Federal Court Shines Light on Patent Litigation Case Management

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.

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