England and Wales High Court (Patents Court) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

		HC 13 B 01040 The Rolls Building 7 Rolls Buildings Fetter Lane London EC4A 1NL
		22/11/2013

MR. JUSTICE BIRSS :

1. This is a patent case. The patents are owned by Battelle Memorial Institute. The patents have an exclusive licensee, which is Velocys. The patents relate to methods of synthesizing crude oil. The methods employ gas to liquid technology, using Fischer-Tropsch synthesis. The patents relate to catalyst structures and methods of carrying out the reaction.
2. CompactGTL is a rival company working in the same field. They have a gas to liquid pilot plant in Wilton, Cleveland in the North East of England. They have delivered a demonstration plant to Petrobras in Brazil. It is convenient to refer to the two sides in this case as CompactGTL and Velocys.
3. The first action began as an action brought by CompactGTL against the Velocys parties for unjustified threats of patent infringement and revocation of seven patents. The seven patents are EP(UK) 1 281 922, 0 862 493, 0 772 756, 1 093 398, 1 102 628, 1 206 509 and 1 206 508.
4. In the second action Velocys have sued CompactGTL for infringement of two of the seven patents. The two patents are EP (UK) 1 206 508 and 1 206 509.
5. Velocys contend that the processes used at Wilton infringe the process claim and that the catalysts used at Wilton infringe the product claims of those two patents. CompactGTL deny infringement and contend the patents are invalid.
6. On 10th June 2013, the case came before me for a case management conference. The parties were agreed about some aspects of how to take the dispute forward. The infringement action in relation to the '508 and '509 patents, along with the claims for revocation of those patents and the issue of unjustified threats, could be conveniently heard together in one trial. The remaining issues of revocation of the other five patents and declarations of invalidity on those patents could be stood over to be heard after the main trial.
7. However, it was clear at that stage that the issues were not well defined. This was for two reasons. First, CompactGTL did not understand the basis of elements of the infringement case being put by Velocys and had served a Request for Further Information. The initial response did not answer most of the questions asked. Second, Velocys were contending that it was a case in which there was a real likelihood that experiments would be required. That remained to be seen.
8. Accordingly, I took the unusual step of directing that the case should return to the Patents Court for a review hearing at the end of November 2013. The timetable was organised so that important steps to clarify the issues would have taken place before the hearing. In particular, Velocys would answer the Request for Further Information in the meantime and would identify which claims were independently valid. There would be disclosure of the Product and Process Description. The date for Notices of Experiments was set for 28th October with the parties to come to court for directions if a Notice was served.
9. The advantage of arranging in June that the case would return to the court in November is that the parties would know that they would be back in court at that stage. It would have the effect of encouraging them to adhere to the timetable. It would not really be adding to the burden or cost of the case since experiments were likely to necessitate such a hearing in any event.
10. In addition, I encouraged but did not order the parties to exchange further information about the nature of their cases. Once CompactGTL had understood the case of infringement against them, it would make it possible for them to articulate their invalidity case with more specificity. That would not require the sort of detail one would expect in a skeleton argument for trial. For example, considering novelty, they should be able to identify in the prior art where the claim features were to be found and for inventive step they would be able to say which claim feature is alleged to be obvious over which reference.
11. Part of the reason for taking this course was the following. In the High Court Patents Court pleadings are formulaic. They never explain a party's case. The result is that the first time one often sees how a patentee construes the claim or how a defendant construes the prior art is in the experts' reports. But the experts' reports are not a good medium for doing this. For one thing, it is not always a matter for the experts. For another, why should the expert attempt to address issues like inventive step of a claim without understanding, at least to some extent, what the patentee says the scope of the claim is? Experience in the past in patents has shown that lengthy expositions on construction at an early stage in cases were unhelpful. However, in the Patents County Court for the last three years I have seen that requiring a patentee to break down its claim into features and say where the alleged infringing features are to be found in the alleged infringement is very helpful. It does not prejudice patentees or significantly increase costs. Equally, the same thing from a defendant challenging validity is helpful; identifying in novelty cases where the claimed features are in the prior art and in inventive step cases identifying what is said to be obvious.
12. Now the matter comes before me on this review hearing, there have been three important developments:
13. First, despite being ordered to answer Request for Further Information, CompactGTL says that Velocys have not done so in critical respects. I will turn to that below.
14. Second, despite the timetable for providing on 28th October a date for Notice of Experiments, Velocys have said in correspondence that they reserve their position as regards experiments. At least at one stage in the correspondence they were indicating that they had not yet decided whether to serve a notice or not. CompactGTL say that that is not appropriate. Things have now changed. The position before me now is that Velocys are not seeking any extension of time for the date for Notice of Experiments.
15. Third, in relation to independently valid claims, in the specification of the '508 patent there are eight claims and in the '509 patent there are 13. Velocys have identified which claims they say are independently valid. Of the 21 claims which could be in issue, 19 are said to be independently valid. In their skeleton argument CompactGTL said this was unhelpful.
16. A trial date has also now been set. The trial is due to be heard in July 2014. CompactGTL seek the following orders: First, an unless order requiring provision of proper responses to the Requests for Further Information; second, an unless order requiring that unless Velocys serves a Notice of Experiments by 16th December they will be debarred from relying on experimental evidence; and third an order that Velocys identify the inventive steps they rely on.
17. Leaving to one side for a moment the Notice of Experiments, to which I shall return, before me Mr. Lykiardopoulos, who appeared for CompactGTL, said these orders were appropriate. As regards the first one, he says that the response to the Request for Further Information has failed to comply with the order.
18. Velocys say they have not failed to comply with the order. If one looks at the second Response Velocys did provide, part of their reason for not answering some of the questions was because Velocys contended they had no obligation to set out their case on construction of the patents. Before me Mr. Purvis, who appears for Velocys, has indicated (as was indicated in correspondence in a letter from Velocys' solicitors on 20th November) that they are prepared to provide further information in relation to their infringement case, but they say no unless order is appropriate because they are not in breach of the previous order.
19. As regards the third part of the order, relating to validity, Velocys rightly point out that no order was ever made requiring them to do anything about validity, save to identify independently valid claims, which they have done. They are prepared to produce a document, within 28 days, which provides a breakdown of the relevant claims in issue, relative to each of the prior art documents so as to identify the inventive step over the pleaded prior art.
20. As regards experiments, Mr. Purvis submits that no order should be made at all, certainly not one barring one side (Velocys) but not the other (CompactGTL).
21. Before I deal with those submissions, I need to stand back and look at this more generally. My experience of the High Court in patent litigation in the last few months is that it has involved numerous late and very late applications to deal with late changes to the parties' cases. While late amendments have always been a feature of all litigation, I must say my own experience is that they seem to be more common now than they used to be. I do not know why that is, but it seems to be a result of parties playing their cards as close to their chest for as long as possible until very close to trial. Then in the run up to trials the parties finally start thinking properly about the issues and realise that adjustments, sometimes radical adjustments, have to be made. I can refer to three particular cases in the last two months: HTC v Nokia, ASSIA v British Telecom and Smith & Nephew v ConvaTec. All three are major pieces of patent litigation with trials in October or November 2013. All three involved very late applications to amend, which were highly contentious and highly disruptive.
22. Turning to the patents in this case, claim 1 of the '508 patent is a method claim. It says as follows:

"A method of Fischer-Tropsch reaction, comprising the steps of:

"(a) providing a catalyst structure having a first porous structure with a first pore surface area and a first pore size of at least 0.1 µm;

"a porous interfacial layer with a second pore surface area and a second pore size less than said first pore size, said porous interfacial layer disposed upon said pore surface area; and

"a Fischer-Tropsch catalyst selected from the group consisting of cobalt, ruthenium, iron, nickel, rhenium, osmium and combinations thereof placed upon said second pore surface area; and

"(b) passing a feed stream having a mixture of hydrogen gas with carbon monoxide gas through said catalyst structure and heating said catalyst structure to at least 200° C at an operating pressure, said feed stream having a residence time within said catalyst structure less than 5 seconds, thereby obtaining a product stream of at least 25% conversion of carbon monoxide, and at most 25% selectivity toward methane."

23. One feature of the claim is the requirement for a feed stream to have a residence time within the catalyst structure of less than 5 seconds. CompactGTL deny that their method involves a feed stream having a residence time of less than 5 seconds. They have produced a Product and Process Description. Their case is that their residence time is longer than five seconds. They do not understand the basis for the case put against them.
24. In the '509 patent, claim 1 is a product claim. It says as follows:

"A catalyst structure for Fischer-Tropsch synthesis, comprising:

"said catalyst structure comprising a first porous structure with a first pore surface area and a first pore surface area and a first pore size of at least 0.1 µm;

"a buffer layer disposed on said porous structure;

"a porous interfacial layer with a second pore surface area and a second pore size less than said first pore size, said porous interfacial layer disposed upon said buffer layer;

"a Fischer-Tropsch catalyst selected from the group consisting of cobalt, ruthenium, iron, rhenium, nickel, osmium and combinations thereof placed upon said second pore surface area."

25. It can be seen that it calls for a catalyst with a number of elements. CompactGTL deny that their catalyst has these elements. Also they say that if their catalyst does, then the claim must cover the prior art or be obvious as a result.
26. The relevant questions which went to these issues in the request for further information were the following.

For the 508 Patent:

"Of paragraph 1 and paragraphs 3.1 and 3.2 of the Particulars of Infringement:

"3. Please identify the processes relied on as being claimed in at least claims 1, 2, 4 and 6 of the 508 Patent. In particular please identify:

"(a) the 'catalyst structure' which it is alleged is used in the alleged infringing processes;

"(b) the 'first porus structure' which it is alleged the catalyst structure comprises;

"(c) the 'pores' which are alleged to exist in the said first porus structure;

"(d) the 'porus interfacial layer' which it is alleged is disposed on the 'first pore surface area';

"(e) the 'pores' which are alleged to exist in the said porous interfacial layer;

"(f) the Fischer-Tropsch catalyst which it is alleged is placed upon the 'second pore surface area';

"(g) the basis for asserting that the process conditions relied upon fall within the claims alleged to be infringed including the required degree of conversion of carbon monoxide and selectivity towards methane."

For the 509 patent:

"5. Please identify the products relied on as being claimed in at least claims 1-4, 6, 7 and 15 of the 509 Patent. In particular please identify:

"(a) the 'catalyst structure' which it is alleged has been imported, used and kept in the United Kingdom;

"(b) the 'first porous structure' which it is alleged the catalyst comprises;

"(c) the 'pores' which are alleged to exist in the said first porous structure;

"(d) the 'buffer layer' which it is alleged is disposed on the said porous structure;

"(e) the 'porous interfacial layer' which it is alleged is disposed upon the said buffer layer;

"(f) the 'pores' which it is alleged exist in the said porous interfacial layer;

"(g) the Fisher-Tropsch catalyst which it is alleged is placed upon the said 'second pore surface area';

"(h) the basis for asserting that the alleged infringing catalyst structure has a porous structure with a geometry claimed in claim 2;

"(i) the basis for asserting that the process conditions relied upon fall within the claims alleged to be infringed including the required degree of conversion of carbon monoxide and selectivity towards methane."

27. Velocys had not answered these questions before 10th June, but the order of 10th June said as follows:

"Velocys shall, by 22 July 2013, provide full particulars in response to each and every one of the requests for clarification and/or additional information made in CGTL's Request For Further Information as served on 18 April 2013."

28. In the response which Velocys provided on 22nd July, it is fair to say, as Mr. Purvis pointed out, that further details of the patentee's case on infringement are set out. However it is clear that the patentee has not made any attempt to identify, in relation to the catalyst, the particular elements of the catalyst which the request explicitly sought identification of. Velocys' reason for not doing this is set out in the second paragraph on page 5 of the Response to the Request which says as follows:

"The above plant structure is such as to fall within the claims of the patent identified in the request above. The various elements of CompactGTL's plant sufficient to enable CompactGTL to identify the issues in dispute are set out above. It is neither necessary nor appropriate to argue issues of construction (such as whether holes in the catalyst structure which allow the feed gas to flow through the reactor formed by the corrugations in the structure constitute pores within the meaning of the claim) at this stage in the proceedings."

29. In relation to the question of the process, and in particular of the residence time, Velocys' answer is as follows:

"So far as Velocys is aware CompactGTL has not made public any details of its process conditions in the FT reaction. However it infers from patent information that has been made available in relation to both the SMR and FT reactors as well as other publicly available information that the process conditions of the FT reactor described above would be such as to fall within the scope of the claims. By way merely of example, the SMR reactor process described in Accentus WO03048035A1 (and the reactor described therein is consistent with that described in the CompactGTL material outlined above) specifies a residence time of less than 0.5secs and preferably 20-100 msec, showing that reactors on this construction are capable of such reduced contact times, and that the system comprising both the SMR and FT reactors is operated with a high feed gas throughput and correspondingly low residence time."

30. As regards residence time, it is fair to say that at the time that Velocys were answering these questions they did not have the benefit of the Product and Process Description. But the Product and Process Description has now been served. Velocys can now see what residence time CompactGTL say their process is using. CompactGTL say that if Velocys' case is really just based on an inference from the patent referred to, then they wish to apply to strike it out. That is one reason why they need to know and understand the basis of Velocys' case on the process. CompactGTL also say that Velocys are in breach of the order.
31. Velocys contend they are not in breach of the order. First, I can deal with the question on the process. Velocys are not in breach of the order as regards the elements of the Request for Further Information which related to the process. It is perfectly understandable why they have said what they said. They put forward a proper case to explain the basis of their allegation that the CompactGTL method infringed. They said an inference could be drawn from a patent and indeed in other passages which I have not read out. They explain why it would be reasonable to draw that inference in relation to CompactGTL.
32. However, I do not understand how it can be said that Velocys are not in breach of the order in relation to the details of the catalyst. The Request for Information was perfectly clear. They were asked to identify various elements of the structure, which I have set out above. The Response to the Request for Information simply does not do so. It is quite true this was at a time before the Product and Process Description was served, but that is not the reason that was put forward in the Response to the Request for Information for why that has not been done. The reason given is the reason I have set out above. They asserted that it was not necessary or appropriate to argue issues of construction. Even if that was true as an observation, it is a point that should have been made at the CMC in June and is not a reason for not providing the information which they were ordered to provide.
33. Apart from anything else, the patentee must have some reason for contending that the catalyst in question has these various features, otherwise it has no basis to bring the infringement case at all. To identify which bits of the catalyst are relied on would not be difficult. It would not have required a full skeleton argument or a lengthy exposition of construction of a patent; all I expect it would have required is a few paragraphs probably with a picture labelled in an appropriate way. It seems to me, therefore, that Velocys are in breach of the order that I made at the CMC.
34. Velocys accept that an order to provide further information should be made. The question is whether, as CompactGTL submit, it should be on unless terms.
35. The factors that I bear in mind are these. First, although they are in breach of the order in relation to the product, they are not in breach of the order in relation to the process. Moreover, Mr. Purvis says that his clients did their best in the absence of the information in the Product and Process Description. Given that information, they are now in a better position to do it than they would have been at the time. I accept that latter point.
36. Mr. Purvis also says, and I accept, that an order in unless terms which requires a party in a case like this to set out full particulars of his case, is apt to create further disputes. I think Mr. Purvis is right about that. The difficulty with an order requiring full particulars in this case is that it will always possible to say later that full particulars have not been provided. If the order was covered by an unless order, that would create the possibility that the other party could come to court and say that the entire proceedings had already been struck out simply as a result of an argument about whether full particulars had been given or not. For these reasons, I will not require Velocys to provide further information subject to unless terms.
37. Mr. Lykiardopoulos also submitted that the 28 day period Velocys sought for this provision of information was too long. I do not agree. Velocys did not deliberately breach the order. They believed that they were not required to produce the information that they required. They now understand that the information needs to be provided and they should be given a proper opportunity to do it. Since they have indicated they will be able to do it in 28 days, it seems to me that that is a fair and proper order to make.
38. The order proposed by Velocys provides:

"Velocys do set out a summary of its case on infringement by providing a breakdown of the integers of the relevant claims of European patents EP(UK) 1 206 508 and EP(UK) 1 206 509 (the patents) in issue relative to the alleged infringement,"

39. Mr. Lykiardopoulos submitted that this was insufficient because it did not refer back to the questions that had been asked in the request for further information at paragraphs 3, and 5 and 6. I agree with Mr. Lykiardopoulos that the wording of the order needs to include a reference to those further paragraphs. I will make an order incorporating Mr Lykiardopoulos' proposal in relation to the first application before me from CompactGTL.
40. The second matter relates to experiments. Since I have no application before me for an extension of time, there is very little that I need to say about this. I will, however, observe that this hearing was scheduled specifically in order for there to be an opportunity, in court, after the date which had been set at the CMC, for any Notice of Experiments which had been filed to be considered and dealt with. Since no application for an extension of time has been made, I will not grant one.
41. However, it bears emphasising that, as far as I am concerned, the parties, and that applies just as much to CompactGTL as it does to Velocys, are now past the point in these proceedings when any Notices of Experiments were due. All the information which they needed to have in order to make that decision was provided for in the CMC and they have had that information and not sought to put in experimental evidence.
42. I also bear in mind this. The trial is now due in eight months time. Although eight months may seem like a long time, if experimental evidence was to be put into proceedings of this kind, then eight months is not long at all. That is why the date for the Notice of Experiments was 28th October of this year. I must say I find it very hard to believe that save in very exceptional circumstances, either party would now be permitted to rely on experimental evidence in this case.
43. Finally, that leaves the issue of validity. As CompactGTL recognise, it cannot be said that Velocys are in breach of any order. It is true, as CompactGTL point out, that, at the hearing before I encouraged both sides to exchange information. CompactGTL are right that the idea was supposed to have been that more information than did emerge was meant to have come in the Response to the Request for Further Information. That would then have allowed CompactGTL to have explained in more detail their case on validity, and it would also have allowed, if it had been possible or if they had been willing to do so, the patentees (Velocys) to explain more about their case on infringement. However, I did not order either party to go further in that way. It would therefore be wrong to make a peremptory order.
44. Nevertheless, it is quite clear that further details on both sides' cases need to be explained. I say "both sides" for two reasons. Mr. Purvis rightly points out that there was a Notice to Admit Facts which was served with a date for response in the summer. In that Notice to Admit Facts, Velocys broke down their claims into various features and asked CompactGTL for admissions as to whether their process did or did not have various elements.
45. Mr. Lykiardopoulos for CompactGTL explains that the reason why his client's response, which was almost entirely to one of non-admission, was because they had not had a proper Response to the Request for Further Information. I sympathise with Mr. Lykiardopoulos' clients' position to this extent. In relation to the qualities of the catalyst, it is quite true that there was no proper response. That justifies CompactGTL's response to the Notice to Admit in relation to the product.
46. However, subsequently CompactGTL have served a full Process and Product Description and have explained their case on validity in a witness statement of Ms. Zoe Butler. That is a helpful document which has articulated many details of CompactGTL's validity case. It also explains the following in paragraph 18:

"It is not in dispute that the accused CGTL process performs a Fischer-Tropsch reaction. Further, heating a Fischer-Tropsch catalyst structure to at least 200 degrees C and obtaining a product stream of at least 25% conversion of carbon monoxide, and at most 25% selectivity toward methane, is, I am informed by CGTL, standard practice, and it is not in dispute that the CGTL Process operates under these conditions. However, the CGTL Process is not within the claimed residence time of less than 5 seconds. It is CGTL's case, therefore, that the CGTL Process clearly does not fall within claim 9 of the 509 patent."

47. Since it was manifestly the case from this paragraph that CompactGTL were able to say what they have said there in relation to the process without the further information they sought from Velocys in relation to the case on infringement, I cannot see any good reason why they were not able to make the same admissions when they responded to the Notice to Admit. What this demonstrates, as Mr. Purvis submitted, is that CompactGTL should themselves revisit the admissions that they are prepared to make. Plainly, they should be able to admit the matters in Ms. Butler's statement. Indeed, as Mr. Purvis also submitted, it seems highly likely in the circumstances, given the nature of this case and the claims, that further admissions can be made by reviewing the matter of the product and process description as against the notice to admit.
48. I will make the order suggested by Velocys, which requires Velocys to provide a breakdown of each of the relevant claims in issue here relative to each of the prior art documents in issue so as to identify the inventive step of the patents over the pleaded prior art. That will be in 28 days. At the same time, I will require CompactGTL within 28 days to serve another version of their response to the notice to admit.
49. Finally, on the issue of validity, I will say this. Velocys has said that 19 claims of the two patents are independently invalid. It is entitled to do that -- maybe they are -- but I must say experience shows that it is unlikely. It is hard not to draw the inference that what has happened is a patentee has again tried to hedge its bets and not be forthcoming about this case. Given the large number of claims which the patentee is relying on, that is all the more reason why a statement of case of the kind which the patentee has indicated it will give in this case will be appropriate. For those reasons, I will make the orders I have indicated.
(See separate transcript for proceedings after judgment)