Wake up and smell the coffee

Caffitaly System S.p.A (Caffitaly), a large coffee machine manufacturer based in Italy, has suffered a setback following the recent decision of the Federal Court of Australia in which orders were made, among other things, for revocation of three of its Australian patents relating to coffee capsule technology.

Proceedings were commenced by Caffitaly against a competitor, One Collective Group Pty Ltd (OCG), its sole director, Ms Julia Tink and her husband Mr Trent Knox (Respondents), alleging that OCG’s compatible coffee capsules infringed various claims within three of Caffitaly’s patents. OCG denied their capsules infringed any of the claims found within Caffitaly’s patents and also issued a cross claim asserting Caffitaly’s patents were invalid.

Having considered a considerable amount of expert evidence, the Court ultimately concluded that the OCG compatible capsules did not infringe Caffitaly’s patents, and in any event, each of Caffitaly’s patents were invalid and revocation orders were made in respect of each.

Barry Nilsson acted for the Respondents in the proceedings.

In Issue

1. Whether the OCG capsules infringed one or more of the claims found within Caffitaly’s patents;
2. Whether the relevant claims found within each of Caffitaly’s three patents were valid; and
3. Depending on the answers to questions one and two, whether Ms Tink and/or Mr Knox authorised or otherwise induced or procured OCG’s alleged infringing acts.

The Background

OCG is an importer and supplier of coffee capsules in Australia. As part of their range, OCG offers coffee capsules which are compatible with coffee machines readily available in the market, including Caffitaly, K-Fee, Nespresso, Nescafe, and Lavazza.

Caffitaly contended that the six versions (Versions 1, 2(a), 2(b), 3, 4 and 5) of the OCG capsule, variously infringed the following claims:

• 1, 2, 9, 16 and 17 of Australian Patent number 2003200627 (627 Patent) with respect to the Version 5 capsule;
• 1 to 5 and 14 of Australian Patent number 2010227121 (121 Patent) with respect to Versions 1, 2(a), 2(b), 3 and 4 capsules; and
• 34, 35 and 36 of Australian Patent number 2008259388 (388 Patent) with respect to Versions 1, 2(a), 2(b) and 3 capsules.

Expert Witnesses

As is typical in proceedings of this nature, a large amount of expert evidence was served by both sides to the proceedings. Caffitaly relied on expert evidence from a mechanical design engineer, Mr William Hunter, and an engineer with experience in mechanical engineering, Dr Frederick Davis.

OCG relied on evidence by a mechanical engineer, Mr Karl Winkler, as well as a Management Engineer, Associate Professor Gianluca D’Urso.

While Justice Nicholas formed a favourable impression of all four experts, the fact that both Professor D’Urso and Mr Winker were familiar with the state of the art, being coffee, coffee capsules and coffee machines at the relevant priority date dates, was a key factor in the persuasiveness of the evidence.

Lay witnesses

Ms Tink, Mr Knox and Ms Reynolds also gave evidence with respect to allegations of authorisation, inducement and procurement of OCG’s alleged infringing acts.

The Decision at Trial

627 Patent

The question of whether the OCG version 5 capsules infringed the 627 Patent ultimately came down to a question of construction. Justice Nicholas set out the relevant principles of construction, which were not in dispute¹. Having regard to that, the Court was required to determine whether the filter of the Version 5 OCG capsule had “a plurality of embossings” and “a plurality of communicating fluid channels”. The Court ultimately concluded, on construction, that the Version 5 capsule did not infringe the 627 patent because the raised portions found on the filter were not “embossing”, rather they were designed to act as piercers and ribs on the filter for structural support. Further, Justice Nicholas was satisfied that the piercers did not create fluid channels or direct fluid flow.

With respect to OCG’s claims on invalidity, the Court went on to consider OCG’s assertion that claims 1, 2, 9, 16 and 17 of the 627 Patent was invalid for lack of inventive step². The Court considered that the design of an espresso coffee cartridge for use in an espresso machine having the features claimed in claims 1 and 2 of the 627 Patent “would not require inventive ingenuity or any contribution that was “beyond the skill of the calling””³. Further, none of the dependent claims asserted against add any additional feature to the combination to claims 1 and 2 to render it inventive. As such, the Court found claims 1, 2, 9, 16 and 17 of the 627 patent to be invalid. His Honour otherwise noted that Caffitaly did not lead evidence of “any long felt or need or commercial success with respect to the invention either or as described in the body of the specification.”⁴ Ultimately, the Court considered that the asserted claims were invalid for lack of inventive step

121 Patent

The 121 Patent largely dealt with the operation of the “groove” found in the body of the capsule, and whether it acted to clampingly fix the filter element to prevent both horizontal and vertical movement⁵. In His Honour’s view, while he accepted that the peripheral edge portion of the filter element and the annular groove prevented the filter from moving in a vertical direction towards the upper end of the main body portion, “vertical movement in the opposite direction is prevented not by engagement of the annular groove and the peripheral edge of the filter element, but by engagement of the base of the filter and the base of the cartridge”⁶. On that basis, none of the versions of the OCG capsule infringed the 121 Patent.

OCG asserted that the relevant claims in the 121 Patent were invalid due to lack of inventive step as it would have been obvious to a person skilled in the art in light of the common general knowledge (CGK) as at the priority date whether considered separately or with information from other patents (EPA605 and the application for the 627 patent). The Court considered the appropriate test and noted that that the “use of a groove in a wall of a coffee cartridge of the kind shown in the EPA605 to clampingly fix the filter to the cartridge reflects no more than application of well-known design principles. A person skilled in the art would be directly led to try such an arrangement…”⁷.

Justice Nicholas went on to conclude that a person skilled in the art, and equipped with either the CGK and the 627 application, would find it “obvious” to utilise a groove as part of a snap fit arrangement to prevent the filter from moving. As a result, the asserted claims of the 121 Patent were deemed invalid for lack of inventive step.

388 Patent

The 388 Patent relates to the physical characteristics of the cut in the second wall and its adjoining portions. Caffitaly’s expert, Mr Hunter, carried out several experiments to prove the existence of a number of integers within claim 34. However, in His Honour’s view, the experiments “rather than address the question of how [OCG]’s capsules would behave in a compatible coffee machine, Mr Hunter’s evidence sought to deal with the infringement issues at a level of abstraction that ignores the effect that the operation of the coffee machine in which the capsule is used will have on the behaviour of the capsule including, in particular the cut”⁸.

As such, on the balance of probabilities, the Court was not persuaded when the OCG capsules were used in a compatible machine, that they would infringe claims 34, 35 or 36 of the 388 patent.

OCG’s claim of invalidly, with respect to the 388 Patent, was ultimately successful on the basis of sufficiency and a lack of utility. The Court, looking to the issue of sufficiency and finding the evidence of Professor D’Urso and Mr Winkler to be persuasive, accepted that the steps a person skilled in the art would need to take to make a capsule meeting the requirements of claim 34 “would be neither readily apparent nor standard or routine in character”⁹.

With respect to OCG’s contention the 388 Patent lacked utility, the Court was of the view that the promise of the invention specified in the 388 patent was to allow pre-infusion of the coffee granules which allowed for an improvement in the flavour or aroma of the coffee. Accepting the evidence of Mr Winkler that pre-infusion required more than merely passing water through the granules, the Court found a capsule which failed to allow the opportunity for pre-infusion to occur would not fulfil the promise of the invention and therefore be invalid for lack of utility.

On the basis that the Court found that the OCG capsules did not infringe and Caffitaly’s patents were invalid, there was no need to consider Ms Tink or Mr Knox’s potential liability.

Implications for you

The decision provides a useful summary of the relevant principles the Court will consider when construing a specification and the relevant claims made in respect of patent disputes.

The case is also a helpful reminder of the need to take great care in engaging appropriately qualified and knowledgeable experts in patent infringement cases. In our view, the retention of experts who were skilled in the art of coffee machines and coffee capsule manufacturing was critical to the decision ultimately obtained and particularly in establishing the state of common general knowledge at the relevant priority dates.

Caffitaly System S.p.A v One Collective Group Pty Ltd [2020] FCA 803