Innovia Security Pty Ltd v Giesecke & Devrient GmbH - [2013] APO 75

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Innovia Security Pty Ltd v Giesecke & Devrient GmbH [2013] APO 75

Patent Application: 2007341700

Title:Safety element having an optically variable element

Patent Applicant:                   Giesecke & Devrient GmbH
Opponent:  Innovia Security Pty Ltd
Delegate:  Greg Powell
Decision Date:  14 November 2014
Hearing Date:  5 September 2014

Catchwords: PATENTS - section 59 – opposition to the grant of a patent – construction of claims – whether the claims are clear, fairly based and define the invention –claims clear, fairly based and define an invention – whether the claimed invention is novel – anticipatory use or publication not established – whether the claimed invention involves an inventive step – obviousness not established – whether specification fully describes invention – specification lacks a full description – opposition successful – costs awarded against applicant

Representation: Patent applicant: Claude Anese, Patent attorney of Cullens, Brisbane
Opponent:J Roger Green and Ken Bolton, Patent attorneys of Watermark, Melbourne

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2007341700

Title:Safety element having an optically variable element

Patent Applicant: Giesecke & Devrient GmbH
Date of Decision: 14 November 2014
DECISION
The opposition is successful under s40(2)(a). While the claims are clear, fairly based, novel and inventive, the invention defined is not fully described.
Costs are awarded against Giesecke.
REASONS FOR DECISION
Background

Application 2007341700 in the name of Giesecke & Devrient GmbH (“Giesecke”) was filed on 6 December 2007 and accepted on 15 April 2013. Innovia Security Pty Ltd (“Innovia) filed a Notice of Opposition on 9 August 2013. The evidence in support of the opposition was completed on 7 February 2014. Giesecke did not file any evidence in answer.
A hearing was held on 5 September 2013 in Canberra to decide the opposition. Innovia was represented by J. Roger Green (patent attorney of Watermark, Melbourne), assisted by Ken Bolton (patent attorney of Watermark, Sydney). Giesecke was represented by Claude Anese (patent attorney of Cullens, Brisbane).
The Opposition
Innovia opposed the grant of a patent on the basis of:
(i)lack of novelty
(ii)lack of inventive step
(iii)the claimed invention was not a manner of manufacture
(iv)non-compliance with section 40(3)
(v)non-compliance with section 40(2) in that the specification is insufficient
Evidence in support consists of a single declaration by John Grace with exhibits JG-1 to JG-15. I will refer to the relevant parts of the evidence where appropriate.
The Specification
The present invention relates to a substrate that has a security element. The specification indicates that these types of security elements can be applied to value documents such as banknotes, security papers, credit or identification cards, passports and the like. It makes mention of a number of patent specifications which provide different approaches to placing security elements on value documents. The specification describes prior approaches such as laser marking of ink layers and use of thin film pigments in inks. The object of the present invention is stated to be to “design a security element having interference-capable pigments to be counterfeit-proof”. This is achieved according to the specification firstly by the use of a security element that has at least one layer of optically variable ink which exhibits different optical effects depending on the angle that it is viewed from. The ink exhibits these effects because each individual pigment in the ink is a multilayer thin film element. Secondly, pigments in certain regions are irreversibly changed by irradiating the region with a laser. The laser changes the optical properties of the outmost layer of the pigment.
The invention is best illustrated in Figure 2a and 2b, which are as follows:
Figure 2a represents an individual pigment 4 in the ink layer. Prior to irradiation by laser 5, the outermost layer 92 has a particular optical property. For example, it may be partially transmissive. After being struck by the laser 5, the outermost layer only is influenced and its optical properties are altered as shown in figure 2b. For example, it may become completely, or nearly completely, transparent. Since the outermost layer is clear, the viewer can now perceive the colour of the reflection layer 7, whereas, prior to treatment, the optical properties of the outmost layer essentially blocked perception of the reflection layer. As such, the viewer sees an area which has a different colour which does not change regardless of the viewing angle.
The specification ends with 16 claims as follows:
1. A substrate having a security element that has at least one optically variable ink having pigments, the individual pigments having at least one interference capable, multilayer structure,
characterized in that the pigments of the optically variable ink of the security element are irreversibly changed in at least one sub-region by means of electromagnetic radiation in such a way that, in this sub-region, the interference effect is distinctly visually and/ or mechanically perceptibly changed compared with adjacent regions having no change in the pigments, the irreversible change in a pigment occurring through the change in the optical properties of the outermost layer of the pigment, which faces the irradiation direction.
1. The substrate according to claim 1, characterized in that the irreversible change in a pigment occurs through an at least partial displacement of at least one layer of the pigment.
1. The substrate according to claim 1 or 2, characterized in that the pigments are formed to be five-layer and consist of a middle reflection layer, two dielectric layers surrounding the middle reflection layer on each side, and two partially transmissive outer layers.
1. The substrate according to claim 3, characterized in that the inner reflection layer consists of aluminum, and/ or
at least one of the dielectric layers consists of silicon dioxide, and/ or
the partially transmissive outer layers consist of at least chrome and/ or nickel.
1. The substrate according to claim 3 or 4, characterized in that the electromagnetic radiation irreversibly changes at least the partially transmissive layer of a pigment.
1. The substrate according to any one of the previous claims, characterized in that the pigment inks are arranged within two foils of a multilayer foil body.
1. The substrate according to claim 6, characterized in that the multilayer foil body is a credit or identification card or a passport.
1. The substrate according to any one of the previous claims, characterized in that the security element at least partially consists of a transparent foil.
1. The substrate (1) according to any one of the previous claims, characterized in that a laser delivers the electromagnetic radiation.
1. A data carrier having a substrate according to any one of claims 1 to 9.
1. The data carrier according to claim 10, characterized in that the data carrier is a value document, especially a banknote or a card.
1. A method for manufacturing a substrate having a security element on which at least one optically variable ink having pigments is imprinted, the individual pigments being formed from at least one interference-capable, multilayer structure,
characterized in that the pigments of the optically variable ink of the security element are irreversibly changed in at least one sub-region by means of electromagnetic radiation in such a way that, in this sub-region, the interference effect is distinctly visually and/ or mechanically perceptibly changed, the irreversible change in a pigment occurring through the change in the optical properties of the outermost layer of the pigment, which faces the irradiation direction.
13.The method for manufacturing a substrate according to claim 12, characterized in that the wavelength of the electromagnetic radiation is adapted to the reflection minimum of the interference-capable layer structure.
14.The method for manufacturing a substrate according to claim 12, characterized in that the reflection minimum of the interference-capable layer structure is adapted to the wavelength of the electromagnetic radiation through the angle of incidence.
15.The method for manufacturing a substrate according to one of claims 12 to 14, characterized in that a grayscale-modulated image is produced through a modulation of the energy of the electromagnetic radiation.
1. A substrate having a security element that has at least one optically variable ink having pigments, the substrate being substantially as described herein with reference to the accompanying drawings.
DECISION
Onus of proof
The examination request for this patent application was filed on 12 September 2011. As a consequence, substantive amendments of the Patents Act brought about by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 do not apply to the present application. This includes the amendment to subsection 60 (3A) that allows the Commissioner to refuse a patent application if satisfied on the balance of probabilities that a ground of opposition exists.
Consequently the former standard for opposition proceedings applies and the opponent must establish that it is clear or practically certain that the patent is invalid (F Hoffman La Roche AG v New England Biolabs Inc [2000] FCA 283 at [29], [67]; [2000] FCA 283; 50 IPR 305 at 311, 319; Commissioner of Patents v Sherman [2008] FCAFC 182 at [18], [22]; [2008] FCAFC 182; 79 IPR 426; Genetics Institute Inc v Kirin-Amgen Inc [1999] FCA 742; [1999] 92 FCR 106 at [17]).
The weight of evidence
This opposition only has a single declaration. Innovia noted at the hearing that Giesecke did not file anything that contradicted the opinions of Mr Grace. Consequently, it could be accepted. Giesecke submitted that the evidence of Mr Grace was simply establishing what was known to only him. It was not enough to establish the knowledge of the person skilled in the art.
I have difficulty in accepting Giesecke’s argument. It is true that statements made by declarants may not be followed by the decision maker, be it a court or otherwise. However, that is a matter of weight. It is not a matter of the opinion being rejected simply because it is one person’s opinion.
I note that section 76(1) of the Evidence Act 1995 states:
“(1)Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed”
This rule, known as the “opinion rule”, in this form would seem to support Giesecke’s position.
However, the rule is qualified by section 79. Section 79(1) states:
“(1)If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge”
Clearly, the opinion of an expert can be taken to be proof of “the existence of a fact about the existence of which the opinion was expressed” (as per s 76). I accept that the Commissioner is not a court and, therefore, is not bound to follow the rules of evidence, but I can see no reason why the principles of section 76 and 79 of the Evidence Act should not be applied by the Commissioner when assessing evidence. In the present case, I accept, and it was not disputed in any way by Giesecke, that Mr Grace is a person skilled in the art. Consequently, he is a person with “specialised knowledge based on the person's training, study or experience” who is able to give an opinion as to a fact “based on that knowledge”. I accept what Mr Grace has to say about the art subject to any other, contradicting evidence that may be present. While there is no evidence from Giesecke which contradicts Mr Grace’s opinions in any way, as will be clear from this decision, there are other considerations that must be taken into account and weighed against Mr Grace’s evidence.
Novelty
Innovia relied upon four documents for the ground of novelty as follows (document numbering is what was used by Innovia):
(i)      AU 2001211949 (D1)
(ii)     EP 1719636 (D2)
(iii)   WO 2005/038136 (D3)
(iv)    AU 2005240277 (D8)
I noted at the hearing with respect to D8 that, while Innovia had cited the A1 publication of the Australian application, they had supplied the B2 publication. However, while the B2 document was published after the earliest priority date of the present application, nothing turns on this in this case. No amendments had been made to D8 during its examination and, consequently, the B2 document that was published was the same as the published A1 document.
It is a requirement of subsection 18(1) of the Patents Act (the Act) that the invention, so far as claimed in any claim, is novel. Subsection 7(1) states that an invention is taken to be novel unless it is not novel in the light of the prior art. A citation is part of the prior art base for the purposes of novelty if it was published before the priority date of the claim.
It is well established that the general test for lack of novelty is the reverse infringement test. The classic formulation of this test is that given by Aickin J in Meyers Taylor Pty Ltd v Vicarr Industries Ltd [1977] HCA 19 at [20], 137 CLR 228 at 235:
“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”.
This test is satisfied if the alleged anticipation discloses all the essential features of the invention as claimed (see Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513 at 517). In order to meet this requirement, the prior art must "contain clear and unmistakeable directions to do what the patentee claims to have invented" (The General Tire & Rubber Company v The Firestone Tyre and Rubber Company Limited [1972] RPC 457 at 486).
The ground of novelty turns on the construction that is to be applied to the phrase “change in optical properties of the outermost layer of the pigment”. Innovia maintained that if the whole layer of optically variable ink in specific regions was affected or removed (i.e. ablated) then it could be said that the optical properties of the outermost layer of the ink pigments in those regions had been changed. Giesecke maintained that this was not what the specification taught. It is therefore necessary that I construe the phrase.
Sheppard J summarised the rules of construction for a patent specification in Décor Corp v Dart Industries 13 IPR 385 at 400. This summary has been referred to in numerous subsequent judgements, and was endorsed by the Full Federal Court in Pfizer Overseas Pharmaceuticals v Eli Lilly [2005] FCAFC 224.
It is a recognised tenet of Australian patent law that each claim must be read as part of the entire specification (Electrical and Musical Industries Ltd v Lissen Ltd 56 RPC 23 at 39), and thus the meaning of the words used in a claim may be affected by what is said in the body of the specification (Rosedale Associated Manufacturers Ltd v Carlton Tyre Saving Co Ltd [1960] RPC 59 at 69). While noting that it is not legitimate to narrow or expand the boundaries of monopoly as fixed by the words of a claim, by adding to those words glosses drawn from other parts of the specification (Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 and Decor Corporation Pty Ltd v Dart Industries Inc (supra)), it is legitimate to refer to the rest of the specification to explain the background to the claims, to ascertain the meaning of technical terms and resolve ambiguities in the construction of the claims (see Interlego AG v Toltoys Pty Ltd (1973) 130 CLR 461 at 476).
More recently, the approach to the construction of claims was discussed by Bennett J in H Lundbeck A/S v Alphapharm Pty Ltd [2009] FCAFC 70, 81 IPR 228 at [118] – [120]:
“the words in a claim should be read through the eyes of the skilled addressee in the context in which they appear … while the claims define the monopoly claimed in the words of the patentee's choosing, the specification should be read as a whole … it is not permissible to read into a claim an additional integer or limitation to vary or qualify the claim by reference to the body of the specification … terms in the claim which are unclear may be defined or clarified by reference to the body of the specification”
I also note what Middleton J said in Eli Lilly and Company Limited v Apotex Pty Ltd [2013] FCA 214, 100 IPR 451 at [139]:
“It is well settled that the Court should, from the outset, approach the task of patent construction with a generous measure of common sense. The Court must place itself in the position of a person skilled in the relevant art, being the subject matter of the patent. From this perspective, the patent is to be read as a whole, in the context of the specification and in light of the prevailing common general knowledge and state of the relevant art at the priority date.”
I asked Innovia during the hearing why the words “change in optical properties” could be read to mean “removal of optical properties”. I said that it seemed from what Giesecke had said that, after the optical treatment, there was always going to be a layer. I asked what was it in the specification that allowed their meaning to be applied. In response, Innovia pointed to the paragraph at the top of page 9 of the description where the first sentence states:
“In a further advantageous embodiment of the present invention, the pigments are ablated or carbonized by the electromagnetic radiation.”
True it is that this mentions ablating the pigment layer. However, the paragraph continues:
“In combination with the above-described change in the pigment, this results in further design possibilities for a security element.” (my emphasis)
Undoubtedly, the specification is teaching that ablation of the layer is not the change being sought. Rather, it is another way of introducing a different security feature to the security element, and is quite separate to the change in optical properties of the outermost layer of the multilayer pigments of the ink layer. This is also supported by another passage which talks about viewing the area irradiated by the laser beam in transmitted light. That is, where the light source is on the opposite side of the ink layer to the viewer. Taking figure 2a or 2b shown above, this would place the light source above the layers and the viewer underneath the layers. This passage states:
“If the optically variable ink 3 is printed on a partially or completely transparent substrate, … when viewed in transmitted light, the optically variable ink appears in a nearly uniform tone, for example uniformly gray, both in the patches that are influenced by the laser beam 5 and in the uninfluenced patches. The patch that is influenced by the laser beam 5 thus does not stand out from the uninfluenced regions in transmitted light, since pigments were influenced by the laser beam 5 only in individual layers, whereas the nearly nontransparent reflection layer 7 remains uninfluenced.” (my emphasis)
Clearly, if ablation formed part of the invention, reflection layer 7 would also have been “influenced”. It follows from this that ablation of multilayer pigments is not the “change in optical properties” that the claims define. It also follows that any other operation that affected all the other layers of the multilayer pigments as well as the outermost layer is also not the change in optical properties that the claims define.
As a consequence of this conclusion, Innovia’s attack on the novelty of the claims must fail. This is due to the fact that each one of D1, D2, D3 and D8 all disclose the use of either ablation or some other operation affecting all layers of the pigment to create a “change” in the optical properties of the outermost layer of the ink pigments. I will discuss each document.

D1 discloses dispersing small, multilayer flakes through ink to create a colour-shifting coating (see page 3 line 25 – page 4 line 4). An image is formed in the coating using laser ablation of sections of the coating (see page 16 line 35 – page 17 line 4).
D2 discloses a security element that is a coating which contains a mixture of a multilayer optically variable pigment and an absorbing material. The absorbing material blocks reflections coming from the multilayer optically variable pigment when the layer is viewed perpendicularly to its surface. D2 states at paragraph [44]:
“Furthermore, the security element according to the invention can be combined with, or applied in the form of indicia of any type. Said indicia can hereby be produced through printing, laser marking, magnetic orientation, etc.” (my emphasis)
There is no further guidance in D2 as to what this type of laser marking is. At paragraph 134 of his declaration, when discussing D2, Mr Grace states:
“Paragraph 44 describes the security element being laser marked in the form of an indicia of any type. Creating this indicia is a visually perceptible change in the interference effect of the OVI [optically variable ink]. As previously discussed, laser marking requires absorption of the laser light to effect the change that causes the mark.
Hence, the partially transmissive layer (that is partially absorptive layer) on the top of the OVI pigments will absorb electromagnetic radiation in the process of generating the laser mark. Other layers of the OVI pigment may also be changed as a result of laser marking but for the purposes of claim 1 of the opposed patent the electromagnetic radiation inherently changes the outer partially transmissive layer.”
Clearly, whatever marking is occurring in D2, it is happening to the whole coating layer. It is not confined to the outermost layer of the multilayer pigments. There are no clear and unmistakable directions to vary the optical properties of the outermost layer without affecting other layers.
D3 discloses a security element made up of a number of thin layers. Following manufacture of this thin-layer element, it can be ground down to particles of such a size that they can be used as optically variable ink pigments (paragraph bridging pages 7 and 8). During manufacture of the thin-layer element, an intermediate layer can have its thickness locally modified after it has been printed via the use, inter alia, of electromagnetic radiation (page 6). After the thickness of the intermediate layer has been adjusted in certain areas, the thickness of a subsequently printed outermost layer will consequently vary (figure 3). As such, different colour shifts will be apparent given the different thicknesses. However, D3 does not disclose changing the optical properties of the outermost layer of a pigment which is already forming part of security element with electromagnetic radiation. It discloses creating different optical effects by changing the thickness of an intermediate layer with electromagnetic radiation before it is incorporated into an ink, which might be used in a security element. These are not the same thing.
D8 discloses an ink mixture which contains a laser-transparent component and a laser-absorbing component. The laser absorbing component can be optically variable interference layer pigments. Markings are made in the ink layer by irradiating the layer with a laser. The irradiation ablates the interference layer pigments (page 4 lines 12–14). As with D1, the destruction of the pigment is not the change in optical properties contemplated by the claims.
The claims are novel. Or, to put it another way, Giesecke could not sue a person practising the inventions of D1, D2, D3 and D8 for infringement of these claims. I reach this conclusion notwithstanding that Mr Grace stated in his declaration that he believed the features of the claims to be present in D1, D2, D3 and D8. Mr Grace’s opinion was based on the assumption that ablating a layer was the same thing as changing the optical properties of the outermost layer of the pigment. I have found that this assumption was not the case. This contradicting consideration (being a matter of law) must be taken into account and it displaces Mr Grace’s opinions.
Inventive Step
For the same reasons surrounding the construction of the phrase “change in optical properties of the outermost layer of the pigment”, Innovia’s opposition under the ground of inventive step must also fail.
Innovia submitted that “the evidence shows” that the claims lacked an inventive step in light of D1, D2, D3 and D8 in combination with the disclosure of D5, D6 or D7 together with the common general knowledge. However, I can find no statement to this effect in Mr Grace’s declaration. Certainly Mr Grace discusses D5, D6 and D7 but he says nothing about combining their disclosures with any one of D1, D2, D3 and D8.
However, putting that to one side and assuming for the sake of argument that it was obvious to combine the disclosures of these documents, there is no disclosure of changing the optical properties of the outermost layer of the pigment as that concept is understood in the present application. D5 and D6 discuss laser ablation (see 7.2.8 of D5 and page 305 and figure 1 of D6). D7 discusses the thickness of the outermost metal absorber layers of multilayer pigment, and Mr Grace states in paragraph 196 of his declaration:
“in order to be transparent these metal absorber layers would need to be completely removed”,
I cannot see where making changes to optical properties of the outermost layers which do not involve removal is discussed in D7.
Moreover, I do not consider that changing the optical properties of the outermost layer in the way it is described in the present invention has been established to be common general knowledge. The examples of markings given in Mr Grace’s declaration (see paragraphs 18–32) do not state anything so focussed. There is simply a general discussion of ablation of substrate material and carbonising substrate material.
The claims do not lack an inventive step.
Manner of manufacture
It is a requirement of subsection 18(1) of the Act that the invention, so far as claimed in any claim, must be a manner of manufacture within the meaning of section 6 of the Statute of Monopolies. Innovia submitted that the invention was nothing more than a substrate with well-known and commonly used features which constituted nothing more than a mere collocation of known elements without a working interrelationship. They concluded that it was apparent, on the face of the specification, that claim 1 lacked the quality of inventiveness necessary to be the subject matter of Letters Patent under the Statute of Monopolies. It follows from my consideration of inventive step in the light of the common general knowledge and the prior art that this ground cannot be made out.
Clarity
Innovia submitted in their Statement of Grounds and Particulars (“SGP”) that claims 1, 5, 6, 8, 12, 13, 14 and 15 lacked clarity for a number of reasons. They made no further submissions at the hearing other than to state that they still pressed the ground.
I have indicated above the approach to construing the claims. Applying these principles, I can see no merit in any of Innovia’s particulars. All of the supposed clarity problems fall away when considered in light of the context in which they appear. While it is certainly possible to apply an overly meticulous, semantic analysis and come up with words or short phrases which are, strictly speaking, not perfect, I note it was said in Austal Ships Sales Pty Ltd v Stena Rederi Aktiebolag [2008] FCAFC 121, 77 IPR 229 at [81]:
“Lack of precise definition in claims is not fatal to their validity, so long as they provide a workable standard suitable to their intended use”
I also note the words of Middleton J in Eli Lilly (supra) as set out in paragraph 23 above. It is also noteworthy that, while Mr Grace states a few times that he finds certain features in claims, or whole claims, to be “pointless’ (see, for example, paragraph 99 of his declaration), he does not seem to have trouble understanding their scope.
Full Description
Innovia submitted in their SGP that the specification did not fully describe the invention for six reasons. These were:
(i)The specification failed to describe a security element that is counterfeit-proof, as required by the object of the invention. It simply described how to increase the counterfeit security;
(ii)The claims require the interference effect produced by the change in optical properties to be “distinctly visually and/ or mechanically perceptibly changed” and the description is silent as to the nature of machine necessary for perceiving the mechanically perceptibly change;
(iii)Claim 2 defined that the change in a pigment occurs through an at least partial displacement of at least one layer of the pigment. Page 5 lines 7–17 indicated that partial displacement meant that a layer of the pigment was not removed, evaporated or transformed, but rather at least partially removed from its original position within the layer structure and displaced to a new position within the layer structure. Innovia submitted that there was no disclosure of how this was achieved;
(iv)The description failed to identify the feature indicated by the numeral ‘6’ in Figure 3a;
(v)The specification failed to describe how the electromagnetic radiation changed the partially transmissive layer 92 (see figures 2a and 2b above) such that it is transparent; and
(vi)Page 14, lines 10 to 14, provided a dictionary for the terms 'comprise', 'comprises' and 'comprising' and these terms did not appear anywhere in the specification other than this dictionary. Innovia submitted that this suggested that a portion of the specification had been omitted and hence the invention was not fully described.
At the hearing Innovia did not press (i), (ii), (iv) and (vi). I will not consider them any further.
Section 40(2)(a) of the Patents Act requires that the invention be described fully, with the appropriate test set out in the High Court decision of Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) HCA 8; 207 CLR 1; 177 ALR 460; 75 ALJR 518 at [25]:
“Section 25(2)(h) of the Patents and Designs Act 1907 (UK) ("the 1907 Act"), as amended by s 3 of the Patents and Designs Act 1932 (UK), made it a ground of revocation that the complete specification did not "sufficiently and fairly describe and ascertain the nature of the invention and the manner in which the invention [was] to be performed". The resemblance to s 40(2)(a) of the 1990 Act will be apparent. Speaking of the 1907 Act in No-Fume Ltd v Frank Pitchford & Co Ltd[43], Romer LJ repeated par (h) of s 25(2) and continued:
"[I]n other words, [it is essential] that the patentee should disclose his invention sufficiently to enable those who are skilled in the relevant art to utilise the invention after the patentee's monopoly has come to an end. Such disclosure is, indeed, the consideration that the patentee gives for the grant to him of a monopoly during the period that the patent would run. ...
It is not necessary that he should describe in his specification the manner in which the invention is to be performed, with that wealth of detail with which the specification of the manufacturer of something is usually put before the workman who is engaged to manufacture it."
The question is, will the disclosure enable the addressee of the specification to produce something within each claim without new inventions or additions or prolonged study of matters presenting initial difficulty?” (my emphasis)
Partial displacement
The criticism by Innovia on the full description of the aspect of the invention claimed in claim 2 is based upon the evidence of Mr Grace. Mr Grace, when discussing the disclosure of partial displacement at page 5 lines 10–17, states (at [69]):
“At page 5, lines 10 to 17, there is a discussion of irreversibly changing the pigments in the OVI by displacing at least one layer of the pigment. Initially I thought that they were simply ablating one or more layers away, but the description at page 5 states that this is not the case – ‘a layer of the pigment is not removed, evaporated or transformed, but rather at least partially removed from its original position within the layer structure and displaced to a new position within the layer structure’. I am at a loss as to how this is achieved through the use of electromagnetic radiation. In particular, it is inconceivable how this is achieved within the tiny flakes of pigment within an OVI.”
When discussing claim 2, Mr Grace states (at [91]):
“Claim 2, like its counterpart section in the description, is a complete mystery to me. If the ‘at least partial displacement of at least one layer of a pigment’ is not occurring as a result of ablating that layer (and, as discussed above, the description makes it clear that this is not the case) then I am unable to guess at how the electromagnetic radiation moves the material from one location on a layer over to an adjacent location.”
Clearly it is noteworthy when a person skilled in the art states that an aspect of a claimed in invention is “a complete mystery” and that he is “at a loss” as to how the aspect can be implemented. It is also important in this case that there is no rebutting evidence.
Giesecke, in their submissions on this point, stated that partial displacement could mean partial removal, which would reduce the thickness of the layer in one area and increasing the thickness in another part of the layer.
I note that page 5 lines 7–17 indicates that “partial displacement” means that:
“… a layer of the pigment is not removed, evaporated or transformed, but rather at least partially removed from its original position within the layer structure and displaced to a new position within the layer structure. This is achieved, for example, by reducing the thickness of a layer in one patch while simultaneously increasing the thickness of a layer in another, especially in the adjacent patch.”
Giesecke’s submissions are essentially a repeat of the words of this passage. As such, they do not advance the matter any further. Giesecke’s submissions are not evidence. There still exists an indication that something is taken from one part of a layer and somehow deposited at another part, with no removal, evaporation or transformation. There is no explanation as to how this operation is achieved. There is no contradicting evidence present to displace Mr Grace’s opinion and I do not read the specification any differently to Mr Grace. As such I cannot see how the disclosure enables the person skilled in the art to produce something within the scope of claim 2 without a new invention.
Converting a transmissive layer to a transparent layer
In discussing how the transmissive layer is converted into a transparent layer Mr Grace makes several observations on what is described and claimed. He states at [74]:
“Page 6, lines 23 to 25 are somewhat confusing as they seem to be describing that the electromagnetic radiation is changing the outermost layer of the Fabry-Perot etalon so that it is no longer partially transmissive but rather transparent. In order to make a layer of nickel or chrome transparent rather than partially translucent it is necessary to ablate it completely away. In essence, the laser is making the nickel or chrome transparent by removing the outer layer. If this happens beneath the surface there will be a void formed as the volume of the ablated material will expand by a factor of 1000 and create a bubble. This will not be transparent. If it happens on the surface then the ablated material can be removed. If the laser is used to thin the outer layer then it will become more translucent, but in order for it to be transparent then the layer needs to be ablated away. In either case when the Fabry-Perot etalon is trapped beneath the surface I find it hard to believe that this can happen as shown simplistically in figure 2b.”
He also states at [88]:
“Page 12, line 25 to page 13, line 2 describes changing the transmission capacity of the partially transmissive layer that faces the laser. In order to do this, these outer transmissive layers of chrome and/or nickel will need to be ablated so that they are thinner or completely removed. I can think of no other way of making a metal layer more transmissive or transparent. It strikes me as odd that the description simply doesn't state that the partially transmissive layers are made thinner by ablation. Indeed if there is another technique of increasing the transmission through these layers of a pigment flake, it has not been described in this patent. Furthermore, I would have liked to see some actual examples to illustrate that the proposed laser mark actually works. In my experience the ablation of metals from a contained structure results in a gas expansion bubble as previously described with said bubble having very deleterious effects on the refractive index and resultant colour change. It is simply not possible to "magic away" the metal layer.” (my emphasis)
He also states in [89]:
“My overall impression of the descriptive part of the opposed patent application is that it lacks substance and any real 'science'.”
Giesecke’s submissions on this point were essentially that it is not necessary that the applicant understands why the invention achieves the effects that it does, it is simply enough that the applicant explains how to achieve the effect.
While I am prepared to accept this statement, the specification does not, in my opinion, describe how it achieves effects such as that shown in figure 2b given above.
In describing the use of the laser the specification provides this description:
“Laser sources are preferably used as the source for the electromagnetic radiation. Here, especially pulsed Nd:YAG lasers, Nd:YVO₄ lasers, CO₂ lasers or other laser types in the wavelength range from UV to far infrared may be used as the source for the electromagnetic radiation, the lasers advantageously also often working with frequency multiplication with an average light output between 0.5 W and 2 W, thus preferably with a pulse energy between 10 µJ and 100 µJ. Particularly advantageously, laser sources in the near infrared are used, since this wavelength range is well suited to the absorption properties of the substrates and printing inks used for value documents. For example, it is easy to specify for this range printing inks that are transparent to the laser radiation, but opaque and colored to the human viewer in the visible spectral range. Particularly advantageously, infrared lasers in the wavelength range from 0.8 µm to 3 µm, especially Nd:YAG lasers or Nd:YVO₄ lasers, are used. If lasers with higher output are used, then the pulse energy can be reduced to the required amount through masking, beam splitting, absorption filters, defocusing or similar known methods. Alternatively, the laser frequency can be increased accordingly.
With a Nd:YAG marking laser (λ = 1.064 µm), vectors, for example, can be inscribed in the layer sequence, which is advantageous above all for fast inscriptions. For this, a Nd:YAG laser can be operated with a pulse frequency of, for example, 20 kHz, an output between 0.5 W and 2 W, and a diameter of the focus of the laser between 70 µm and 300 μm, particularly advantageously 100 μm and 200 μm. The working distance between the lens and the substrate is chosen to be somewhat lower than required for optimum focusing in order to achieve a slight defocusing of the laser spot. With a pulse, if the focus diameter is chosen to be larger than the advantageous setting, then, with a uniform energy distribution in the beam (top hat) and appropriately higher pulse energy, also larger surface areas can be changed and thus the inscription speed increased at the expense of the resolution.”

No further information about the use of the laser is given. There is no discussion how, for example, the effects sought by the invention (e.g. transparency of the outermost layer) are achieved without the use of ablation. Mr Grace indicates that, if there is another technique, he does not know what it is. Giesecke submitted that transparency did not require the absence of a layer and pointed to the fact that a window was transparent, but had a layer of glass. However, I think that this misses the point. What is not explained is how the effect (creating transparency of an inherently opaque layer) is achieved. It is also not explained what other changes are contemplated and how they may be achieved. Given the lack of understanding apparent in Mr Grace’s uncontested evidence, to my mind it is clear that the person skilled in the art would be faced with having to create new inventions or additions, or would have to undertake prolonged study to develop a system that achieves the same outcomes.
I cannot see how the disclosure enables the person skilled in the art to produce something within the scope of claims 1 and 3–16 without a new invention. The description is insufficient.
That being said, if:
(i)my construction of the specification that ablation is not contemplated by Giesecke as a tool for altering the optical properties of the outermost layer is incorrect; and
(ii)the person skilled in the art would use their common general knowledge (as exemplified in Mr Grace’s evidence) to supply what I consider to be the missing parts of the description and such supply was not an onerous task,
such that my conclusion on full description is wrong, then I think it would be open to find that the claims were not novel and/or lacked an inventive step. It is clear from my discussion on novelty and inventive step that the prior art discloses the ablation of pigments such as to change optical properties. However, as it stands, that is not my decision.
Fair basis
Under Section 40(3), fair basis is “concerned purely with the relationship between the body and claims of the one specification.” (Lockwood Security v Doric Products [2004] HCA 58; 217 CLR 274; 212 ALR 1; 79 ALJR 260). As was noted in Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd [2001] HCA 8; 207 CLR 1; 177 ALR 460; 75 ALJR 518 “a comparison between the matter described in the specification and the claim which defines the scope of the monopoly”, following the reasoning of Barwick CJ in Olin Corporation v Super Cartridge Co Pty Ltd [1977] HCA 23; (1994) 180 CLR 236 when he said:
“The question whether the claim is fairly based is not to be resolved ... by considering whether a monopoly in the product would be an undue reward for the disclosure. Rather, the question is a narrow one, namely whether the claim to the product being new, useful, and inventive, that is to say, the claim as expressed, travels beyond the matter disclosed in the specification.”
As was noted in Lockwood (supra):
“the statutory test as expounded by Barwick CJ does not call for any evaluation of whether the breadth of the claims exceeds "the technical contribution to the art embodied in the invention", merely for an evaluation of whether the claims travel beyond the matter described in the specification”
I also note that it was said in Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd [1988] FCA 162 at [54]:
“The circumstance that something is a requirement for the best method of performing an invention does not make it necessarily a requirement for all claims; likewise, the circumstance that material is part of the description of the invention does not mean that it must be included as an integer of each claim. Rather, the question is whether there is a real and reasonably clear disclosure in the body of the specification of what is then claimed, so that the alleged invention as claimed is broadly, that is to say in a general sense, described in the body of the specification”
This was cited with approval in Lockwood.
In their SGP Innovia indicated that claim 1 did not satisfy section 40(3) because “it lacks supporting description for the term 'mechanically perceptibly'.” While those words appeared in the description, Innovia noted that it was well established that this on its own was not enough to establish fair basis. Innovia noted that:
“the description provides no support for how a change in pigments within the optically variable ink can be perceived mechanically. There is no description of the mechanism needed to perform this task or how the mechanical perception might be achieved.”
Innovia also indicated that claim 2 was not fairly based because the description “fails to provide any indication as to how a layer in the individual pigments of the optically variable ink can be partially displaced.”
With respect to both of these issues, and while noting my conclusion with respect to full description with respect to claim 2 above, it does not appear from the case law to be correct to say that a lack of support, in the sense of enablement of the claimed invention, means a lack of fair basis. Rather the question to be asked is whether the description broadly describes the invention. With respect to the partial displacement of claim 2, which would give a mechanically perceived change as required by claim 1, the description is quite clear on what this means. As noted above this calls for:
“reducing the thickness of a layer in one patch while simultaneously increasing the thickness of a layer in another”,
but not by removing, evaporating or transforming the layer. The fact that there is no instruction as to how to do this is not a part of the consideration under s40(3). The claims do not appear to travel beyond the description (such as it is).
Claims do not define the invention
Finally, Innovia submitted in their SGP that the claims did not define the invention because:
“… claim 1 fails to define the physical characteristics of the irreversible change in the optical properties of the outermost layer. This change has been defined in terms of its result (i.e. a distinctly visual and/or mechanically perceptible change) and in terms of the manner in which it is produced (i.e. by exposure to electromagnetic radiation).
Claiming by result is well established and acceptable. However, defining the physical feature of an apparatus claim by the way it was produced is improper. If the manner of production yields a particular physical characteristic in a structural feature, and that particular physical characteristic is essential to the invention, then it is that particular physical characteristic that must be defined in the claims. If the essence of the invention resides the manner of production, then the invention must be claimed in a method claim.
Claim 1 does not define the physical characteristics of the change to the outermost layer caused by the electromagnetic radiation. Alternatively, claim 1 should be directed to a method of making a substrate with a security element. Therefore claim 1 fails to define the invention. It follows that claims 2 to 11 (especially claim 9, which also defines a method step), similarly fail to define the invention.”
I cannot see any merit in this ground. Innovia seems to saying that there is a particular physical characteristic that is essential to the invention and that actual characteristic must be defined in the claim. I am unsure what this characteristic is. In any event, I do not see why the claims do not define an invention.
A complete specification must end with a claim or claims “defining the invention” (sec 40(2)(b)). This requires that the claims define the monopoly for which application has been made. The dictionary to the Act defines ‘invention’ as including an ‘alleged invention’. It follows that any investigation under this ground is directed to deciding whether the claim fulfils the statutory purpose of ‘defining the invention’, including an alleged invention. Claims in the form of:
“My invention is worth $1 million dollars”,
do not define any invention. However, claims which clearly and distinctly identify the invention to be protected can be said to define an invention. The claims of the present application are in the form of the latter example and not the former. As such, they can be said to satisfy the requirement that they define an invention.
CONCLUSION
The opposition is successful as the specification does not comply with section 40(2)(a). While the claims are clear, fairly based, novel and inventive, the invention defined is not fully described.
It is difficult to be sure if such a finding can be overcome. I note that it is possible for a description to be amended to include further information as long as that amendment does result in new material being added to the claims, does not alter definitions of terms used in the claims, or affect the meaning or scope of generic claims. As such, it may be possible for Giesecke to supply the necessary information via amendment, but this appears doubtful to me. Nevertheless, I will allow Giesecke 60 days from the date of this decision to file amendments if they wish to do so in an attempt to overcome my finding.
COSTS
As a general proposition, in the absence of special circumstances, costs follow the event. In the present case, Giesecke submitted that if Innovia was successful on a minor point, then any costs order should reflect the scale of that given the presence of many other grounds within the opposition. Innovia submitted that cost should follow the event.
Innovia has been successful and not on what I would call a minor point. As such I see no reason to alter the usual practice. I award costs against Giesecke.
Greg Powell
Delegate of the Commissioner of Patents