Canada: Federal Court Of Appeal: Obviousness Is An "Inherently Factual" Inquiry

Introduction

Recently, the Federal Court of Appeal published its decision in Packers Plus Energy Services Inc. v. Essential Energy Services Ltd.,1 in which the appellant, Packers, alleged a number of errors in the Federal Court's holding that Packers' patent was obviousness. The Federal Court of Appeal dismissed the appeal, reaffirming that obviousness is a predominantly factual determination.

The decision is the latest in a recent line of cases from the Federal Court of Appeal focusing on obviousness.2

Background

The patent in-suit claimed both a method and an apparatus for hydraulic fracturing ("fracking"), using a pipe string (lengths of well pipe joined together end-to-end) containing ports that could be opened by inserting a ball into the pipe string (the "ball drop method"). Using the ball drop method, operators could control the flow of high pressure fracking fluids into hydrocarbon-containing shale formations. The pipe string, which has a smaller diameter than the wellbore, was held in place using 'packers', a material placed between the pipe string and the wellbore.

While the ball drop method had been used in the past, Packers was the first to use the ball drop method in 'open hole' wellbores (wellbores without a concrete casing to maintain the shape of the wellbore).3

At trial, the Federal Court held that the claims at issue were obvious. The Court accepted Packers' construction of the inventive concept – "the use of the ball-drop method in an open-hole wellbore"4 – but held that neither the ball-drop method, nor its use in an open hole wellbore was inventive.5

At trial, Packers argued that the skilled person would not have foreseen various problems in deploying the ball drop method in open hole wellbores. However, the Court held that this was more a function of the particular geological formation than the alleged invention.6 The Court held that the skilled person, knowing the features of the formation, would have chosen the appropriate tools from the prior art.7 and, in reality, little effort was required to develop the alleged invention.8

Packers' commercial success – a secondary indicator of inventiveness – was discounted because it was not caused by the invention. Rather, any commercial success was driven principally by rising commodity prices that had made fracking more economical and commonplace.9

While the Court doubted whether the obvious-to-try test was applicable to the oil and gas industry, it nonetheless held that the invention was obvious to try.10

The Appeal

On appeal, Packers alleged a number of errors on the part of the Federal Court. The appeal court held that most of these were invitations to reweigh the evidence before the Federal Court. The Court rejected the invitation, holding that obviousness is a finding of mixed fact and law subject to review for palpable and overriding error, absent an extricable legal error.11 There was evidence before the Federal Court supporting each of its findings, and therefore no basis to intervene.12

First, Packers argued the Federal Court failed to determine the common general knowledge of the skilled person, an essential step of the obviousness test.13 The Court rejected this argument, noting that:

...The skilled person's common general knowledge may be used to understand or augment the relevant prior art in assessing the gap between it and the invention claimed where such knowledge encompasses information that is not specifically mentioned in the prior art, but would have been known to the skilled person at the relevant date.14

The common general knowledge added only one element not found in the prior art: the specific packer types useful with an open hole wellbore.15 Since the Federal Court had made this specific finding, a more thorough exposition of the common general knowledge could only have increased the probability of that the claims were obvious.16

Moreover, while identifying the inventive concept is an exercise in patent construction to which the common general knowledge is presumably relevant, the Federal Court had accepted Packers' construction of the inventive concept.17 This finding was not challenged on appeal.

Interestingly, in the course of its reasons on this issue, the appeal court noted that the relevant prior art would all have been found on a reasonably-diligent search.18 While the continued application of the 'reasonably diligent search test' has been a matter of recent attention (our blogs here and here), nothing turned on this finding.

Second, Packers argued that the common general knowledge excluded certain prior art accepted by the Federal Court. The Federal Court of Appeal rejected this argument which conflated patent law concepts. Obviousness is assessed with respect to the state of the art (prior art supplemented by common general knowledge), not with respect to the common general knowledge alone, as Packers appeared to be arguing.19

Third, Packers argued the Federal Court had imposed a higher inventiveness threshold than required. Specifically, Packers argued that the Federal Court had required the invention to be "truly new, useful and unobvious", citing portions of the reasons appearing in the introduction of the reasons and a portion dealing with inutility.20 However, reading the Federal Court's reasons in totality, it was clear that the Federal Court had applied the correct test.21

Fourth, Packers argued that the Court had erred by failing to address the Beloit question – 'if the invention was obvious, why didn't you do it?' – and had applied hindsight bias.22 The appeal court noted that the Beloit question was not necessary to answer. However, even if it were necessary, there was an answer: there had been no long-felt need for the alleged invention because shale formations had only recently begun to be exploited at the time of the alleged invention.23

Fifth, Packers argued that the Federal Court's obvious-to-try analysis imposed a lower standard than necessary to find obviousness ("might work" rather than "ought to work").24 Having already found the invention obvious, the appeal court held that the obvious-to-try holdings were obiter and not necessary to consider on appeal.25

Footnotes

1 Packers Plus Energy Services Inc. v. Essential Energy Services Ltd., 2019 FCA 96 ("Packers Plus FCA").

2 See, e.g., Ciba Specialty Chemicals Water Treatments Limited's v. SNF Inc., 2017 FCA 225, Bristol-Myers Squibb Canada Co. c. Teva Canada Limited, 2017 FCA 76,

3 Packers Plus FCA at para. 7.

4 Packers Plus FCA at para., 12, citing Packers Plus Energy Services Inc. v. Essential Energy Services Ltd., 2017 FC 1111 at para. 147 ("Packers Plus FC").

5 Packers Plus FCA at para. 14.

6 Packers Plus FCA at para. 15, citing Packers Plus FC at para. 192.

7 Packers Plus FCA at para. 15, citing Packers Plus FC at para. 191.

8 Packers Plus FCA at para. 14.`

9 Packers Plus FCA at para. 16, citing paras. 193-94.

10 Packers Plus FCA at paras. 14, 18, citing paras. 198-200.

11 Packers Plus FCA at para. 29

12 Packers Plus FCA at paras. 29-31, 33, 39.

13 Packers Plus FCA at para. 21.

14 Packers Plus FCA at para. 32

15 Packers Plus FCA at para. 36.

16 Packers Plus FCA at para. 36.

17 Packers Plus FCA at para. 12.

18 Packers Plus FCA at para. 13.

19 Packers Plus FCA at para. 37.

20 Packers Plus FCA at para. 23.

21 Packers Plus FCA at para. 38.

22 Packers Plus FCA at para. 25.

23 Packers Plus FCA at para. 40.

24 Packers Plus FCA at para. 27.

25 Packers Plus FCA at para. 42.

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