
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`13. The DynaStage® system was, when launched, and is still, today,
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`unrivaled in performance and technological advances and has proved to be the
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`safest and most reliable, versatile, and highly valued perforating gun system in the
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`industry. In fact, the DynaStage® system ushered in the era of “pre-wired” and
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`factory assembled perforation guns that do not require cumbersome on-site
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`assembly of internal components or wiring of electrical and/or ballistic
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`connections.
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`14.
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`Indeed, the DynaStage® perforation gun system is assembled in
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`DynaEnergetics’ facility in Blum, TX, ballistically connected, tested for electrical
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`and mechanical connectivity, shipped to the wellbore site and as a last stage, a
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`wireless detonator is inserted into each gun. By assembling perforation guns in
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`this way, wellbore site operators have experienced far fewer on-site safety and
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`quality incidents (and near misses), and reliability in perforating has increased.
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 7 of 16
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`15. Dozens of pre-wired guns inspired by the DynaStage® system have
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`now entered the market—the DynaStage® system has singularly changed the
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`industry and raised performance standards, setting a new, higher benchmark
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`against which all perforating systems in the market, including look-alike systems
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`and pre-wired guns, are measured.
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`16. The heart of the DynaStage® system is, as shown below, a stackable
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`assembly of injection-molded shaped charge holders and connectors for ballistic
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`and electrical connections, and DynaEnergetics’ flagship wireless “push-in” Plug
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`and Go™ detonator, shown in the below image of the current commercial
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`embodiment, and in the configuration shown in FIG. 30 of the ’938 Patent.
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`Ex. 2006 at 7.
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 8 of 16
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`Plug and Go™ Detonator
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`17. The injection-molded components are custom-formed to make all
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`necessary electrical and ballistic connections by contact (i.e., without manual
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`wiring) in an entirely self-contained, modular assembly completed, loaded, and
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`locked into a gun carrier, and quality tested in the factory. After arrival at the
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`wellbore site, the wireless detonator need only be inserted into the top connector of
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 9 of 16
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`the perforating assembly to complete the electrical connections and ballistic
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`couplings.
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`18. A top connector includes directional locking fins to lock the assembly
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`safely within the gun carrier during their trip to the wellbore site.
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`19. Upon arrival at the wellbore site, the modular assemblies are armed
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`and electrical feedthrough connections are completed by simply inserting the Plug
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`and Go™ detonator into an end of a connector, as shown above.
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`20. The Plug and Go™ detonator is reminiscent in size and shape to a meat
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`thermometer, and inserting it into the connector is simpler than inserting a battery
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`into a flashlight.
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 10 of 16
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`21. The detonator includes all of the electrical connections, safety and
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`switch circuitry, explosive components and controls necessary for relaying
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`electrical signals along a gun string and selectively detonating the shaped charges
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`after receiving its unique series of digital detonation codes. All of the electrical
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`connections and ballistic alignments are automatically made when the detonator is
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`inserted into the top connector.
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`22. As shown below in Figure 32 from the ’938 Patent and a blown-up
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`excerpt thereof, the bulkhead (orange) is positioned within a tandem seal adapter
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`(TSA) (pink). The term “bulkhead” is a common and accepted industry term and
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`is generally understood to include a device that pressure isolates adjacent guns and
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`passes an electrical signal between the adjacent guns. The term “tandem seal
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`adapter” is not a common or accepted industry term. DynaEnergetics coined that
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`term to describe a component, i.e., the TSA shown below, that creates a seal
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`between two gun housings and provides a channel to receive or accommodate the
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`bulkhead. The bulkhead seals adjacent guns when positioned within the TSA. In
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 11 of 16
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`addition to sealing the guns, the bulkhead has an electrical pin contact assembly
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`(brownish orange) passing through the middle of it to electrically connect adjacent
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`guns.
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 12 of 16
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`23. The development work behind these DynaStage® system innovations
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`was extensive and required a rethinking of the most fundamental principles of
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`perforating products. Such innovative features of the DynaStage® system
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`described and claimed in the ʼ938 Patent include: developing a wireless detonator
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`having three separate and distinct wireless connectors, and developing a wireless
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`ground contact connector capable of maintaining a reliable contact with a TSA
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`without becoming compromised, or otherwise interfering with a pin contact
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`extending from a bulkhead within the TSA to a wireless signal-in connector on the
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`detonator adjacent to the TSA.
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`24. Since its introduction to the market in 2014, the DynaStage® system
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`has been very successful and displaced sales of traditional gun systems at a high
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`rate. For example, a report published by third-party Stifel Financial Corp. on
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`stocks in the oilfield services and equipment sector indicates that sales of the
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`DynaStage® system increased from only 2,500 units in the first quarter of 2017 to
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`over 80,000 units in the first quarter of 2018. Ex. 2007 at 53. This is generally
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`consistent with my understanding and DynaEnergetics’ internal records.
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`25. DynaEnergetics’ customers were initially skeptical about the
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`DynaStage® system and whether its benefits justified the increased price over
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`conventional systems. However, after field trials demonstrated its enormous
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`benefits, customers began to demand the DynaStage® system.
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 13 of 16
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`26. DynaEnergetics’ market share has increased as a result of the
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`DynaStage® system’s success and adoption in the industry. A report published by
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`third-party industry experts Spears and Associates shows that, by the end of the
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`third quarter in 2019, DynaEnergetics had roughly 24% share of the perforating
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`market, nearly doubling its market share since 2017. Ex. 2010 at 104. I note that
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`the report shows Hunting Titan’s increase in market share following the
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`introduction of its H-1™ Perforating Gun System, Hunting Titan’s answer to the
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`DynaStage® system, in 2015. Id. The previous leader in the segment (Corelab
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`Owen) lost market share year over year by not offering a comparable system. Id.
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`27.
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`In response to this success, DynaEnergetics recently completed
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`construction of a new 74,000-square-foot state of the art facility in Blum, Texas
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`focused on production of the DynaStage® system. The new facility has six new
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`assembly lines for the DynaStage® system, which has significantly expanded
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`DynaEnergetics’ capacity to meet customer demand for the DynaStage® system
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`and allowed for DynaEnergetics’ continued growth. Ex. 2007 at 53; Ex. 2011.
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`28.
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`In addition to its commercial success, the DynaStage® system has
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`garnered significant praise from the industry for its improved safety and ability to
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`significantly reduce the risk of misruns, misfires, and human error and its 99.99%
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`operating efficiency. Ex. 2007 at 2, 6; Ex. 2012. Our customers have also touted
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`the benefit of the Plug and Go™ nature of the DynaStage® system because it
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 14 of 16
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`“[d]oes not require any initiator or switch wiring or crimping at the wellsite.” Ex.
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`2013 at 5.
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`29.
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` Based on my knowledge and experience, I believe that the success of
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`and praise for the DynaStage® system can be directly attributed to several features
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`described in the ’938 Patent, including but not limited to the features described in
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`detail above.
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`DynaEnergetics Europe GmbH
`Ex. 2003
`Page 15 of 16
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`I hereby declare that all statements of my knowledge made in this declaration are
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`true and that these statements were made with the knowledge that willful false
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`statements and the like are punishable by fine or imprisonment, or both, under
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`Section 1001 of Title 18 of the United States Code.
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`Dated:
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`b‘MW'
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`-
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`‘1
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`will
`
`Thilo Scharf
`
`DynaEnergetits Europe GmbH
`Ex. 2003
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`Page 16 of 16
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