Biosimilars Deals 2021

Hanwha Solutions Corporation v REC Pte Ltd [2023] FCA 1017

29 August 2023

Federal Court of Australia

Burley J

Highlight

In this patent infringement/validity dispute, Hanwha failed to establish that REC infringed its “old Act” Australian patent No 2008323025, and its dependant ACL claims were dismissed.  REC’s unjustified threats claim succeeded in part, as did its novelty challenges to certain patent claims.  REC’s validity challenges based on inventive step (on different claims to the novelty challenge), clarity, utility and fair basis failed.

Burley J emphasised the importance of effective case management strategies in patent litigation, and reminded us that a prior art search is not always required to successfully challenge inventive step.

Background

Hanwha Solutions Corporation (HSC) and Hanwha Q CELLS Australia Pty Ltd (Hanwha) brought separate patent infringement proceedings against LONGi Green Energy Technology Co Ltd (and related companies) (LONGi), Jinko Solar Australia Holdings Co Pty Ltd (Jinko), and REC Pte Ltd (and authorised sellers) (REC) on AU2008323025.  The proceedings were heard together, but Hanwha settled the proceedings against LONGi and Jinko before judgment.

The “old Act” patent related to a solar cell with a silicon substrate, and methods for making such a cell.  The asserted claims relate to a solar cell comprising a first dielectric layer and a different, second dielectric layer containing hydrogen on a surface of the first dielectric layer.  Hanwha did not assert the method claims of the patent against REC, but asserted them against LONGi and Jinko.

Hanwha alleged that REC infringed certain product claims of the patent, and that the sale of the REC products in Australia involved misleading and deceptive conduct in breach of the Australian Consumer Law (ACL).

REC denied infringement, cross-claimed for invalidity of the asserted claims (and further claims) on the grounds of novelty, inventive step, clarity, fair basis, and utility, and asserted that Hanwha had made unjustified threats in contravention of s 128 of the Patents Act 1990 (Cth) (the Act).

Hanwha failed to establish infringement by REC, and its dependant ACL claims were dismissed.  REC’s unjustified threats claim succeeded in-part, as did its novelty challenges to certain patent claims.  REC’s validity challenges based on lack of fair basis, inventive step, clarity and utility also failed.

Key issues

Claim construction

Construction has always been a matter for the Court, and Burley J reminded us that expert evidence does not bind the Court on construction by construing one phrase in a manner that was inconsistent with the expert evidence led by the parties.  Regarding product claim 9, Burley J interpreted the phrase “hydrogen being embedded into the second dielectric layer” inconsistently with expert evidence led by both parties, finding that “embedded” is a requirement that hydrogen merely be present in the second dielectric layer in the completed product.  Burley J commented that the evidence “tends to fuse the teaching of the specification and the requirements of the claims” and to that extent, it must be set aside [para 207].

Burley J found that Hanwha’s construction distorted the language of the claim by adding a qualification that hydrogen must be present before any firing step in a form enabling its release during a subsequent firing.  His Honour noted that this might make sense in the context of a sequential method claim (like claim 1) but not a product claim like claim 9.   He concluded that whilst the skilled reader might understand that hydrogen may be embedded to act as a source during a subsequent firing step, that is not the teaching of the specification nor a requirement of the asserted claim.

Validity

REC submitted that the patent lacked novelty, inventive step, fair basis, utility and clarity.

Burley J found that two of the recited novelty references either did not provide clear direction to produce something within the claim as it did not require the use of a second dielectric layer, or did not direct, recommend or suggest that following the instructions in the reference (namely, to optionally add aluminium oxide as the second passivating layer) will result in the claimed invention.  A skilled addressee following the second reference would only achieve the result of the claimed invention if the conditions happened to be right.  Therefore, the carrying out of the instructions in the reference did not inevitably result in something being made which would constitute an infringement.

REC argued that the final reference (Nakano) anticipated claims 9, 12, 16 and 21.  There was dispute whether Nakano contained two relevant integers.  There were minor differences in the expert’s views.  Hanwha argued that REC’s construction involved impermissible mosaicking of discrete parts of Nakano.  His Honour disagreed, concluding that REC’s construction involved permissible mosaicking and therefore Nakano anticipated claims 9 and its relevant dependant claims 12, 16 and 21.

REC submitted that two prior art documents rendered claims 9, 11-14 and 16-21 obvious.  Under the old Act (i.e. prior to the 2012 changes introduced by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) (RTB)) it is necessary to establish that the person skilled in the art (PSA) would have ‘ascertained’ the cited obviousness references.  Justice Burley found that the PSA would have so ascertained them.

• A first reference was published in a widely read and respected journal that all the experts had published in, two of the experts had read the prior art before the priority date, and a pre-priority date survey named the article itself as one of the most relevant publications in the field.
• The second reference was a later reference by the same author. It is in this context that Burley J found that an artificial ex post facto literature search does not need to be carried in patent litigation to establish that the prior art information would have been “ascertained” pursuant to s 7(3) of the Act pre-RTB, noting that such searches initiate an enquiry that adds unnecessary expense.  Given the likelihood the earlier obviousness reference would have been ascertained for the reasons explained above, his Honour J did not require an artificial search in this case, despite submissions from Hanwha to the contrary [at 367]:

“Finally, I note that… it is not the case that an artificial ex post facto literature search must be carried out at the time of the conduct of patent litigation in order to establish the “ascertained” aspect of s 7(3) of the Patents Act.  Whilst such a search, if properly conducted, may quell controversy about the question, frequently it spawns an enquiry that adds unnecessary expense and argument to an already time consuming aspect of a validity challenge.  In the present case, in my view a search of this type was not required because the paper was likely to have been heard of, even if not read, by those skilled in the field.”

In relation to claims 9, 11-14 and 16-21, Burley J concluded that the prior art references were insufficient to demonstrate lack of inventive step.

REC’s remaining grounds of invalidity (fair basis, clarity, utility) also failed.

Unjustified threats

REC argued that both HSC’s letters of demand to REC, and an HSC media release relating to the proceedings constituted unjustified threats of patent infringement contra to s 128 of the Act.  Surprisingly, HSC agreed that the letters contravened s 128 (the content of the letters is not set out in the decision), but disputed that the media release amounted to an unjustified threat.  His Honour agreed, finding that the three-page press release published after commencement of proceedings merely reported that HSC had brought patent infringement proceedings, and therefore could not constitute a threat that HSC would bring proceedings.

Case management

Burley J noted that the conduct of the multiple independently represented parties was a testament to the pragmatism of the parties.  His Honour was grateful for the cooperation of the parties, and took time in his judgement to call out the key case management strategies employed by the parties, namely:

• the respondents agreed to use one substantive witness (between them) on invalidity;
• the respondents each provided product descriptions and non-infringement statements, and Hanwha replied with an infringement position, noting areas of difference;
• the parties jointly prepared a final primer and CGK statement with areas of disagreement marked up for the Court’s convenience;
• the respondents combined their particulars of invalidity, reducing repetition and complexity;
• the parties set confidentiality rules, collaborating together with minimal court involvement; and
• judicial registrars and experts together created six joint expert reports on various topics.

It is refreshing to see parties to litigation avoiding an unnecessarily combative approach to patent litigation.  Whilst not unheard of, it is not yet the norm.  With the encouragement of Burley J, this may become more common.

Outcome

Justice Burley found no infringement by the REC Products, with invalidity (novelty) established in relation to a subset of claims.  His Honour’s reasons for the infringement finding are redacted until at least 13 October 2023, as REC has asserted confidentiality over the findings.

Implications

This decision demonstrates the Federal Court’s focus on improving case management practices in patent litigation.  His Honour’s comments regarding the artificial searches undertaken to satisfy s 7(3) of the pre-RTB Act, alongside his summary and gratitude towards the parties for their cooperation in complex multi-party litigation, demonstrate that the Court encourages, and may implement, pragmatic case management.

The case reaffirmed that the judicial role in construing patent claims cannot be usurped by expert evidence.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards – Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.

Orikan Group Pty Ltd v Vehicle Monitoring Systems Pty Limited [2023] FCA 1031

29 August 2023

Federal Court of Australia

O’Bryan J

Highlight

The Federal Court considered for the first time post-RTB, whether Anshun estoppel operates to prevent a cross-claimant for patent revocation raising arguments it did not raise in a previous opposition to grant of the same patent, or in subsequent Federal Court appeals.  In finding that no Anshun estoppel exists, the Court placed significance on the fact that that the revocation challenge was in defence to infringement proceedings, but it left open whether the answer would be different if the revocation suit was not by cross-claim.

Background

Orikan Group Pty Ltd (Orikan), is the registered owner of the patent in suit AU2013213708 titled “Vehicle Detection” (Patent), assigned to it from SARB (a related entity) in 2022.

Orikan alleged infringement by Vehicle Monitoring Systems Pty Ltd (VMS) in connection with the manufacture, sale and use of in ground vehicle detection sensor units dating back to 2013.  VMS denied infringement and filed a cross-claim for revocation of the patent.  This decision concerns an interlocutory application by Orikan for a stay of the cross-claim on the basis of Anshun estoppel or strikeout as an abuse of process in light of the fact that VMS did not (but could have) raised the same invalidity grounds in earlier opposition proceedings or subsequent Federal Court appeals.

The dispute is part of a longstanding and multipronged commercial dispute between the parties relating to several patents to vehicle monitoring devices, including:

1. 2011 VMS Infringement Proceedings: The first spat between the parties occurred in 2011, when VMS sued SARB for infringement of a VMS patent titled “Method, apparatus and system for parking overstay detection”, and SARB cross-claimed for revocation. Judgment was delivered in May 2013 in favour of VMS.
    
2. 2012 SARB Innovation Patent Proceedings: Infringement proceedings commenced by SARB against VMS for infringement of an innovation patent titled “Vehicle detection”. Both that innovation patent and the Patent claim priority to the same 2008 parent application, and the claims overlap considerably.  VMS cross-claimed for revocation.  The dispute settled in 2014.
    
3. 2016 VMS Opposition Proceedings: Unsuccessful VMS pre-grant opposition filed in 2016 against the Patent. VMS’s 2018 appeal to the Federal Court was decided in March 2020 to the same effect.  VMS appealed again to the Full Federal Court and its decision delivered in December 2021 again rejected the opposition. We reported on that decision in our 2021 Patent Case Summary.  The patent granted in January 2022 and was assigned to Orikan in May that year.
    
4. 2022 Orikan Infringement Proceedings: The same year the Patent was granted and then assigned to Orikan by SARB, Orikan brought proceedings against VMS for infringement of the Patent, and VMS cross- claimed for revocation.

Orikan’s interlocutory application for stay (based on Anshun estoppel) or strike (based on abuse of process) which we report on here was based on VMS’s cross-claim for revocation raising invalidity grounds in the 2022 Orikan Infringement Proceedings (these proceedings) which it had not previously raised in the 2016 opposition proceedings or the two subsequent appeals, in which it challenged the same Patent.  Importantly, there was substantial overlap between the invalidity grounds raised in this revocation cross-claim and that in the 2012 innovation patent proceedings.

Orikan’s application was unsuccessful and it did not appeal the decision.

Key Issues

Anshun estoppel is a common law principle that precludes a party from raising an issue of fact or law in a subsequent proceeding, if the later proceeding was “so connected with the earlier proceeding that it would have been unreasonable” not to raise the issue in that earlier proceeding.  Anshun estoppel will only apply if the issue could have and should have been raised in the earlier proceeding.  The question for the Court is whether it was “unreasonable to defer” the challenge, which depends “not so much on legalities, but on practicalities” (paragraph 27).

VMS accepted that it could have raised the current particulars of invalidity in the 2016 opposition proceedings, but not that it should have.  VMS submitted that employing the various avenues to challenge validity made available under the Patents Act 1990 (Cth) should not count against it.  VMS argued that it was not unreasonable to have relied on more limited grounds in the initial opposition before the Patent Office, as compared to the more ‘expansive approach’ taken in the cross-claim in both these proceedings and the 2012 innovation patent proceedings, submitting this was in fact an efficient use of judicial resources.

The Court has power under r16.21(1)(f) of the Federal Court Rules 2011 (Cth) to strike out proceedings for an abuse of process.  The Court made clear that there is no hard and fast rule; rather a broad, merits-based judgment is required, taking into account public and private interests and all the facts of the case and facilitating efficient resolution of disputes.

Orikan’s application for the strikeout was based on the time, cost and inefficiencies arising from the invalidity cross-claim in these proceedings being the fourth challenge to the validity of the Patent, and having already challenged the validity of the same subject matter in the 2012 innovation patent proceedings.  VMS submitted that the Patent assignment from SARB to Orikan occurring between the Federal Court decision in the 2016 opposition proceedings and these proceedings meant that neither had suffered harassment or unjustifiable oppression.  It again made the argument that it was not unreasonable to rely on different statutory routes to challenge the validity of a patent.

Outcome

The Court held that no Anshun estoppel operated to prevent VMS running its invalidity cross-claim.  First, there was no risk of inconsistent judgments, since if VMS were to succeed in the cross-claim, it would be on a different basis to any decision in the 2016 opposition proceedings.  Further, any cost relating to the additional particulars was not in fact additional, since Orikan’s position was essentially that they should have been raised anyway, only earlier.

The Court held there was no abuse of process for the same reasons.

Implications

The question of whether Anshun estoppel operates to prevent a subsequent validity challenge following a failed opposition under the pre-RTB Act was answered in the negative by the Full Court in Genetics Institute Inc v Kirin-Amgen Inc [1999] FCA 742.

The pre-RTB standard of proof required for oppositions and appeals to the Federal Court (‘practically certain’) then differed from that required in revocation cases (‘balance of probabilities’).  But the standard of proof required in oppositions and appeals post-RTB (‘balance of probabilities’) is now aligned with that required in a revocation suit.  Therefore, notwithstanding Genetics Institute, the question of whether Anshun estoppel would operate post- RTB has been one for Australian patent lawyers to debate since the RTB reforms came into effect.

In this case, a single judge of the Federal Court considered – for the first time post-RTB – whether Anshun estoppel operates to prevent a party raising in a revocation cross-claim arguments not raised in a previous opposition or Federal Court appeal from the opposition decision.  In finding that no Anshun estoppel exists, and despite the same standard of proof applying, it was significant that the revocation challenge was in defence to an infringement allegation.  Anshun estoppel did not prevent a revoker holding back arguments from an opposition and any subsequent appeals, keeping them “up its sleeve” for a subsequent revocation challenge as a “shield” to an infringement suit.

The Court left open whether the answer would be different for a revocation suit other than by cross-claim.  Because VMS had not previously raised these substantive arguments, legal questions relating to the applicability of issue estoppel and res judicata (in short, “asked and answered”) were saved for another day.

The distinction the Court drew between a revocation challenge initiated by the revoker (which remains an open question) and a revocation case as a “shield” to an infringement suit (which the Court addressed here) seems, with respect, to be splitting hairs.

About Pearce IP

Pearce IP is a boutique firm offering intellectual property specialist lawyers, patent attorneys and trade mark attorneys to the life sciences industries (in particular, pharmaceutical, biopharmaceutical, biotech, ag-tech and food tech).  Pearce IP is the 2021 ‘Intellectual Property Team of the Year’ (Lawyers Weekly Australian Law Awards) and was shortlisted for the same award in 2022.  Pearce IP is ranked in IAM Patent 1000 and Managing IP (MIP) IP Stars, in Australasian Lawyer 5 Star Awards as a ‘5 Star’ firm, and the Legal 500 APAC Guide for Intellectual Property.

Our leaders have been recognised in virtually every notable IP listing for their legal, patent and trade mark excellence including: IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WIPR Leaders, 5 Star IP Lawyers, Best Lawyers, and Australasian Lawyer 5 Star Awards, and have been honoured with many awards including Australian Law Awards – IP Partner of the Year, Women in Law Awards – Partner of the Year, Women in Business Law Awards – Patent Lawyer of the Year (Asia Pacific), Most Influential Lawyers (Changemaker), among other awards.