Source text

Aux Sable Liquid Products LP v. JL Energy Transportation Inc.
Court (s) Database
Federal Court Decisions
Date
2019-05-06
Neutral citation
2019 FC 581
File numbers
T-1612-16
Notes
Reported Decision A correction was made on December 15, 2020.
Decision Content
Date: 20190506
Docket: T-1612-16
Citation: 2019 FC 581
Ottawa, Ontario, May 6, 2019
PRESENT: Mr. Justice Southcott
BETWEEN:
AUX SABLE LIQUID PRODUCTS LP,
AUX SABLE LIQUID PRODUCTS INC.
AND AUX SABLE CANADA LTD.
Plaintiffs
and
JL ENERGY TRANSPORTATION INC.
Defendant
JUDGMENT AND REASONS
Table of Contents
I. Overview 2
II. Background 3
III. Issues 7
IV. Witnesses 8
A. Dr. Stephen Ramsay 8
B. Mr. Graeme King 9
C. Dr. Mukul Sharma 11
D. Dr. Wayne Monnery 13
E. Mr. Mark Ryan 16
F. Fact Witnesses 18
V. The Skilled Person 18
VI. Claim Construction 21
VII. Are claims 9-10 of the 670 Patent invalid based on the following grounds? 25
A. Overbreadth 25
B. Inutility 33
C. Anticipation 39
Stinson 43
Handbook 48
D. Obviousness 55
VIII. Are claims 1-8 of the 670 Patent invalid for obviousness? 55
A. Analytical Framework 55
B. Common General Knowledge 57
C. Inventive Concept 60
D. Test for a Citable Prior Art Reference 63
E. Sanofi Steps 3 and 4 86
IX. Are claims 1-10 of the 670 Patent invalid based on the following grounds? 105
A. Insufficiency 105
B. Unpatentable subject matter 112
X. Conclusion and Costs 117
Appendix “A” 119
I.
Overview
[1] This decision relates to an action by the Plaintiffs, Aux Sable Liquid Products LP, Aux Sable Liquid Products Inc., and Aux Sable Canada Ltd. [together, Aux Sable], to invalidate a patent identified as Canadian Patent No. 2,205,670 [the 670 Patent], related to the transportation of natural gas by pipeline, held by the Defendant, JL Energy Transportation Inc. [JL Energy].
[2] For the reasons explained in detail below, I find that claims 9-10 of the 670 Patent are invalid for overbreadth, inutility, anticipation and non-patentable subject matter. I do not find claims 1-8 to be invalid under any of the invalidity allegations raised by the Plaintiffs.
II. Background
[3] Aux Sable Liquid Products LP is a limited partnership formed under Delaware law and registered as an extra-provincial limited partnership in Alberta [Aux Sable LP]. Aux Sable Liquid Products Inc. is also a Delaware company and the general partner of the limited partnership [Aux Sable GP]. Aux Sable Canada Ltd. is an Alberta company and carries on business in the province and elsewhere in Canada [Aux Sable Canada].
[4] JL Energy is a company incorporated under the laws of Alberta and is the owner of the 670 Patent. By way of introduction to the technology that is the subject of this litigation, the Abstract of the Invention, set out in the 670 Patent, reads as follows:
Abstract of the Invention
At pressures over 1000 psia, it is advantageous to add to natural gas an additive which is a C2 C3 and C4 hydrocarbon compound, CO, NH3 or HF or a mixture of such additives. Above a lower limit (which varies with the additive being added and the pressure), this results in a smaller Z factor, or (MwZ) product, representing increased packing of molecules, and therefore leading to a decrease in the amount of power needed to pump the mixture or to compress it.
[5] By way of further background explanation of the relevant technology, the following appears uncontroversial. Natural gas, in its naturally occurring form, is composed mainly of methane, a hydrocarbon molecule with only one carbon atom. However, natural gas may also include smaller quantities of hydrocarbons with a larger number of carbon atoms, such as ethane (having two carbon atoms, designated as C2), propane (having three carbon atoms, designated as C3), butane (having four carbon atoms, designated as C4), and other heavier hydrocarbons. All these heavier hydrocarbons have a higher molecular weight (a property designated by the term Mw) than methane, because their molecules are composed of more atoms. As such, the greater the concentration of such heavier hydrocarbons in a gas mixture, the greater will be its average molecular weight. However, it is a feature of gas behaviour that, at a given temperature and pressure, a gas mixture which includes increased quantities of the heavier molecular weight hydrocarbons C2 and C3 becomes more compressible, a property designated by what is called the “z factor”. A lower z factor represents a more compressible gas.
[6] Directionally, heavier molecular weight hydrocarbons require more energy to be transported in a pipeline than does the lighter molecular weight methane. However, the increased compressibility (or lower z factor) of a mixture containing increased quantities of the heavier hydrocarbons C2 and C3 contributes directionally to less energy being required to transport the mixture. Beyond a certain threshold of increased quantities of these heavier molecular weight hydrocarbons, and at certain temperatures and pressures, this increased compressibility can “overcome” the effect of the heavier molecular weight. Therefore, treating a naturally occurring gas mixture (consisting primarily of methane and small quantities of ethane, propane, butane, etc.) by intentionally adding C2 and/or C3 can result in a reduction of the amount of energy required to transport the mixture in a pipeline.
[7] Whether such a reduction in the energy required to transport the mixture in a pipeline will actually result can be determined by calculating the product of the molecular weight (Mw) and the compressibility of the new gas mixture (z) and comparing that product (zMw) to the zMw product of the untreated gas. A lower zMw product indicates that a reduction in the energy required to achieve transport of the gas mixture will result.
[8] In June 1996, prior to filing the application for the 670 Patent, JL Energy (then called 665976 Alberta Ltd.) licensed certain technology, broadly of the sort described in general terms above, to one of the Plaintiffs, Aux Sable LP (then called Alliance Pipeline NGL LP) [the Licence]. In January 1999, Aux Sable LP assigned the Licence, with the consent of JL Energy, to Aux Sable Extraction LP, another limited partnership formed under Delaware law [Aux Sable Extraction]. Aux Sable Extraction is not a party to this litigation.
[9] In May 2016, JL Energy brought an action for breach of contract and infringement of the 670 Patent in the Court of Queen’s Bench of Alberta against several defendants, including Aux Sable LP and Aux Sable GP [the Alberta Action]. The Alberta Action has not progressed, pending the outcome of the within action before this Court, although there is a pending application in the Alberta Action to add defendants, including Aux Sable Canada and Aux Sable Extraction.
[10] In response to the Alberta Action, the Plaintiffs commenced the within action in September 2016, seeking an order pursuant to subsection 60(1) of the Patent Act, RSC 1985 c P-4 [the Act] declaring that the 670 Patent is invalid, void and of no force and effect. It is acknowledged by the Defendant that each of the Plaintiffs is an “interested person” for purposes of bringing a proceeding under s 60(1) of the Act.
[11] As will be explained in more detail below, the 670 Patent sets out 10 claims. Claims 1 and 9 are independent claims, with claims 2 through 8 depending on claim 1 and claim 10 depending on claim 9. The Plaintiffs raise invalidity arguments, in connection with all claims, related to obviousness, insufficiency, and unpatentable subject matter. They also argue that claims 9 and 10 are invalid for anticipation/novelty, overbreadth and lack of utility. The Defendant denies that any of the claims of the 670 Patent are invalid, for any of the reasons asserted by the Plaintiffs. The Defendant had also argued, as a consequence of the Licence, that the principles of licensee estoppel preclude the Plaintiffs from challenging the validity of the patent, but it did not pursue this argument at trial. The parties have agreed that, for purposes of the issues in this litigation, the 670 Patent was filed in Canada on May 16, 1997 and the claim date for the 670 Patent is November 18, 1996.
[12] Much of the documentary evidence in this action was admitted by agreement of the parties. Each of the parties supported its positions on the various grounds of invalidity through the evidence of expert witnesses. The Defendant also called the inventor of the 670 Patent and several other witnesses of fact to speak to the relationship between the 670 Patent and the so-called Alliance Pipeline, a pipeline between Northwest Alberta and Chicago, Illinois, which the Defendant had a role in developing and which it argues employs the technology of the patent. These witnesses also testified as to the disputed confidentiality of one of the prior art documents that the Plaintiffs had been relying upon in connection with anticipation and obviousness arguments. However, during the course of trial, the Plaintiffs withdrew their reliance upon that document. As such, the confidentiality dispute and the evidence related to that issue need not be addressed any further. The evidence of the witnesses necessary to address the remaining issues in this action will be canvassed later in these Reasons.
III. Issues
[13] The issues to be decided by the Court in this action, ordered in the same manner as presented by the Plaintiffs in their closing submissions, are as follows:
Are claims 9-10 of the 670 Patent invalid based on the following grounds:
Overbreadth;
Inutility;
Anticipation; or
Obviousness?
Are claims 1-8 of the 670 Patent invalid for obviousness?
Are claims 1-10 of the 670 Patent invalid based on the following grounds:
Insufficiency; or
Unpatentable subject matter?
[14] The allegations of invalidity necessarily require identification of the person of ordinary skill in the art [the Skilled Person], to whom the 670 Patent is directed, and construction of the claims of the 670 Patent prior to consideration of the invalidity allegations. The obviousness allegation also raises a particular legal issue in the present case, surrounding whether the statutory amendment enacting s 28.3 of the Act removed the requirement, found in relevant jurisprudence, that prior art references proposed by the Plaintiffs in support of the obviousness allegations be locatable by a reasonably diligent search.
IV. Witnesses
[15] Each of the parties introduced expert evidence in support of its respective positions on construction of the claims of the 670 Patent and the various grounds of invalidity that are at issue, including opining on the credentials and characteristics of the Skilled Person, the relevant prior art, and the common general knowledge [CGK] of the Skilled Person. Each of the experts was found by the Court, without objection from the opposing party, to be qualified to provide opinions on all these issues. While the experts’ evidence will be considered in more detail in connection with the individual issues to which it relates, the following are my general observations as to the reliability of the individual experts.
A. Dr. Stephen Ramsay
[16] The first expert to testify on behalf of Aux Sable was Dr. Stephen Ramsay. Dr. Ramsay is a professional engineer and senior consultant at an engineering consulting firm. His educational qualifications include a PhD in Engineering and Applied Mathematics and Theoretical Physics (Fluid Mechanics) from the University of Cambridge. Dr. Ramsay was an Assistant Professor, and later Adjunct Professor, at the University of Western Ontario as of the claim date and publication date of the 670 Patent. He has more than 35 years of experience in consulting, teaching, and research related to pipelines, oil and gas, energy, transportation and related industries. Dr. Ramsay submitted a principal report setting out his opinions on the issues in this action and a further report in reply to the reports of JL Energy’s experts.
[17] JL Energy submits that, in areas of conflicting evidence, Dr. Ramsay’s opinion should be given little weight. JL Energy argues that during cross-examination, Dr. Ramsay acknowledged multiple errors he had made in his expert reports, retracted multiple statements, and offered evidence contradictory to his reports. In support of this position, JL Energy also refers the Court to commentary by the British Columbia Supreme Court [BCSC] on Dr. Ramsay’s role as an expert witness in Drader v Abbotsford (City), 2012 BCSC 873 [Drader]. The BCSC found, at paragraphs 238 and 241, that Dr. Ramsay had tailored his calculations and analysis to achieve a particular outcome.
[18] While I note these comments by the BCSC, I agree with Aux Sable’s submission that, in considering concerns of the sort raised in Drader, what matters is whether Dr. Ramsay’s evidence demonstrates similar concerns in the present action. I find that it does not. Rather, as JL Energy notes, in cross-examination Dr. Ramsay made a number of concessions surrounding the evidence in his reports. I did not regard his testimony as argumentative or as demonstrating advocacy for the parties that had retained him. However, the concessions Dr. Ramsay made in cross-examination will be taken into account where relevant to considering the individual issues to which that evidence relates.
B. Mr. Graeme King
[19] Aux Sable’s second expert, Mr. Graeme King, is a pipeline engineering specialist with more than 45 years’ experience as a professional engineer. He has designed, constructed and maintained pipelines and facilities for transporting natural gas, dense phase gas, liquefied natural gas, oil, bitumen, sulphur, and steam in Canada, the United States, Mexico, Russia, Kazakhstan, the Middle East, and Australia. Mr. King has published in this area, including on the dense phase (a concept which will be explained later in these Reasons), and has presented at numerous conferences. Like Dr. Ramsay, Mr. King submitted a principal report setting out his opinions on the issues in this action and a further report in reply to the reports of JL Energy’s experts.
[20] Although JL Energy does not dispute Mr. King’s credentials, it argues that he acted as an advocate for Aux Sable’s positions. JL Energy submits that, throughout his cross-examination, Mr. King was difficult, inflexible, and intransigent, refusing to answer simple questions, and being intent on reiterating his views, regardless of whether those views were responsive to the questions he was asked.
[21] I find merit to JL Energy’s characterization of Mr. King’s evidence. On many occasions throughout his cross-examination, Mr. King did not answer relatively straightforward questions, at least when initially asked, and presented as instead being focused on advancing his opinions. For example, when asked whether the gas mixtures identified in one of the papers he authored contained butane in concentrations exceeding a particular concentration disclosed by the 670 Patent, rather than answering the question, Mr. King took issue with JL Energy’s counsel’s reading of the patent. When asked to confirm that the same paper does not expressly refer to the zMw product as a parameter to indicate when hydraulic efficiency gains are achieved though the deliberate addition of C2 and/or C3, Mr. King did not initially answer the question and instead provided an explanation of why measuring pressure loss in a pipeline amounted to the same thing.
[22] Similarly, when asked to confirm that his papers did not compare the zMw product for untreated gas versus gas to which C2 or C3 had been added, Mr. King described the role of that product in a flow equation, effectively reiterating one of the principal opinions expressed in his expert report, rather than answering the question asked. When asked whether he was aware of the 670 Patent’s description of features of the so-called “energy hill” (which will be further explained later in these Reasons) as attributable to the rate of decrease of the z factor overcoming the rate of increase in density, Mr. King took issue with the patent’s explanation rather than answering the question asked.
[23] There are other examples of this pattern in Mr. King’s cross-examination. Despite Mr. King’s undoubted experience and expertise in the technical areas that are the subject of this action, the concerns described above do raise reservations about relying on his opinions in connection with the issues where the parties’ respective experts diverge.
C. Dr. Mukul Sharma
[24] Aux Sable’s third expert, Dr. Mukul Sharma, is a professor, and past department chair, in the Hildebrand Department of Petroleum and Geosystems Engineering at the University of Texas. Dr. Sharma has taught natural gas engineering for over 32 years, including courses relating to the transportation of natural gas by pipeline and fundamental knowledge for engineers interested in such transportation. He has published more than 400 articles and conference proceedings and holds over 23 patents. Dr. Sharma is also the recipient of prestigious technical awards presented by the Society of Petroleum Engineers (SPE).
[25] JL Energy argues that Dr. Sharma’s evidence should be given little weight, submitting that he prepared his report with a fundamental misunderstanding of the legal construct of the Skilled Person. JL Energy also takes the position that Dr. Sharma lacks pipeline experience relevant to the opinions he sought to tender.
[26] I find no deficit in Dr. Sharma’s experience which would adversely affect the weight to be afforded to his evidence. JL Energy refers to Dr. Sharma’s testimony that he is not familiar with high pressure pipelines that intentionally add C2 and C3, in the manner contemplated by the 670 Patent, and that his experience relates to pipelines in Texas. I do not find those limitations on Dr. Sharma’s experience to undermine his qualifications to speak to the technical issues in this action. I also note that I found Dr. Sharma to present as a knowledgeable and articulate witness, without demonstrating defensiveness or a lack of objectivity in the manner in which he responded to questions in cross-examination.
[27] However, I do find merit to the concern that JL Energy raises about Dr. Sharma’s understanding of the Skilled Person. Dr. Sharma was clear in his testimony that his conception of the Skilled Person was an engineer with an average level of inventiveness. This conflicts with the description of the Skilled Person by Mr. Justice Rothstein, in Sanofi-Synthelabo Canada Inc. v. Apotex Inc., 2008 SCC 61 [Sanofi] at para 52, as a “… technician skilled in the art but having no scintilla of inventiveness or imagination …”. As pointed out by Aux Sable, this concern arises in the context of an obviousness analysis, as it is the non-inventive technician through whose eyes Justice Rothstein explains the question of obviousness must be assessed. As will be addressed later in these Reasons, Dr. Sharma’s incorrect understanding of the characteristics of the notional Skilled Person is relevant to the weight that can be afforded to certain of his opinions in connection of the obviousness of the 670 Patent. However, I do not find this misunderstanding to undermine the weight to be afforded to other aspects of Dr. Sharma’s evidence.
D. Dr. Wayne Monnery
[28] JL Energy called two experts. The first to testify, Dr. Wayne Monnery, is a registered professional engineer and currently the principal process engineer for Chem-Pet Process Technology Ltd., which position he has held since 1996. Dr. Monnery’s educational qualifications include a PhD in Chemical and Petroleum Engineering from the University of Calgary. He has also lectured and instructed at a number of schools and was an adjunct associate professor at the University of Calgary, Schulich School of Engineering, between 1999 and 2016, lecturing on topics including thermodynamics, phase separator design, and gas processing. Dr. Monnery has over 30 years’ experience teaching, consulting and conducting research in the area of thermodynamics and oil and gas processing.
[29] I should explain at this juncture the one dispute that arose at trial surrounding expert qualifications. While Dr. Monnery’s expertise as described above was agreed, and Aux Sable did not object to him being qualified to give expert evidence in relation to the various issues that are before the Court, JL Energy sought to include among his qualifications that Dr. Monnery is qualified to give expert evidence with respect to the transportation of gas by pipeline. In that respect, JL Energy adduced evidence from Dr. Monnery as to his role in teaching undergraduate and graduate courses that included instruction in such transportation. Aux Sable objected to this area of qualification, not because Dr. Monnery does not have the requisite expertise, but because all his teaching in this area was subsequent to November 1996 and therefore later than the date for assessing the prior art relevant to this action.
[30] I ruled at trial that Dr. Monnery’s qualifications included this disputed area, with Aux Sable entitled to cross-examine Dr. Monnery and subsequently adduce arguments related to the weight that should be afforded to his evidence arising from the timing within which his expertise was acquired. While Aux Sable did subsequently raise arguments about the reliability of Dr. Monnery’s evidence, the argument about the timing of acquisition of his expertise was not pursued.
[31] Aux Sable argues that Dr. Monnery was a combative witness and provided unresponsive answers to cross-examination questions in an effort to advocate for JL Energy’s positions. I agree that there were aspects of Dr. Monnery’s cross-examination that raise concern about him acting somewhat as an advocate for JL Energy. Aux Sables’ counsel identified in cross-examination areas where he gave evidence that appeared prompted by consideration of the impact of his evidence rather than the particular questions being asked. For instance, when questioned about a figure in one of the prior art references relevant to the Plaintiff’s anticipation allegations, Dr. Monnery volunteered his opinion that this figure was not intended to be read in conjunction with another figure. This answer was not responsive to the question asked and appeared intended to respond to what Dr. Monnery understood to be one of the Plaintiffs’ anticipation arguments.
[32] Similarly, when questioned about another prior art reference that involved combining two different natural gas mixtures, Dr. Monnery referred to the term “added”, used by Aux Sable’s counsel in posing the question, as “a little bit of a loaded gun”. In the course of the same line of questioning, when asked by counsel to confirm that, as one moved through the mixtures in the prior art reference, the concentrations of natural gas liquids increased, Dr. Monnery responded that there was an increase but not a material one. Counsel pointed out that he had not asked about the materiality of the increase, Dr. Monnery confirmed that he had not stated in his report that there was no material increase, and he confirmed that he had heard the testimony of other experts on whether there was a material increase.
[33] I agree with Aux Sable’s argument that testimony of this nature demonstrates more of an effort to advance a position than the Court would prefer to see in the experts appearing before it. I do not find this concern with Dr. Monnery’s evidence to have permeated his testimony sufficiently to undermine the reliability of his evidence. However, I do take it into account in assessing the weight to be afforded to his evidence in areas where the opinions of the parties’ experts diverge.
[34] Aux Sable also notes that Dr. Monnery testified in cross-examination that he ascribed some level of inventiveness to the Skilled Person, describing the person as “not particularly inventive” or “not very inventive”. This is an error similar to that made by Dr. Sharma, as described above. The extent to which this affects the weight to be ascribed to Dr. Monnery’s opinions, in connection with the obviousness analysis, will be addressed when that allegation is considered later in these Reasons.
[35] Aux Sable also submits that Dr. Monnery was unaware of and did not cite the legal instructions he was meant to apply, that he improperly relied on work outside of his affidavit, that he misapplied fundamental legal principles including admitting that his Skilled Person did not read all of the prior art in this case, and that he was instructed not to conduct his own independent search of the literature. To the extent necessary to address the components of the invalidity allegations to which these aspects of Dr. Monnery’s evidence relate, those arguments can be considered in connection with the analysis of such allegations.
E. Mr. Mark Ryan
[36] JL Energy’s second expert, Mr. Mark Ryan, is a registered professional engineer and works for OEL Projects Ltd., with which he has been employed since 1993, currently as Vice President of Process Engineering, which position he has held for the past 11 years. He holds a Bachelor of Science in Chemical Engineering from the University of Calgary. During his time with OEL Projects Ltd., Mr. Ryan has executed over 11,000 projects, many of which involved pipeline design either as a primary scope or in association with related facility work.
[37] I found Mr. Ryan to be a forthright and straightforward witness, who testified clearly, did not appear to be defensive or to be advocating for either the party which had retained him or his own opinions. He readily acknowledged certain errors in his expert report. While those errors are relevant to the extent they relate to portions of his evidence that affect the analysis in these Reasons, I generally find Mr. Ryan to be a reliable witness, subject to certain specific concerns raised by Aux Sable as described below.
[38] In challenging Mr. Ryan’s evidence, Aux Sable submits that he did not properly set out in his expert report the legal instructions which he received and was relying upon. They also argue that he admitted to errors in software modelling that he performed, omitted from his report certain results that he was required to include pursuant to the Code of Conduct for Expert Witnesses prescribed by Rule 52.2 of the Federal Courts Rules, SOR 98/106, and failed to conduct his own prior art search before giving his opinion. To the extent necessary, these arguments can be addressed when considering the portions of the invalidity allegations to which the relevant aspects of Mr. Ryan’s evidence relate.
[39] As with some of the other witnesses, concerns have also been raised about Mr. Ryan’s approach to the role of the Skilled Person. Mr. Ryan stated in cross-examination that he considered himself a proxy for the Skilled Person, in terms of academic and career experience at the relevant time in 1996, and that in his expert report he advanced opinions based on his own personal views, applying those views to the Skilled Person. In re-examination, Mr. Ryan also confirmed that he employed definitions of the Skilled Person supplied by JL Energy’s counsel. JL Energy submits that Mr. Ryan’s evidence indicates only that he is applying his own academic and work experience, which at the relevant time aligned with that of the Skilled Person, not that he is treating his own experience entirely as a proxy for the Skilled Person.
[40] I have considered JL Energy’s submission but agree with Aux Sable’s position that this aspect of Mr. Ryan’s evidence potentially raises concerns. I do not find the re-examination evidence to particularly assist with this issue. The fact that he was working with an accurate legal definition of the Skilled Person does not remove the question raised by his evidence that, at least to some extent, he relied on his personal views when undertaking tasks assigned by patent law to the Skilled Person. That question is whether his approach undermines the opinions expressed by Mr. Ryan in connection with those tasks. I consider that question later in these Reasons where it has the potential to bear upon areas in which the opinions of the parties’ experts diverge.
F. Fact Witnesses
[41] As previously noted, JL Energy called as witnesses of fact the inventor of the 670 Patent, Mr. Ian Morris, and several other witnesses to speak to the relationship between the 670 Patent and the Alliance Pipeline. I found no issues with the credibility of any of these witnesses. However, their evidence was offered as relevant to secondary factors that can be considered in assessing the obviousness of the 670 Patent and, as will be explained below, I do not find it necessary to move to secondary factors to arrive at my conclusions on obviousness. As such, no further comment is required in relation to the witnesses of fact.
V. The Skilled Person
[42] As noted above, in relation to some of the parties’ experts’ opinions, there are concerns about the particular characteristics of the Skilled Person or the manner in which those characteristics were invoked by the particular expert. However, as between the parties, there does not appear to be any substantive disagreement as to the characteristics assigned by patent law to the Skilled Person. The Plaintiffs refer the Court to the following extract from the description of the Skilled Person, expressed in the particular context of the Skilled Person’s role in an obviousness analysis, in Apotex Inc. v H. Lundbeck A/S, 2013 FC 192 at para 83, quoting Lilly Icos LLC v Pfizer Ltd, [2000] EWHC Patents 49:
The question of obviousness has to be assessed through the eyes of the skilled but non-inventive man in the art. This is not a real person. He is a legal creation. He is supposed to offer an objective test of whether a particular development can be protected by a patent. He is deemed to have looked at and read publicly available documents and to know of public uses in the prior art. He understands all languages and dialects. He never misses the obvious nor stumbles on the inventive. He has no private idiosyncratic preferences or dislikes. He never thinks laterally. He differs from all real people in one or more of these characteristics.
…
[43] To similar effect, JL Energy’s experts state that they were instructed by counsel for JL Energy to assume that the Skilled Person is a technician who has not a scintilla of inventiveness or imagination, is a paragon of deduction and dexterity, is wholly devoid of intuition, is not a dullard, and is a competent worker who keeps up to date with the relevant literature.
[44] There is also broad, although not complete, agreement among the parties’ experts as to the credentials of the particular Skilled Person to whom the 670 Patent is directed. Dr. Ramsay described the Skilled Person as an individual with an undergraduate degree in applied science, engineering or a related area and 1-3 years of hands-on work experience related to the transportation of natural gas by pipeline. Mr. King described the Skilled Person, in similar terms, as an individual with an undergraduate degree in engineering or applied science with undergraduate courses in thermodynamics and fluid flow and 1-3 years of hands-on work related to the pipeline transmission of fluids including natural gas. Mr. King states that the Skilled Person may also have worked for a few years designing and optimizing pipelines for the transportation of fluids like natural gas or possibly oil.
[45] Similar to the Plaintiffs’ other two experts, Dr. Sharma described the Skilled Person as an individual with an undergraduate degree in applied science, engineering or a related area with 1-3 years of practical experience related to pipeline transportation of natural gas. However, Dr. Sharma also added a further description, stating that the Skilled Person may alternatively have an advanced degree related to the transportation of natural gas by pipeline and less work experience.
[46] Turning to the Defendant’s experts, Dr. Monnery states in his expert report that he was instructed by JL Energy’s counsel to adopt Mr. King’s description of the credentials of the Skilled Person, with the exception of the possibility that the Skilled Person may have worked for a few years designing and optimizing pipelines for the transportation of fluids like natural gas or possibly oil. He also states that he was instructed to disregard Dr. Sharma’s description of the Skilled Person’s credentials, which includes the possibility of having an advanced degree related to the transportation of natural gas by pipeline.
[47] Similarly, Mr. Ryan states in his expert report that he was instructed by JL Energy’s counsel to adopt a particular description of the credentials of the Skilled Person, which description appears to align with the instructions provided to Dr. Monnery.
[48] Notwithstanding some minor divergence in the above descriptions of the credentials of the Skilled Person, I agree with the submission of Aux Sable that JL Energy has not identified any difference in the knowledge of the Skilled Person relevant to this action that would depend on which description is preferred. Indeed, I note the statement by JL Energy’s expert Dr. Monnery that, even if he were to adopt the elements of the Skilled Person’s credentials that he was instructed by JL Energy’s counsel to disregard, this would not change the opinions set out in his report. For purposes of these Reasons, as neither party has identified anything material that turns on this issue, I adopt the description of the Skilled Person which is in substance common to the reports of all the experts, i.e. an individual with an undergraduate degree in engineering or applied science with undergraduate courses in thermodynamics and fluid flow and 1-3 years of hands-on work experience related to the pipeline transmission of fluids including natural gas.
VI. Claim Construction
[49] Having identified the Skilled Person, the next task is to identify how the Skilled Person would construe the claims of the 670 Patent. There does not appear to be any disagreement between the parties surrounding the principles applicable to claim construction. As explained in Whirlpool Corp. v Camco Inc., 2000 SCC 67 at paras 43 and 49, the claims of a patent are to be construed once and for all purposes prior to consideration of validity issues. In Mylan Pharmaceuticals ULC v Eli Lilly Canada Inc, 2016 FCA 119 [Mylan] at para 39, the Federal Court of Appeal explained the process of claim construction as follows:
… The rules of patent construction preclude reference to the specification when the claims are clear, and also improper if it varies the scope of the claims: Hughes and Woodley on Patents, p. 312:
In construing a patent, the claims are the starting point. The claims alone define the statutory monopoly and the Patentee has a statutory duty to state, in the claims, what he invention is for which protection is sought. In construing the claims, recourse to the rest of the specifications is (1) permissible to assist in understanding the terms used in the claims; (2) unnecessary where the words and plain and unambiguous and (3) improper to vary the scope or ambit of the claims.
[50] The evidence of experts offered by both parties confirms that the claims are clear and unambiguous. As such, the claims are to be construed by reference to the words of the claims themselves. Reproduced in full, the 10 claims of the 670 Patent read as follows:
1. A method of transporting natural gas by pipeline, which comprises:
(a) adding to such natural gas sufficient of at least one C2 or C3 hydrocarbon or a mixture of C2 and C3 hydrocarbons such so the hydrocarbon, together with the C2 and C3 hydrocarbon (if any) originally in the natural gas, forms a resulting mixture with a total C2 or C3 hydrocarbon content which is sufficient, at the pressure and temperature to be used for transporting, to reduce the product of the z factor and the average molecular weight of the resulting mixture to a level lower than the product of the z factor and the average molecular weight of the untreated natural gas, and
(b) transporting such resulting mixture by pipeline at a temperature of between -40° and +120° Fahrenheit and pressure greater than 1000 psia, said pressure and temperature being chosen so the resulting mixture has no coherent liquid phase at the temperature and pressure of transmission.
2. A method as claimed in claim 1, where the hydrocarbon is selected from
(a) between 26 and 40% of at least one C2 compound if the pressure is about 1000 psia, declining smoothly to about 6% to 15% of said C2 compound if the pressure is about 2200 psia, or
(b) between 12% and 5% of a C3 compound, if the pressure is about 1000 psia, declining smoothly to the C3 amount which will not cause liquefaction at the pressure used when the pressure is above 1000 psia.
3. A method as claimed in either claim 1 or claim 2, in which there is not more than 1% by volume of carbon dioxide in the resulting mixture.
4. A method as claimed in claim 1 or claim 2, in which there is not more than 2% nitrogen in the resulting mixture.
5. A method as claimed in any of claims 1 – 4, in which the temperature at which the resulting mixture is transmitted is between -20°F and +120°F.
6. A method as claimed in any of claims 1 – 4, in which the pressure at which the resulting mixture is transmitted is between 2160 psia and 1150 psia.
7. A method as claimed in any of claims 1 – 6 in which the C2 hydrocarbon added to the natural gas is ethane.
8. A method as claimed in any of claims 1 – 7 in which the C3 hydrocarbon added to the natural gas is propane.
9. A gas mixture, for use in a pipeline at a pressure greater than 1,000 psia and a temperature of from -40 degrees F to +120 degrees F, which comprises:
(a) from 68 to 92% by volume of methane;
(b) from 6 to 35% by volume of ethane;
(c) from 0 to 9% by volume of propane;
(d) from 0% by volume of C4 hydrocarbons to a percentage of C4 hydrocarbons which does not liquify at the pressure used;
(e) not more than 1% of carbon dioxide;
(f) not more than 2% of nitrogen, the total being 100%, and such mixture being completely gaseous with no liquid phase at the temperature and pressure of intended operation.
10. A gas mixture as claimed in claim 9, said gas mixture being at a pressure of 1000-2200 psia and a temperature of from -20 degrees F to +120 degrees F.
[51] The parties and their respective experts now appear to be substantially in agreement as to the construction of the claims. Most material to the issues in this action, both parties agree that the independent claim 1, and claims 2 to 8 which depend upon claim 1, include the following elements:
The intentional addition to natural gas of a C2 hydrocarbon and/or a C3 hydrocarbon; and
Ensuring that the product of the molecular weight (Mw) and the z factor of the resulting gas mixture is lower than the zMw product prior to such addition.
[52] I therefore adopt the above agreement between the parties related to the construction of claims 1-8. Prior to trial, the parties appeared to disagree on claim construction with respect to claims 9 and 10. JL Energy took the position that those claims include the same two elements as described in the preceding paragraph, i.e. intentional addition of C2 and/or C3 and evaluation of the resulting change in zMw. Aux Sable’s experts opined that claims 9 and 10 claim gas mixtures for transport in a pipeline, with certain composition, pressure and temperate ranges, and without any liquid phase present in the gas mixture, but do not include the two elements of adding C2 and/or C3 and evaluating zMw. However, this disagreement was resolved by the conclusion of trial. In cross-examination, JL Energy’s experts identified no disagreements with this aspect of the claim construction by Aux Sable’s experts, and JL Energy’s c

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Aux Sable Liquid Products LP v. JL Energy Transportation Inc. Court (s) Database Federal Court Decisions Date 2019-05-06 Neutral citation 2019 FC 581 File numbers T-1612-16 Notes Reported Decision A correction was made on December 15, 2020. Decision Content Date: 20190506 Docket: T-1612-16 Citation: 2019 FC 581 Ottawa, Ontario, May 6, 2019 PRESENT: Mr. Justice Southcott BETWEEN: AUX SABLE LIQUID PRODUCTS LP, AUX SABLE LIQUID PRODUCTS INC. AND AUX SABLE CANADA LTD. Plaintiffs and JL ENERGY TRANSPORTATION INC. Defendant JUDGMENT AND REASONS Table of Contents I. Overview 2 II. Background 3 III. Issues 7 IV. Witnesses 8 A. Dr. Stephen Ramsay 8 B. Mr. Graeme King 9 C. Dr. Mukul Sharma 11 D. Dr. Wayne Monnery 13 E. Mr. Mark Ryan 16 F. Fact Witnesses 18 V. The Skilled Person 18 VI. Claim Construction 21 VII. Are claims 9-10 of the 670 Patent invalid based on the following grounds? 25 A. Overbreadth 25 B. Inutility 33 C. Anticipation 39 Stinson 43 Handbook 48 D. Obviousness 55 VIII. Are claims 1-8 of the 670 Patent invalid for obviousness? 55 A. Analytical Framework 55 B. Common General Knowledge 57 C. Inventive Concept 60 D. Test for a Citable Prior Art Reference 63 E. Sanofi Steps 3 and 4 86 IX. Are claims 1-10 of the 670 Patent invalid based on the following grounds? 105 A. Insufficiency 105 B. Unpatentable subject matter 112 X. Conclusion and Costs 117 Appendix “A” 119 I. Overview [1] This decision relates to an action by the Plaintiffs, Aux Sable Liquid Products LP, Aux Sable Liquid Products Inc., and Aux Sable Canada Ltd. [together, Aux Sable], to invalidate a patent identified as Canadian Patent No. 2,205,670 [the 670 Patent], related to the transportation of natural gas by pipeline, held by the Defendant, JL Energy Transportation Inc. [JL Energy]. [2] For the reasons explained in detail below, I find that claims 9-10 of the 670 Patent are invalid for overbreadth, inutility, anticipation and non-patentable subject matter. I do not find claims 1-8 to be invalid under any of the invalidity allegations raised by the Plaintiffs. II. Background [3] Aux Sable Liquid Products LP is a limited partnership formed under Delaware law and registered as an extra-provincial limited partnership in Alberta [Aux Sable LP]. Aux Sable Liquid Products Inc. is also a Delaware company and the general partner of the limited partnership [Aux Sable GP]. Aux Sable Canada Ltd. is an Alberta company and carries on business in the province and elsewhere in Canada [Aux Sable Canada]. [4] JL Energy is a company incorporated under the laws of Alberta and is the owner of the 670 Patent. By way of introduction to the technology that is the subject of this litigation, the Abstract of the Invention, set out in the 670 Patent, reads as follows: Abstract of the Invention At pressures over 1000 psia, it is advantageous to add to natural gas an additive which is a C2 C3 and C4 hydrocarbon compound, CO, NH3 or HF or a mixture of such additives. Above a lower limit (which varies with the additive being added and the pressure), this results in a smaller Z factor, or (MwZ) product, representing increased packing of molecules, and therefore leading to a decrease in the amount of power needed to pump the mixture or to compress it. [5] By way of further background explanation of the relevant technology, the following appears uncontroversial. Natural gas, in its naturally occurring form, is composed mainly of methane, a hydrocarbon molecule with only one carbon atom. However, natural gas may also include smaller quantities of hydrocarbons with a larger number of carbon atoms, such as ethane (having two carbon atoms, designated as C2), propane (having three carbon atoms, designated as C3), butane (having four carbon atoms, designated as C4), and other heavier hydrocarbons. All these heavier hydrocarbons have a higher molecular weight (a property designated by the term Mw) than methane, because their molecules are composed of more atoms. As such, the greater the concentration of such heavier hydrocarbons in a gas mixture, the greater will be its average molecular weight. However, it is a feature of gas behaviour that, at a given temperature and pressure, a gas mixture which includes increased quantities of the heavier molecular weight hydrocarbons C2 and C3 becomes more compressible, a property designated by what is called the “z factor”. A lower z factor represents a more compressible gas. [6] Directionally, heavier molecular weight hydrocarbons require more energy to be transported in a pipeline than does the lighter molecular weight methane. However, the increased compressibility (or lower z factor) of a mixture containing increased quantities of the heavier hydrocarbons C2 and C3 contributes directionally to less energy being required to transport the mixture. Beyond a certain threshold of increased quantities of these heavier molecular weight hydrocarbons, and at certain temperatures and pressures, this increased compressibility can “overcome” the effect of the heavier molecular weight. Therefore, treating a naturally occurring gas mixture (consisting primarily of methane and small quantities of ethane, propane, butane, etc.) by intentionally adding C2 and/or C3 can result in a reduction of the amount of energy required to transport the mixture in a pipeline. [7] Whether such a reduction in the energy required to transport the mixture in a pipeline will actually result can be determined by calculating the product of the molecular weight (Mw) and the compressibility of the new gas mixture (z) and comparing that product (zMw) to the zMw product of the untreated gas. A lower zMw product indicates that a reduction in the energy required to achieve transport of the gas mixture will result. [8] In June 1996, prior to filing the application for the 670 Patent, JL Energy (then called 665976 Alberta Ltd.) licensed certain technology, broadly of the sort described in general terms above, to one of the Plaintiffs, Aux Sable LP (then called Alliance Pipeline NGL LP) [the Licence]. In January 1999, Aux Sable LP assigned the Licence, with the consent of JL Energy, to Aux Sable Extraction LP, another limited partnership formed under Delaware law [Aux Sable Extraction]. Aux Sable Extraction is not a party to this litigation. [9] In May 2016, JL Energy brought an action for breach of contract and infringement of the 670 Patent in the Court of Queen’s Bench of Alberta against several defendants, including Aux Sable LP and Aux Sable GP [the Alberta Action]. The Alberta Action has not progressed, pending the outcome of the within action before this Court, although there is a pending application in the Alberta Action to add defendants, including Aux Sable Canada and Aux Sable Extraction. [10] In response to the Alberta Action, the Plaintiffs commenced the within action in September 2016, seeking an order pursuant to subsection 60(1) of the Patent Act, RSC 1985 c P-4 [the Act] declaring that the 670 Patent is invalid, void and of no force and effect. It is acknowledged by the Defendant that each of the Plaintiffs is an “interested person” for purposes of bringing a proceeding under s 60(1) of the Act. [11] As will be explained in more detail below, the 670 Patent sets out 10 claims. Claims 1 and 9 are independent claims, with claims 2 through 8 depending on claim 1 and claim 10 depending on claim 9. The Plaintiffs raise invalidity arguments, in connection with all claims, related to obviousness, insufficiency, and unpatentable subject matter. They also argue that claims 9 and 10 are invalid for anticipation/novelty, overbreadth and lack of utility. The Defendant denies that any of the claims of the 670 Patent are invalid, for any of the reasons asserted by the Plaintiffs. The Defendant had also argued, as a consequence of the Licence, that the principles of licensee estoppel preclude the Plaintiffs from challenging the validity of the patent, but it did not pursue this argument at trial. The parties have agreed that, for purposes of the issues in this litigation, the 670 Patent was filed in Canada on May 16, 1997 and the claim date for the 670 Patent is November 18, 1996. [12] Much of the documentary evidence in this action was admitted by agreement of the parties. Each of the parties supported its positions on the various grounds of invalidity through the evidence of expert witnesses. The Defendant also called the inventor of the 670 Patent and several other witnesses of fact to speak to the relationship between the 670 Patent and the so-called Alliance Pipeline, a pipeline between Northwest Alberta and Chicago, Illinois, which the Defendant had a role in developing and which it argues employs the technology of the patent. These witnesses also testified as to the disputed confidentiality of one of the prior art documents that the Plaintiffs had been relying upon in connection with anticipation and obviousness arguments. However, during the course of trial, the Plaintiffs withdrew their reliance upon that document. As such, the confidentiality dispute and the evidence related to that issue need not be addressed any further. The evidence of the witnesses necessary to address the remaining issues in this action will be canvassed later in these Reasons. III. Issues [13] The issues to be decided by the Court in this action, ordered in the same manner as presented by the Plaintiffs in their closing submissions, are as follows: Are claims 9-10 of the 670 Patent invalid based on the following grounds: Overbreadth; Inutility; Anticipation; or Obviousness? Are claims 1-8 of the 670 Patent invalid for obviousness? Are claims 1-10 of the 670 Patent invalid based on the following grounds: Insufficiency; or Unpatentable subject matter? [14] The allegations of invalidity necessarily require identification of the person of ordinary skill in the art [the Skilled Person], to whom the 670 Patent is directed, and construction of the claims of the 670 Patent prior to consideration of the invalidity allegations. The obviousness allegation also raises a particular legal issue in the present case, surrounding whether the statutory amendment enacting s 28.3 of the Act removed the requirement, found in relevant jurisprudence, that prior art references proposed by the Plaintiffs in support of the obviousness allegations be locatable by a reasonably diligent search. IV. Witnesses [15] Each of the parties introduced expert evidence in support of its respective positions on construction of the claims of the 670 Patent and the various grounds of invalidity that are at issue, including opining on the credentials and characteristics of the Skilled Person, the relevant prior art, and the common general knowledge [CGK] of the Skilled Person. Each of the experts was found by the Court, without objection from the opposing party, to be qualified to provide opinions on all these issues. While the experts’ evidence will be considered in more detail in connection with the individual issues to which it relates, the following are my general observations as to the reliability of the individual experts. A. Dr. Stephen Ramsay [16] The first expert to testify on behalf of Aux Sable was Dr. Stephen Ramsay. Dr. Ramsay is a professional engineer and senior consultant at an engineering consulting firm. His educational qualifications include a PhD in Engineering and Applied Mathematics and Theoretical Physics (Fluid Mechanics) from the University of Cambridge. Dr. Ramsay was an Assistant Professor, and later Adjunct Professor, at the University of Western Ontario as of the claim date and publication date of the 670 Patent. He has more than 35 years of experience in consulting, teaching, and research related to pipelines, oil and gas, energy, transportation and related industries. Dr. Ramsay submitted a principal report setting out his opinions on the issues in this action and a further report in reply to the reports of JL Energy’s experts. [17] JL Energy submits that, in areas of conflicting evidence, Dr. Ramsay’s opinion should be given little weight. JL Energy argues that during cross-examination, Dr. Ramsay acknowledged multiple errors he had made in his expert reports, retracted multiple statements, and offered evidence contradictory to his reports. In support of this position, JL Energy also refers the Court to commentary by the British Columbia Supreme Court [BCSC] on Dr. Ramsay’s role as an expert witness in Drader v Abbotsford (City), 2012 BCSC 873 [Drader]. The BCSC found, at paragraphs 238 and 241, that Dr. Ramsay had tailored his calculations and analysis to achieve a particular outcome. [18] While I note these comments by the BCSC, I agree with Aux Sable’s submission that, in considering concerns of the sort raised in Drader, what matters is whether Dr. Ramsay’s evidence demonstrates similar concerns in the present action. I find that it does not. Rather, as JL Energy notes, in cross-examination Dr. Ramsay made a number of concessions surrounding the evidence in his reports. I did not regard his testimony as argumentative or as demonstrating advocacy for the parties that had retained him. However, the concessions Dr. Ramsay made in cross-examination will be taken into account where relevant to considering the individual issues to which that evidence relates. B. Mr. Graeme King [19] Aux Sable’s second expert, Mr. Graeme King, is a pipeline engineering specialist with more than 45 years’ experience as a professional engineer. He has designed, constructed and maintained pipelines and facilities for transporting natural gas, dense phase gas, liquefied natural gas, oil, bitumen, sulphur, and steam in Canada, the United States, Mexico, Russia, Kazakhstan, the Middle East, and Australia. Mr. King has published in this area, including on the dense phase (a concept which will be explained later in these Reasons), and has presented at numerous conferences. Like Dr. Ramsay, Mr. King submitted a principal report setting out his opinions on the issues in this action and a further report in reply to the reports of JL Energy’s experts. [20] Although JL Energy does not dispute Mr. King’s credentials, it argues that he acted as an advocate for Aux Sable’s positions. JL Energy submits that, throughout his cross-examination, Mr. King was difficult, inflexible, and intransigent, refusing to answer simple questions, and being intent on reiterating his views, regardless of whether those views were responsive to the questions he was asked. [21] I find merit to JL Energy’s characterization of Mr. King’s evidence. On many occasions throughout his cross-examination, Mr. King did not answer relatively straightforward questions, at least when initially asked, and presented as instead being focused on advancing his opinions. For example, when asked whether the gas mixtures identified in one of the papers he authored contained butane in concentrations exceeding a particular concentration disclosed by the 670 Patent, rather than answering the question, Mr. King took issue with JL Energy’s counsel’s reading of the patent. When asked to confirm that the same paper does not expressly refer to the zMw product as a parameter to indicate when hydraulic efficiency gains are achieved though the deliberate addition of C2 and/or C3, Mr. King did not initially answer the question and instead provided an explanation of why measuring pressure loss in a pipeline amounted to the same thing. [22] Similarly, when asked to confirm that his papers did not compare the zMw product for untreated gas versus gas to which C2 or C3 had been added, Mr. King described the role of that product in a flow equation, effectively reiterating one of the principal opinions expressed in his expert report, rather than answering the question asked. When asked whether he was aware of the 670 Patent’s description of features of the so-called “energy hill” (which will be further explained later in these Reasons) as attributable to the rate of decrease of the z factor overcoming the rate of increase in density, Mr. King took issue with the patent’s explanation rather than answering the question asked. [23] There are other examples of this pattern in Mr. King’s cross-examination. Despite Mr. King’s undoubted experience and expertise in the technical areas that are the subject of this action, the concerns described above do raise reservations about relying on his opinions in connection with the issues where the parties’ respective experts diverge. C. Dr. Mukul Sharma [24] Aux Sable’s third expert, Dr. Mukul Sharma, is a professor, and past department chair, in the Hildebrand Department of Petroleum and Geosystems Engineering at the University of Texas. Dr. Sharma has taught natural gas engineering for over 32 years, including courses relating to the transportation of natural gas by pipeline and fundamental knowledge for engineers interested in such transportation. He has published more than 400 articles and conference proceedings and holds over 23 patents. Dr. Sharma is also the recipient of prestigious technical awards presented by the Society of Petroleum Engineers (SPE). [25] JL Energy argues that Dr. Sharma’s evidence should be given little weight, submitting that he prepared his report with a fundamental misunderstanding of the legal construct of the Skilled Person. JL Energy also takes the position that Dr. Sharma lacks pipeline experience relevant to the opinions he sought to tender. [26] I find no deficit in Dr. Sharma’s experience which would adversely affect the weight to be afforded to his evidence. JL Energy refers to Dr. Sharma’s testimony that he is not familiar with high pressure pipelines that intentionally add C2 and C3, in the manner contemplated by the 670 Patent, and that his experience relates to pipelines in Texas. I do not find those limitations on Dr. Sharma’s experience to undermine his qualifications to speak to the technical issues in this action. I also note that I found Dr. Sharma to present as a knowledgeable and articulate witness, without demonstrating defensiveness or a lack of objectivity in the manner in which he responded to questions in cross-examination. [27] However, I do find merit to the concern that JL Energy raises about Dr. Sharma’s understanding of the Skilled Person. Dr. Sharma was clear in his testimony that his conception of the Skilled Person was an engineer with an average level of inventiveness. This conflicts with the description of the Skilled Person by Mr. Justice Rothstein, in Sanofi-Synthelabo Canada Inc. v. Apotex Inc., 2008 SCC 61 [Sanofi] at para 52, as a “… technician skilled in the art but having no scintilla of inventiveness or imagination …”. As pointed out by Aux Sable, this concern arises in the context of an obviousness analysis, as it is the non-inventive technician through whose eyes Justice Rothstein explains the question of obviousness must be assessed. As will be addressed later in these Reasons, Dr. Sharma’s incorrect understanding of the characteristics of the notional Skilled Person is relevant to the weight that can be afforded to certain of his opinions in connection of the obviousness of the 670 Patent. However, I do not find this misunderstanding to undermine the weight to be afforded to other aspects of Dr. Sharma’s evidence. D. Dr. Wayne Monnery [28] JL Energy called two experts. The first to testify, Dr. Wayne Monnery, is a registered professional engineer and currently the principal process engineer for Chem-Pet Process Technology Ltd., which position he has held since 1996. Dr. Monnery’s educational qualifications include a PhD in Chemical and Petroleum Engineering from the University of Calgary. He has also lectured and instructed at a number of schools and was an adjunct associate professor at the University of Calgary, Schulich School of Engineering, between 1999 and 2016, lecturing on topics including thermodynamics, phase separator design, and gas processing. Dr. Monnery has over 30 years’ experience teaching, consulting and conducting research in the area of thermodynamics and oil and gas processing. [29] I should explain at this juncture the one dispute that arose at trial surrounding expert qualifications. While Dr. Monnery’s expertise as described above was agreed, and Aux Sable did not object to him being qualified to give expert evidence in relation to the various issues that are before the Court, JL Energy sought to include among his qualifications that Dr. Monnery is qualified to give expert evidence with respect to the transportation of gas by pipeline. In that respect, JL Energy adduced evidence from Dr. Monnery as to his role in teaching undergraduate and graduate courses that included instruction in such transportation. Aux Sable objected to this area of qualification, not because Dr. Monnery does not have the requisite expertise, but because all his teaching in this area was subsequent to November 1996 and therefore later than the date for assessing the prior art relevant to this action. [30] I ruled at trial that Dr. Monnery’s qualifications included this disputed area, with Aux Sable entitled to cross-examine Dr. Monnery and subsequently adduce arguments related to the weight that should be afforded to his evidence arising from the timing within which his expertise was acquired. While Aux Sable did subsequently raise arguments about the reliability of Dr. Monnery’s evidence, the argument about the timing of acquisition of his expertise was not pursued. [31] Aux Sable argues that Dr. Monnery was a combative witness and provided unresponsive answers to cross-examination questions in an effort to advocate for JL Energy’s positions. I agree that there were aspects of Dr. Monnery’s cross-examination that raise concern about him acting somewhat as an advocate for JL Energy. Aux Sables’ counsel identified in cross-examination areas where he gave evidence that appeared prompted by consideration of the impact of his evidence rather than the particular questions being asked. For instance, when questioned about a figure in one of the prior art references relevant to the Plaintiff’s anticipation allegations, Dr. Monnery volunteered his opinion that this figure was not intended to be read in conjunction with another figure. This answer was not responsive to the question asked and appeared intended to respond to what Dr. Monnery understood to be one of the Plaintiffs’ anticipation arguments. [32] Similarly, when questioned about another prior art reference that involved combining two different natural gas mixtures, Dr. Monnery referred to the term “added”, used by Aux Sable’s counsel in posing the question, as “a little bit of a loaded gun”. In the course of the same line of questioning, when asked by counsel to confirm that, as one moved through the mixtures in the prior art reference, the concentrations of natural gas liquids increased, Dr. Monnery responded that there was an increase but not a material one. Counsel pointed out that he had not asked about the materiality of the increase, Dr. Monnery confirmed that he had not stated in his report that there was no material increase, and he confirmed that he had heard the testimony of other experts on whether there was a material increase. [33] I agree with Aux Sable’s argument that testimony of this nature demonstrates more of an effort to advance a position than the Court would prefer to see in the experts appearing before it. I do not find this concern with Dr. Monnery’s evidence to have permeated his testimony sufficiently to undermine the reliability of his evidence. However, I do take it into account in assessing the weight to be afforded to his evidence in areas where the opinions of the parties’ experts diverge. [34] Aux Sable also notes that Dr. Monnery testified in cross-examination that he ascribed some level of inventiveness to the Skilled Person, describing the person as “not particularly inventive” or “not very inventive”. This is an error similar to that made by Dr. Sharma, as described above. The extent to which this affects the weight to be ascribed to Dr. Monnery’s opinions, in connection with the obviousness analysis, will be addressed when that allegation is considered later in these Reasons. [35] Aux Sable also submits that Dr. Monnery was unaware of and did not cite the legal instructions he was meant to apply, that he improperly relied on work outside of his affidavit, that he misapplied fundamental legal principles including admitting that his Skilled Person did not read all of the prior art in this case, and that he was instructed not to conduct his own independent search of the literature. To the extent necessary to address the components of the invalidity allegations to which these aspects of Dr. Monnery’s evidence relate, those arguments can be considered in connection with the analysis of such allegations. E. Mr. Mark Ryan [36] JL Energy’s second expert, Mr. Mark Ryan, is a registered professional engineer and works for OEL Projects Ltd., with which he has been employed since 1993, currently as Vice President of Process Engineering, which position he has held for the past 11 years. He holds a Bachelor of Science in Chemical Engineering from the University of Calgary. During his time with OEL Projects Ltd., Mr. Ryan has executed over 11,000 projects, many of which involved pipeline design either as a primary scope or in association with related facility work. [37] I found Mr. Ryan to be a forthright and straightforward witness, who testified clearly, did not appear to be defensive or to be advocating for either the party which had retained him or his own opinions. He readily acknowledged certain errors in his expert report. While those errors are relevant to the extent they relate to portions of his evidence that affect the analysis in these Reasons, I generally find Mr. Ryan to be a reliable witness, subject to certain specific concerns raised by Aux Sable as described below. [38] In challenging Mr. Ryan’s evidence, Aux Sable submits that he did not properly set out in his expert report the legal instructions which he received and was relying upon. They also argue that he admitted to errors in software modelling that he performed, omitted from his report certain results that he was required to include pursuant to the Code of Conduct for Expert Witnesses prescribed by Rule 52.2 of the Federal Courts Rules, SOR 98/106, and failed to conduct his own prior art search before giving his opinion. To the extent necessary, these arguments can be addressed when considering the portions of the invalidity allegations to which the relevant aspects of Mr. Ryan’s evidence relate. [39] As with some of the other witnesses, concerns have also been raised about Mr. Ryan’s approach to the role of the Skilled Person. Mr. Ryan stated in cross-examination that he considered himself a proxy for the Skilled Person, in terms of academic and career experience at the relevant time in 1996, and that in his expert report he advanced opinions based on his own personal views, applying those views to the Skilled Person. In re-examination, Mr. Ryan also confirmed that he employed definitions of the Skilled Person supplied by JL Energy’s counsel. JL Energy submits that Mr. Ryan’s evidence indicates only that he is applying his own academic and work experience, which at the relevant time aligned with that of the Skilled Person, not that he is treating his own experience entirely as a proxy for the Skilled Person. [40] I have considered JL Energy’s submission but agree with Aux Sable’s position that this aspect of Mr. Ryan’s evidence potentially raises concerns. I do not find the re-examination evidence to particularly assist with this issue. The fact that he was working with an accurate legal definition of the Skilled Person does not remove the question raised by his evidence that, at least to some extent, he relied on his personal views when undertaking tasks assigned by patent law to the Skilled Person. That question is whether his approach undermines the opinions expressed by Mr. Ryan in connection with those tasks. I consider that question later in these Reasons where it has the potential to bear upon areas in which the opinions of the parties’ experts diverge. F. Fact Witnesses [41] As previously noted, JL Energy called as witnesses of fact the inventor of the 670 Patent, Mr. Ian Morris, and several other witnesses to speak to the relationship between the 670 Patent and the Alliance Pipeline. I found no issues with the credibility of any of these witnesses. However, their evidence was offered as relevant to secondary factors that can be considered in assessing the obviousness of the 670 Patent and, as will be explained below, I do not find it necessary to move to secondary factors to arrive at my conclusions on obviousness. As such, no further comment is required in relation to the witnesses of fact. V. The Skilled Person [42] As noted above, in relation to some of the parties’ experts’ opinions, there are concerns about the particular characteristics of the Skilled Person or the manner in which those characteristics were invoked by the particular expert. However, as between the parties, there does not appear to be any substantive disagreement as to the characteristics assigned by patent law to the Skilled Person. The Plaintiffs refer the Court to the following extract from the description of the Skilled Person, expressed in the particular context of the Skilled Person’s role in an obviousness analysis, in Apotex Inc. v H. Lundbeck A/S, 2013 FC 192 at para 83, quoting Lilly Icos LLC v Pfizer Ltd, [2000] EWHC Patents 49: The question of obviousness has to be assessed through the eyes of the skilled but non-inventive man in the art. This is not a real person. He is a legal creation. He is supposed to offer an objective test of whether a particular development can be protected by a patent. He is deemed to have looked at and read publicly available documents and to know of public uses in the prior art. He understands all languages and dialects. He never misses the obvious nor stumbles on the inventive. He has no private idiosyncratic preferences or dislikes. He never thinks laterally. He differs from all real people in one or more of these characteristics. … [43] To similar effect, JL Energy’s experts state that they were instructed by counsel for JL Energy to assume that the Skilled Person is a technician who has not a scintilla of inventiveness or imagination, is a paragon of deduction and dexterity, is wholly devoid of intuition, is not a dullard, and is a competent worker who keeps up to date with the relevant literature. [44] There is also broad, although not complete, agreement among the parties’ experts as to the credentials of the particular Skilled Person to whom the 670 Patent is directed. Dr. Ramsay described the Skilled Person as an individual with an undergraduate degree in applied science, engineering or a related area and 1-3 years of hands-on work experience related to the transportation of natural gas by pipeline. Mr. King described the Skilled Person, in similar terms, as an individual with an undergraduate degree in engineering or applied science with undergraduate courses in thermodynamics and fluid flow and 1-3 years of hands-on work related to the pipeline transmission of fluids including natural gas. Mr. King states that the Skilled Person may also have worked for a few years designing and optimizing pipelines for the transportation of fluids like natural gas or possibly oil. [45] Similar to the Plaintiffs’ other two experts, Dr. Sharma described the Skilled Person as an individual with an undergraduate degree in applied science, engineering or a related area with 1-3 years of practical experience related to pipeline transportation of natural gas. However, Dr. Sharma also added a further description, stating that the Skilled Person may alternatively have an advanced degree related to the transportation of natural gas by pipeline and less work experience. [46] Turning to the Defendant’s experts, Dr. Monnery states in his expert report that he was instructed by JL Energy’s counsel to adopt Mr. King’s description of the credentials of the Skilled Person, with the exception of the possibility that the Skilled Person may have worked for a few years designing and optimizing pipelines for the transportation of fluids like natural gas or possibly oil. He also states that he was instructed to disregard Dr. Sharma’s description of the Skilled Person’s credentials, which includes the possibility of having an advanced degree related to the transportation of natural gas by pipeline. [47] Similarly, Mr. Ryan states in his expert report that he was instructed by JL Energy’s counsel to adopt a particular description of the credentials of the Skilled Person, which description appears to align with the instructions provided to Dr. Monnery. [48] Notwithstanding some minor divergence in the above descriptions of the credentials of the Skilled Person, I agree with the submission of Aux Sable that JL Energy has not identified any difference in the knowledge of the Skilled Person relevant to this action that would depend on which description is preferred. Indeed, I note the statement by JL Energy’s expert Dr. Monnery that, even if he were to adopt the elements of the Skilled Person’s credentials that he was instructed by JL Energy’s counsel to disregard, this would not change the opinions set out in his report. For purposes of these Reasons, as neither party has identified anything material that turns on this issue, I adopt the description of the Skilled Person which is in substance common to the reports of all the experts, i.e. an individual with an undergraduate degree in engineering or applied science with undergraduate courses in thermodynamics and fluid flow and 1-3 years of hands-on work experience related to the pipeline transmission of fluids including natural gas. VI. Claim Construction [49] Having identified the Skilled Person, the next task is to identify how the Skilled Person would construe the claims of the 670 Patent. There does not appear to be any disagreement between the parties surrounding the principles applicable to claim construction. As explained in Whirlpool Corp. v Camco Inc., 2000 SCC 67 at paras 43 and 49, the claims of a patent are to be construed once and for all purposes prior to consideration of validity issues. In Mylan Pharmaceuticals ULC v Eli Lilly Canada Inc, 2016 FCA 119 [Mylan] at para 39, the Federal Court of Appeal explained the process of claim construction as follows: … The rules of patent construction preclude reference to the specification when the claims are clear, and also improper if it varies the scope of the claims: Hughes and Woodley on Patents, p. 312: In construing a patent, the claims are the starting point. The claims alone define the statutory monopoly and the Patentee has a statutory duty to state, in the claims, what he invention is for which protection is sought. In construing the claims, recourse to the rest of the specifications is (1) permissible to assist in understanding the terms used in the claims; (2) unnecessary where the words and plain and unambiguous and (3) improper to vary the scope or ambit of the claims. [50] The evidence of experts offered by both parties confirms that the claims are clear and unambiguous. As such, the claims are to be construed by reference to the words of the claims themselves. Reproduced in full, the 10 claims of the 670 Patent read as follows: 1. A method of transporting natural gas by pipeline, which comprises: (a) adding to such natural gas sufficient of at least one C2 or C3 hydrocarbon or a mixture of C2 and C3 hydrocarbons such so the hydrocarbon, together with the C2 and C3 hydrocarbon (if any) originally in the natural gas, forms a resulting mixture with a total C2 or C3 hydrocarbon content which is sufficient, at the pressure and temperature to be used for transporting, to reduce the product of the z factor and the average molecular weight of the resulting mixture to a level lower than the product of the z factor and the average molecular weight of the untreated natural gas, and (b) transporting such resulting mixture by pipeline at a temperature of between -40° and +120° Fahrenheit and pressure greater than 1000 psia, said pressure and temperature being chosen so the resulting mixture has no coherent liquid phase at the temperature and pressure of transmission. 2. A method as claimed in claim 1, where the hydrocarbon is selected from (a) between 26 and 40% of at least one C2 compound if the pressure is about 1000 psia, declining smoothly to about 6% to 15% of said C2 compound if the pressure is about 2200 psia, or (b) between 12% and 5% of a C3 compound, if the pressure is about 1000 psia, declining smoothly to the C3 amount which will not cause liquefaction at the pressure used when the pressure is above 1000 psia. 3. A method as claimed in either claim 1 or claim 2, in which there is not more than 1% by volume of carbon dioxide in the resulting mixture. 4. A method as claimed in claim 1 or claim 2, in which there is not more than 2% nitrogen in the resulting mixture. 5. A method as claimed in any of claims 1 – 4, in which the temperature at which the resulting mixture is transmitted is between -20°F and +120°F. 6. A method as claimed in any of claims 1 – 4, in which the pressure at which the resulting mixture is transmitted is between 2160 psia and 1150 psia. 7. A method as claimed in any of claims 1 – 6 in which the C2 hydrocarbon added to the natural gas is ethane. 8. A method as claimed in any of claims 1 – 7 in which the C3 hydrocarbon added to the natural gas is propane. 9. A gas mixture, for use in a pipeline at a pressure greater than 1,000 psia and a temperature of from -40 degrees F to +120 degrees F, which comprises: (a) from 68 to 92% by volume of methane; (b) from 6 to 35% by volume of ethane; (c) from 0 to 9% by volume of propane; (d) from 0% by volume of C4 hydrocarbons to a percentage of C4 hydrocarbons which does not liquify at the pressure used; (e) not more than 1% of carbon dioxide; (f) not more than 2% of nitrogen, the total being 100%, and such mixture being completely gaseous with no liquid phase at the temperature and pressure of intended operation. 10. A gas mixture as claimed in claim 9, said gas mixture being at a pressure of 1000-2200 psia and a temperature of from -20 degrees F to +120 degrees F. [51] The parties and their respective experts now appear to be substantially in agreement as to the construction of the claims. Most material to the issues in this action, both parties agree that the independent claim 1, and claims 2 to 8 which depend upon claim 1, include the following elements: The intentional addition to natural gas of a C2 hydrocarbon and/or a C3 hydrocarbon; and Ensuring that the product of the molecular weight (Mw) and the z factor of the resulting gas mixture is lower than the zMw product prior to such addition. [52] I therefore adopt the above agreement between the parties related to the construction of claims 1-8. Prior to trial, the parties appeared to disagree on claim construction with respect to claims 9 and 10. JL Energy took the position that those claims include the same two elements as described in the preceding paragraph, i.e. intentional addition of C2 and/or C3 and evaluation of the resulting change in zMw. Aux Sable’s experts opined that claims 9 and 10 claim gas mixtures for transport in a pipeline, with certain composition, pressure and temperate ranges, and without any liquid phase present in the gas mixture, but do not include the two elements of adding C2 and/or C3 and evaluating zMw. However, this disagreement was resolved by the conclusion of trial. In cross-examination, JL Energy’s experts identified no disagreements with this aspect of the claim construction by Aux Sable’s experts, and JL Energy’s c

Aux Sable Liquid Products LP v. JL Energy Transportation Inc.

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Aux Sable Liquid Products LP v. JL Energy Transportation Inc.

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