Steelhead LNG (ASLNG) Ltd. v. ARC Resources Ltd.

Steelhead LNG (ASLNG) Ltd. v. ARC Resources Ltd.
Court (s) Database
Federal Court Decisions
Date
2023-12-13
Neutral citation
2023 FC 1684
File numbers
T-1488-20
Notes
A correction was made on February 29th, 2024.
Decision Content
Date: 20231213
Docket: T-1488-20
Citation: 2023 FC 1684
Toronto, Ontario, December 13, 2023
PRESENT: The Honourable Mr. Justice Manson
BETWEEN:
STEELHEAD LNG (ASLNG) LTD. and STEELHEAD LNG LIMITED PARTNERSHIP
Plaintiffs
and
ARC RESOURCES LTD., ROCKIES LNG LIMITED PARTNERSHIP, ROCKIES LNG GP CORP., and BIRCHCLIFF ENERGY LTD.
Defendants
AND BETWEEN:
ARC RESOURCES LTD., ROCKIES LNG LIMITED PARTNERSHIP, ROCKIES LNG GP CORP., and BIRCHCLIFF ENERGY LTD.
Plaintiffs by Counterclaim
and
STEELHEAD LNG (ASLNG) LTD., STEELHEAD LNG LIMITED PARTNERSHIP, AZIMUTH CAPITAL MANAGEMENT IB LTD., AZIMUTH ENERGY PARTNERS IV (NR) LP, AND AZIMUTH ENERGY PARNTERS IV LP
Defendants by Counterclaim
PUBLIC JUDGMENT AND DECISION
(Confidential Judgment and Reasons issued December 13, 2023)
Table of Contents
I. Introduction 2
II. Background 3
A. The Parties 3
B. The Technical Background 4
C. The 085 Patent 6
III. Issues 9
IV. The Parties’ Evidence 10
A. Arc’s Expert Witness 10
B. Steelhead’s Expert Witness 12
C. Fact Witnesses 14
V. Analysis 20
A. Claim Construction 20
B. Anticipation 28
C. Obviousness 67
D. Lack of Utility 90
E. Insufficiency 92
F. Overbreadth 93
VI. Costs 94
VII. Conclusion 98
I. Introduction [1] This proceeding is a counterclaim commenced by the Defendants/Plaintiffs by Counterclaim against the Plaintiffs/Defendants by Counterclaim. The counterclaim challenges the validity of Canadian Patent No. 3,027,085 (the “085 Patent”) pursuant to the Patent Act, RSC, 1985, c P-4 [Patent Act].
[2] The Court previously held on summary trial that the Defendants/Plaintiffs by Counterclaim did not infringe on the 085 Patent and accordingly dismissed the action underlying this counterclaim (Steelhead LNG (ASLNG) Ltd v ARC Resources Ltd, 2022 FC 998). Here, the Defendants/Plaintiffs by Counterclaim seek a declaration that the claims of the 085 Patent are invalid.
[3] For the reasons that follow, I find that:
Claims 24, 25, 27, 28, and 29 are valid;
Claims 26, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, and 55 are valid insofar as they depend on claims 24, 25, 27, 28, and 29, directly or indirectly, and are otherwise invalid;
Claims 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, and 84 are invalid.
II. Background [4] The background to the previous decision, the parties’ joint statement of facts, and the evidence presented in the course of trial are set out below as relevant.
A. The Parties (1) The Plaintiffs/Defendants by Counterclaim (hereinafter, “Steelhead”) [5] Steelhead LNG (ASLNG) Ltd. is a company incorporated pursuant to the laws of British Columbia (“Steelhead ASLNG”). Steelhead ASLNG is a wholly owned subsidiary of Steelhead LNG Limited Partnership (“Steelhead LP”). Steelhead LP is a partnership formed in and under the laws of Manitoba.
[6] Azimuth Capital Management IB Ltd., Azimuth Energy Partners IV (NR) LP, and Azimuth Energy Partners IV LP (collectively, “Azimuth”) were not plaintiffs in the initial action but were named as defendants in the counterclaim. Azimuth did not take part in this proceeding, except in relation to costs.
(2) The Defendants/Plaintiffs by Counterclaim (hereinafter, “Arc”) [7] ARC Resources Ltd. is an oil and gas producer with a corporate office in Calgary, Alberta. ARC Resources Ltd. is the successor in interest to Seven Generations Energy Ltd. by way of amalgamation in early 2021.
[8] Birchcliff Energy Ltd. is an intermediate oil and gas company with a corporate office in Calgary, Alberta (“Birchcliff”). Birchcliff and ARC Resources Ltd. are limited partners of Rockies LNG Limited Partnership (“Rockies LP”). Rockies LP is a limited partnership comprised of a group of natural gas producers in Alberta and British Columbia. Rockies LNG GP Corp. is the general partner of Rockies LP (“Rockies GP”).
B. The Technical Background (1) Natural Gas and LNG [9] Natural gas is a mixture of gaseous hydrocarbons. Methane accounts for about 90% or more of that mixture by volume. Other hydrocarbons typically found in natural gas are ethane, propane, and butane. In addition, natural gas will often contain impurities like water and carbon dioxide.
[10] Liquefied natural gas (“LNG”) is natural gas in its liquid state. The temperature at which natural gas converts between its vapour and liquid states is approximately -162°C. Natural gas in its liquid state occupies less volume (approximately 1/600th) than its corresponding gaseous state. One reason for liquefying natural gas is to make it easier to transport as cargo in a ship, which is called an LNG carrier or tanker.
(2) Commercial Liquefaction [11] The parties agree that, by June 2018, there were several commercially available liquefaction systems and processes for liquefying natural gas. These include the single mixed refrigerant (“SMR”) process, the dual mixed refrigerant (“DMR”) process, the nitrogen (“N2”) expander process, the propane pre-cooled mixed refrigerant (“C3-MR”) process, and the Cascade process. At a basic level, a closed-loop refrigeration cycle used to convert natural gas to LNG will include a compressor, condenser, expansion device, and evaporator. Commercially, these liquefaction systems and processes take place in LNG facilities.
[12] The development of an LNG facility will typically progress in stages or phases. The early or planning phases of an LNG facility are commonly referred to as feasibility, pre-FEED (front end engineering design), and FEED stages, which are followed by an EPC (engineering procurement and construction) phase.
[13] Electricity to support the LNG facility may be sourced from a power grid – that is, a network of power generation, transmission and distribution that commonly provides power to communities. Alternatively, it may be produced more locally, at or near the LNG facility.
(3) Floating LNG Facilities [14] LNG facilities may be placed on land or on sea. It was known as of June 2018 that conditions nearshore (alternatively referred to as “at-shore”) are typically more benign than conditions further offshore.
[15] Floating LNG (“FLNG”) facilities are on-sea facilities that float on a water-based vessel. Floating vessels may incorporate a ballast system to (among other reasons) maintain an even keel and ensure the vessel’s stability. This was known in June 2018. It was also known then that a ballast system could be open-looped or closed-looped. An open-loop ballast system allowed ballast fluid (typically seawater) to enter a ship’s ballast tank system and be discharged to surrounding waters. A closed-loop system could be designed to either (a) treat the ballast fluid before it is discharged to surrounding waters (a hybrid closed-loop ballast) or (b) operate without discharging ballast fluid to surrounding waters (a permanently closed-loop ballast).
C. The 085 Patent (1) Description and Relevant Dates [16] Steelhead ASLNG is named as the owner of the 085 Patent, entitled “Liquefaction Apparatus, Methods, and Systems”. It relates generally to apparatus, methods, and systems respecting nearshore liquefaction of natural gas.
[17] The application for the 085 Patent was filed on December 10, 2018. The application became open to public inspection on February 8, 2019. The patent issued on November 3, 2020 and is set to expire on December 10, 2038.
[18] The patent claims priority from PCT International Patent Application No. PCT/CA2018/050662 filed on June 1, 2018. Pursuant to section 28.1 of the Patent Act, the claim date is June 1, 2018.
(2) The Disclosure [19] The background section of the 085 Patent’s disclosure observes that sizeable reserves of natural gas exist in shallow waters that are inaccessible to FLNG facilities designed for deep offshore projects. This purported gap in the technology requires improvements to water-based liquefaction.
[20] The background section is followed by a summary of the claimed invention, all of which more or less follow the language and order of the patent’s claims. The disclosure’s subsequent section provides exemplary drawings and a more a detailed description of the claimed invention. I discuss those details and drawings as may be relevant in the analysis below.
(3) The Independent Claims [21] The 085 Patent’s claims include four independent claims (claims 1, 21, 56, and 67) and 80 dependent claims. Independent claim 1 claims “a system for liquefaction of natural gas,” comprised of (1) an external source of electricity and gas, and (2) a water-based apparatus. The water-based apparatus is comprised of a hull moored to the shore, an air-cooled electrically-driven refrigeration (or AER) system, and a plurality of storage tanks.
[22] The language of the other independent claims is similar in scope to claim 1. Independent claim 21 claims the water-based apparatus essentially as described in claim 1, but where the LNG storage tanks must be on the lower deck of the hull. Independent claim 56 claims the AER method essentially as described in claim 1. Independent claim 67 claims the water-based apparatus essentially as described in claim 1, where the storage tanks are below deck and with the addition of (1) a plurality of sensors to support coordinated functions between the water-based apparatus and the external source, and (2) a means of receiving communication to control the coordinated functions.
[23] The dependent claims add a number of elements to the invention. These include pre-treatment, membrane tanks, balanced topside configurations, LNG output methods, mechanisms for coordination, deck openings, fuel gas redistribution, and further, as discussed below.
[24] The essential elements of each claim are discussed in detail in the following analysis.
III. Issues [25] Arc seeks a declaration that the claims of the 085 Patent are invalid. The parties jointly summarized the issues to be decided as follows:
Construction of claims 1-84 of the 085 Patent; and
Whether the claims of the 085 Patent are invalid by reason of:
Anticipation –
Do Talib 2014 and/or Talib May 2013 anticipate the subject matter of claims 1-3, 5, 10, 13-16, 18-23, 26, 36-38, 41, 42, 56-59, 64-67, 70 and 82-84 of the 085 Patent?
Do Sullivan 2017 and/or Sullivan 2016 anticipate the subject matter of claims 1-3, 5, 7, 8, 10, 13, 14, 21, 23, 26, 36-39, 41, 42, 56, 58, 59, 64 and 65 of the 085 Patent?
Obviousness – Would the subject matter defined by the claims have been obvious on the claim date to a person skilled in the art?
Insufficiency – Does the 085 Patent satisfy the requirements of subsection 27(3) of the Patent Act?
Ambiguity – Does the 085 Patent satisfy the requirements of subsection 27(4) of the Patent Act?
Overbreadth – Are the claims of the 085 Patent broader than either the invention made by the named inventors of the 085 Patent or the invention disclosed in the specification of the 085 Patent?
Lack of Sound Prediction/No Demonstrated Utility – Had the inventors demonstrated or soundly predicted a utility related to the subject matter of the claims of the 085 Patent by the Canadian filing date?
[26] In the course of trial, Arc abandoned the ground of ambiguity. They also abandoned anticipation with respect to claims 10 and 23. Consequently, they abandoned anticipation with respect to claims that depend on claims 10 and 23, to the extent of the dependency. Finally, they restricted the lack of utility challenge to claim 29.
IV. The Parties’ Evidence A. Arc’s Expert Witness [27] Michael Wyllie is a professional engineer in the United Kingdom (“UK”). He received a Bachelor of Science degree in Chemical and Process Engineering from Heriot-Watt University in Edinburgh, UK in 1980.
[28] Mr. Wyllie has practiced engineering in the oil and gas industry for over 40 years. In the course of his career, he worked at Foster Wheeler Energy Ltd, Total Marine Oil Ltd (now Total Energies), Shell UK Exploration and Production, Altra Consultants (which he co-founded), and SBM Offshore NV. In those organizations, he assumed various roles, including process engineer, chief engineer, project director, and chief technology officer.
[29] Mr. Wyllie’s career involved working on FLNG facilities, floating platforms, and mooring systems. He worked extensively on floating production storage and offloading (“FPSO”) units, a floating vessel that receives hydrocarbons, processes them into liquid form, and stores them for offloading.
[30] Mr. Wyllie is presently the Managing Director and Principal Consultant with OpenWater Energy Ltd, a company he founded in 2019. He is also a Fellow of the UK Institution of Chemical Engineers.
[31] I accepted Mr. Wyllie’s expert qualification as follows:
Mr. Michael Wyllie is a professional engineer with energy industry related expertise. His expertise includes the design, manufacture and operation of facilities, systems and equipment used in the production, storage and transportation of hydrocarbons, including those that operate in a water-based environment such as FLNGs, FPSOs, FSRUs, FSUs and LNG carriers, and their related systems and equipment. His expertise also includes the steps undertaken in the energy industry to develop a project from its early to final stages.
[32] Mr. Wyllie was asked to provide his opinion on the following issues: (1) who is the skilled person of the 085 Patent?; (2) what is the common general knowledge of that skilled person?; (3) what is the proper construction of the 085 Patent’s claims?; (4) is the 085 Patent’s subject matter novel?; (5) is the 085 Patent’s subject matter obvious?; (6) is the 085 Patent’s disclosure sufficient?; (7) are the 085 Patent’s claims broader than what it discloses?; and (8) does the 085 Patent’s subject matter lack utility? Mr. Wyllie provided his opinion in his expert report, dated May 26, 2023.
[33] I found Mr. Wyllie to be a knowledgeable and credible expert witness. He was consistent in his evidence throughout his oral testimony, including cross-examination. I discuss his evidence as may be relevant in the analysis below.
B. Steelhead’s Expert Witness [34] Willem Ravesloot is a project executive consultant in the Netherlands. He received a Master of Science degree in Mechanical Engineering from the Delft University of Technology in the Netherlands in 1989.
[35] Mr. Ravesloot spent most of his career with Shell plc, including its subsidiaries and joint ventures. His roles included acting as project engineer, lead engineering manager, business group manager, and project director.
[36] Mr. Ravesloot’s career focus has been LNG facilities generally, but not FLNG facilities in particular. His main responsibilities pertained to the design, construction, operation, and maintenance of LNG facilities in various locations around the world, including Canada.
[37] Mr. Ravesloot is currently a project executive consultant with Gawwer BV, a consulting company that he founded and owns. He also acts as the managing partner at MACH10 Energy BV, a consulting firm that caters to oil and gas operators. Finally, Mr. Ravesloot consults with Partners in Performance, where he provides assessments of LNG projects as a subject matter expert.
[38] I accepted Mr. Ravesloot’s expert qualification as follows:
Mr. Willem (Wim) Ravesloot is an engineer with expertise in mechanical engineering and related engineering disciplines in the field of oil & gas and liquefied natural gas. In particular, Mr. Ravesloot has expertise in the design, development, and operation of land-based and floating liquefied natural gas facilities, including in the design, selection, implementation, and operation of liquefaction processes as well as process equipment used for liquefaction of natural gas such as compressors and compressor drivers, cooling systems, control systems, safety systems, and storage facilities. Additionally, Mr. Ravesloot is a project executive with particular expertise in project engineering, engineering project management, and project development in the oil & gas and liquefied natural gas industry.
[39] Mr. Ravesloot was asked to provide his opinion on the same issues as Arc’s expert, with some variation. First, with respect to novelty and anticipation, Mr. Ravesloot’s mandate was restricted to the publications cited by Arc’s expert. Second, with respect to overbreadth and utility, Mr. Ravesloot’s mandate was limited to claim 29.
[40] Mr. Ravesloot is a knowledgeable and qualified expert witness in his field. That said, he applied incorrect legal standards in his analysis on various issues, as discussed further below. That misapprehension of certain legal principles that he needed to apply in his report reduces the weight to be given to his testimony in these proceedings.
[41] Moreover, Mr. Ravesloot’s testimony was sometimes inconsistent, not only with prior statements he made in the course of the infringement action that underlies this counterclaim, but also with his own evidence in this proceeding. At times, he tended to be evasive during cross-examination.
[42] I discuss Mr. Ravesloot’s evidence and any problems therewith, as may be relevant, below.
C. Fact Witnesses (1) For Arc (a) Andrew Loose [43] Andrew Loose is an engineer with extensive experience working on LNG and FLNG projects. Between 2006 and 2021, he was an employee of KBR. KBR is an international company that provides consultancy, engineering, and construction services to clients in the energy sector.
[44] Between 2016 and 2018, Mr. Loose and others in KBR wanted to secure an engineering contract from Steelhead in relation to an FLNG project. They met with Victor Ojeda and Alex Brigden of Steelhead on March 23, 2016, for that purpose. In their meeting, Mr. Loose and his colleagues provided Steelhead with a presentation. The presentation included a discussion of the Triton FLNG project, which KBR helped design between 2011 and 2014.
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[46] Because Triton LNG was not relied upon as prior art, the relevance of Mr. Loose’s evidence in that regard is limited to the background to the invention story.
[47] Mr. Loose also testified that he attended an FLNG conference in June 2014. There, he attended a public presentation by Thomas Larsen, Vice President Technical at Höegh LNG (the “Larsen presentation”). The Larsen presentation discussed nearshore FLNG facilities. It also contained a slide discussing various options for an FLNG facility design, including among them air-cooling, electrical drives, power from shore, storage in the FLNG facility, and various mooring methods.
[48] Mr. Loose testified that there was no expectation for confidentiality communicated during the Larsen presentation. However, on cross examination, he admitted that the slides stated that its content cannot be reproduced, distributed, or divulged without Höegh LNG’s written consent.
[49] I found Mr. Loose to be a credible witness.
(b) Paul Sullivan [50] Paul Sullivan has over 30 years of experience in engineering and construction in the LNG industry. In 2017 and 2018, he was Vice President, Projects at Steelhead and then Project Advisor to its CEO. All of the 085 Patent’s inventors reported to Mr. Sullivan in his capacity as Vice President, directly or indirectly.
[51] Prior to his time with Steelhead, Mr. Sullivan was with WorleyParsons (now known as Worley). However, he was still involved with Steelhead, as Steelhead had retained WorleyParsons as a contractor on some of its FLNG projects.
[52] Mr. Sullivan testified that he attended an event organized by the Society of Petroleum Engineers in Houston, Texas in July 2016, where he presented on the topic of nearshore FLNG to between 50 and 70 individuals, most of whom were engineers (“Sullivan 2016”). Mr. Sullivan also testified that he presented on the topic of nearshore FLNG facilities at the FLNG World Congress on June 21, 2017 (“Sullivan 2017”, and collectively with Sullivan 2016, the “Sullivan presentations”).
[53] The Sullivan presentations are two of four documents that Arc relies on to argue anticipation and obviousness. The other two are papers written in part by Javid Talib of Black & Veatch in 2014 (“Talib 2014”) and 2013 (“Talib 2013”, and collectively with Talib 2014, the “Talib papers”).
[54] I found Mr. Sullivan to be a credible witness.
(2) For Steelhead (a) Alex Brigden [55] Alex Brigden is a professional engineer in the UK with extensive experience on offshore projects. He joined Steelhead between April 2015 and January 2019 where he worked on Steelhead’s Malahat LNG project and Sarita Bay (later Kwispaa) LNG project. Both projects were planned for areas close to the British Columbia coastline.
[56] Mr. Brigden is a named inventor of the 085 Patent and was very involved in developing its claimed “at-shore LNG concept”. He acted as Vice President, Technical at Steelhead between 2017 and 2019. All other co-inventors were members of his technical team, and they all reported to him. His evidence in chief pertained primarily to the invention story behind the 085 Patent.
[57] According to Mr. Brigden, he and his team were not aware of anyone “having put forward” an FLNG facility composed of LNG storage units, electrically driven compressors, air cooled refrigeration, and an external electric power source. Instead, they arrived at this concept through their project development process. This process involved (1) concept identification, (2) concept evaluation, and (3) concept selection. The project development process yielded a number of documents summarizing Steelhead’s final design selections and the reasoning behind them. Mr. Brigden said that Steelhead spent millions of dollars and a number of years to arrive at the final concept.
[58] On cross-examination, Mr. Brigden recalled that he met with representatives of KBR in March 2016, consistent with Mr. Loose’s testimony above, but did not recall who gave a presentation. He also admitted that:
He carried on work with respect to an FLNG facility before joining Steelhead;
Respecting electric compressors – (i) he knew prior to joining Steelhead of other LNG projects where electric compressors were used; (ii) he himself led an LNG project prior to joining Steelhead that contemplated using electric compressors on a separate on-land LNG project; (iii) he knew that electric drivers and gas turbines were the two options available for compressors; (iv) there is a limit to the reductions in greenhouse gas (“GHG”) emissions when using gas turbine compressors; (v) electric compressors would significantly reduce GHG emissions and ensure regulatory compliance; and (vi) “political support” would be “lost” in British Columbia if GHG emissions from Steelhead’s facility were not in the bottom quartile of global LNG plants;
Respecting air-coolers – (i) he knew that air coolers had less of a negative environmental impact than water coolers; (ii) he knew that air coolers were used in prior projects; and (iii) he knew that First Nations in the relevant project areas would voice opposition to the use of water coolers because of the effect on the marine environment;
Respecting LNG storage – (i) he knew prior to joining Steelhead that a barge could feasibly support a processing facility and include integrated storage tanks; and (ii) he knew sloshing would not be a problem nearshore; and
Respecting sensors – he knew that sensors were used to monitor spills for “a long time” before June 2018.
[59] Mr. Brigden also stated on cross-examination that the following features of the at-shore LNG concept were, in his view, “essential”, “required”, “important”, or otherwise “part of” the concept he helped design:
setting the air coolers in a layout that uses space efficiently while maintaining safety;
placing some elements of the facility strictly on-shore, while keeping others on the floating vessel;
modifying the membrane storage tanks’ chamfers to lower the center of gravity and improve stability;
using transverse beams to support the deck of the facility;
pre-treatment of feed gas at a separate location to limit impurities to within a narrow range;
using flexible, durable, and insulated electrical lines for the transit bridge;
using a voltage of 138kV to balance the number of electric cables connected to the FLNG facility; and
a cryogenic spill protection system that routed spills away from the hull and other facility elements.
[60] Mr. Brigden at times conceded on cross-examination only after counsel for Arc showed him prior statements he made that were inconsistent with his evidence at trial. Given the inconsistent statements and admissions he made on cross-examination, I give his evidence limited weight, and I discuss it as may be relevant in my analysis below.
(b) Victor Ojeda [61] Victor Ojeda was the President of Steelhead between 2013 and 2019. He oversaw the direction of the business during his tenure. He also acted as interim Vice President, Technical for several months in 2016.
[62] The only relevant portion of Mr. Ojeda’s evidence in chief pertains to Steelhead’s dealings with KBR in 2016. Mr. Ojeda stated that when he met with Mr. Loose and other members of the KBR team, Steelhead’s work on the at-shore LNG concept was already underway and its key concepts were already decided. He also testified that Steelhead entered into a mutual non-disclosure agreement with KBR. Mr. Ojeda specifically denied that the at-shore LNG concept was based on KBR’s work.
[63] Mr. Ojeda remained consistent on cross-examination. I find him to be a credible witness. I discuss his evidence as may be relevant in my analysis below.
V. Analysis A. Claim Construction (1) General Principles [64] The Supreme Court of Canada has outlined the principles of claim construction in three decisions: Whirlpool Corp v Camco Inc, 2000 SCC 67 [Whirlpool] at paragraphs 49 to 55; Free World Trust v Électro Santé Inc, 2000 SCC 66 [Free World Trust] at paragraphs 44 to 54; and Consolboard Inc v MacMillan Bloedel (Saskatchewan) Ltd, 1981 CanLII 15 (SCC), [1981] 1 SCR 504 (SCC) at paragraph 27. The Federal Court of Appeal summarized those principles in Tearlab Corporation v I-MED Pharma Inc, 2019 FCA 179 [Tearlab] at paragraphs 31 to 34, as follows:
[31] The Patent Act promotes adherence to the language of the claims, which in turn promotes fairness and predictability (Free World Trust at paras. 31(a), (b) and 41). The words of the claims must, however, be read in an informed and purposive way (at para. 31(c)), with a mind willing to understand (at para. 44). On a purposive construction, it will be apparent that some elements of the claimed invention are essential while others are non-essential (at para. 31(e)). The interpretative task of the court, in claim construction, is to separate and distinguish between the essential and the non-essential elements, and to give the legal protection to which the holder of a valid patent is entitled only to the essential elements (at para. 15).
[32] To identify these elements, the claim language must be read through the eyes of a [person of skill in the art], in light of the latter’s common general knowledge (Free World Trust at paras. 44-45; see also Frac Shack at para. 60; Whirlpool at para. 53). As noted in Free World Trust:
[51] …The words chosen by the inventor will be read in the sense the inventor is presumed to have intended, and in a way that is sympathetic to accomplishment of the inventor’s purpose expressed or implicit in the text of the claims. However, if the inventor has misspoken or otherwise created an unnecessary or troublesome limitation in the claims, it is a self-inflicted wound. The public is entitled to rely on the words used provided the words used are interpreted fairly and knowledgeably. [Emphasis in the original.]
[33] Claim construction requires that the disclosure and the claims be looked at as a whole “to ascertain the nature of the invention and methods of its performance, … being neither benevolent nor harsh, but rather seeking a construction which is reasonable and fair to both patentee and public” (Consolboard at p. 520; see also Teva Canada Ltd. v. Pfizer Canada Inc., 2012 SCC 60, [2012] 3 S.C.R. 625 at para. 50). Consideration can thus be given to the patent specifications to understand what was meant by the words in the claims. One must be wary, however, not to use these so as “to enlarge or contract the scope of the claim as written and … understood” (Whirlpool at para. 52; see also Free World Trust at para. 32). The Supreme Court recently emphasized that the focus of the validity analysis will be on the claims; specifications will be relevant where there is ambiguity in the claims (AstraZeneca Canada Inc. v. Apotex Inc., 2017 SCC 36, [2017] 1 S.C.R. 943 at para. 31; see also Ciba at paras. 74-75).
[34] Finally, it is important to stress that claim construction must be the same for the purpose of validity and for the purpose of infringement (Whirlpool at para. 49(b)).
[65] In short, the Court must interpret claims purposively and with a mind willing to understand, taking into account the whole of the specification where there is ambiguity, but ultimately adhering to the language of the claims. The Court’s task is to identify the essential elements of the claimed invention. The Court must do all this from the perspective of a person of skill in the art at the publication date, taking into account the common general knowledge as it was then.
(2) Person of Skill in the Art [66] In Free World Trust, at paragraph 44, the Supreme Court of Canada, quoting Harold G. Fox, The Canadian Law and Practice Relating to Letters Patent for Inventions, 4th ed. (Toronto: Carswell, 1969) at 184, described a “person skilled in the art” as follows:
[A] hypothetical person possessing the ordinary skill and knowledge of the particular art to which the invention relates, and a mind willing to understand a specification that is addressed to him. This hypothetical person has sometimes been equated with the “reasonable man” used as a standard in negligence cases. He is assumed to be a man who is going to try to achieve success and not one who is looking for difficulties or seeking failure.
[67] And in Whirlpool, at paragraph 53, the Court held that:
[T]he patent specification is not addressed to grammarians, etymologists or to the public generally, but to skilled individuals sufficiently versed in the art to which the patent relates to enable them on a technical level to appreciate the nature and description of the invention: H. G. Fox, The Canadian Law and Practice Relating to Letters Patent for Inventions (4th ed. 1969), at p. 185. The court, writes Dr. Fox, at p. 203, must place itself
in the position of some person acquainted with the surrounding circumstances as to the state of the art and the manufacture at the time, and making itself acquainted with the technical meaning in that art or manufacture that any particular word or words may have.
[68] Therefore, in taking the place of a person skilled in the art, the Court must assume a mind willing to understand the claims before it – one that is equipped with the set of skills, knowledge, and technical acumen ordinarily known within that particular art at the relevant time.
(3) Common General Knowledge [69] Common general knowledge refers to what would generally have been known to the person of skill in the art at the date of publication (Apotex Inc v Sanofi-Synthelabo Canada Inc, 2008 SCC 61 [Sanofi] at para 37).
[70] Common general knowledge does not include all information in the public domain. The mere fact that some information is published in an individual patent, a scientific publication, or any other document will not suffice on its own to establish that that information is within the common general knowledge of a person skilled in the art. Instead, that information must be ordinarily known within the art or industry (Gemak Trust v Jempak Corporation, 2022 FCA 141 at paras 95-96).
(4) Application (a) Person of Skill in the Art [71] Arc’s expert is of the view that the 085 Patent addresses two categories of subject matter. The first category is floating production facilities. The second is the production of LNG. He states that the skilled person is in fact a “skilled team”.
[72] With respect to the first category (floating production facilities), Arc’s expert describes the person of skill in that field as someone with an engineering degree in a relevant discipline – namely mechanical, structural, naval, or chemical and process engineering. For some of the claims, the relevant disciplines may also include electrical or instrumentation engineering. The skilled person also has at least five years of multidisciplinary experience with floating production facilities, which may be focused on FLNG facilities, but may also include experience with other floating facilities.
[73] In relation to the second category (the production of LNG), Arc’s expert describes the skilled person as someone with a chemical and process engineering degree and a minimum of five years experience with LNG production. This person understands the types of processes used in LNG production like the SMR and DMR liquefaction systems, as well as those used in pre-treating the natural gas feed.
[74] Steelhead’s expert believes that the skilled person is someone with an engineering background. He singles out mechanical engineering as the skilled person’s sub-discipline. However, he acknowledges that the skilled person may alternatively have a degree in industrial, chemical, or electrical engineering. Ultimately, he concludes that the skilled person addressed by the 085 Patent is one with a bachelor’s degree in a relevant engineering field and two to four years experience – or, in lieu of that experience, a master’s degree in LNG facility design and only one to two years of hands-on training.
[75] I find that the 085 Patent is directed towards a skilled person (or persons) with a background in both mechanical and naval engineering and at least four years of experience with LNG and floating production facilities, such as FLNG or FPSO facilities.
(b) Common General Knowledge [76] Both expert witnesses agree that the common general knowledge of the skilled person is the same for all relevant dates. They also generally agree that the following topics are part of the skilled person’s common general knowledge:
Natural gas and its various chemical components;
Liquid natural gas, its chemical properties, and its commercial advantage;
The production of natural gas and its treatment to remove impurities and/or heavy hydrocarbons;
The refrigeration cycle and its main stages;
Common liquefaction processes associated with natural gas;
Compressors, their various types, and their role in refrigeration and liquefaction;
The engineering stages involved in LNG facility development;
Floating facilities used in LNG production, particularly FLNG facilities;
The various classes of LNG storage tanks, including membrane tanks;
The use of ballast systems and mooring methods to stabilize and fix the location of an FLNG facility; and
FLNG facilities that were constructed by June 2018, including Shell’s Prelude facility.
[77] The two experts disagree in their reports on some topics, and Arc’s expert’s overview of the skilled person’s common general knowledge included more topics in contrast to Steelhead’s expert’s report. Upon review of their reports, I find that the following matters are also part of the skilled person’s common general knowledge, notwithstanding any disagreement or omission by either expert:
Modular design – it was known that a facility’s constituent units may be constructed separately at different locations and then put together during final assembly;
Sensors, automation, and containment – it was known that LNG facilities, including FLNG facilities, use sensors and control systems to monitor the facility, automate operations, ensure safety, and contain hazards and spills;
Nearshore FLNG facilities – the skilled person would have been aware of the concept of an FLNG facility operating nearshore and the potential benefits associated with such a concept;
Marine systems – the skilled person would have been aware of the main components of a marine vessel; and
Offloading – the skilled person would have been aware of offloading systems used on an FLNG facility, particularly offloading “arms” or hoses.
(c) Construing the Claims [78] The relevant date for the purposes of claim construction is the date of publication: February 8, 2019.
[79] Both experts state that the elements of each claim are all essential to that claim. I agree.
[80] The experts also generally agree on the proper construction of the claims, except with respect to two phrases: (1) “water-based apparatus”, and (2) “void space… capable of containing”. I adopt the construction agreed upon by the experts and apply it as necessary. As for the areas of disagreement, I resolve them as follows.
(i) The meaning of “water-based apparatus” [81] Arc’s expert adopts a broad interpretation of the term “water-based apparatus”. Specifically, he interprets it to include not only a barge, a ship, and a floating platform, but also a gravity-based platform – meaning a vessel that is floated to position and then grounded on the seabed. Steelhead’s expert takes a narrower view. To him, the term refers to a facility that is continuously floating on the water. He therefore excludes gravity-based platforms from the definition.
[82] I agree with Steelhead’s expert that the term “water-based apparatus” excludes gravity-based platforms. The disclosure of the 085 Patent and the independent claims state that the “water-based apparatus” would be “moored” to a location on-shore. This would be understood by the skilled person to be a method of keeping a floating vessel in place – one that is not used on gravity-based platforms.
(ii) The meaning of “void space… capable of containing” [83] Claim 29 speaks of a “void space… capable of containing” fluid with a weight similar to the AER System. Arc’s expert interprets this to mean that the void space must always be able to contain that fluid, including when the AER System is installed on the vessel. In contrast, Steelhead’s expert understands the term to mean that the void space would only be used during manufacturing.
[84] I accept that there is ambiguity here, one that arises from the use of the word “capable”. Essentially, Arc’s expert’s view is that “capable” here means “able at all times”, while Steelhead’s expert’s opinion is that it means “able when needed”. Steelhead’s expert resolves this ambiguity by citing page 16 the 085 Patent’s disclosure, which states at lines 11 to 21 that the void space would be filled “during manufacturing” of the vessel to “simulat[e]” the weight of the AER System and, second, that the fluid would be incrementally “releas[ed]” as the AER System is loaded on the vessel.
[85] Arc argues that it is not necessary to review the patent’s disclosure if claim 29 is read along with the claims that it depends on. Once claim 29 is so read, there will be no ambiguity, since it will be evident that the void space must be capable of carrying the fluid after the AER System is installed.
[86] I have reviewed claim 29 along with the claims that it depe