FCA Nudges SCC to Consider that Claim Construction should be Reviewed on Reasonableness Standard

FCA Nudges SCC to Consider that Claim Construction should be Reviewed on Reasonableness Standard

Abb Technology AG, ABB Inc v Hyundai Heavy Industries Co, Ltd, 2015 FCA 181

In an infringement dispute between ABB Technology AG, ABB Inc. (“ABB”), and Hyundai Heavy Industries Co. (“Hyundai”), the Federal Court of Appeal (“FCA”) made several comments about the standard of review of claim construction. The FCA observed that although claim construction is to be reviewed on a correctness standard, courts are so heavily reliant on expert witnesses to aid them in construing the claims that the standard of review that is often applied when reviewing issues of claim construction is palpable and overriding error. [26]

In light of this high standard, the FCA found that the Federal Court (“FC”) made no palpable and overriding error when it weighed the evidence on claim construction, and therefore upheld the FC’s findings that Hyundai did not infringe ABB’s patents (Canadian Patents No. 2,567,781 (“the ‘781 Patent’) and 2,570,772 (“the ‘772 Patent’)) and that the patents are also invalid. The FCA queried whether “the time has come to reconsider the view that appellate courts are to review patent construction on the basis of correctness,” [27] but applied the standard of review as it currently exists pending future consideration by the Supreme Court of Canada. [28]

The ‘781 Patent on a Viewing Window

Both of the patents relate to gas-insulated switchgear assemblies used in electrical power transmission. [7] A switchgear assembly includes a number of components and switches designed to safely control the flow of electrical power from an incoming side to an outgoing side. [7]

claim construction

The ‘781 Patent teaches adding a small viewing window to the switchgear assembly through which a person can view the position of a grounding switch. [14] Claim 1 describes the invention as including a “moveable switch-contact element”:

  1. A gas-insulated switchgear assembly having at least one disconnector within a housing for the insulating-gas area of the switchgear assembly, and comprising an inspection window fitted in the housing such that positions of a moveable switch-contact element: can be seen from outside the housing in a direct line of sight via the inspection window by an unassisted eye; or can be seen from outside the housing in an indirect line of sight via the inspection window and at least one mirror by an otherwise unassisted eye. [31, emphasis added]

Hyundai argued, and ABB acknowledged, that the use of a viewing window to observe the position of a particular kind of switch, known as a knife blade switch, was known in the prior art. [33] The question was whether “moveable switch-contact element” included a knife blade switch, in which case the claim would be invalid for anticipation, or whether the term was limited to a different type of switch known as a sliding contact switch. [33]

ABB argued that, according to Whirlpool, if a term that has two interpretations then it should be construed to include only one variant. [52] The FC rejected this argument as an erroneous reading of Whirlpool that rests on the flawed view that patent law is a collection of disparate and unconnected rules divorced from an underlying concept. [53] Here, the term “disconnector” in claim 1 is described in the disclosure as including both kinds of switches, [54] and the FC’s preferred expert also interpreted “moveable switch-contact element” to cover both kinds of switches. [55]

ABB pointed to the figures in the ‘781 Patent, which show only sliding contact switches and not a knife blade switch. The FC observed, however, that the ‘781 Patent stated that the figures were only “exemplary”, [57] so could therefore not be used to limit the claim to only the embodiment shown. The FCA hinted that ABB’s case might have been helped if it referred to those figures as the “preferred embodiment” rather than just “exemplary”. [57]

After finding that Claim 1 was anticipated, the FC also found that each of the remaining claims, all of which were dependent on Claim 1, were obvious on the basis of expert evidence which showed that inspection windows to view switch positions were well-known in the prior art. [61-62]

The FCA did not find it necessary to comment on the issue of infringement. [69]

The ‘772 Patent on an Enlarged Circuit Breaker Compartment

The ‘772 Patent teaches a way to enlarge the breaker compartment in a gearbox so as to accommodate a grounding switch without enlarging the surrounding switchgear assembly: [12]

  1.         A gas-insulated medium-voltage switchgear assembly comprising circuit breakers, isolators and ground conductors, wherein a circuit breaker compartment thereof is dimensioned such that both (i) the circuit breakers and (ii) the isolators and ground conductors in an outgoing section, are arranged therein. [71, emphasis added]

At issue was whether Claim 1 included as an essential feature the presence of a second switch below the transformer capable of grounding the outgoing cables. [73] Accepting the evidence of Hyundai’s expert, the FC found that a second switch below the transformer capable of grounding the outgoing cables was an essential element. [74] It was included in Claim 1, and there was nothing in the disclosure to suggest that it was anything less than required. [74] The FCA could find no palpable and overriding error to overturn the FC’s assessment of the evidence on the scope of Claim 1. [75]

Given that this element was essential, the FC then found all of the claims to be obvious. [76] The invention was no different than ABB’s own design practices and what was in the prior art. [76] The remaining claims, each of which were dependent on Claim 1, each disclosed nothing more than what was well-known in the prior art, and their combination was nothing inventive. [72]

On the issue of infringement, the FCA upheld the FC finding that the switchgear assemblies sold by Hyundai did not include a cable grounding feature, so there could be no infringement. [80]

Costs

There was also a separate costs appeal, which the FCA disposed of simultaneously with the liability appeal. Hyundai argued that the FC should not have departed from the Tariff in making its cost award. [89] True to the theme of palpable and overriding error deciding the case, the FCA reiterated the finding in the recent case of Imperial Manufacturing Group Inc v Décor Grates Incorporated, 2015 FCA 100, that costs are a discretionary order reviewable only on palpable and overriding error, [86] and found no palpable and overriding error made by the FC in making its  cost award. [93]

Commentary

This case involves little legal analysis on the issue of claim construction other than the acknowledgement that the FC made no palpable and overriding errors in its weighing of the evidence on claim construction. The FCA’s comments on claim construction come off as a dignified protest of how claim construction is said to be a question of law, yet so much of the analysis is a question of fact.

This recognition of the dominance of factual findings in the claim construction analysis was discussed recently by the Supreme Court of the United States in Teva v Sandoz, where the SCOTUS recognized that claim construction can involve “subsidiary factual disputes” that are reviewed on a “clear error” standard.

One useful takeaway for patent drafters is the FCA’s comments regarding the “exemplary” figures in the ‘781 Patent which showed only sliding contact switches, not knife blade switches. It is normal drafting practice for the embodiments described in the figures to be described as merely examples, so as to not limit the scope of the claims. In this case, however, referring to the figures are mere examples actually hurt. The patentee could not point to the absence of knife blade switches in the figures to limit Claim 1 from reading onto the prior art, which taught the claimed use in conjunction of knife blade switches, since the figures were described as merely exemplary. The FCA hinted that if the patentee had limited itself to the figures more, perhaps by referring to them as the “preferred” embodiment, then the claim might have been saved. [See 57]