FLUID ENERGY SYSTEMS PTY LTD

[1991] APO 40

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re: Patent Application No. 20319/88 by FLUID ENERGY SYSTEMS PTY. LTD.

Examiner's objections.

Background

Application no. 20319/88 entitled "Integrated Hydroelectric Power Network" was filed on 2 August 1988.  The application claims priority from provisional specification PI 3513 lodged on 4 August 1987.  A first adverse report was issued on 24 May 1990, and since then two further adverse reports have been issued.  Despite submissions to the contrary and the proposal of some apparently minor amendments, the main objections which have been maintained throughout are that the application is not for a manner of new manufacture, and the invention as claimed is not novel.
          The applicant requested to be heard in respect of the objections.  The matter was heard in Canberra on 19 July 1991.  Mr Graham Halford, Patent Attorney, of Halford and Co., represented the applicant.
The Specification
          The specification indicates that the invention relates to an arrangement of hydroelectric power stations in a region which includes climatic zones which have differing seasonal patterns of precipitation and run-off.  The region may be divided into a number of sub-regions having complementary patterns of average precipitation and run-off through the calendar year.  The sub-regions are chosen so that the integration of the rainfall

and run-off of the sub-regions gives an aggregate precipitation and run-off which is sufficient for the generation of hydroelectric power in relation to the pattern of demand of the region for electricity through the year, particularly in periods of peak demand.
          Claim 1 as proposed to be amended reads as follows:

1. A hydro-electric power generation and supply arrangement comprising a region containing differing climatic zones, said region being divisible into a number of sub-regions chosen such that the aggregate of the annual distribution of the average precipitation and run-off of relevant catchments in each sub-region correlates more with the annual distribution of demand for electricity within the region than with the average precipitation and run-off in any one of those sub-regions, each of those sub-regions having at least one hydroelectric power station utilizing the respective output thereof and means for interconnecting said power stations into a distribution grid.

The specification also contains three claims appended to claim 1, specifying the connection of other generating units to the distribution grid, and an omnibus claim.  None of these claims are relevant to the matters at issue.

Objections and submissions

The examiner objected that the application is not for a manner of new manufacture because what is claimed as an invention merely relates to a scheme or arrangement wherein the principal integers of the claim are abstract in the sense that it relies on the projection of historical hydrological data into the future.  The examiner also objected that the invention as claimed in claim 1 et al is not novel in the light of known electricity supply grids which are fed by regional power stations.
          In response the applicant submitted that the invention as claimed is a collection of inter-working integers, namely a number of hydroelectric power stations interconnected through a distribution grid and distributed geographically according to the relationship of the local precipitation and run-off to the demand for electricity of the network as a whole.  Furthermore the invention as claimed is novel because it is directed to a combination of hydroelectric power generation and supply network whose generating stations are located in accordance with the demands of the network as a whole rather than of the individual geographic location in which the station is located.  Thus the location of a generating station in a low demand region having a high and reliable precipitation and run-off can now be used as a viable and economical construction.
          Both the Section 6 and novelty objections were maintained in the second report. In support of the Section 6 objection the examiner cited two exemplary documents which allegedly describe in theory and practice how individual hydroelectric power stations of a region that are subjected to differing climatic and/or topographic zones are integrated such that the total precipitation and/or run-off of the region correlates more with the total demand/distribution of electricity within the region on an annual demand basis.  The two documents are:

"Design of Water-Resource Systems" by Maass et al, in particular chapter 7 by Bower, and

"Hydro-Electric Engineering Practice" by J.Guthrie Brown and J.K.Hunter, pp 263 to 267,

both of which were available in the Patent Office library long before the priority date of the claims.
          The applicant responded by asserting that each citation is described with respect to a single river basin system, which in the language of the specification is a single "sub-region".  Each describes a system relying on the characteristics of a single climatic zone, and each depending for their working on the necessary fact that the hydrologies of separate catchments of a single river system are interdependent.
          At the hearing, Mr. Halford on behalf of the applicant augmented the previous arguments against the Section 6 objections by making the further points that:

.citations were irrelevant to the issue of Section 6

.the claim represented an artificially created state of affairs having an economic purpose and therefore met the criterion of patentability.

In response to my suggestion that the Section 6 issue could also be looked at from the point of view of "generally inconvenient", he argued that:

.the applicant was in the process of putting the scheme in accordance with the invention into practice somewhere in NSW with the full approval of the NSW Government who therefore didn't consider it as "inconvenient" to them

.he did not see it as taking away freedom of choice

.any patent is inconvenient to competitors in that it restricts what they can do without infringing, and that as a matter of logic this claim was no different from any other claim and therefore no more invalid under Section 6 than any other patent claim.

On the question of novelty Mr. Halford submitted that the Bower citation related to a single river basin, there was no suggestion of more than one climatic region, hence no selection of catchments, and that it therefore omitted two essential characteristics of the present invention and could not consequently destroy the novelty of claim 1.  Essentially the same argument applied to the second citation.

Decision
          Before discussing the main issues of Section 6 and novelty, I must first address several Section 40 issues which emerged from the hearing but had previously escaped attention.
          The first of these concerns the meaning of the terms "the aggregate of the annual distribution of the average precipitation and run-off of relevant catchments in each sub-region" and "the average precipitation and run-off in any one of those sub-regions".  My first inclination was to treat these expressions as representing, for want of a better term, the (potential) capacity of the region or subregion to provide hydro-electric power.  During the hearing Mr. Halford indicated quite strongly that he considered this interpretation to be wrong.  He stated that:

"we are not talking about capacity because capacity of supply of electricity is something which is ultimately going to depend on many factors other than the factors with which we are concerned in this arrangement.  In the normal course of events this arrangement is going to be feeding power into a grid which will be supplied by coal burning power stations and whatever other sources of electricity are available.  A hydro-electric scheme is rarely used on its own for the purpose of electricity supply.  It is always used in conjunction with other sources of power.  It is normally used in conjunction with other aims of water resource usage e.g. flood control, irrigation, recreation, etc.  All of these are factors in terms of capacity.  Capacity isn't an issue here." 

However he was unable to advise me of an alternative interpretation.  It is quite clear that precipitation and run-off do not necessarily coincide: it is not clear whether the claim means one or the other, or whether the two parameters are combined in some (unspecified) way.  The specification contains figures to facilitate understanding of the invention.  These figures, which are graphs presumably illustrating the  parameters of claim 1, are described as showing the "inflow" available to the catchments.  While I am conscious that Mr. Halford believes my interpretation of these terms to be erroneous, in the absence of any clearer guidance I am unable to take any other view.  In this regard I note that the specification at page 2 line 32 et seq. refers to ".... such that integration of the rainfall and the run-off ..... leads to to an aggregate precipitation and run-off which is sufficient for the generation and supply of hydro-electric power...".
          A second point concerns the defined relationship between those terms and the annual distribution of demand for electricity within the region.  For convenience I shall refer to the demand distribution as parameter C, and the two terms discussed above as A and B respectively.  Then the claim in its current form defines that A correlates more with C than it does with B.  In the course of discussing a separate point, Mr Halford proposed an alternative wording for claim 1 as follows:

A hydro-electric power generation arrangement for the supply of electricity the demand for which varies according to a characteristic annual pattern of demand, the arrangement comprising a region containsing differing climatic zones, a plurality of hydro-electric power generating stations each supplied by a respective catchment within said region, the catchments of said stations being hydrologically independent and being so located with regard to such zones that the aggregate of the annual distribution of the average precipitation and run-off of said catchments correlates more closely with said pattern than does that of any one of said zones.

This version defines that A correlates more closely with C than B does.  These two definitions are distinctly different, however it seems to me that the latter form corresponds more closely to the consistory statement in the specification as lodged.  Subsequent to the hearing the applicant has confirmed that the latter form is correct, and that he wishes me to consider this alternative version of claim 1.
          Accordingly the remainder of my decision is directed at this form of the claim.
          I am also concerned with the term "correlates more" in claim 1.  I am not entirely sure that I know what the strict mathematical meaning of "correlates" is in this particular context, but for the purposes of this decision I am prepared to assume that "correlates more" simply means "provides a better match".  The claim thus reduces to the statement that the aggregate capacity of the region correlates more with (i.e. provides a better match with) the demand distribution of the region than does any of the sub-region capacities.
          I have further problems with the rest of the specification in relation to the claim when so construed.  The descriptive part of the specification is a relatively short document running to just over four  typed pages. Apart from a consistory statement which reflects claim 1, the specification conveys the suggestion of a network of hydro-electric power stations situated in hydrologically independent locations such that they complement each other.  See for example the paragraph commencing at page 2 line 28:

We have found that a study of the hydrology of such a region, with particular regard to its rainfall and run-off characteristics, will show that the region may be divided into a number of sub-regions having complementary patterns of average precipitation and run-off through the calendar year, such that integration of the rainfall and the run-off of suitable chosen sub-regions leads to an aggregate precipitation and run-off which is sufficient for the generation and supply of hydro-electric power, in relation to the pattern of demand of the region for electricity through the year, and particularly in periods of peak demand.

This concept is not reflected in the claim.  In particular there is no explanation anywhere as to how the relationship defined in the claim relates to this objective.
          The specification does not provide a best method of performance.  The nearest it comes to doing so is in the passage beginning at page 4 line 12.  This is said to facilitate an understanding of the invention by way of an example which is illustrated in figures 1 and 2.  While this appears to illustrate the concept of individual stations complementing each other to give an aggregate which may approximate the demand distribution, it certainly does not even begin to illustrate the relationship between the parameters which is defined in the claim.  Indeed this illustration tends more to provide support for the examiner's objection that the invention is in the category of "designs, schemes, and plans".
          For all the above reasons I do not consider that the specification meets the requirements of Section 40. 
          These Section 40 matters are quite substantial and arise largely from the alternative form of the claim presented at the hearing and which the applicant has subsequently indicated is the form he wishes me to  consider.  This claim changes the relationship between the parameters quite significantly, a fact which was not immediately apparent at the hearing.  Accordingly much of the discussion at the hearing on Section 6 and novelty issues related more to the earlier form of the claim and is not necessarily relevant to the latest form.  Conversely Section 6 and novelty issues with regard to the latest version were not directly addressed.

With regard to Section 6, I have already indicated that I construe the essential characterisation of the claim to be that the aggregate capacity of the region correlates more (i.e. provides a better match) with the demand distribution of the region than does any of the sub-region capacities.  While, subject to the concerns discussed above, this claim may be clear in terms of defining the limits of the monopoly sought, the real practical significance of the characterisation, in terms of what it achieves, is uncertain.  The inference from the specification is that this corresponds to an arrangement of hydrologically independent hydro-electric stations which are complementary in the sense that collectively they provide a better match to the demand distribution than would otherwise be possible.  Whether or not the arrangement defined in the claim necessarily produces this result (and I have already expressed concerns in this regard under Section 40), it is apparent that arrangements which do in fact produce this result could be within the scope of the claim.
          I am concerned that such a result is what an electricity generating authority would seek to achieve when planning to increase its generating capacity by building an additional hydro-electric plant in a different "sub-region" from another hydro-electric station connected to the same network or grid.  Public utilities have a duty to ensure that capacity meets projected demand, even to the extent of planning the construction of extra capacity long before it is required.  It is implicit that the matching of supply to demand extends, as far as possible, to the matching of seasonal or other time variations.  It is well known for authorities to encourage the use of "off-peak" electricity to even out fluctuations in demand over a 24 hour period.  In the Snowy Mountains scheme it is common practice for stored water to be used to generate extra capacity at times of peak demand, and for the water so used to be pumped back upstream during slack demand (i.e. off-peak) for subsequent re-use.  In planning to extend their capacity, the relevant Authority takes all sorts of factors into account, including type (energy source) of generating station, cost, location, political considerations, etc.  The extent to which a new plant complements existing capacity is just one of many desiderata, but all things being equal a competent Authority would prefer a new station which improved the supply-demand match to one which didn't.  A monopoly which would prevent a public utility from operating in this way is, in my view, contrary to Section 6, which requires that the patent monopoly be not "contrary to law or mischevious to the state.....or generally inconvenient".  Nor should a public utility be inhibited in seeking this goal by the need to avoid a relationship whose "inventive ingenuity" in achieving that goal has not been demonstrated.  My view that this claim therefore fails Section 6 is I think consistent with a line of authorities including:

Commisioner of Patents v Lee (16 CLR 138)

Rolls-Royce Ltd's Application ( 80 RPC 251)

Hiller's Application ( (1969) RPC 267)

Hiller's application is particularly appropriate.  The judgement of Lloyd-Jacob J. is brief and self-explanatory and I reproduce it in full below:

"The applicant appeals from the decision of Mr K.M. Smith (superintending examiner acting for the Comptroller General) dated 24th April 1968, wherein he decided that the alleged invention as broadly claimed was not on any reasonable view a manner of new manufacture.

The alleged invention is expressed as relating to a subterranean utility distribution system and is claimed in its broadest form as follows:

"(1)In an underground installation for distribution of utilities services within a parcel of land having a longitudinally extending length of roadway located therein and being divided into a plurality of lots along said roadway, each of which lots is defined at least in part by a property line transversely oriented with respect to said roadway and which installation includes a main conduit defining a utility service and being disposed in said land below its surface and further includes a branch conduit connected with said main conduit and being disposed in said land below the surface thereof in traversing relation with said roadway, the improvement characterised by said main conduit extending along one side of said roadway latterly exterior thereto and said branch conduit being located and oriented to extend from the vicinity of such property line on one side of said length of roadway to the vicinity of a property line on the other side of said roadway to enable adjacent lots to be served by a single transversal of said roadway and by the branch conduit making the same."

All this verbiage can be simply paraphrased to denote the laying of pipes, cables and the like to service a proposed housing estate to a plan by which the main supply route borders the common road and has branches passing under the road serving adjacent pairs of houses.

It is of course common knowledge that provision for supplies of gas, electricity and water and for sewage disposal by buried conduits is conveniently secured by planned distribution common to several dwellings, the record of which facilitates access should occasion for attention or repair arise.  It is difficult to believe that the applicant's only conceivable feature of novelty, that is the location of the common supply conduit alongside and not beneath the roadway, is not a characteristic of many such existing systems, but if any assumption of novelty is made it falls to be considered whether the monopoly claimed constitutes anything which can be comprehended within the conception of a manner of manufacture.  The issuance of instructions to a gang of workmen to dig excavations and lay conduits as indicated on a plan of a site cannot of itself constitute any development in a useful art, nor can the product of their activity be differentiated from existing conglomerations of main service conduits except to the extent to which the alignment shown in the plan to which they have worked provides a distinction.  Reference to E.S.P.'s Application (1945) 62 R.P.C. 87 and D.A. & K.'s Application (1926) 43 R.P.C. 154 suffices to indicate that patentability does not attach to any novelty or ingenuity which can be asserted for such a plan.

It is not therefore necessary to consider what may well be an equally fatal objection to a grant upon the application in its present form, namely, the general inconvenience to the public of restricting the freedom of the providers of public utility services to select appropriate locations for their mains, an objection to which the hearing officer referred with reference to the decision in Rolls-Royce Ltd.'s Application [1963] R.P.C. 255. I endorse the decision of the hearing officer and dismiss this appeal."

The final paragraph on general inconvenience is clearly obiter dictum but nevertheless it is persuasive in relation to the present claim.  Furthermore the main reason for adverse judgement is on similar lines to the "designs, schemes or plans" objection raised by the examiner in this case.  In fact I find the decision in Hiller's Application more persuasive than Mr Halford's arguments to the contrary and consider that the present claim fails section 6 on this ground also. 
          On the question of novelty Mr Halford has pointed out that the two documents cited each related to a single river basin, that neither suggested a region with more than one climatic zone, and therefore there was no selection of catchments based on climatological differences.  Accordingly neither citation destroys the novelty of claim 1, a conclusion with which I agree.  Likewise although one might suspect that arrangements may already exist which meet the definition of the claim, in the absence of evidence of this a novelty objection cannot be sustained.  There remains a possible argument along the lines that the claim is not novel over an arrangement of hydrologically independent hydro-electric stations not possessing the characterising relationship because the difference makes no contribution to the working ...... along the lines of Griffin v Isaacs, but on that point I am prepared to give the applicant the benefit of the doubt.
Conclusion
          I have found that there are significant Section 40 problems with claim 1, and that it offends against Section 6 of the Statute of Monopolies.  However I am conscious of the fact that at least some of these problems arise in the claim first proposed at the hearing.  Since these points were not appreciated until later,  Mr. Halford has had no opportunity to address them.  Rather than refuse the application outright, I am prepared to provide the applicant the opportunity to propose suitable amendments to my satisfaction within the time remaining for acceptance.

(G. R. BROWN)
  Supervising Examiner of Patents

Patent Attorneys for the Applicant: Halford and Co., Sydney