07 February 2011

Innovation Patent Claims Once Again Construed Narrowly

Australian Mud Company Pty Ltd v Coretell Pty Ltd [2010] FCA 1169 (29 October 2010)

Claim construction – meaning of ‘device’ – whether ‘core orientation device’ is a unitary tool or may be in multiple parts

We have commented previously that the price to be paid for the near-invulnerability of the Australian innovation patent to invalidity attacks based on lack of ‘innovative step’ may be a corresponding tendency for the claims to be interpreted more narrowly. 

There is nothing in the Australian Patents Act authorising any difference in treatment between the claims of a standard patent, and the claims of an innovation patent.  However, it is not uncommon in a patent dispute that makes it as far as the Federal Court for key issues to be finely-balanced.  If this were not so, the parties would most likely have settled the dispute earlier, rather than both sides believing that they may prevail in court.

Claim construction is just such a key issue.  A broad interpretation of claim terms makes infringement more likely, but also increases the likelihood that the claim is invalid when compared with the prior art.  Conversely, a narrow interpretation may allow an alleged infringement to escape the scope of the claim, even though the claim is valid.  The parties to a patent dispute will therefore often argue for alternative constructions of the claims, and in a finely-balanced case the Court’s decision could go either way.

All else being equal, it may well be open to the Court – as perhaps in this case – to fall on the side of a narrower construction when dealing with an innovation patent.

BACKGROUND

The Australian Mud Company Pty Ltd ('’Australian Mud’) is the patentee of Innovation Patent 2006100113 entitled ‘Core Sample Orientation’ (‘the Patent’).  The Patent has a priority date of 3 September 2004 and was certified on 20 July 2006.  The invention is an ‘orientation device’, which is used for determining the down-hole orientation of core samples taken during drilling operations, typically in the mining industry.

Coretell Pty Ltd (‘Coretell’) and Mincrest Holding Pty Ltd (‘Mincrest’) were distributing  two core orientation tools, both of which Australian Mud alleged infringed the Patent.  The parties agreed that there was no relevant difference between the two tools, and that therefore either both or neither tools were infringing the Patent.

While Coretell and Mincrest denied that their core orientation tools took any of the claimed features of the Australian Mud invention, ultimately the main difference between the accused tools and the device described in the patent specification (and sold by Australian Mud) is that the accused tools comprise two separate components, whereas the Australian Mud tool  consists of a single component.

For our purposes it is sufficient to understand that the patented tool includes the necessary orientation-sensing and processing electronics within one unit, which is inserted into the bore during sampling, while the accused tool comprises a simpler ‘in-bore’ component, which communicates wirelessly with a separate handheld component that performs some of the processing functions of the patented tool.

The decisive issue turned out to be whether the claims of the Patent cover a multi-part tool.

IS A ‘DEVICE’ NECESSARILY UNITARY?

Claim 1 of the Patent relevantly includes the following terms:

An orientation device … comprising
  1. means for determining and storing the orientation of the device at predetermined time intervals relative to a reference time, …
Much expert evidence was led on both sides regarding the identity and background of the relevant ‘person skilled in the art’, and how this person would interpret the term ‘device’ in the context of the field of technology and in light of the specification and claims. 

After much deliberation, the court (Justice Barker) conclude (at [85]):

I consider the resolution of this construction issue to be finely balanced. However, in the result, I consider the literal construction [that the ‘device’ is unitary] contended for by the respondents is neither contrived nor in defiance of common sense. It also, in my view, is the construction that best sits with established construction principles.

In this regard, the Judge was influenced not only by expert testimony that a ‘device’ would normally be understood as denoting a single integrated unit, but also by the specific language of the claim.  In particular, if the ‘orientation device’ of the preamble could comprise multiple parts, this would create issues in the construction of ‘the orientation of the device’ in the first integer of the body.  How could a multi-part device have a definite orientation?  And would ‘the device’ in the body of the claim necessarily coincide with ‘the orientation device’ of the preamble?  There is nothing in the specification, which describes only a unitary device, that could resolve these potential ambiguities.  (See paragraphs [86]-[89].)

The court concluded, therefore, (at [89]) that the claims must literally encompass only a unitary implementation, and thus the accused tools avoided infringement.

MATERIAL VARIATION?

Unsurprisingly, in the circumstances, Australian Mud also pressed the argument that even if literal infringement might be avoided, the Coretell tool was nonetheless an immaterial variation of the claim invention that could be captured by a ‘purposive construction’ of the claims.

Although the court was not persuaded of the relevance of this approach to this case, it is precisely the kind of issue upon which appeals are founded, and so the decision goes on to discuss (at some length – paragraphs [90]-[108]) the ‘material’ nature of the differences between the patented device and the Coretell tool.

The respondents’ case in favour of the accused tool was built largely on identifying advantages, or improvements, provided by a two-part tool.  We would note that this is more properly the test for ‘innovative step’, i.e. whether the differences between the Coretell tool and the patented device (viewed as prior art) have a material effect on the way the tool functions.  However, the fact that the Coretell tool might itself have been the subject of a valid innovation patent is not, in itself, relevant  to the question of infringement.  After all, many patented improvements nonetheless fall within the scope of patents covering the improved product.

When assessing infringement, therefore, the question is more properly framed in terms of the specification and claims, without reference to the allegedly infringing article.  This was recognised by the court, which stated (at [106]):

It may be argued, however, that the benefits provide examples of why a two part device is a material variation on a one part device. But this question rather begs the question whether the invention described in the Patent is constituted of one part or two parts. If the invention so described were not limited to one part, and could be realised in more than one part (such as a two component device, along the lines of that realised in the Coretell Equipment), then to identify the benefits of the two part device that is constituted by the Coretell Equipment would be beside the point. In my view, the identification of those benefits would not, of themselves, in my view, in such circumstances disclose any material variation from any of the essential integers or essential features of the invention as described.

This is, perhaps, not the most eloquent possible expression of the point, and it veers dangerously close to circularity.  But it is, we think, the correct view.

COMMENT

As we noted at the outset, there appears to be an emerging correlation between the relative invulnerability of innovation patents, i=on the one hand, and a certain narrowness of scope of the other.

There are, in fact, some quite sound policy reasons why this may be a good thing, even though the legislature never actually signalled this as an express intention.  Innovative step is a much lower threshold of validity than inventive step, and yet innovation patents provide up to eight years of monopoly rights giving the patentee exactly the same remedies – including injunction – as a standard patent.  There is something, therefore, to be said for limiting the scope of an innovation patent, where reasonable, to something that is more commensurate with the incremental advance required to support an innovative step.

We cannot help wondering, however, whether the outcome in this case could have been different with only a minor variation in the claim language, that would probably not have altered an examiner’s view of the claim scope.  For example, the claim might have referred to an ‘apparatus’ or a ‘system’, rather than a ‘device’.  And it may further have referred to ‘an orientation of the apparatus/system’, rather than ‘the orientation…’

Indeed, in our view both of these variations represent preferred drafting style, even if the drafter did not consider the possibility of a multi-part implementation.

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