BlueScope Steel Limited v Dongkuk Steel Mill Co., Ltd (No 2) [2019] FCA 2117

(17 December 2019)

Patent infringement and validity – failure of experimental proof to establish infringement – lack of best method – refusal to amend patent to address lack of best method

Dongkuk carries on business outside Australia as a manufacturer and supplier of alloy-coated steel strip products which are sold by third parties in Australia.  BlueScope sued Dongkuk for infringement of various claims of two patents which relate to steel strips coated with an alloy containing aluminium, zinc, silicon and magnesium (Al-Zn-Si-Mg) but where there is only a small proportion of Mg2Si particles or substantially no Mg2Si particles in the surface of the coating.  The patents also claim methods for hot dip coating to produce such steel strips.

The major obstacles to BlueScope’s infringement case all arose from failings in experimental proof it needed to establish the requisite amount of Mg2Si in the surface of the alloy coating of the coiled steel strips.  In particular, BlueScope’s sample size of Dongkuk’s product was insufficient.  First, the size of a coil sold by Dongkuk is 1.2m wide and three kilometres long, but the sizes of the two samples requested by BlueScope were only 210mm x 300mm.

Secondly, of the two samples it tested, BlueScope should have conducted more testing given the “huge fluctuations in the amounts of Mg2Si over a small area”.  Beach J observed that, rather than testing the relatively small number of extracts of each sample, what may have been required was to “slice along the whole length and breadth of the strip or at least sample A and sample B at a depth of at least 5% of the total depth of the coating and then to compare the Mg2Si particles in that slice with the Mg2Si particles in the remainder of the coating.”  Noting that the length of the strip was three kilometres, one can imagine how difficult the proof may have been.

Interestingly, Dongkuk admitted that the two small samples it provided to BlueScope were representative of the entire coiled steel strip.  However, Beach J accepted Dongkuk’s characterisation of that admission as being representative “so far as it is possible in relation to non-uniformly distributed phases” – the point being that the samples in fact showed that distribution of Mg2Si was not uniform.  Accordingly, the experimental protocol was doomed to fail because the sample size was not “sufficient to adequately cater for the non-uniform distribution of Mg2Si”, Dongkuk was not obliged by any court order to agree to the protocol and it was not prevented from asserting that the protocol was not adequate to prove the facts.

Turning then to the “best method” invalidity case, one of the patents included a statement that “special operational measures” were applied to keep the alloy coating thickness variation under control.  The patent described the “uniformness of coating thickness across the strip surface” as the “second important factor”.  Accordingly, there could be little doubt that, as required by the authorities, the “special operating measures” were essential to the best method of performing the alleged invention.

Beach J asked himself whether the reference to “special operational measures” in the context of the specification was sufficient to disclose the best method of performing the invention known to BlueScope at the filing date to the person skilled in the art, construing the specification at that date or the priority date.  BlueScope’s inventor contended that the phrase “special operational measures” was a reference to means of controlling thickness variations known to those in the field at the time.  BlueScope contended that the skilled addressee would know the best method or determine it by simple routine experiment.

Beach J observed that the best method known to BlueScope involved the combination of four operating measures.  However, first, the skilled addressee would not understand what “special operational measures” meant in the context of the specification.  Second, even if the best operating measures formed part of the common general knowledge, the skilled addressee would not understand that those measures were being referred to because of the word “special”.  Third, the skilled person would not know that the particular combination of four measures used by BlueScope was being referred to.  Finally, two of the measures were in fact not common general knowledge.

To the extent that the claims of the second patent concerned minimising thickness variation of the alloy coating, Dongkuk asserted those claims were invalid by reason of the failure to disclose the best method and Beach J so found.  As an aside, it is not clear to us why all the claims of the second patent were not asserted as being invalid by reason of the failure to disclose the best method.  The Full Court in Sandvik Intellectual Property AB v Quarry Mining & Construction Equipment Pty Ltd (2017) 126 IPR 427 at [125] observed that there could be a failure to disclose the best method even where the claim does not have, as a limitation, the feature to which the best method relates.  The Full Court there said: “We do not accept Sandvik’s submission that it was unnecessary to describe the sealing member because the water seal was not part of the claimed invention. First, as discussed above, for present purposes it is necessary to identify the invention described in the specification as a whole, as distinct from the invention as claimed in the claims.”  However, it may be that, properly construed, there were two inventions disclosed and claimed in the second patent, contrary to the examination requirement for unity of invention.

Finally, anticipating the possibility of failing on the best method attack, BlueScope sought to amend the specifications of the patents to include the best method in fact known to it at the date of filing those patents.  Beach J refused to exercise his discretion under section 105 of the Patents Act 1990 (Cth) to do so, primarily because BlueScope was on notice from its prosecution of related patent applications overseas and, indeed, in Australia, that in order to overcome objections to grant, it was necessary to explain what was meant by “special operational measures” by reference to information that was not apparent from the specification.

At the least, BlueScope had constructive knowledge of the need to amend well before it did so and, as Beach J put it, BlueScope “simply made a calculated decision to take its chances with the disclosure it had made, whilst simultaneously benefiting commercially from the best method to the detriment of the public”.

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