Biosimilars Deals 2021

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.

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.

QIP Nominees Pty Ltd v Marlow Foods Limited [2023] APO 19

17 April 2023

Australian Patent Office

Felix White

Highlight

This Patent Office decision on a post-RTB patent provides a useful overview of the steps involved in assessing patent validity, and specifically on law on sufficiency and support for post-RTB patents, and the importance of correctly identifying the inventive concept of the patent.

Background

Marlow Foods Limited (Marlow) was the applicant for Australian patent application no 2016211049, directed to an edible formulation comprising edible fungal particles of the filamentous fungus Fusarium and calcium ions, including 0 wt% of components derived from animals.  QIP Nominees Pty Ltd (QIP) filed a pre-grant opposition pressing the grounds of lack of manner of manufacture, inventive step, support, sufficiency, disclosure of best method, clarity and utility at the hearing.

The patent office found for the opponent, determining that most claims in the application lacked inventive step, a decision which was not appealed.  Dependant claims to the presence and amount of acetate were upheld and the patent proceeded to grant on 2 November 2023.

Key Issues

As the application was filed after 15 April 2013, the Patents Act 1990 (Cth) in its post-Raising the Bar (RTB) form applied.

The patent description stated that edible filamentous fungi had been previously used as meat substitutes, in formulations incorporating egg albumin as a binder so as to replicate the appearance and texture of meat.  The parties diverged as to problem to be solved by the invention, sometimes referenced as the “useful result” or the “outcome to be sought”, which is critical to the determination of inventive step according to the reformulated Cripps question.

The patent applicant Marlow characterised the problem to be solved as replacing egg albumin as a binding agent to produce a vegan variation of existing Fusarium products.  The opponent QIP submitted three alternative characterisations of the problem to be solved:

1. supplementing a vegan foodstuff with calcium;
2. no problem to be solved; and
3. providing firmness to a vegan foodstuff with alginate as a gelling agent.

Outcome

Inventive step

The Delegate outlined the modified or reformulated Cripps question as one way of assessing inventive step (as endorsed by the High Court in Alphapharm¹), namely:

Would the notional research group at the relevant date in all the circumstances directly be led as a matter of course to try [the claimed invention] in the expectation that it might well produce [the desired result]?

He also referred to the Full Federal Court decision in Nichia², explaining that the desired result may also be characterised as the problem to the solved, and must be commensurate with the whole scope of the claims.

The Delegate found that the breadth of the claims encompassed a variety of products, including those containing only a small amount of the fungus (given the absence of any lower limit in the claims), vegan variations of existing Fusarium meat substitutes, and even intermediates or components used in the manufacture of such products.  As such, he considered Marlow’s approach to characterising the problem to be solved too narrow as it would not apply across the full scope of the claims, and at most would be relevant only to the examples.  The Delegate preferred QIP’s approach.

The key prior art document cited in the proceedings disclosed foodstuffs comprising edible filamentous fungi (including Fusarium), and hydrocolloids, preferable egg albumin or an alginate gel comprising calcium ions.  In applying the Cripps question to Marlow’s formulation of the problem to be solved, the Delegate found at least claim 1 obvious.  The Delegate found the obviousness position even stronger when applying at least one of QIP’s formulations of the problem: supplementing a vegan foodstuff.

The Delegate found that most of the remaining claims (all of which depend from claim 1) failed to contribute an inventive step: limitations to the amount of calcium were drafted in terms of amounts relative to the amount of fungi, or were otherwise not significant (amounts of other components, properties of the packaging or Fusarium, or methods of making the composition).  Certain dependent claims to the presence an amount of acetate were held to be inventive as they were stated in the specification to counter the disagreeable taste of calcium chloride.  The Delegate found that palatability was a technical problem and that no evidence had been led as to disclosure of acetate for this purpose in the prior art.

Sufficiency and support

The Delegate noted that both parties referred to Burley J’s decision in Merck³, the first Federal Court decision to consider the post-RTB support requirement, including his Honour’s restatement of principles derived from the decision of the Supreme Court of the United Kingdom in Regeneron⁴.

However the Delegate found these principles to be directed to a claimed invention which defines a product by its properties (specifically a range of features, as was the case in Regeneron) rather than a product defined simply by its constituent parts, as in the patent the subject of these proceedings.  (The application of these principles to an invention where a range of features is relevant is discussed in more detail in our summary of the Full Federal Court’s decision in Jusand Nominees Pty Ltd v Rattlejack Innovations Pty Ltd on page).

According to the Delegate, the main issue for support was identification of the technical contribution of the application, said by Burley J in Merck to be the ability of the skilled person to make the product itself.   The With little discussion, the delegate found that QIP had not made out this ground of opposition.

The Delegate restated the test for sufficiency as endorsed in Merck:  Can the skilled person readily perform the invention over the whole area claimed without undue burden and without needing inventive skill?

QIP submitted that the starting material of mycoprotein paste (Fusarium mixed with calcium ions) was not commercially available.  The Delegate found that there is no legal requirement that the examples can be reproduced exactly – only that all products within the scope of the claim will, if made, deliver the same general benefit promised.  As to that benefit, consistent with his finding on the problem to be solved the Delegate found that given the claims were broad enough to encompass a large number of embodiments the problem solved was also broad, and was not limited to specific functional limitations such as palatability or texture.   As a result the sufficiency opposition ground was not made out.

Remaining grounds

QIP failed on the remaining grounds of manner of manufacture, clarity, best method and utility.

Implications

Opposition decisions can be a useful, albeit brief, primer on patent validity grounds and the correct approach to them, including claim construction, identification of the field, the common general knowledge and the skills and knowledge of the person skilled in the art.   In particular this decision provides a useful overview of the law on sufficiency and support for post-RTB patents, and the importance of correctly identifying the invention the subject of the patent.

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[1] Aktiebolaget Hassle v Alphapharm Pty Ltd (1981) 148 CLR 262 at 286
[2] Nichia Corporation v Arrow Electronics Australia Pty Ltd [2019] FCAFC 2
[3] Merck Sharp & Dohme Corporation v Wyeth LLC (No 3) [2020] FCA 1477
[4] Regeneron Pharmaceuticals Inc v Kymab Ltd [2020] UKSC 27.

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.