Poor Drafting and Poor Choice of Expert Brings Calix Process Patent To Boiling Point

Calix Limited v Grenof Pty Ltd [2023] FCA 378

28 April 2023

Federal Court of Australia

Nicholas J

Highlight

Nicholas J considered for the first time, and rejected, the application of section 121A of the Patents Act which reverses the onus for infringement for process patents in certain circumstances.

Background

Australian industrial technology company Calix Limited (Calix), the proprietor of Australian patent no. 2014339743 (the patent), commenced proceedings against government-backed water treatment innovation company Grenof Pty Ltd (Grenof) and DGL subsidiary waste water solutions company Aquadex Pty Ltd in relation to the exploitation of a magnesium hydroxide slurry as “Phodine” and “Phodine Plus” in Australia.  The products are used as a neutralising agent for waste water.

Calix alleged infringement of claim 1 directed to methods of manufacture of a hydroxide slurry.  Such slurries are widely used in industrial processes including in sewerage treatment and precipitating heavy metals.  Grenof filed a cross claim seeking revocation of claim 1 on the grounds that the claim lacked novelty and inventive step, and was not clear or supported by the specification.

In this April 2023 decision regarding a post Raising the Bar (Post-RTB) patent, Nicholas J considered and rejected the application of section 121A of the Patents Act which reverses the onus for infringement for process patents in certain circumstances.  Despite s121A coming into effect in January 1995, it has not been fully considered by a Court.  The structure of s121A is such that the onus reversal will only apply in limited circumstances, and the patentee’s case fell short of the criterion of the section.

Nicholas J found that the claim in suit was not infringed, and whilst it was novel and clear, it was invalid for lack of inventive step and lack of support, his Honour finding in relation to support that “the invention as defined by claim 1 is fundamentally different from the invention disclosed in the body of the specification”. His Honour was underwhelmed by the “confused and muddled” patent specification, and was critical of the expert evidence led by the patentee providing clear examples of practices prosecutors and litigators should avoid.

Given his Honour’s finding of non-infringement and validity, he also found Calix had engaged in unjustified threats (of infringement), although he found Grenof had suffered no damage.

Calix was ordered to pay Grenof’s costs.  It has not filed an appeal.

Key issues

The Claimed Process

The process of claim 1 included mixing caustic calcinated carbonate powder or caustic calcinated hydroxide powder with water, and then the steps of (i) allowing heat of hydration to raise the temperature of the reaction mixture to near the boiling point, and (ii) allowing steam to evaporate from the reaction mixture to remove excess heat and control the maximum reaction temperature to “near the boiling point”.  The claim feature ‘near the boiling point’ was a key issue in both the infringement and validity analysis of the Court.

Rejecting the patentee’s evidence, His Honour ultimately found that ‘near the boiling point’ refers to temperatures near to but not at or above the boiling point of water (i.e. 100°C).  Ominously, Nicholas J described the patent specification as a ‘confused and muddled document, especially when regard is had to the temperature limitation (“near the boiling point”)’.  He was critical of the patentee’s evidence on this feature of the claim, and gave it little weight, finding it “contradictory and inconsistent” and “unconvincing and often inconsistent.  His Honour also commented at one point that the witness “stubbornly refused to accept the obvious implication of his own evidence”.  The Court questioned whether Professor Sorrell would qualify as the person skilled in the art, as he had insufficient practical interest, training or experience to provide evidence on the common general knowledge at the patent priority date.

Calix’s infringement case relied on the submission that the maximum reaction temperature reached during the Grenof process was near, but not at or above, the boiling point of the reaction mixture.  Pursuant to an interlocutory application by Calix, Nicholas J issued orders permitting an independent expert called by Calix to examine the equipment used in the Grenof process and observe its operation.  The experts measured the Grenof reaction mixture temperature as at least 101°C.

First Attempted Onus Reversal Under S121A for Process Patents Fails

Interestingly, in the first case of its kind, Calix sought to rely on s121A of the Patents Act 1990 (Cth) to shift the burden of proof for infringement to Grenof.  s121A provides that in the case of proceedings for infringement of a patent to a process for obtaining a product (only):

• if the defendant alleges it has used a different process from the one claimed to obtain an identical product; and
• the Court is satisfied that it is very likely the defendant’s product is made by the patented process, and the patentee has taken reasonable steps to find out the defendant’s process but has not been able to do so;

then in the absence of proof to the contrary (for which the onus is on the defendant) the defendant’s process is taken to have been obtained by the patented process.

Nicholas J discussed s121A:

“The section is primarily aimed at circumstances in which the plaintiff has access to the defendant’s product, but not the defendant’s process (eg. because it is used by a third party overseas and is unavailable for inspection by the plaintiff)….”

In the context of this dispute His Honour found:

“Section 121A can only apply if the Court is satisfied (inter alia) that it is “very likely” that those products were made by the patented process (ie. the method of claim 1).  ….There is nothing about the respondents’ product which satisfies me that it is likely, much less very likely, that it was made by the method of claim 1.  In those circumstances, s121A of the Act cannot apply.”

Nicholas J held that the Grenof reaction mixture “reaches boiling point and boils” and therefore avoids infringement.

Outcome

The claims were found novel.

On obviousness, Nicholas J held that it was well known that the chemical reaction claimed was exothermic, i.e. it produced heat, and that as the powder reagents react with water, at normal pressure the steam resulting from boiling will prevent the reaction mixture from exceeding the boiling point of the excess water. He also held that controlling the mixing rate and the reagent feed rate and rations to keep the reaction mixture close to but below the boiling point would have been routine as at the priority date of the patent.  Moreover, he held this practice was in fact carried out at the priority date to avoid excessive pressure in the reaction mixture.  Given his findings on common general knowledge, he found the claims to be clear but not inventive.

Nicholas J also found the claims lacked support.  Under the post-RTB Act, the claims must be supported by the technical contribution to the art as determined from the description.  As the embodiments in the description included various procedures incorporating boiling, his Honour held that the overall disclosure in the specification was to a process in which the reaction mixture was permitted to reach boiling and therefore could not support a claim in which this was restrained.

Practical Implications for Drafting and Litigation

This decision highlights the importance of fully understanding the invention when the drafting process begins, so that the claims and the disclosure in the specification are aligned.  Where the scope of the claims is arguably narrower than the disclosure, it is not a given that the claims will be adequately supported for the purposes of the Act.  The disparity between the claims and description in this case not only left the patent vulnerable on validity, it also doomed the patentee’s infringement case.  This incongruence may have resulted from an evolution in strategies adopted during patent prosecution stage which should have resulted in a strategic audit of the entire patent family, not just the claims in isolation.

Calix will likely rue its expert selection which drew the criticism of the Court equally for his lack of appropriate technical expertise, for his self-contradiction, and for his stubborn refusal to make reasonable concessions.

It is an open question whether claim amendments, available to a patentee during Court proceedings at the judge’s discretion but not sought here, may have assisted the patentee.

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