ExxonMobil Upstream Research Company v Shell Internationale Research Maatschappij B.V - [2016] APO 79

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
ExxonMobil Upstream Research Company v Shell Internationale Research Maatschappij B.V. [2016] APO 79
Patent Application: 2011217243
Title:Hydrocarbon processing vessel and method

Patent Applicant:                   Shell Internationale Research Maatschappij B.V.
Opponent:  ExxonMobil Upstream Research Company
Delegate:  Rhys Munzel
Decision Date:  8 November 2016
Hearing Date:  28 July 2016

Catchwords: PATENTS – configuration of hydrocarbon processing vessel comprising storage tanks, parallel bulkheads extending along the mid-plane of the vessel in between the storage tanks, and a container or duct arranged between the bulkheads to contain ballasting water – all claims found to be novel in view of the prior art – all claims found to comprise an inventive step –not established that it was a matter of routine to provide a container or duct for ballast in a space between the bulkheads – costs – costs awarded against the opponent

Representation: Counsel for the applicant: Julian Cook
Attorney for the applicant: Spruson & Ferguson
Counsel for the opponent: Ian Horak
Attorney for the opponent: Watermark

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2011217243

Title:Hydrocarbon processing vessel and method

Patent Applicant: Shell Internationale Research Maatschappij B.V.
Date of Decision: 8 November 2016
DECISION

All claims are found to be novel and to comprise an inventive step. Subject to an appeal against this decision I direct that the application proceed to grant. Costs are awarded according to Schedule 8 against ExxonMobil Upstream Research Company.
REASONS FOR DECISION
Background
This decision relates to an opposition by ExxonMobil Upstream Research Company (“Exxon”) to the grant of a patent for application 2011217243 (“the application”) applied for by Shell Internationale Research Maatschappij B.V. (“Shell”). The application was filed internationally as PCT/EP2011/052484, and has an earliest claimed priority date of 22 February 2010.
Shell requested examination of the application on 4 July 2012. As this date is prior to 15 April 2013 substantive amendments to the Patents Act[1] brought about by the Intellectual Property Laws Amendment (Raising the Bar) Act[2] do not apply to this opposition.
[1] 1990 (Cth) (“the Act”).
[2] 2012 (Cth) (“the Raising the Bar Act”).
Evidence
Shell and Exxon each relied on evidence in the form of declarations and annexed exhibits as follows.
Evidence in Support
_·William Bray (“Bray 1”) and Exhibits WHB-1 to WHB-21, dated 24 November 2014;
_·Roger Basu (“Basu 1”) and Exhibits RB-1 to RB-18, dated 25 November 2014;
_·Roald Lokken (“Lokken 1”) and Exhibits RTL-1 to RTL-20, dated 24 November 2014;
_·Richard Baddeley (“Baddeley 1”) and Exhibits RHB-1 to RHB-3, dated 26 November 2014.
Evidence in Answer
_·John Cook (“Cook 1”) and Exhibits JDC-1 and JDC-2, dated 24 February 2015;
_·John Cook (“Cook 2”), dated 27 April 2015;
_·Patrick Englebert (“Englebert 1”) and Exhibit PE-1, dated 25 April 2015.
Evidence in Reply
_·Roald Lokken (“Lokken 2”) and Exhibits RTL-21 to RTL-24, dated 9 July 2015;
_·William Bray (“Bray 2”) and Exhibit WHB-22;
_·Roger Basu (“Basu 2”) and Exhibit RIB-19, dated 10 July 2015;
_·Paul Sincock (“Sincock 1”) and Exhibit PS-1, dated 10 July 2015.
Onus
As noted above, substantive amendments to the Act arising from the Raising the Bar Act do not apply to this opposition. This includes the amendment to s 60(3A) allowing the Commissioner to refuse a patent application if satisfied on the balance of probabilities that a ground of opposition exists. Exxon must instead establish that it is clear a valid patent cannot be granted.[3]
[3] F Hoffman La Roche AG v New England Biolabs Inc [2000] FCA 283, [29], [67]; [2000] FCA 283; 50 IPR 305, 311, 319; Commissioner of Patents v Sherman [2008] FCAFC 182, [18], [22]; [2008] FCAFC 182; 79 IPR 426;
In Austal Ships Pty Ltd v Stena Rederi Aktiebolag[4] Bennett J observed:
“I can accept that a lower standard may apply to proof of evidence such as whether a document has been published or, indeed, whether a prior art vessel was well-known. I do not accept that it properly applies to the factual question that itself is the test for obviousness or lack of inventive step. Where the factual question is itself the legal test, as set out in s 7(3) of the Act, it seems to me that it should be determined at the higher standard.”
[4] 66 IPR 420, 423; [2005] FCA 805, [12] (“Austal Ships”).
Grounds of opposition
CSR relies on the following grounds of opposition:
- lack of novelty; and
- lack of inventive step.
Nature of the invention as described
As is usual in patent specifications the description divides into discussion of the field of the invention and background art, the summary of the invention, and its detailed description.
Field of the invention and background art
The invention is said to relate to a vessel for the processing of a hydrocarbon stream and to a method using such a vessel.[5] The specification exemplifies the sort of vessels contemplated as: floating liquefied natural gas carriers (“LNGC”), floating petroleum gas carriers (“LPGC”), floating liquefied natural gas production, storage and offloading (“FPSO”) structures, floating natural gas treatment, liquefaction, storage and offloading (“FLNG”) structures, or offshore hydrocarbon processing structures in general.[6]
[5] The specification, page 1 lines 1-3.
[6] Ibid, page 1, lines 3-24
The specification notes that LNG carriers have large storage tanks that will be either empty or full and therefore may efficiently comprise large tanks which span the beam of the tanker.[7] On the other hand FPSO structures have tanks that are by comparison filled and emptied slowly and are therefore often partially filled. As such vessels move in response to movements in water, a partially filled tank will be subject to “sloshing”.[8] Sloshing can damage certain types of tanks.[9]
[7] Ibid, page 2 lines 3-6.
[8] Ibid, page 2 lines 13-18.
[9] Ibid, page 2 lines 19-21.
The specification discusses three types of LNG storage tanks used in vessels.[10] “SPB”[11] tanks are described as withstanding sloshing; however their internal reinforcing structures render them expensive.[12] Kvaerner Moss tanks can also withstand sloshing but have a spherical shape and use vessel space inefficiently.[13] Membrane tanks provide the cheapest containment system and their generally rectangular cross section[14] uses available hull space efficiently, however they can be damaged by sloshing – particularly when partially filled.[15]
[10] Ibid, page 2 lines 23-26.
[11] Meaning self-supporting prismatic type "B".
[12] Ibid, page 2 line 27 to page 3 line 2.
[13] Ibid, page 3 lines 6-12.
[14] Ibid, figure 1.
[15] Ibid, page 3 line 14 to page 4 line 2.
The specification discusses several prior art patent documents beginning with US 2009/0218354. US 2009/0218354 is described as disclosing a floating marine structure including membrane storage tanks.[16] Each storage tank includes an internal longitudinal bulkhead to separate the tank into two compartments joined by one or more fluid passages provided near the bottom of the bulkhead. The specification notes that a fluid-tight bulkhead is not used to separate the compartments, as this would require separately installed equipment such as pumps to discharge the LNG. WO 2009/072681 is similarly cited as disclosing LNG cargo tanks with anti-sloshing means formed of an internal longitudinal corrugated bulkhead provided with holes to create fluid passages.[17]
[16] Ibid, page 4 lines 3-16.
[17] Ibid, page 4 lines 17-19.
US 2010/0018453 is then described as disclosing a floating vessel including a fluid storage area divided into two longitudinal membrane storage tanks by a centreline cofferdam.[18] Each of the two storage tanks may be about 212 m long by 14.5 m wide and 32.5 m tall. The specification explains that the length of the tanks means that costly reinforcing structures are required to prevent torsion of the vessel during heavy seas.[19]
[18] Ibid, page 4 lines 21-33.
[19] Ibid, page 4 lines 30-33.
The specification lastly summarises the non-patent document “Mobil’s Floating LNG plant”.[20] This document is described as providing a square concrete barge within a central moonpool surrounded by prismatic LNG storage tanks, water ballast tanks, processing units, living quarters and turbines. The storage tanks are located in the square hull around the central moon pool, the tanks being surrounded by bulkheads. Each tank is surrounded by concrete coated with polyurethane foam such that there is no penetration though the LNG tank except the pump shaft at the top. The barge has a main deck without any processing equipment. [21]
[20] Ibid, page 5 lines 11-15.
[21] Ibid.
Object of the invention
The object of the invention is described as to substantially overcome or ameliorate one or more of the above disadvantages.[22]
[22] Ibid, page 5 lines 15-17.
Summary of the invention
The invention is described in five aspects[23] corresponding with the five independent claims[24] of the claim set. Each aspect shares features (a) through (e) listed below:
(a)an elongate hull comprising longitudinal sides, a base extending between the sides, a deck being located atop the hull and between the sides, and a longitudinal mid-plane in between the longitudinal sides;
(b)a plurality of first storage tanks arranged on the starboard side of the longitudinal mid-plane;
(c)a plurality of second storage tanks arranged on the port side of the longitudinal mid-plane in symmetrical side-by-side arrangement with the plurality of first storage tanks; at least one longitudinal bulkhead extending along the mid-plane and located between adjacent first and second storage tanks;
wherein the at least one longitudinal bulkhead comprises
(d)a first longitudinal bulkhead and a second longitudinal bulkhead spaced apart from and parallel to the first longitudinal bulkhead; and
(e)a container or a duct arranged within a space between the first longitudinal bulkhead and second longitudinal bulkhead near the base of the vessel, to contain ballasting water.
[23] Ibid, pages 5-6b.
[24] Ibid, claims 1, 17-20.
Each aspect is then distinguished by its respective final feature as follows:
First aspect
‘wherein the maximum width of the vessel is 70 metres or more.’[25]
Second aspect
‘and at least one processing deck, which is elevated with respect to the deck, the processing deck having processing units for the processing of a hydrocarbon stream thereon.’[26]
Third aspect
‘and secondary longitudinal bulkheads extending along and parallel to the longitudinal sides.’[27]
Fourth aspect
‘and wherein the first and second storage tanks have a width of about 30 metres or more.’[28]
Fifth aspect
[25] Ibid, page 6 line 3.
[26] Ibid, page 6 line 21.
[27] Ibid, page 6a line 8.
[28] Ibid, page 6a line 25.
[29] Ibid, page 6b lines 11, 12
‘wherein the first and second storage tanks are membrane tanks having a width of 35-50 metres.’[29]
Detailed description
Fig. 2 provides a transverse cross section across the exemplified vessel while Fig. 4 provides a schematic plan view. Each are reproduced below.
The vessel 100 comprises an elongate hull 2, the hull comprising longitudinal sides 4, 6, a base 8 extending between the sides, a deck 10 located atop the hull and a longitudinal mid-plane 12 in between the sides. First and second longitudinal bulkheads 26, 28 extend along respective sides of the longitudinal mid-plane.[30] First storage tanks 20 are arranged on the starboard side of the longitudinal mid-plane while second storage tanks 22 are located on the port-side. The storage tanks are preferably membrane tanks having a membrane inner surface 16.[31] Pipes (not shown) may be arranged between the first and second longitudinal bulkheads to counteract cooling of the cargo in the storage tanks. A container or duct to contain ballast may also be arranged within the space near the base of the shell.[32] The vessel may comprise at least one processing deck 50 that is elevated with respect to the deck 10. The processing deck has processing units for the processing of a hydrocarbon stream located thereon. A space 54 between the two decks allows passage by crewmembers.[33]
[30] Ibid, page 9 lines 1-14.
[31] Ibid, page 3 lines 20-23.
[32] Ibid, page 9 lines 15-23.
[33] Ibid, page 10 lines 1-22.
The use of ballast in the longitudinal bulkhead is central to this opposition. Page 9 lines 15-23 of the description states:
“Pipes (not shown) for the circulation of warm fluid may be arranged between the first and the second longitudinal bulkhead 26, 28 to counteract the cooling effect of the cargo in the plurality of first and second storage tanks. The space between the first and second bulkhead may also be used for ballasting, for instance using seawater. In the latter case, a container or a duct to contain the ballasting water may be arranged within said space near the base 8 of the vessel.”
The claims
As noted there are five independent claims (claims 1 and 17-20) corresponding with the five identified aspects of the invention. Claims 2-16 append from claim 1; claim 21 appends to any of claims 1-20; while claim 22 is an omnibus claim defining “the hydrocarbon processing vessel as hereinbefore described with reference to the accompanying drawings.” As the aspects of the invention described are consistent with the independent claims the omnibus claim relates to what is broadly described with features limited by configurations shown in the drawings.
Construction issues
Several construction issues arose between the parties that I will now address.
a container or a duct arranged within a space between the first longitudinal bulkhead and second longitudinal bulkhead near the base of the vessel, to contain ballasting water
Exxon noted that the space between two bulkheads itself provides a void that can contain ballast. In other words, Exxon submitted that the two bulkheads may themselves form part of a container as claimed. Shell submitted that a space or void may be distinguished from a container or duct provided in such space. The text of the defined feature supports Shell’s position in that it requires a duct or container to exist in a space between two bulkheads. Logically the bulkheads themselves cannot constitute part of such a container. To the extent the matter may give rise to ambiguity[34], the passage[35] of the description I reproduce above is consistent with a separate container or duct for ballast being required between the two bulkheads.
A plurality of second storage tanks arranged on the port side of the longitudinal mid-plane in symmetrical side-by-side arrangement with the plurality of first storage tanks
[34] Decor Corp v Dart Industries [1988] FCA 399; 13 IPR 385 at [25].
[35] The specification, page 9 lines 15-23. See also Cook 2, [60] where Dr Cook’s construction is consistent with mine.
In written submissions Shell distinguished between a plurality of storage tanks and a single storage tank divided into compartments. Shell submitted that where adjacent tanks are connected by a fluid path they operate as one tank and not as separate tanks as required of the Application. While it is possible to distinguish between two tanks and a single tank divided into compartments I do not believe the distinction lies merely in whether the tanks/compartments are fluidly connected. In my experience it is common to identify two tanks as distinguishable despite them being fluidly connected by, for example, a pipe. Similarly it is possible for compartments within a tank to not be fluidly connected. Reviewing the Evidence in Answer I identify examples[36] where Shell’s experts similarly recognised two tanks as “tanks” despite them being fluidly connected.
[36] Englebert 1, [127]; Cook 2, [35].
As I alluded to above, the description summarises US 2009/0218354 as follows:
“US-2009/0218354-A1 discloses a floating marine structure including membrane storage tanks. Each storage tank includes an internal longitudinal bulkhead which is provided with one or more fluid passages near the bottom part thereof to create fluid communication between first and second compartments ….
US-2009/0218354-A1 rejects the use of a fluid tight bulkhead, as the division of the storage tanks in two independent spaces would require separately installed pipe lines and equipment, such as pumps and pump towers for discharging LNG. Also, according to US-2009/0218354-A1 the manufacturing costs would increase and the operation and management of the LNG storage tanks is complicated.” [37]
[37] The specfication, page 4 lines 3-16.
This passage is consistent with Shell’s submissions. However in the absence of any ambiguity in the use of the word ‘tank’ in the claims I believe it would be a gloss[38] to use this passage to depart from the common understanding of “tank” as established by the evidence. I consider it possible for two “tanks” to be connected by a fluid path.
At least one longitudinal bulkhead extending along the mid-plane and located between adjacent first and second storage tanks
[38] Decor Corp v Dart Industries [1988] FCA 399; 13 IPR 385 at [25].
Shell submits that the phrase “extending along the mid-plane” requires that the bulkhead traverse the entire extent of the mid-plane such that the bulkhead essentially runs from the stern of the ship to the bow. I do not agree with Shell’s submission. I can distinguish the wording of the present phrase from that of claim 8 (as reproduced in part):
“The vessel of any one of the preceding claims, wherein the at least one bulkhead extends from the base of the hull to the deck…”
In claim 8 the extent the bulkhead extends is clearly specified. This is distinguishable from an open definition where, for example, the bulkhead “extends vertically”. The current feature is more like my example than claim 8. The phrase “extending along” requires that the bulkhead is located on and aligned with the direction of the mid-plane. Reviewing the evidence I find that the experts’ construction, so far as I can identify it, aligns with mine.[39]
[39] Bray 1, [5.5]; Cook 2, [58].
Novelty
The general test for lack of novelty is the reverse infringement test. The classic formulation of this test was given by Aickin J in Meyers Taylor Pty Ltd v Vicarr Industries Ltd:[40]
"The basic test for anticipation or want of novelty is the same as that for infringement and generally one can properly ask oneself whether the alleged anticipation would, if the patent were valid, constitute an infringement".
[40] [1977] HCA 19 at [20], 137 CLR 228 at 235.
This test is satisfied if the alleged anticipation discloses all the essential features of the invention as claimed.[41] Australian courts have often cited, with approval, the words of the UK Court of Appeal in The General Tire & Rubber Company v The Firestone Tyre and Rubber Company Limited:[42]
“If the prior inventor's publication contains a clear description of, or clear instructions to do or make, something that would infringe the patentee’s claim if carried out after the grant of the patentee's patent, the patentee's claim will have been shown to lack the necessary novelty, that is to say, it will have been anticipated. The prior inventor, however, and the patentee may have approached the same device from different starting points and may … have so described their devices that it cannot be immediately discerned from a reading of the language which they have respectively used that they have discovered in truth the same device; but if carrying out the directions contained in the prior inventor's publication will inevitably result in something being made or done which … would constitute an infringement of the patentee's claim, this circumstance demonstrates that the patentee's claim has in fact been anticipated.”
[41] Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513, 517.
[42] [1972] RPC 457, 485-486 (“General Tire”).

Exxon relied on one document as relevant prior art for novelty:
D9Deybach, et al., Going Offshore with Membrane Containment Systems, Gastech 2009, Abu Dhabi, May 27, 2009.
D9 is a conference paper directed to offshore LNG platforms and addressing the problem of sloshing. It recommends the “two row concept”, which is said to reduce sloshing loads within tanks by allowing the “tank” and “floater” resonance periods to shift in opposite directions.[43] In short, resonance can lead to sloshing. Reducing tank breadth reduces the transverse tank resonance period while the larger beam of the offshore unit (compared to a standard LNG Carrier) provides a larger floater period, thereby reducing the likelihood of resonance between the two.[44]
[43] D9, page 6.
[44] Ibid, page 6.
D9 further notes that offshore platforms require wide decks to provide for platform equipment. The increased width has direct effects on the mid-ship section, meaning that a central support dividing the deck should be considered.[45] D9 recommends that a “cofferdam” dividing the two tanks and providing the required central support is provided.[46] For now the relevant cofferdam is provided by a pair of longitudinal bulkheads. A cross-section of the two row tank system is provided below.
D9 explains that a heating system will be installed in the longitudinal cofferdam to guarantee that the temperature in the cofferdam will never fall below 5 ̊C.[47]
[45] Ibid, page 8.
[46] Ibid, page 8.
[47] Ibid, page 9.
D9 then discusses economic considerations. It notes that the central cofferdam doubles the number of tanks compared to a standard design. This in turn means an increase in the amount of equipment used, such as “tripod masts”, cargo pumps and sensors.[48] An analysis of operational requirements may allow a minimisation of the number of tanks that need to be doubled. This is exemplified by Fig. 6 reproduced on the left below in which the rear two tanks are not doubled.[49] D9 alternatively discloses that the two row tanks may be “paired” to operate as one tank by introducing communication means at the top and bottom of the tanks, in turn allowing some reduction in the duplication of equipment.[50] Such communication ports are exemplified in Fig. 14 reproduced on the right below.
Each party’s analysis of D9 largely concentrated on matters illustrated in these two figures.
[48] Ibid, page 9.
[49] Ibid, page 9.
[50] Ibid, pages 13-15.
Are there a series of tanks arranged side-by-side of the cofferdam?
As shown in the above figures there is a series of tanks provided side by side of the cofferdam. Shell submits that the tanks each side of the cofferdam constitute a single tank and not a pair of tanks, since they are fluidly connected. I firstly note that it does not appear the tanks embodied in Fig. 6 are intended to be fluidly connected. In Fig. 6 the author is seeking to minimise the number of two row tank systems, and the resulting duplication of equipment. Providing fluid communication between tanks is thereafter proposed as an apparently alternative means to minimise equipment duplication.[51] This is emphasised by one of the proposed advantages of the Fig. 6 design:
“dividing the tanks in two also brings additional flexibility and reduces vulnerability: individual tanks are of a smaller capacity, the volume unusable during a maintenance or a repair would therefore be smaller.”[52]
Were the tanks fluidly connected, as exemplified by figure 14, this advantage would not be achievable.
[51] Ibid, page 10 last paragraph.
[52] Ibid, page 10 first paragraph.
In any case, even if the tanks in Fig. 6 were connected, they are still identified as distinguishable tanks in D9,[53] and neither of Shell’s experts identified this issue as a point of difference between D9 and the claimed invention. Shell’s submission relies on a construction of “tank” that I have not taken.
[53] Ibid, page 8 last paragraph, page 9 first and last paragraph, page 10 last paragraph.
Does the cofferdam extend sufficiently along the mid-plane?
Shell submits that the cofferdam shown in figure 6 does not extend along the mid-plane as it does not extend from stern to bow. Shell’s submission relies on a construction of the phrase ‘extends along’ that I have not taken. The disclosed cofferdam extends along the mid-plane.
Is there a container or duct arranged in a space within the cofferdam?
In short the answer is no. Exxon submits that a container is disclosed as the cofferdam itself may constitute a container. I have construed feature (e) as requiring a separate duct or container provided in the cofferdam.
Summary
D9 does not disclose a separate container or duct for ballast in the cofferdam. All claims are novel.
Inventive step
Subsection 7(2) of the Act states that an invention is taken to involve an inventive step unless it would have been obvious to a person skilled in the art (“PSA”) in the light of the common general knowledge (“CGK”), considered alone or together with the prior art. A document is prior art for this purpose if “a skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood, regarded [the document] as relevant.”[54]
[54] The Act, s 7(3).
The test for whether an invention is obvious is to ask whether it would have been a matter of routine to proceed to the claimed invention. In Wellcome Foundation Ltd v V.R. Laboratories (Aust.) Pty Ltd[55] Aickin J stated:
“The test is whether the hypothetical addressee faced with the same problem would have taken as a matter of routine whatever steps might have led from the prior art to the invention, whether they be the steps of the inventor or not.”
[55] [1981] HCA 12 at [45], 148 CLR 262 at 286.
Exxon raised a lack of inventive step in view of the CGK taken alone, and alternatively in view of several prior art documents. In addition to D9 Exxon relies on the following documents as relevant prior art for s 7(3):
D4OTC 14100 – Faber et al., “Floating LNG Solutions from the Drawing Board to Reality,” Offshore Technology Conference, 2002.
D10Ryu, MC et al. Sloshing Load Assessment for LNG Offshore Units with a Two-Row Tank Arrangement, Proceedings of the Nineteenth (2009) International Offshore and Polar Engineering Conference, Osaka, June 21-26, 2009.
D13KR 100918199 (Daewoo Shipbuilding & Marine Engineering Ltd.) 21 September 2009
D54OTC 7424 – Addy, et al., “Gryphon A: the first purpose-built permanently moored FPSO in the North Sea”, Offshore Technology Conference, 1994.
D55OTC 7721 – Doble, et al., “Gryphon A – features and operational benefits”, Offshore Technology Conference, 1995.
The PSA
The PSA is the hypothetical person to whom the patent specification is addressed.[56] The identity of the PSA will vary with the nature of the invention and the field with which it is concerned.[57] In KD Kanopy Australasia Pty Ltd v InstaImage Pty Ltd[58] Kiefel J identified the PSA as:
“a person acquainted with the surrounding circumstances of the state of the art and manufacture at the relevant time… They are likely to have a ‘practical interest in the subject matter of the invention’… and may often work in the art with which the invention is connected.”
[56] General Tire & Rubber Co. v Firestone Tyre & Rubber Co. Ltd (1971) 1A IPR 121, 134
[57] Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411, 465 [152]-[153]; Ranbaxy Australia Pty Ltd v Warner-Lambert Co LLC (No 2) (2006) 71 IPR 46, 63[67].
[58] (2007) 71 IPR 615, 621.
Exxon identified the PSA as a naval architect or engineer working on offshore floating structures, in particular, those specialising in the design of fixed and floating offshore platforms.[59] Shell appeared[60] to generally agree with this identification and I am also satisfied with it.
[59] Exxon’s written submissions, [14].
[60] Shell’s written submissions, [11], [12].
The problem to be solved
In determining the problem or “starting point” for considering inventive step, the Full Court in AstraZeneca AB v Apotex Pty Ltd[61] stated:
“If the problem addressed by a patent specification is itself common general knowledge, or if knowledge of the problem is s 7(3) information, then such knowledge or information will be attributed to the hypothetical person skilled in the art for the purpose of assessing obviousness. But if the problem cannot be attributed to the hypothetical person skilled in the art in either of these ways then it is not permissible to attribute a knowledge of the problem on the basis of the inventor’s “starting point” such as might be gleaned from a reading of the complete specification as a whole.”
[61] [2014] FCAFC 99, [202]-[203].
Exxon identifies the problem to be overcome as sloshing causing damage to tanks. Shell identifies as relating to several difficulties identified in the specification. As I noted above the specification details the following:
- sloshing can cause damage to tanks;
- while Kvaener-Moss tanks can usually withstand sloshing, they take up space inefficiently;
- while SPB tanks can also usually withstand sloshing, their internal reinforcing structures render them relatively expensive;
- membrane tanks are relatively cheap and use available space efficiently, however they can be damaged by sloshing – particularly when partially filled.
·long membrane tanks can require costly reinforcing structures to prevent torsion during heavy seas.
I accept Shell’s submission that preventing damage caused by sloshing is an overly simplistic take on the problem solved. If it were the sole consideration then the problem had already been solved by the Kvaerner-Moss and SPB tanks. I identify the problem as providing an effective hydrocarbon storage and/or processing vessel in view of: cost, efficient use of space, and the potential for damage by sloshing and high seas.
The CGK
As previously noted each party provided evidence from experts in the field. While the experts discussed many matters I will concentrate on matters that are contentious or otherwise pertinent.
The size of hydrocarbon processing vessels
There is a general trend to increase the size and capacity of a vessel, due to economies of scale.[62] Size is limited by the shipyard.[63] Larger sizes also affect flexibility and the ports and terminals a vessel can visit.[64]
[62] Basu 1, [4.6], [5.1], [5.3]; Bray 1, [3.40].
[63] Ibid, [4.9]; Bray 1, [3.45].
[64] Ibid, [5.2].
For Shell Mr Cook similarly noted a trend toward larger ships. [65] He also declared:
“SF asked me to describe the maximum width of hydrocarbon processing vessels that I was aware of before 22 February 2010.
The maximum width of a hydrocarbon processing vessel that I was aware of before February 2010 was approximately 60m beam (width). These were VLCCs that had been converted to FPSOs.”[66]
[65] Cook 1, [29].
[66] Ibid, [62], [63].
Patrick Englebert provided similar evidence and tabled the size of several ships he had worked on ranging in beam size between 27 and 44m.[67] While I acknowledge Mr Cook and Mr Englebert’s evidence on the size of currently existing ships, this point does not detract from a general understanding that economies of scale had been driving the industry toward larger vessels. My understanding is therefore that, while larger LNG storage or processing ships having beams of 70m or more may not have been manufactured, such a size had been understood in the industry as desirable among other considerations in view of economies of scale.[68]
The size of storage tanks
[67] Englebert, [78].
[68] Bray 1, [4.1.4]
While the invention claimed is not necessarily limited to membrane tanks (or LNG tanks more generally) I will concentrate on them in discussing this point. The following passage is provided in the specification: “Herein, full size membrane tanks implies that the storage tanks have a width in the order of about 30 meters or more.”[69] This passage is consistent with an understanding that membrane storage tanks were known to have a width of the suggested order. This is supported by the expert evidence provided by both parties.[70]
[69] The specification, page 14 lines 1-3.
[70] Lokken 1, [3.9.1]; Bray 1, [5.10]; Englebert 1, [32], [35]; Cook, [45].
As previously noted damage caused by sloshing is a particular problem for membrane tanks. As the size of the storage tank increases the impact force caused by sloshing becomes more severe.[71] Dr Basu explained sloshing in a tank by reference to the tank’s natural frequency. Resonance may occur when the natural frequency of the tank coincides with that of the vessel and the larger the tank the more likely that the two natural frequencies will coincide.[72] Similar evidence was also provided by Mr Bray[73] and I note this matter was referred to in discussing D9 above.
[71] Lokken 1, [0014].
[72] Basu 1, [5.13].
[73] Bray 1, [3.31].
A vessel has two most relevant natural frequencies, relating to “pitching” and “rolling” motions.[74] These motions are most easily explained by reference to the following picture I have reproduced from Wikipedia:
[74] Basu 1, [5.13].
In existing LNG carriers pitching is a major consideration and has led to vessels with more tanks to reduce to the longitudinal dimension of each tank and hence the likelihood of damaging levels of sloshing.[75] Dr Basu declared that the same considerations apply to rolling such that tanks overly large in the transverse direction are more likely to have a natural frequency close to that of the ship. Hence, he declared, concepts with side by side tanks have been proposed.[76] I will consider whether side by side, or two-row, tank configurations were known below.
[75] Ibid, [5.14]; Cook 2, [37].
[76] Ibid, [5.15].
I surmise that it was known to have larger tanks of for example 35m. However the issue of resonance and damage by sloshing limited their size in larger vessels and led to several tanks routinely being provided in the longitudinal direction of the vessel.
Two rows of storage tanks
The question is whether it was known in the art to provide a vessel with parallel rows of hydrocarbon storage tanks instead of a single row. Exxon’s experts considered this configuration known, and referred to several prior art documents disclosing relevant configurations to reinforce that opinion.[77] For Shell Mr Cook declared he was not aware of the two row configuration at the priority date.[78] Mr Englebert stated he was aware of the “Farwa” floating production storage and offloading vessel, which incorporated a two row configuration.[79] He was also aware that large oil carrier vessels built between 1993 and 2010 generally had a two or three row configuration where tanks shared a common wall.[80]
[77] Bray 1, [3.37]; Lokken 1, [3.5.2], [3.7.3]-[3.7.7], [3.9].
[78] Cook 2, [18], [19], [51].
[79] Englebert 1, [55]-[62].
[80] Ibid, [69]
Taking into account Bennett J’s comments in Austal Ships[81] (as I reproduced previously) I consider it more likely than not that a two row tank configuration formed part of the CGK. Exxon’s experts provided supporting prior art documents consistently disclosing such a configuration, while for Shell Mr Englebert was also clearly aware of certain vessels generally having multiple rows of storage tanks.
Cofferdams
[81] 66 IPR 420, 423; [2005] FCA 805, [12].
Cofferdams were described in evidence as “compartments between bulkheads or decks to provide separation between spaces, generally for safety purposes.”[82] A cofferdam may for example be needed to separate two different cargoes that can react dangerously.[83] Cofferdams are generally available for inspection.[84] Mr Bray declared that:
“A vessel with multiple membrane storage tanks will require an arrangement of two bulkheads between adjacent membrane tanks to form a cofferdam to avoid a single bulkhead dropping in temperature due to heat leakage from the membrane insulation system.”[85]
[82] Bray 1, [3.11].
[83] Ibid, [3.11]
[84] Ibid, [3.11].
[85] Ibid, [3.28].
Dr Lokken also discussed cofferdams at length, and noted that LNG carriers are designed with transverse cofferdams between LNG tanks. [86] Each cofferdam is defined by a pair of bulkheads further defining the wall of a cargo tank. [87] The space in between bulkheads is typically filled with air and is used for inspection of the hull structure as required by the IMO IGC code. [88] These cofferdams ensure that the steel in the hull structure is not overcooled by the LNG cargo and offer the opportunity to heat the steel through passive heating or by circulating a heating medium in the cofferdam space.[89] Dr Lokken also noted that cofferdams allow access for inspection and repair of the hull structure while a FLNG or FSRU is in service.[90]
Ballast
[86] Lokken 1, [3.6.5]
[87] Ibid, [3.6.5].
[88] Ibid, [3.6.5].
[89] Ibid, [3.6.5].
[90] Ibid, [3.7.6].
Ballast is known and commonly used to maintain the stability or “sea-kindliness” of a vessel.[91] It can alter the draft, trim, or heel of the vessel, well as alter the vessel’s centre of gravity and weight distribution.[92] For stability, ballast should be low down in the vessel in a similar longitudinal distribution to the cargo tanks.[93] Vessels are therefore generally provided with double bottom and wing tanks and centreline forepeak and aft peak tanks for water ballast.[94] In other words vessels are often double-hulled, providing space between each hull for ballast.[95]
[91] Lokken 1, [3.4.2].
[92] PS-1, [2.1].
[93] Ibid, [2.2].
[94] Ibid 1, [2.2].
[95] Lokken 1, [3.6.6].
Mr Bray explained the placement of ballast as follows:
“Ballast water is used in hydrocarbon processing vessels, as well as tankers. Spaces used for ballast, ballast tanks, are generally formed by the primary hull structure of bulkheads, deck, and bottom plate. These arrangements are typical of tankers and have been used for over a century.
Cofferdams are compartments between bulkheads or decks to provide separation between spaces, generally for safety purposes. A cofferdam can be a void space or a ballast tank, for example to separate tanks containing different liquids (e.g. cargo tanks) and machinery space.” [96]
[96] Bray 1, [3.11].
He then expressed concern over the placement of ballast between cryogenic storage tanks as follows:
In vessels with cryogenic storage, consideration is also given as to which compartments should be retained as voids due to the cooling effects of the cargo. For example, transverse compartments on liquid natural gas carriers (LNGC) are generally voids and do not contain ballast water, but have a heating system to counter cooling effects of the cargo. Since the tanks on either side would continually absorb heat, the void would cool to unacceptable temperatures. If they were to contain ballast water exclusively, then the water would cool and eventually freeze, destroying the vessels.”[97]
[97] Bray 1, [3.12]. See also Bray 1, [3.28], [5.6]. Basu 1, [5.16], appendix 1 discussion of claim 2.
Placing the issues of freezing and access to one side and presuming the PSA would provide ballast in a cofferdam between cryogenic storage tanks, the invention claimed raises the further question: would one use the cofferdam itself as the ballast tank, or would one provide a separate ballast tank within the cofferdam? Exxon in its written submissions provided the following:
“One of these features is the incorporation of a container or duct to contain ballast water. The specification does not teach that any advance resides in this feature and the feature does not assist in overcoming the problem set out in the specification. It is a routine design preference.”[98]
With respect to Exxon’s submission, whether incorporation of a container or duct to contain ballast water is a routine design preference is a matter to be borne out by evidence.
[98] Exxon’s written submissions, [66].
As I noted above, Mr Bray declared that ballast tanks are generally formed by the primary hull structure.[99] He also noted that a cofferdam can be a void space or itself a ballast tank.[100] Dr Lokken declared that: “[t]he spaces between longitudinal bulkheads near the mid-plane can be used for ballast water”[101] and that:
“[t]here can be secondary longitudinal bulkheads, which define the double side space of the hull, that extend parallel to the longitudinal sides and can be used as ballast tanks.”[102]
Mr Bray and Dr Lokken’s evidence suggests it would be the bulkheads of the cofferdam itself that would be used as a ballast tank.
[99] Bray 1, [3.10].
[100] Ibid, [3.11]
[101] Lokken 1, [3.9.1].
[102] Ibid, [3.9.1].

Dr Sincock more interestingly stated in relation to several documents:
“Is expected that ballast could be placed in the following regions… centreline tanks, located in the void spaces (both longitudinal and transverse) between the cargo tanks.”[103]
However, when further asked how he expected ballast may be stored in such a region, Dr Sincock declared:
“It is expected that the ballast would take the form of sea water ballast and be stored in dedicated ballast tanks that are an integral part of the structure of the vessel.”[104]
It is possible that Dr Sincock expects ballast tanks to be provided separately within a cofferdam. However his response to the further question seems consistent with the evidence of other experts in which ballast tanks would be formed utilising structural elements such as bulkheads. I am not sufficiently convinced by Dr Sincock’s responses that he expects a separate ballast tank would be provided between bulkheads. I am moreover not convinced by the sum of the evidence that such an approach was generally known.
[103] PS-1, 2.4(a), 3.4(a)
[104] PS-1, page 6.
In summary I am not convinced it was generally known, were one to provide ballast in a cofferdam, to do so by providing a separate tank, container or duct in a space between bulkheads. Further addressing Exxon’s submission, while there is no evidence on this point I can personally envisage several advantages to providing a separate container or duct as claimed, such as:
·     it could allow ballast water to kept separate to any heating arrangements required between cryogenic tanks;
·     it could allow access to the cofferdam even where the container or duct contains ballast; and
·     it could allow any leak of hydrocarbon material arising from a breach of one of the tanks to be kept separate from the ballast water.
Does any claim lack an inventive step in view of the CGK alone?
Exxon has not established it was known or otherwise a matter of routine to provide a ballast container or duct in a space between the two bulkheads. For at least this reason Exxon has not established that any claim lacks an inventive step in view of the CGK.
Ascertainability of the prior art
Each party provided evidence on how information is disseminated in the art. For Exxon Dr Basu noted that the most used channels include: trade press, trade shows and conferences, scientific and technical conferences, research journals, newsletters and websites, and Joint Industry Projects.[105] Dr Basu also noted that he would refer to patent databases when working on a project involving novel aspects.[106] Dr Lokken provided similar evidence.[107]
[105] Basu 1, [8.2].
[106] Ibid, [8.13].
[107] Lokken 1, [3.2].
For Shell Mr Englebert noted that he did not routinely read patent documents as means of keeping up to date, however he had read one or two patent specifications for particular research projects he was working on.[108] Mr Cook noted that in his role as a marine engineer, patent specifications are not consulted as a source of information. At this stage I note that D13 is a Korean patent document. In James Hardie Technology Limited v BCG (Australia) Pty & CSR Building Products Limited[109] I was asked whether a patent document in a language other than English would have been ascertained by the PSA (of an unrelated art). In that decision I noted:
“The evidence establishes that the PSA would, either directly or indirectly, have conducted patent searches in solving technical problems. During such searches documents in foreign language may have surfaced and been identified as potentially relevant. Presumably such documents could be identified because of a relevant English abstract. The evidence also however establishes that it would have been uncommon to have such documents translated due to the related cost. Such being the case it seems that a foreign language document’s English abstract would have to have been identified as very clearly relevant to the problem at hand before one went to the effort of translating it.”[110]
[108] Englebert 1, [22].
[109] [2016] APO 31.
[110] Ibid, at [163].
I do not suggest that this finding has any general relevance beyond the particular technology and time period considered. It may for example have become more common in other technologies to request translations or use automated translations as provided online. Nevertheless in the present case while Exxon has demonstrated that patents were consulted as a source of technical information it has not demonstrated that foreign language documents were routinely translated or otherwise viewed in detail as part of that process. I am not satisfied I can reasonably expect the PSA to have ascertained or understood D13. I will not discuss it further.
In relation to conference papers Mr Englebert noted that he attends conferences relevant to the projects he undertakes, and that he has authored and presented a paper at a conference.[111] Mr Englebert otherwise noted he does not read published conference proceedings of papers. Mr Cook noted that he considered conferences more as networking opportunities than as a means of continuing professional development.[112] It is clear that those in the art attend conferences. With due respect to Mr Englebert and Mr Cook, I think it is reasonable to expect a PSA that regularly attends conferences to read presented papers relevant to his or her work. I similarly think it is reasonable to expect the PSA to view conference papers as relevant source of information worth searching when researching a technical problem. I am satisfied I can reasonably expect D4, D9, D10, D54 and D55 to have been ascertained, understood and regarded as relevant by the PSA.
[111] Englebert
[112] Cook 1, [24].
D4
D4 is a conference paper summarising Shells progress toward practical, safe and economic floating production systems to deliver oil/condensate and LNG from the same unit. It identifies the technical challenges to the project most generally as: “one cannot simply build an onshore LNG plant on a barge”.[113] Nevertheless the basic concept proposed is described as “a rectangular barge moored by a rotating turret attached to the bow, and storage for LNG and oil condensate contained within the hull.”[114] The barge design is more specifically described in page 4, which states:
“A double hull is employed throughout. Crude oil is stored in six tanks (two forward and four aft) and LNG is stored in four insulated tanks in the centre of the barge, near the LNG offloading arms. To provide a clear upper deck for the processing topsides, the membrane containment design has been utilized for LNG storage.”[115]
Does D4 discloses side-by-side symmetrical tanks, i.e. features (b) and (c)?
[113] D4, page 1.
[114] Ibid, page 2.
[115] Ibid, page 4.
Shell in its written submissions referred to evidence provided by Mr Cook:
“Figure 8 in OTC 14100 refers to “#1 cargo tank (P and S)” and discloses a plurality of tanks. I understand ‘P’ to refer to port side and ‘S’ to refer to starboard side of a vessel. Figure 8, however, does not disclose a plurality of second storage tanks ….in symmetrical side-by-side arrangement with the plurality of the first storage tanks. I, therefore, am of the opinion that OTC 14100 does not disclose this feature of claim 1.” [116]
[116] Cook 2, [172].
Reviewing Fig. 8 I find I disagree with Mr Cook. The tanks are quite clearly shown in Fig. 8. In particular, while the plan view in the isometric drawing shows the top deck of the barge, the outlines of the tanks below the top deck are nevertheless clearly shown. Below I reproduce part of Fig. 8 where I focus in on two LNG tanks and highlight the corners of the tanks in red.
While the tanks are less easily identified without enlarging the image I am still able to identify the four insulated LNG tanks and the six oil tanks. In Annex A I have outlined the insulated tanks in in red and the oil tanks in green.
Does D4 disclose longitudinal bulkheads, i.e. feature (d)?
Shell in its written submissions again referred to evidence provided by Mr Cook:
“There is no disclosure in this paper (including Figure 8) of a vessel having at least one longitudinal bulkhead extending along the mid-plane of a vessel.”[117]
[117] Exxon’s written submissions, [162].
Dr Lokken in reply stated:
“I believe that this disclosure is made on Figure 8 by showing that there are port and starboard LNG tanks, which can only be separated by longitudinal bulkheads. Further, any offshore engineer familiar with the design of membrane LNG cargo storage would understand that two parallel longitudinal bulkheads would be required. IGC Code, Section 3.5.1, requires the ability to inspect “at least one side of the inner hull structure without the removal of any fixed structure”, which can only be achieved through the use of two parallel bulkheads. IGC Code, Section 4.8.4, discusses the need to heat hull steel for both transverse and longitudinal structure. Transverse bulkheads in membrane LNG carriers comprise two parallel bulkheads defining a cofferdam to allow inspection and heating.”[118]
[118] Lokken 2, page 16.
Mr Bray also declared:
“A vessel with multiple membrane storage tanks will require an arrangement of two bulkheads between adjacent membrane tanks to form a cofferdam to avoid a single bulkhead dropping in temperature due to heat leakage from the membrane insulation system.”[119]
[119] Bray 1, [3.28].
As apparent from Annex A I agree that the port and starboard LNG tanks are separated from one another. Port and starboard oil tanks are similarly separated. Most generally it also appears to me that two bulkheads are shown as highlighted in red in Annex B. However, I acknowledge that neither Mr Cook nor Dr Lokken took bulkheads as so explicitly drawn. Dr Lokken and Mr Bray have provided logical reasons as to why longitudinal bulkheads would be inherent while Mr Cook’s evidence notes only that such bulkheads are not explicitly provided. I accept that feature (d) is disclosed.
Would it be a matter of routine to incorporate feature (e)?
Exxon acknowledged in submissions that feature (e) is not disclosed in D4.[120] Exxon has not established that it was known or otherwise routine to provide a ballast container or duct in a space between bulkheads. It is not established that the invention claimed lacks an inventive step in view of D4.
[120] Exxon’s written submissions, [163].
D9
I have discussed D9 for the purposes of novelty where I noted that a container or duct arranged in the cofferdam to contain ballast water is not disclosed. I have also found that it would not be matter of routine to provide one. Exxon has not established that the invention claimed lacks an inventive step in view of D9.
D10
D10 is a conference paper arising from the International Offshore and Polar Engineering Conference and entitled “Sloshing Load Assessment for LNG Offshore Units with a Two-Row Tank Arrangement”. The general configuration of the two-row cargo tank arrangement is shown in Figs. 2 and 3. As shown below, Figs. 2 and 3 provide a two row tank design split by a cofferdam in which each row of tanks comprises several tanks.
The two-row concept provides the advantages of reduced sloshing, while a centreline bulkhead provides robust supporting hull structures for heavy topside modules.[121] The typical breadth of the disclosed tanks is about 27 metres.[122]
[121] D10, page 284.
[122] Ibid, page 284.
Much of D10 is spent explaining the methodology behind its assessment of sloshing loads and discussing the results of such testing. D10 concludes by noting:
“As an intermediate conclusion, one of best approaches for cost effective and robust FLNG cargo tank design could be the two-row cargo tank arrangement with the NO.96 membrane containment system.”[123]
Would it be a matter of routine to incorporate feature (e) to the configuration of D10?
[123] Ibid, page 293.
Exxon acknowledged in submissions that feature (e) is not disclosed in D10.[124] I have found that it would not be matter of routine to provide the defined container or duct. It is not established that the invention claimed lacks an inventive step in view of D10.
D54 and D55
[124] Exxon’s written submissions, [147].
In submissions D54 and D55 were treated as providing largely equivalent disclosures and I shall do the same by referring primarily to D54. D54 is a conference paper titled “Gryphon A: the first purpose-built permanently moored FPSO in the North Sea”. D54 unsurprisingly describes the design of the Gryphon A, which I shall summarise by reference to Fig. 6 as shown below.
The Gryphon A is described as a turret moored ship shaped storage vessel supporting the production, offloading and utility systems required to process the Gryphon well fluids.[125] The vessel has dimensions as follows: 257.6 m length, 41.0 m beam, 23.6 m depth, 16.5 m draft.[126] The hull is contracted with a double bottom, double sides, and double transverse and longitudinal bulkheads to provide ballast tankage on all sides of the cargo tanks except at the main deck level.[127] I note this is also demonstrated in the above Fig in which ballast tankage is also provided between transverse bulkheads between tanks. As also shown in the above Fig. the vessel has oil processing equipment provided above
[125] D54, page 2.
[126] Ibid, page 2.
[127] D54, page 3.
Exxon’s written submissions state (footnotes omitted):
“The Gryphon A includes a cofferdam suitable for the placement of ballast as per the IMO IGC Code. It would be a matter of routine to place ballast in the central cofferdam space towards the bottom of the hull.”[128]
Whether the disclosed cofferdam is a suitable place to provide ballast, neither D54 nor D55 disclose a container or duct arranged in a space between the two bulkheads. Feature (e) is not disclosed in D54/D55. Exxon has not established that it would be matter of routine to provide the defined container or duct. It is not established that the invention claimed lacks an inventive step in view of D54/D55.
[128] Exxon’s written submissions, [170].
Summary on inventive step
Exxon has not established that any claim lacks an inventive step, at least because it has not established it would be a matter of routine to place a container or duct for ballast in a space between two longitudinal bulkheads as claimed.
Conclusion
The opposition has not succeeded on any ground. Subject to an appeal against this decision I direct that the application proceed to grant.
Costs
Generally costs should follow the event. I see no reason to depart from this approach in the present circumstances. I will award costs according to Schedule 8 against Exxon.
Rhys Munzel
Delegate of the Commissioner of Patents
Annex A
Annex B

Genetics Institute Inc v Kirin-Amgen Inc [1999] FCA 742; [1999] 92 FCR 106, [17].