Patent Law Update - Hanwha Solutions Corporation v REC Solar Pte Ltd [2023] FCA 1017

In this case about solar cell technology, Burley J concluded that the respondent’s products did not fall within the scope of the claims of the asserted patent, and accordingly none of the asserted claims were infringed. As a result, the ACL claim also failed and the unjustified threats claim succeeded. Burley J also found that claims 9, 12, 16 and 21 of the patent were invalid for want of novelty in the light of one piece of prior art, but that otherwise, the novelty, inventive step, fair basis, utility and clarity grounds failed.

In the course of his judgment, Burley J gave some guidance on useful case management techniques for litigation involving multiple respondents; reaffirmed that a Court is not bound by the expert evidence on construction; confirmed that evidence is not necessary to make out a section 7(3) inventive step case, but that an inventive step case must confront the obstacles that would have faced the skilled addressee and demonstrate that they would have been overcome; refused the argument that a claim to a product was not fairly based where the product was not made by the claimed method; found that the claims were anticipated notwithstanding the cautious language of the experts; found that the claims were useful and clear, and found that pre-action correspondence was an unjustified threat, but a media release announcing that proceedings have been brought was not.

Introduction

In these proceedings, Hanwha Solutions Corporation and Hanwha Q CELLS Australia Pty Ltd (collectively Hanwha) sued for infringement of Hanwha Solutions’ Australian patent No AU 2008323025 titled “Method for manufacturing a solar cell with a surface-passivating dielectric double layer, and corresponding solar cell” against LONGi Green Energy Technology Co Ltd and three other related companies (collectively, LONGi), Jinko Solar Australia Holdings Co Pty Ltd; and REC Solar Pte Ltd, and two other companies (collectively REC Solar).

After the hearing, but before judgment, the proceedings against LONGi and Jinko settled, but, because of the cooperation between the respondents during trial, the matters in controversy remained largely unchanged.

Hanwha alleged that: (i) products sold and offered for sale by or with the approval of REC Solar (REC Solar products) fell within the scope of asserted claims of the patent; and that (ii) REC Solar had falsely represented that one or more of the accused REC Solar products do not infringe any intellectual property rights and that it is legally entitled to sell (and third parties are entitled to purchase, install and use those products) in breach of the Australian Consumer Law (ACL).

REC Solar denied infringement and cross-claimed, asserting that the claims were invalid. REC Solar relied on lack of novelty, inventive step, fair basis, and clarity and lack of utility, and asserted unjustified threats of patent infringement, in breach of s 128 of the Patents Act 1990 (Cth).

Outcome

Justice Burley concluded that the REC Solar products do not fall within the scope of the asserted claims of the patent. As a result, the ACL claim failed and the unjustified threats claim succeeded in part. Justice Burley also found claims 9, 12, 16 and 21 of the patent invalid for want of novelty in the light of one piece of prior art (Nakano), but that otherwise the invalidity challenges advanced by REC Solar failed.

Case management

Justice Burley commended the following respects in which the parties cooperated in a way which overcame issues arising from an action against so many separately represented respondents:

• The respondents accepted that they should be permitted one substantive witness (between them) to give evidence as to validity.

• Each respondent filed a product description and a position statement of non-infringement and Hanwha responded with a position statement on infringement.
• The parties prepared a technical primer and a statement of common general knowledge which identified the areas of disagreement between them.

• The respondents cooperated to produce one consolidated set of particulars of invalidity.
• The parties agreed to a confidentiality regime that ensured that sufficient disclosure was provided to the other parties to enable the legal advisors to understand how the case would run.

• Liability (under the Patents Act and ACL) was bifurcated from quantum (including additional damages).
• The respondents relied on separate experts on the issue of infringement who did not participate in joint expert reports or give concurrent evidence on validity.

• The experts produced six joint expert reports, three on infringement, one on claim construction and two on validity.
• For each of the separate proceedings against the various respondents, evidence in one proceeding was evidence in all proceedings.

• The parties agreed on the use of section 136 of the Evidence Act 2008 (Cth) to limit the use of the evidence on infringement.

Construction

There are two points of note in relation to construction of the claims of the patent in suit.

First, the central dispute between the parties concerning the meaning of the claims focussed on the question of what “depositing a first dielectric layer on a surface of silicon substrate” meant, and whether the first dielectric layer must be on the silicon substrate itself, or whether other material, particularly a silicon oxide, could be present.

Hanwha submitted that “the thermal growing of a very thin silicon oxide or the presence of a very thin interfacial oxide” does not “avoid” the integer in claim 1(c) of “depositing a first dielectric layer on a surface of the silicon substrate” or in claim 9(c) of a “first dielectric layer … on a surface of the silicon substrate”.

REC Solar submitted first, that that the words “depositing a first dielectric layer” require that no other dielectric layer has been formed, grown or deposited, and secondly that the phrase “on a surface of the silicon substrate” means “on the outer face of the silicon crystalline structure”.

His Honour construed the integer in accordance with REC Solar’s submissions, given the meaning of “silicon substrate” and the positional words “on a surface of the silicon substrate”. His Honour’s view was fortified by the description of the substrate in the specification and the evidence as to the meaning of “silicon substrate”. In reaching this view, his Honour rejected an argument by Hanwha that an article which was referred to in the patent was incorporated by reference and held that the context of the reference to it did not provide any insight into the claimed invention.

Second, his Honour construed the words “and hydrogen being embedded into the second dielectric layer” in a manner which was inconsistent with the expert evidence (and which did not require a minimum amount of hydrogen to be embedded), on the basis that the expert evidence tended to fuse the teaching of the specification and the requirements of the claim. In coming to that conclusion, his Honour noted that expert evidence does not bind the court on questions of construction.

Infringement

Justice Burley’s reasoning on infringement is redacted, but it is apparent that Hanwha’s infringement case (and consequently, its Australian Consumer Law case) failed. Given the debate about construction, it seems likely that construction of the claims of the patent was a feature of the non-infringement finding.

Inventive step

REC Solar contended that the invention in the challenged claims of the patent lacked an inventive step in light of the common general knowledge before 14 November 2007 together with: (1) an article called Hoex 2006 in the reasons; and (2) an article called Hoex 2007 in the reasons. His Honour considered that his findings as to Hoex 2007 also applied to Hoex 2006.

REC Solar submitted that an invention may be obvious within established authority despite the fact that it would require significant work or cost to verify or implement.

Hanwha submitted that obviousness is to be assessed based on the commercial and practical realities at the priority date. In that context, it submitted that REC Solar had not discharged its onus to prove that either of the Hoex articles would reasonably be expected to have been ascertained or regarded as relevant by the skilled addressee. And, in relation to “regarded as relevant”, Hanwha submitted that the question is what a person skilled in the art would regard as relevant “when faced with the same problem as the patentee”. It contended that the person skilled in the art would not have regarded the prior art as relevant to the production of a commercial solar cell.

His Honour found that, before November 2007:

• there was an acknowledged problem facing the solar cell industry that silicon cell efficiency should be increased and cost should be reduced;

• there were several known strands of research and development under way at that time; and
• whilst improvements made to the sun-facing side of the conventional solar cell were apparently the main priority, there was significant interest in improving the rear surface of cells, and that part of the known problem was to improve the surface passivation of that surface.

Accordingly, his Honour did not accept the division that Hanwha sought to draw between work done by researchers in academic institutions and the work of persons in industry. He found that the skilled team consisted of academic workers as well as persons in industry and they were likely to collaborate.

Notwithstanding the absence of any evidence as to ascertainment, his Honour accepted, on the balance of probabilities, that Hoex 2006 would have been ascertained, given that: (1) it was published in a widely read and respected journal in the photovoltaic field in which each of the experts had published; (2) two of the experts had read it before the priority date; and (3) it was identified in a pre-priority date publication as one of the most relevant publications in the field of photovoltaics.

Notably, Burley J observed: “it is not the case that an artificial ex post facto literature search must be carried out at the time of the conduct of patent litigation in order to establish the “ascertained” aspect of s 7(3) of the Patents Act. Whilst such a search, if properly conducted, may quell controversy about the question, frequently it spawns an enquiry that adds unnecessary expense.”

Justice Burley also found Hoex 2006 relevant, notwithstanding that it did not disclose a process capable of immediate commercial application, because it proposed a solution to a known problem which was considered to be of interest. His Honour observed: “The fact that some further work is required to be done does not deprive the article of relevance.”

His Honour reached a similar conclusion in relation to Hoex 2007.

However, Burley J did not conclude that the claimed invention was obvious in light of Hoex 2006 or Hoex 2007 because he considered that the hypothetical skilled team was likely to have faced a number of problems if it decided to move from the teaching of the prior art to the development of a solar cell. His Honour did not consider that REC Solar had demonstrated that it was obvious to take the steps posited by REC Solar, and that there were several assumptions that needed to be made along the path.

Although his Honour accepted that, in some cases, a series of routine tests with predictable outcomes may yield a conclusion that the movement from the prior art base to the invention claimed does not involve an inventive step, the position in these proceedings was different. His Honour found that the series of tests, requiring a series of decisions, proposed by the expert in his hypothetical exercise revealed that the line had been crossed between there being a case where the steps could be seen as routine to try as a matter of course, to a case where the skilled team was simply postulating steps which would be worthwhile to try.

Fair basis

REC Solar contended that the challenged claims travelled beyond the matter described in the specification in that there was no real and reasonably clear disclosure in the specification of a solar cell, or a method for manufacturing such a solar cell, having a first dielectric layer formed by means other than atomic layer deposition (ALD).

Justice Burley rejected REC Solar’s fair basis argument because he concluded that it was apparent from the specification that the invention asserted by the patentee includes a product absent the requirement that it be manufactured by any particular method. In this respect, his Honour distinguished between the product and method aspects of the invention and observed that there was no requirement that the product (the solar cell) be made by any particular method.

Novelty

REC Solar contended that various claims identified were not novel in light of various prior art patents or patent applications, nominated as Isaka, Bhattacharyya and Nakano.

His Honour found that Isaka did not anticipate because, although a skilled worker carrying out the instructions in Isaka may achieve the result of the claims, they would only do so if adventitiously the conditions happened to be right. Isaka did not teach these conditions. Put another way, the carrying out of the instructions in Isaka would not inevitably result in something being made which would constitute an infringement of the relevant claim.

Burley J concluded Bhattacharyya did not provide clear directions to produce something within the claim, because it did not require the use of a second dielectric layer.

The only matter in dispute in relation to Nakano was whether hydrogen was present in the second dielectric layer. REC Solar’s expert evidence was that because hydrogen-containing precursors were used, hydrogen would be present. Although Hanwha’s expert was not “scientifically convinced” that the presence of hydrogen in the chemicals used “can confidently lead to the conclusion that hydrogen will be present in the final layer”, he accepted that it is “possible” and “maybe even likely” that hydrogen would be present, and (in the joint evidence session) that some hydrogen would be present.

His Honour noted: “The experts in this case, as scientists tend generally to be, were cautious in expressing opinions in terms of absolutes. It is in this context that I regard the evidence of Professors Weber and Cuevas-Fernandez as to the general ubiquity of hydrogen and the probability that hydrogen will be present in the second dielectric layer as disclosed in the Nakano publication as sufficient to satisfy me that in carrying out the directions disclosed the second dielectric layer the skilled reader would inevitably result in something which would constitute infringement of this aspect of claim 9 of the patent.” Accordingly, his Honour found Nakano anticipated several claims of the patent.

Lack of utility

REC Solar contended that the alleged invention as claimed in the challenged claims was not a patentable invention for the purposes of s 18(1)(c) of the Patents Act because those claims included solar cells containing dielectric layers that do not achieve the promise of the invention. That argument failed.

Justice Burley did not consider that the specification involved a promise that all embodiments that fell within the challenged claims would achieve very good passivation. He considered there was a promise within the specification that, by making a product in accordance with the claims, the skilled reader is likely to be able to achieve very good surface passivation, because the relevant statements were that “it should be possible” to produce solar cells displaying very good surface passivation, that very good surface passivation can be achieved and that both low and high doped n- and p-type silicon surfaces can be passivated very effectively.

Further, while the experts agreed that the use of lightly doped n-type surfaces would be “problematic in practice”, this was due to the potential formation of a parasitic shunt, which is a mechanism that serves to reduce the efficiency of the solar cell but does not affect the surface passivation.

Similarly, by reference to the language in the specification, Burley J found that the promise of the specification was not that every conceivable embodiment falling within the claims will have very good optical properties, but that it is possible to achieve such properties.

Justice Burley’s reasoning reaffirms that a utility case which asserts a promise in the specification will turn in large part on the language of the “promise”.

Lack of clarity

REC Solar contended that the specification of the patent did not comply with the requirements of s 40(3) of the Patents Act in that claims 16 (and claims 17-21 to the extent dependent on claim 16), were not clear and succinct because: (a) the phrase “wherein the surface of the silicon substrate is passivated by hydrogen” is unclear and ambiguous and there is no workable standard for determining whether that feature is present; and (b), if the phrase “hydrogen being embedded into the second dielectric layer” in claim 9 is construed so as to require a minimum concentration of hydrogen, then that phrase is ambiguous because there is no workable standard for determining whether the feature is present.

The first argument failed because his Honour found that the claim provided a metric for determining infringement, namely that where there is such hydrogen at the surface of the silicon substrate as will lead to passivation, the claim will be satisfied. His Honour observed that, while this may be difficult to test, there was no absence of clarity as to the requirement of the claim. The second argument did not arise, because his Honour did not consider the relevant phrase required a minimum concentration of hydrogen.

Unjustified Threats

REC Solar contended that in letters and media releases issued Hanwha Solutions made assertions that each of the REC Solar parties (being the cross claimants) had infringed claims of the patent. Hanwha accepted that the letters of demand that it sent prior to the proceedings involved threats of patent infringement. However, it disputed that the media releases constituted threats within the terms of s 128 of the Patents Act. The media release stated that Hanwha had commenced proceedings.

His Honour observed that it was difficult to see how the media releases could amount to wrongful threats in circumstances where they was released after the commencement of the proceedings and reported that fact. Justice Burley concluded that the media releases did not amount to an unjustified threat that Hanwha Solutions intended to bring proceedings for infringement against the person said to be threatened, but a report that it had brought legal proceedings.