Date:
20110817
Docket:
A-121-11
Citation: 2011 FCA 237
CORAM: NOËL
J.A.
PELLETIER J.A.
MAINVILLE
J.A.
BETWEEN:
PHOSTECH
LITHIUM INC.
Appellant
and
VALENCE
TECHNOLOGY INC.
Respondent
REASONS FOR
JUDGMENT
PELLETIER
J.A.
INTRODUCTION
[1]
This
is an appeal from the decision of Gauthier J. of the Federal Court (the trial
judge), reported as Valence Technology, Inc. v. Phostech Lithium Inc.,
2011 FC 174 (Reasons), which held that the appellant Phostech Lithium Inc’s.
(Phostech) P1 Process for the manufacture of lithiated iron phosphate (LiFePO4)
infringed the respondent Valence Technology, Inc.’s (Valence) Canadian Patent
no. 2, 395, 115 (the ‘115 Patent). The appeal raises no novel question of law;
it turns on the construction of a single claim of the ‘115 Patent and, in
particular, on the meaning of the word “carbon” in the claim. Phostech also
raises the issue of the validity of a second Valence patent,
Canadian Patent no. 2, 466, 366 (the ‘366 Patent).
[2]
For
the reasons which follow, I am of the view that the trial judge made no error
in concluding that the term “carbon” in claim 3 of the ‘115 Patent is not
restricted to particulate carbon, and encompasses carbon in other forms. I am also
of the view that Phostech’s request for a declaration of invalidity of the ‘366
Patent should be dismissed. As a result, I would dismiss the appeal with costs.
THE INVENTION
[3]
The
‘115 Patent deals with novel lithium mixed metal materials, which have useful
properties in the manufacture of lithium ion batteries, and with a novel method
of producing such materials. In this case, only the method is in issue.
[4]
The
trial judge summarized the invention taught in the ‘115 Patent as follows
(Reasons at para. 107):
[I]t appears that the
invention set out in the ‘115 Patent can be summarized as: an improved method
whereby selective CTR [or carbothermal reduction] is used to make lithium mixed
metal compounds (such as LiFePO4) that could contain conductive
carbons intimately mixed with the final product of the reaction. Thus a feature
of the invention is that carbon can have a dual role – enabling the use of
cheaper metal containing compounds with a valency that will be reduced by CTR
and increasing the conductivity of the end product.
[5]
The
term “selective CTR” refers to the use of carbon as a selective reducing agent
to reduce the oxidation state of the metal without reducing it to its elemental
oxidation state of zero. Not all metals are capable of existing in multiple
oxidation states. For example aluminum is binary and exists in either the 3+
state when oxidized or in its elemental oxidation state of 0 (Examination in
Chief of Dr. Dahn, Appeal Book at 8343). Other metals, such as iron, can exist
in a range of oxidations states. In the patented process, the selective
reduction of iron results in its reduction from the 3+ to the 2+ oxidation
state (depicted as Fe3+ and Fe2+ respectively) rather
than full reduction to its elemental state of Fe0. The advantage
obtained by this selective reduction is the ability to use less expensive
precursors in which iron is in the Fe3+ state.
[6]
Another
advantage of the invention noted by the trial judge is that, after the CTR
reaction, carbon remains in the final product and increases its electrical
conductivity.
[7]
While
the principles of carbothermal reduction were previously known, they had not
been applied in this context. The novel aspect of the ‘115 Patent, whose
validity was admitted, was set out at page 60 of the specification:
Principles of carbothermal
reduction have been applied to produce pure metal from metal oxides by removal
of oxygen. [references omitted]. Principles of carbothermal and thermal
reduction have also been used to form carbides. [references omitted]. Such
methods are not known to have been applied to form lithiated products or to
form products without oxygen abstraction from the precursor. The methods
described with respect to the present invention provide high quality products
which are prepared from precursors which are lithiated during the reaction
without oxygen abstraction. This is a surprising result.
[8]
The
patent deals at length with the selection of precursor materials and with
variations on the method taught in the patent. For our purposes, it is
sufficient to focus on the role of carbon in the process as the definition of
carbon is the main issue raised in the appeal.
[9]
The
‘366 Patent is a divisional patent flowing from the ‘115 Patent.
PHOSTECH’S P1 PROCESS
[10]
Phostech
manufactures lithium iron phosphate using a process whose details are the
subject of a confidentiality order. However, the trial judge’s public Reasons
for Judgment disclose sufficient details of the process for the purposes of
this appeal. (The parties to the trial received Confidential Reasons for
Decision in which the particulars of the P1 Process are disclosed).
[11]
Phostech
begins by mixing two precursor compounds in particle form and adding to that
mixture an organic compound which acts as a binder and assists in the formation
of pellets. This ensures that the compounds are in intimate contact during the
reaction.
[12]
The
pellets are placed in a kiln and exposed to high temperatures in an inert
atmosphere. At a point prior to the carbothermal reaction, the binder decomposes
leaving behind a carbonaceous residue. The temperature is further increased to
the point where carbothermal reduction occurs. The mixture is then cooled to
room temperature. The final product is LiFePO4.
THE FEDERAL COURT’S
DECISION
a) Infringement of the
‘115 Patent
[13]
The
only claim whose infringement is in issue in this appeal is claim 3 of the ‘115
Patent which states as follows:
In a method of making a
lithium mixed metal polyanion compound by reacting a mixture of a lithium
compound and at least one metal containing compound, said compounds in particle
form, the improvement comprising: incorporating carbon into the said mixture in
an amount sufficient to reduce the oxidation state of at least one metal ion of
the metal containing compound without full reduction to an elemental state and
carrying out the reaction in the presence of said carbon.
[14]
The
parties agreed that all the elements of the claim, whatever they meant, were
essential.
[15]
Valence alleged that
Phostech’s P1 Process infringed claim 3 of the ‘115 Patent in that the process
contained all the essential elements of the claim. In particular, Valence claimed that
the carbonaceous residue formed by the pyrolysis of the polymer supplied the
carbon for the carbothermal reduction of the oxidation state of at least one
metal ion of the metal containing compound.
[16]
At
trial, Phostech raised a number of defences to Valence’s claim that
its P1 Process infringed claim 3. Over the course of the litigation, Phostech
abandoned many of its defences and at the conclusion of the trial only three
issues remained: the definition of “carbon”, the meaning of “incorporating
carbon into said mixture” and whether carbon was required to be the
reducing agent or simply a reducing agent.
[17]
The
trial judge heard conflicting evidence from the parties’ experts on the meaning
of “carbon”. Phostech’s expert, Dr. Whittingham, testified that, to a person
skilled in the art, carbon meant carbon in solid form, “that is as particles,
not a gas or a liquid” (Appeal Book at 6192-6193). In cross-examination, Dr.
Whittingham conceded that the carbon referred to in claim 3 must exist in a
form in which it is capable of functioning as a reductant in carbothermal
reduction. One of Valence’s experts, Dr. Dahn, testified that the person
skilled in the art would understand that the claim did not require carbon to be
present in particulate form (Appeal Book at 1223, 8346). The other, Dr. Cairns,
testified that the person skilled in the art would understand that the carbon
formed by the decomposition of a carbonaceous material would constitute
“carbon” as that term is used in claim 3 (Appeal Book at 10,218).
[18]
The
trial judge carefully reviewed the qualifications and the evidence of the
expert witnesses and concluded that she preferred the evidence of Valence’s experts.
[19]
In
particular, the trial judge accepted the evidence of Valence’s experts to the
effect that claim 3 only required that carbon be present prior to the
carbothermal reaction and that it need not be incorporated into the mixture of
precursors prior to the start of the process, that is prior to the introduction
of the material into the kiln (Reasons at paras. 114, 119).
[20]
Finally,
the trial judge concluded that “it is not an essential element of claim 3 that
each and every ion of the metal-containing compound be reduced by the carbon
described in the claim” (Reasons at para. 128).
b) Validity of the ‘366
Patent
[21]
At
trial, Phostech raised, then dropped, a number of issues with respect to the
validity of the ‘366 Patent and, in particular, claim 26 thereof. In the end,
the only issues the judge had to deal with were the insufficiency of the
disclosure as to the expression “source of carbon” and “linked by or being
nucleated or bound to carbon”, and an argument based on the misappropriation of
the claims of Phostech’s own patent application and misrepresentation. Since
the only issue which is under appeal is that of the sufficiency of the
disclosure, I will review only those parts of the judge’s Reasons dealing with
that issue.
[22]
It
will be recalled that the ‘366 Patent is a divisional of the ‘115 Patent and
that they share a common disclosure, except for four pages which were added to
specification of the ‘366 Patent. Nothing in this appeal turns on those four
additional pages.
[23]
Phostech’s
argument as to invalidity turns on the fact that while claim 26 includes as a
precursor “a source of carbon”, the specification deals only with “carbon”. To
that extent, says Phostech, the disclosure is insufficient as it would not
permit a person skilled in the art to work the invention. The trial judge noted
that Phostech’s expert, Dr. Whittingham, was alone in his view as to the effect
of the disclosure. The trial judge noted that there was no evidence that a
person skilled in the art would need more information in order to work the
invention. While it was known that certain polymers would evaporate rather form
a carbonaceous residue, it was a matter of standard tests to determine which
polymers would be suitable for use in the reaction. In the result, the trial
judge rejected this attack on the validity of the ‘366 Patent.
PHOSTECH’S GROUNDS OF
APPEAL
[24]
Phostech,
who is now represented by new counsel, appealed from the trial judge’s decision
on only two narrow grounds. Regarding the finding that claim 3 of the ‘115
Patent was infringed, Phostech argued that the trial judge erred in her
construction of claim 3, specifically, in her interpretation of the term
“carbon”. As for the ‘366 Patent, Phostech argued that the patent is invalid on
the basis that while claim 26 refers to a “source of carbon”, the specification
of the patent teaches only the use of carbon itself so that the claim is
invalid for insufficiency of disclosure.
[25]
Counsel’s
admirable concision in framing the grounds of appeal is a significant departure
from the approach taken at the trial where numerous grounds were advanced and
abandoned by the time the case reached final arguments. The case put before us was
significantly different than that before the trial judge.
ANALYSIS
[26]
This
is an appeal from the decision of a judge rendered after a trial. The
appropriate standard of review was set out in Housen v. Nikolaisen, 2002
SCC 33, [2002] 2 S.C.R. 235: correctness for questions of law, and palpable and
overriding error for questions of fact and question of mixed fact and law. Since
the issues raised by Phostech are questions of law, the standard of review is
correctness.
a) Infringement of the
‘115 Patent
[27]
Phostech’s
argument with respect to claim 3 of the ‘115 Patent is a classic lawyer’s
argument, namely that where a draftsman (or patent agent) uses different words,
different meanings are intended. Counsel for Phostech put before us a table
showing the various expressions used in the patent such as “ source of
[element]”, “[element]-containing compound”, “[element] compound”, the point of
which was to underline that the drafters of the patent referred only to
“carbon” and did not include the qualifying words used in relation to other
substances. From this, Phostech argued that where the patent refers to carbon,
it means carbon in a pure form as opposed to some other compound which may be a
source of carbon.
[28]
This
argument was fully developed in oral argument without any reference to the
evidence of the expert witnesses who testified as to what a person skilled in
the art would understand from the words used in the patent.
[29]
It
is trite law that it is the court’s function to construe the patent, not the
expert’s. While the interpretation of the expression “carbon” in claim 3 is a
question of law, it must be construed in the light of the evidence as to its
meaning to the person skilled in the art (see Unilever PLC v. Procter &
Gamble Inc. (1995), 61 C.P.R. (3d) 499 (F.C.A.) at 506-507, 184 N.R. 378; Halford
v. Seed Hawk Inc., 2006 FCA 275 at para. 11, 54 C.P.R. (4th) 130).
[30]
In
this case, the trial judge heard conflicting evidence on this question. In the
end, she preferred the evidence of the experts called by Valence to that of the
experts called by Phostech, for the reasons which she set out in paragraphs 61,
77, 118, 131 (footnote 75), 166, 167, and 169 of her Reasons.
[31]
The
trial judge summarized the evidence underpinning her conclusion in paragraphs
114 and 115 of her Reasons [footnote omitted]:
Dr. Dahn testified that “incorporating
carbon into said mixture” only means to a posita [person of ordinary skill in
the art] that you have to add carbon to the reaction mixture to perform the
necessary reduction and it really doesn’t matter how the reducing carbon gets
in there. It could be done directly in the form in which it will react or via a
precursor material such as a binder (including a polymer) which would yield
carbon in a form that can be used in the CTR.
…
It is not disputed that the
posita would understand that in carrying out the selective CTR the “carbon”
must be intimately mixed with the starting material before the reduction starts
and he or she would know that the carbon, whether included in particle form
before the mixture was heated or in particle form before the reduction starts
as a result of the decomposition of a polymer, would be equally capable of
carrying out the CTR.
[32]
She
then set out her conclusion at paragraph 119 of her Reasons:
“Carbon” is a wide term. The
fact that carbon black in powder form is what first comes to mind because it is
used in making cathode cells or because it is used in example 9 and appears to
be one of the preferred forms is not sufficient to justify limiting the claim
in the manner proposed by Dr. Whittingham especially when it is clear and known
that it makes no difference to the carbon’s ability to reduce in CTR. Having
considered the expression in its entire context, the Court prefers the construction
proposed by Drs. Cairn, Dahn and Morgan.
[33]
In
my view, the trial judge’s interpretation of the expression “carbon” in claim 3
of the ‘115 Patent, resting as it does on the evidence which she accepted as to
the person skilled in the art’s understanding of the term, is unassailable.
[34]
The
fact that a lawyer, using the usual rules of interpretation, might come to a
different conclusion, is of no consequence. The patent is not directed to
lawyers but to persons skilled in the art. This principle is anchored in the
language of the Patent Act itself (R.S.C. 1985, c. P-4, s. 27(3)(b)
[emphasis added]):
|
(3) The specification of an invention must
…
(b) set out
clearly the various steps in a process, or the method of constructing,
making, compounding or using a machine, manufacture or composition of matter,
in such full, clear, concise and exact terms as to enable any person
skilled in the art or science to which it pertains, or with which it is most
closely connected, to make, construct, compound or use it;
|
(3) Le mémoire descriptif
doit :
[…]
b) exposer
clairement les diverses phases d’un procédé, ou le mode de construction, de
confection, de composition ou d’utilisation d’une machine, d’un objet
manufacturé ou d’un composé de matières, dans des termes complets, clairs,
concis et exacts qui permettent à toute personne versée dans l’art ou la
science dont relève l’invention, ou dans l’art ou la science qui s’en
rapproche le plus, de confectionner, construire, composer ou utiliser
l’invention;
|
[35]
That
which is true for the specification is equally true for the claims. It could
not be otherwise.
[36]
As
a result, I find that the trial judge committed no error of law in construing
the expression “carbon” to include carbon in forms other than particles or
powders.
b) Validity of the ‘366
Patent
[37]
I
turn now to Phostech’s attack on the validity of the ‘366 Patent. Phostech
seeks a declaration “that the ‘366 Patent, and in particular claim 26 thereof
and the claims that depend therefrom, are, and always have been, invalid, void
and of no effect”. As a preliminary matter, the issue of validity was
approached on the basis of a single claim, claim 26. This appears to reflect an
agreement between counsel which the trial judge accepted but not without noting
that it might be based on an incorrect legal premise (Reasons at para. 6,
footnote 4). The parties did not change their position on this issue before us,
with the result that for the purposes of this appeal, the validity of the ‘366
patent is to be decided on the basis of the validity of claim 26.
[38]
The
trial judge described the evidence on the issue of invalidity as follows
(Reasons at para. 185):
Dr. Whittingham essentially states that
i) there is no support in the specification for any reductant other than carbon
itself, ii) the term “source of carbon” is not itself used and iii) there is no
example where a source of carbon other than carbon itself is used.
[39]
On
appeal, Phostech limited its argument to the fact that claim 26 includes as a
precursor material “a source of carbon” whereas the specification itself
contains only references to “ carbon”. In Phostech’s view, this means that the
invention claimed in claim 26 was not disclosed in the specification.
[40]
The
trial judge preferred the evidence of Valence’s witnesses on the
scope of the disclosure. In construing the claims and the disclosure, she
referred to their evidence as follows, at paragraph 134 of her Reasons:
This is disputed by Valence whose experts stated that the
posita would understand that this is referring to carbon itself or any
carbon-containing material such as those that can yield carbon in a form that
can achieve the CTR. In reaching this conclusion, they considered among other
things the other portion of the claim which refers to “one thermal step to heat
said source of carbon and to decompose or transform the same”. Although the
term “source of” is not used per se in the disclosure, this step would be
understood as including what is described on page 13
of the specification (i.e. a binder that decomposes to form a carbon
residue). Here again, Valence experts do not construe this expression as being limited to
carbon in a particle form.
[41]
Phostech
argued that the trial judge effectively construed “carbon”, as used in the
specification, and “source of carbon” as used in claim 26 of the ‘366 Patent,
as meaning the same thing. I can see no reason in principle why the trial judge
could not come to that conclusion, if the evidence as to the person skilled in
the art’s understanding of those expressions, in the context in which they were
used, supported her conclusion. When I consider the evidence which the trial
judge accepted on these questions, and her reasoning process, I do not see any
inconsistency in her construction of those two expressions. Another patent
agent might have drafted the patent differently, but that is not the issue.
Rather, the issue is what would the person skilled in the art understand the
inventor to have disclosed and claimed? Reading paragraphs 185-187, and
paragraph 194 of the trial judge’s Reasons, it is clear that she accepted that
the disclosure supported claim 26. I find no error in her having done so.
[42]
In
the result, I would dismiss Phostech’s request for a declaration that the ‘366
Patent is invalid.
CONCLUSION
[43]
Phostech
has not persuaded me that the trial judge erred in finding that its P1 Process
infringed claim 3 of the ‘115 Patent. Her construction of the expression
“carbon” was based on the evidence before her as to what a person skilled in
the art, reading the patent as a whole, would understand that expression to
mean. I find that she committed no error in law in concluding as she did. I
also find that there is no basis for saying that the trial judge abdicated her
role to those of the experts whose evidence she preferred. I would therefore
dismiss Phostech’s appeal as to the finding of infringement of claim 3 of the ‘115
Patent.
[44]
I
would also dismiss Phostech’s request for a declaration that the ‘366 Patent is
invalid for the reasons set out above.
[45]
I
would dismiss the appeal with costs.
“J.D.
Denis Pelletier”
“I
agree
Marc Noël J.A.”
“I
agree
Robert M.
Mainville J.A.”
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