2023 FC, 2023 FC 1684

Date: 20231213 Docket: T-1488-20 Citation: 2023 FC 1684 Toronto, Ontario, December 13, 2023 PRESENT: The Honourable Mr. Justice Manson BETWEEN: STEELHEAD LNG (ASLNG) LTD. and STEELHEAD LNG LIMITED PARTNERSHIP Plaintiffs and ARC RESOURCES LTD., ROCKIES LNG LIMITED PARTNERSHIP, ROCKIES LNG GP CORP., and BIRCHCLIFF ENERGY LTD. Defendants AND BETWEEN: ARC RESOURCES LTD., ROCKIES LNG LIMITED PARTNERSHIP, ROCKIES LNG GP CORP., and BIRCHCLIFF ENERGY LTD.

Plaintiffs by Counterclaim and STEELHEAD LNG (ASLNG) LTD., STEELHEAD LNG LIMITED PARTNERSHIP, AZIMUTH CAPITAL MANAGEMENT IB LTD., AZIMUTH ENERGY PARTNERS IV (NR) LP, AND AZIMUTH ENERGY PARNTERS IV LP Defendants by Counterclaim PUBLIC JUDGMENT AND DECISION (Confidential Judgment and Reasons issued December 13, 2023) Table of Contents I. Introduction 2 II. Background 3 A. The Parties 3 B. The Technical Background 4 C. The 085 Patent 6 III. Issues 9 IV. The Parties’ Evidence 10 A. Arc’s Expert Witness 10 B. Steelhead’s Expert Witness 12 C. Fact Witnesses 14 V. Analysis 20 A. Claim Construction 20 B.

Anticipation 28 C. Obviousness 67 D. Lack of Utility 90 E. Insufficiency 92 F. Overbreadth 93 VI. Costs 94 VII. Conclusion 98 I. Introduction [ 1 ] This proceeding is a counterclaim commenced by the Defendants/Plaintiffs by Counterclaim against the Plaintiffs/Defendants by

Counterclaim. The counterclaim challenges the validity of Canadian Patent No. 3,027,085 (the " “085 Patent”) " pursuant to the Patent Act , RSC, 1985, c P-4 [ Patent Act ]. [ 2 ] The Court previously held on

summary trial that the Defendants/Plaintiffs by Counterclaim did not infringe on the 085 Patent and accordingly dismissed the action underlying this counterclaim ( Steelhead LNG (ASLNG) Ltd v ARC Resources Ltd , 2022 FC 998 ). Here, the Defendants/Plaintiffs by Counterclaim seek a declaration that the claims of the 085 Patent are invalid. [ 3 ] For the reasons that follow, I find that: 1 . Claims 24, 25, 27, 28, and 29 are valid; 2 .

Claims 26, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, are valid insofar as they depend on claims 24, 25, 27, 28, and 29, directly or indirectly, and are otherwise invalid; 3 . Claims 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, and 84 are invalid. II.

Background [ 4 ] The background to the previous decision, the parties’ joint statement of facts, and the evidence presented in the course of trial are set out below as relevant. A. The Parties

(1) The Plaintiffs/Defendants by Counterclaim (hereinafter, " “Steelhead” " ) [ 5 ] Steelhead LNG (ASLNG) Ltd. is a company incorporated pursuant to the laws of British Columbia ( " “Steelhead ASLNG” " ). Steelhead ASLNG is a wholly owned subsidiary of Steelhead LNG Limited Partnership ( " “Steelhead LP” " ). Steelhead LP is a partnership formed in and under the laws of Manitoba. [ 6 ] Azimuth Capital Management IB Ltd., Azimuth Energy Partners IV (NR) LP, and Azimuth Energy Partners IV LP (collectively, " “Azimuth” " ) were not plaintiffs in the initial action but were named as defendants in the counterclaim. Azimuth did not take

part in this proceeding, except in relation to costs.

(2) The Defendants/Plaintiffs by Counterclaim (hereinafter, " “Arc” " ) [ 7 ] ARC Resources Ltd. is an oil and gas producer with a corporate office in Calgary, Alberta. ARC Resources Ltd. is the successor in interest to Seven Generations Energy Ltd. by way of amalgamation in early 2021. [ 8 ] Birchcliff Energy Ltd. is an intermediate oil and gas company with a corporate office in Calgary, Alberta ( " “Birchcliff” " ). Birchcliff and ARC Resources Ltd. are limited partners of Rockies LNG Limited Partnership ( " “Rockies LP” " ).

Rockies LP is a limited partnership comprised of a group of natural gas producers in Alberta and British Columbia. Rockies LNG GP Corp. is the general partner of Rockies LP ( " “Rockies GP” " ). B. The Technical Background

(1) Natural Gas and LNG [ 9 ] Natural gas is a mixture of gaseous hydrocarbons. Methane accounts for about 90% or more of that mixture by volume. Other hydrocarbons typically found in natural gas are ethane, propane, and butane. In addition, natural gas will often contain impurities like water and carbon dioxide. [ 10 ] Liquefied natural gas ( " “LNG” " ) is natural gas in its liquid state. The temperature at which natural gas converts between its vapour and liquid states is approximately -162°C. Natural gas in its liquid state occupies less volume (approximately 1/600th) than its corresponding gaseous state.

One reason for liquefying natural gas is to make it easier to transport as cargo in a ship, which is called an LNG carrier or tanker.

(2) Commercial Liquefaction [ 11 ] The parties agree that, by June 2018, there were several commercially available liquefaction systems and processes for liquefying natural gas. These include the single mixed refrigerant ( " “SMR” " ) process, the dual mixed refrigerant ( " “DMR” " ) process, the nitrogen ( " “N2” " ) expander process, the propane pre-cooled mixed refrigerant ( " “C3-MR” " ) process, and the Cascade process. At a basic level, a closed-loop refrigeration cycle used to convert natural gas to LNG will include a compressor, condenser, expansion device, and evaporator.

Commercially, these liquefaction systems and processes take place in LNG facilities. [ 12 ] The development of an LNG facility will typically progress in stages or phases. The early or planning phases of an LNG facility are commonly referred to as feasibility, pre-FEED (front end engineering design), and FEED stages, which are followed by an EPC (engineering procurement and construction) phase. [ 13 ] Electricity to support the LNG facility may be sourced from a power grid – that is, a network of power generation, transmission and

distribution that commonly provides power to communities. Alternatively, it may be produced more locally, at or near the LNG facility.

(3) Floating LNG Facilities [ 14 ] LNG facilities may be placed on land or on sea. It was known as of June 2018 that conditions nearshore (alternatively referred to as " “at-shore” " ) are typically more benign than conditions further offshore. [ 15 ] Floating LNG ( " “FLNG” " ) facilities are on-sea facilities that float on a water-based vessel. Floating vessels may incorporate a ballast system to (among other reasons) maintain an even keel and ensure the vessel’s stability. This was known in June 2018. It was also known then that a ballast system could be open-looped or closed-looped.

An open-loop ballast system allowed ballast fluid (typically seawater) to enter a ship’s ballast tank system and be discharged to surrounding waters. A closed-loop system could be designed to either (

a) treat the ballast fluid before it is discharged to surrounding waters (a hybrid closed-loop ballast) or (

b) operate without discharging ballast fluid to surrounding waters (a permanently closed-loop ballast). C. The 085 Patent

(1) Description and Relevant Dates [ 16 ] Steelhead ASLNG is named as the owner of the 085 Patent, entitled " “Liquefaction Apparatus, Methods, and Systems” " . It relates generally to apparatus, methods, and systems respecting nearshore liquefaction of natural gas. [ 17 ] The application for the 085 Patent was filed on December 10, 2018. The application became open to public inspection on February 8, 2019. The patent issued on November 3, 2020 and is set to expire on December 10, 2038. [ 18 ] The patent claims priority from PCT International Patent Application No. PCT/CA2018/050662 filed on June 1, 2018. Pursuant to

section 28.1 of the Patent Act , the claim date is June 1, 2018.

(2) The Disclosure [ 19 ] The background

section of the 085 Patent’s disclosure observes that sizeable reserves of natural gas exist in shallow waters that are inaccessible to FLNG facilities designed for deep offshore projects. This purported gap in the technology requires improvements to water-based liquefaction. [ 20 ] The background

section is followed by a

summary of the claimed invention, all of which more or less follow the language and order of the patent’s claims. The disclosure’s subsequent

section provides exemplary drawings and a more a detailed description of the claimed invention. I discuss those details and drawings as may be relevant in the analysis below.

(3) The Independent Claims [ 21 ] The 085 Patent’s claims include four independent claims (claims 1, 21, 56, and 67) and 80 dependent claims. Independent claim 1 claims " “a system for liquefaction of natural gas,” " comprised of (1) an external source of electricity and gas, and (2) a water-based apparatus. The water-based apparatus is comprised of a hull moored to the shore, an air-cooled electrically-driven refrigeration (or AER) system, and a plurality of storage tanks. [ 22 ] The language of the other independent claims is similar in scope to claim 1.

Independent claim 21 claims the water-based apparatus essentially as described in claim 1, but where the LNG storage tanks must be on the lower deck of the hull. Independent claim 56 claims the AER method essentially as described in claim 1.

Independent claim 67 claims the water-based apparatus essentially as described in claim 1, where the storage tanks are below deck and with the addition of (1) a plurality of sensors to support coordinated functions between the water-based apparatus and the external source, and (2) a means of receiving communication to control the coordinated functions. [ 23 ] The dependent claims add a number of elements to the invention.

These include pre-treatment, membrane tanks, balanced topside configurations, LNG output methods, mechanisms for coordination, deck openings, fuel gas redistribution, and further, as discussed below. [ 24 ] The essential elements of each claim are discussed in detail in the following analysis. III. Issues [ 25 ] Arc seeks a declaration that the claims of the 085 Patent are invalid. The parties jointly summarized the issues to be decided as follows: 1 . Construction of claims 1-84 of the 085 Patent; and 2 . Whether the claims of the 085 Patent are invalid by reason of: a . Anticipation – 1 .

Do Talib 2014 and/or Talib May 2013 anticipate the subject matter of claims 1-3, 5, 10, 13-16, 18-23, 26, 36-38, 41, 42, 56-59, 64- 67, 70 and 82-84 of the 085 Patent?

2 . Do Sullivan 2017 and/or Sullivan 2016 anticipate the subject matter of claims 1-3, 5, 7, 8, 10, 13, 14, 21, 23, 26, 36-39, 41, 42, 56, 58, 59, 64 and 65 of the 085 Patent? a . Obviousness – Would the subject matter defined by the claims have been obvious on the claim date to a person skilled in the art? b . Insufficiency – Does the 085 Patent satisfy the requirements of subsection 27(3) of the Patent Act ? c . Ambiguity – Does the 085 Patent satisfy the requirements of subsection 27(4) of the Patent Act ? d .

Overbreadth – Are the claims of the 085 Patent broader than either the invention made by the named inventors of the 085 Patent or the invention disclosed in the specification of the 085 Patent? e . Lack of Sound Prediction/No Demonstrated Utility – Had the inventors demonstrated or soundly predicted a utility related to the subject matter of the claims of the 085 Patent by the Canadian filing date? [ 26 ] In the course of trial, Arc abandoned the ground of ambiguity. They also abandoned anticipation with respect to claims 10 and 23.

Consequently, they abandoned anticipation with respect to claims that depend on claims 10 and 23, to the extent of the dependency. Finally, they restricted the lack of utility challenge to claim 29. IV. The Parties’ Evidence A. Arc’s Expert Witness [ 27 ] Michael Wyllie is a professional engineer in the United Kingdom ( " “UK” " ). He received a Bachelor of Science degree in Chemical and Process Engineering from Heriot-Watt University in Edinburgh, UK in 1980. [ 28 ] Mr. Wyllie has practiced engineering in the oil and gas industry for over 40 years.

In the course of his career, he worked at Foster Wheeler Energy Ltd, Total Marine Oil Ltd (now Total Energies), Shell UK Exploration and Production, Altra Consultants (which he co- founded), and SBM Offshore NV. In those organizations, he assumed various roles, including process engineer, chief engineer, project director, and chief technology officer. [ 29 ] Mr. Wyllie’s career involved working on FLNG facilities, floating platforms, and mooring systems.

He worked extensively on floating production storage and offloading ( " “FPSO” " ) units, a floating vessel that receives hydrocarbons, processes them into liquid form, and stores them for offloading. [ 30 ] Mr. Wyllie is presently the Managing Director and Principal Consultant with OpenWater Energy Ltd, a company he founded in 2019. He is also a Fellow of the UK Institution of Chemical Engineers. [ 31 ] I accepted Mr. Wyllie’s expert qualification as follows: Mr. Michael Wyllie is a professional engineer with energy industry related expertise.

His expertise includes the design, manufacture and operation of facilities, systems and equipment used in the production, storage and transportation of hydrocarbons, including those that operate in a water-based environment such as FLNGs, FPSOs, FSRUs, FSUs and LNG carriers, and their related systems and equipment. His expertise also includes the steps undertaken in the energy industry to develop a project from its early to final stages. [ 32 ] Mr.

Wyllie was asked to provide his opinion on the following issues: (1) who is the skilled person of the 085 Patent?; (2) what is the common general knowledge of that skilled person?; (3) what is the proper construction of the 085 Patent’s claims?; (4) is the 085 Patent’s subject matter novel?; (5) is the 085 Patent’s subject matter obvious?; (6) is the 085 Patent’s disclosure sufficient?; (7) are the 085 Patent’s claims broader than what it discloses?; and (8) does the 085 Patent’s subject matter lack utility? Mr. Wyllie provided his opinion in his expert report, dated May 26, 2023. [ 33 ] I found Mr.

Wyllie to be a knowledgeable and credible expert witness. He was consistent in his evidence throughout his oral testimony, including cross-examination. I discuss his evidence as may be relevant in the analysis below. B. Steelhead ’s Expert Witness [ 34 ] Willem Ravesloot is a project executive consultant in the Netherlands. He received a Master of Science degree in Mechanical Engineering from the Delft University of Technology in the Netherlands in 1989. [ 35 ] Mr. Ravesloot spent most of his career with Shell plc, including its subsidiaries and joint ventures.

His roles included acting as project engineer, lead engineering manager, business group manager, and project director. [ 36 ] Mr. Ravesloot’s career focus has been LNG facilities generally, but not FLNG facilities in particular. His main responsibilities pertained to the design, construction, operation, and maintenance of LNG facilities in various locations around the world, including Canada. [ 37 ] Mr. Ravesloot is currently a project executive consultant with Gawwer BV, a consulting company that he founded and owns.

He also acts as the managing partner at MACH10 Energy BV, a consulting firm that caters to oil and gas operators. Finally, Mr. Ravesloot consults with Partners in Performance, where he provides assessments of LNG projects as a subject matter expert.

[ 38 ] I accepted Mr. Ravesloot’s expert qualification as follows: Mr. Willem (Wim) Ravesloot is an engineer with expertise in mechanical engineering and related engineering disciplines in the field of oil & gas and liquefied natural gas. In particular, Mr.

Ravesloot has expertise in the design, development, and operation of land-based and floating liquefied natural gas facilities, including in the design, selection, implementation, and operation of liquefaction processes as well as process equipment used for liquefaction of natural gas such as compressors and compressor drivers, cooling systems, control systems, safety systems, and storage facilities. Additionally, Mr.

Ravesloot is a project executive with particular expertise in project engineering, engineering project management, and project development in the oil & gas and liquefied natural gas industry. [ 39 ] Mr. Ravesloot was asked to provide his opinion on the same issues as Arc’s expert, with some variation. First, with respect to novelty and anticipation, Mr. Ravesloot’s mandate was restricted to the publications cited by Arc’s expert. Second, with respect to overbreadth and utility, Mr. Ravesloot’s mandate was limited to claim 29. [ 40 ] Mr. Ravesloot is a knowledgeable and qualified expert witness in his field.

That said, he applied incorrect legal standards in his analysis on various issues, as discussed further below. That misapprehension of certain legal principles that he needed to apply in his report reduces the weight to be given to his testimony in these proceedings. [ 41 ] Moreover, Mr. Ravesloot’s testimony was sometimes inconsistent, not only with prior statements he made in the course of the infringement action that underlies this counterclaim, but also with his own evidence in this proceeding. At times, he tended to be evasive during cross-examination. [ 42 ] I discuss Mr.

Ravesloot’s evidence and any problems therewith, as may be relevant, below. C. Fact Witnesses

(1) For Arc (

a) Andrew Loose [ 43 ] Andrew Loose is an engineer with extensive experience working on LNG and FLNG projects. Between 2006 and 2021, he was an employee of KBR. KBR is an international company that provides consultancy, engineering, and construction services to clients in the energy sector. [ 44 ] Between 2016 and 2018, Mr. Loose and others in KBR wanted to secure an engineering contract from Steelhead in relation to an FLNG project. They met with Victor Ojeda and Alex Brigden of Steelhead on March 23, 2016, for that purpose. In their meeting, Mr. Loose and his colleagues provided Steelhead with a presentation.

The presentation included a discussion of the Triton FLNG project, which KBR helped design between 2011 and 2014. [ 45 ] |||||||||||||||||||||||||||||||||||||| |||||||||||||||||||||||||||||||||||||| 1 . |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| || || || | | |||||||||||||| 2 . |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| 3 . |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| [ 46 ] Because Triton LNG was not relied upon as prior art, the relevance of Mr.

Loose’s evidence in that regard is limited to the background to the invention story. [ 47 ] Mr. Loose also testified that he attended an FLNG conference in June 2014. There, he attended a public presentation by Thomas Larsen, Vice President Technical at Höegh LNG (the " “Larsen presentation” " ). The Larsen presentation discussed nearshore FLNG facilities. It also contained a slide discussing various options for an FLNG facility design, including among them air-cooling, electrical drives, power from shore, storage in the FLNG facility, and various mooring methods. [ 48 ] Mr.

Loose testified that there was no expectation for confidentiality communicated during the Larsen presentation. However, on cross examination, he admitted that the slides stated that its content cannot be reproduced, distributed, or divulged without Höegh LNG’s written consent. [ 49 ] I found Mr. Loose to be a credible witness. (

b) Paul Sullivan [ 50 ] Paul Sullivan has over 30 years of experience in engineering and construction in the LNG industry. In 2017 and 2018, he was Vice President, Projects at Steelhead and then Project Advisor to its CEO. All of the 085 Patent’s inventors reported to Mr. Sullivan in his capacity as Vice President, directly or indirectly. [ 51 ] Prior to his time with Steelhead, Mr. Sullivan was with WorleyParsons (now known as Worley). However, he was still involved with Steelhead, as Steelhead had retained WorleyParsons as a contractor on some of its FLNG projects. [ 52 ] Mr.

Sullivan testified that he attended an event organized by the Society of Petroleum Engineers in Houston, Texas in July 2016, where he presented on the topic of nearshore FLNG to between 50 and 70 individuals, most of whom were engineers ( " “Sullivan

2016” " ). Mr. Sullivan also testified that he presented on the topic of nearshore FLNG facilities at the FLNG World Congress on June 21, 2017 ( " “Sullivan 2017” " , and collectively with Sullivan 2016, the " “Sullivan presentations” " ). [ 53 ] The Sullivan presentations are two of four documents that Arc relies on to argue anticipation and obviousness. The other two are papers written in part by Javid Talib of Black & Veatch in 2014 ( " “Talib 2014” " ) and 2013 ( " “Talib 2013” " , and collectively with Talib 2014, the " “Talib papers” " ). [ 54 ] I found Mr. Sullivan to be a credible witness.

(2) For Steelhead (

a) Alex Brigden [ 55 ] Alex Brigden is a professional engineer in the UK with extensive experience on offshore projects. He joined Steelhead between April 2015 and January 2019 where he worked on Steelhead’s Malahat LNG project and Sarita Bay (later Kwispaa) LNG project. Both projects were planned for areas close to the British Columbia coastline. [ 56 ] Mr. Brigden is a named inventor of the 085 Patent and was very involved in developing its claimed " “at-shore LNG concept” " . He acted as Vice President, Technical at Steelhead between 2017 and 2019.

All other co-inventors were members of his technical team, and they all reported to him. His evidence in chief pertained primarily to the invention story behind the 085 Patent. [ 57 ] According to Mr. Brigden, he and his team were not aware of anyone " “having put forward” " an FLNG facility composed of LNG storage units, electrically driven compressors, air cooled refrigeration, and an external electric power source. Instead, they arrived at this concept through their project development process. This process involved (1) concept identification, (2) concept evaluation, and (3) concept selection.

The project development process yielded a number of documents summarizing Steelhead’s final design selections and the reasoning behind them. Mr. Brigden said that Steelhead spent millions of dollars and a number of years to arrive at the final concept. [ 58 ] On cross-examination, Mr. Brigden recalled that he met with representatives of KBR in March 2016, consistent with Mr. Loose’s testimony above, but did not recall who gave a presentation. He also admitted that: 1 . He carried on work with respect to an FLNG facility before joining Steelhead; 2 . Respecting electric compressors – (

i) he knew prior to joining Steelhead of other LNG projects where electric compressors were used; (ii) he himself led an LNG project prior to joining Steelhead that contemplated using electric compressors on a separate on- land LNG project; (iii) he knew that electric drivers and gas turbines were the two options available for compressors; (iv) there is a limit to the reductions in greenhouse gas ( " “GHG” " ) emissions when using gas turbine compressors; (

v) electric compressors would significantly reduce GHG emissions and ensure regulatory compliance; and (vi) " “political support” " would be " “lost” " in British Columbia if GHG emissions from Steelhead’s facility were not in the bottom quartile of global LNG plants; 3 . Respecting air-coolers – (

i) he knew that air coolers had less of a negative environmental impact than water coolers; (ii) he knew that air coolers were used in prior projects; and (iii) he knew that First Nations in the relevant project areas would voice opposition to the use of water coolers because of the effect on the marine environment; 4 . Respecting LNG storage – (

i) he knew prior to joining Steelhead that a barge could feasibly support a processing facility and include integrated storage tanks; and (ii) he knew sloshing would not be a problem nearshore; and 5 . Respecting sensors – he knew that sensors were used to monitor spills for " “a long time” " before June 2018. [ 59 ] Mr.

Brigden also stated on cross-examination that the following features of the at-shore LNG concept were, in his view, " “essential” " , " “required” " , " “important” " , or otherwise " “part of” " the concept he helped design: 1 . setting the air coolers in a layout that uses space efficiently while maintaining safety; 2 . placing some elements of the facility strictly on-shore, while keeping others on the floating vessel; 3 . modifying the membrane storage tanks’ chamfers to lower the center of gravity and improve stability; 4 . using transverse beams to support the deck of the facility; 5 . pre-treatment of feed gas at a separate location to limit impurities to within a narrow range; 6 . using flexible, durable, and insulated electrical lines for the transit bridge; 7 . using a voltage of 138kV to balance the number of electric cables connected to the FLNG facility; and 8 . a cryogenic spill protection system that routed spills away from the hull and other facility elements. [ 60 ] Mr.

Brigden at times conceded on cross-examination only after counsel for Arc showed him prior statements he made that were inconsistent with his evidence at trial. Given the inconsistent statements and admissions he made on cross-examination, I give his evidence limited weight, and I discuss it as may be relevant in my analysis below. (

b) Victor Ojeda [ 61 ] Victor Ojeda was the President of Steelhead between 2013 and 2019. He oversaw the direction of the business during his tenure. He

also acted as interim Vice President, Technical for several months in 2016. [62] The only relevant portion of Mr. Ojeda’s evidence in chief pertains to Steelhead’s dealings with KBR in 2016. Mr. Ojeda stated thatwhen he met with Mr. Loose and other members of the KBR team, Steelhead’s work on the at-shore LNG concept was alreadyunderway and its key concepts were already decided. He also testified that Steelhead entered into a mutual non-disclosure agreementwith KBR. Mr. Ojeda specifically denied that the at-shore LNG concept was based on KBR’s work. [63] Mr. Ojeda remained consistent on cross-examination.

I find him to be a credible witness. I discuss his evidence as may be relevant inmy analysis below. V. Analysis A. Claim Construction

(1) General Principles [64] The Supreme Court of Canada has outlined the principles of claim construction in three decisions: Whirlpool Corp v Camco Inc,2000 SCC 67 [Whirlpool] at paragraphs 49 to 55; Free World Trust v Électro Santé Inc, 2000 SCC 66 [Free World Trust] at paragraphs44 to 54; and Consolboard Inc v MacMillan Bloedel (Saskatchewan) Ltd, (SCC), [1981] 1 SCR 504 (SCC) at paragraph27.

The Federal Court of Appeal summarized those principles in Tearlab Corporation v I-MED Pharma Inc, 2019 FCA 179 [Tearlab] atparagraphs 31 to 34, as follows: [31] The Patent Act promotes adherence to the language of the claims, which in turn promotes fairness and predictability(Free World Trust at paras. 31(a), (

b) and 41). The words of the claims must, however, be read in an informed and purposiveway (at para. 31(c)), with a mind willing to understand (at para. 44). On a purposive construction, it will be apparent thatsome elements of the claimed invention are essential while others are non-essential (at para. 31(e)).

The interpretative taskof the court, in claim construction, is to separate and distinguish between the essential and the non-essential elements, and togive the legal protection to which the holder of a valid patent is entitled only to the essential elements (at para. 15). [32] To identify these elements, the claim language must be read through the eyes of a [person of skill in the art], in light ofthe latter’s common general knowledge (Free World Trust at paras. 44-45; see also Frac Shack at para. 60; Whirlpool atpara. 53).

As noted in Free World Trust: [51] …The words chosen by the inventor will be read in the sense the inventor is presumed to have intended, and in a waythat is sympathetic to accomplishment of the inventor’s purpose expressed or implicit in the text of the claims. However, ifthe inventor has misspoken or otherwise created an unnecessary or troublesome limitation in the claims, it is a self-inflictedwound.

The public is entitled to rely on the words used provided the words used are interpreted fairly and knowledgeably.[Emphasis in the original.] [33] Claim construction requires that the disclosure and the claims be looked at as a whole “to ascertain the nature of theinvention and methods of its performance, … being neither benevolent nor harsh, but rather seeking a construction which isreasonable and fair to both patentee and public” (Consolboard at p. 520; see also Teva Canada Ltd. v. Pfizer Canada Inc.,2012 SCC 60, [2012] 3 S.C.R. 625 at para. 50).

Consideration can thus be given to the patent specifications to understandwhat was meant by the words in the claims. One must be wary, however, not to use these so as “to enlarge or contract thescope of the claim as written and … understood” (Whirlpool at para. 52; see also Free World Trust at para. 32). TheSupreme Court recently emphasized that the focus of the validity analysis will be on the claims; specifications will berelevant where there is ambiguity in the claims (AstraZeneca Canada Inc. v.

Apotex Inc., 2017 SCC 36, [2017] 1 S.C.R. 943at para. 31; see also Ciba at paras. 74-75). [34] Finally, it is important to stress that claim construction must be the same for the purpose of validity and for the purposeof infringement (Whirlpool at para. 49(b)). [65] In short, the Court must interpret claims purposively and with a mind willing to understand, taking into account the whole of thespecification where there is ambiguity, but ultimately adhering to the language of the claims. The Court’s task is to identify the essentialelements of the claimed invention.

The Court must do all this from the perspective of a person of skill in the art at the publication date,taking into account the common general knowledge as it was then.

(2) Person of Skill in the Art [66] In Free World Trust, at paragraph 44, the Supreme Court of Canada, quoting Harold G. Fox, The Canadian Law and PracticeRelating to Letters Patent for Inventions, 4th ed. (Toronto: Carswell, 1969) at 184, described a "“person skilled in the art”" as follows: [A] hypothetical person possessing the ordinary skill and knowledge of the particular art to which the invention relates, anda mind willing to understand a specification that is addressed to him. This hypothetical person has sometimes been equatedwith the “reasonable man” used as a standard in negligence cases.

He is assumed to be a man who is going to try to achievesuccess and not one who is looking for difficulties or seeking failure. [67] And in Whirlpool, at paragraph 53, the Court held that: [T]he patent specification is not addressed to grammarians, etymologists or to the public generally, but to skilled individualssufficiently versed in the art to which the patent relates to enable them on a technical level to appreciate the nature and

description of the invention: H. G. Fox, The Canadian Law and Practice Relating to Letters Patent for Inventions (4th ed. 1969), at p. 185. The court, writes Dr.

Fox, at p. 203, must place itself in the position of some person acquainted with the surrounding circumstances as to the state of the art and the manufacture at the time, and making itself acquainted with the technical meaning in that art or manufacture that any particular word or words may have. [ 68 ] Therefore, in taking the place of a person skilled in the art, the Court must assume a mind willing to understand the claims before it – one that is equipped with the set of skills, knowledge, and technical acumen ordinarily known within that particular art at the relevant time.

(3) Common General Knowledge [ 69 ] Common general knowledge refers to what would generally have been known to the person of skill in the art at the date of publication ( Apotex Inc v Sanofi-Synthelabo Canada Inc , 2008 SCC 61 [ Sanofi ] at para 37 ). [ 70 ] Common general knowledge does not include all information in the public domain. The mere fact that some information is published in an individual patent, a scientific publication, or any other document will not suffice on its own to establish that that information is within the common general knowledge of a person skilled in the art.

Instead, that information must be ordinarily known within the art or industry ( Gemak Trust v Jempak Corporation , 2022 FCA 141 at paras 95-96 ).

(4) Application (

a) Person of Skill in the Art [ 71 ] Arc’s expert is of the view that the 085 Patent addresses two categories of subject matter. The first category is floating production facilities. The second is the production of LNG. He states that the skilled person is in fact a " “skilled team” " . [ 72 ] With respect to the first category (floating production facilities), Arc’s expert describes the person of skill in that field as someone with an engineering degree in a relevant discipline – namely mechanical, structural, naval, or chemical and process engineering.

For some of the claims, the relevant disciplines may also include electrical or instrumentation engineering. The skilled person also has at least five years of multidisciplinary experience with floating production facilities, which may be focused on FLNG facilities, but may also include experience with other floating facilities. [ 73 ] In relation to the second category (the production of LNG), Arc’s expert describes the skilled person as someone with a chemical and process engineering degree and a minimum of five years experience with LNG production.

This person understands the types of processes used in LNG production like the SMR and DMR liquefaction systems, as well as those used in pre-treating the natural gas feed. [ 74 ] Steelhead’s expert believes that the skilled person is someone with an engineering background. He singles out mechanical engineering as the skilled person’s sub-discipline. However, he acknowledges that the skilled person may alternatively have a degree in industrial, chemical, or electrical engineering.

Ultimately, he concludes that the skilled person addressed by the 085 Patent is one with a bachelor’s degree in a relevant engineering field and two to four years experience – or, in lieu of that experience, a master’s degree in LNG facility design and only one to two years of hands-on training. [ 75 ] I find that the 085 Patent is directed towards a skilled person (or persons) with a background in both mechanical and naval engineering and at least four years of experience with LNG and floating production facilities, such as FLNG or FPSO facilities. (

b) Common General Knowledge [ 76 ] Both expert witnesses agree that the common general knowledge of the skilled person is the same for all relevant dates. They also generally agree that the following topics are part of the skilled person’s common general knowledge: 1 . Natural gas and its various chemical components; 2 . Liquid natural gas, its chemical properties, and its commercial advantage; 3 . The production of natural gas and its treatment to remove impurities and/or heavy hydrocarbons; 4 . The refrigeration cycle and its main stages; 5 . Common liquefaction processes associated with natural gas; 6 .

Compressors, their various types, and their role in refrigeration and liquefaction; 7 . The engineering stages involved in LNG facility development; 8 . Floating facilities used in LNG production, particularly FLNG facilities; 9 . The various classes of LNG storage tanks, including membrane tanks; 10 . The use of ballast systems and mooring methods to stabilize and fix the location of an FLNG facility; and

11 . FLNG facilities that were constructed by June 2018, including Shell’s Prelude facility. [ 77 ] The two experts disagree in their reports on some topics, and Arc’s expert’s overview of the skilled person’s common general knowledge included more topics in contrast to Steelhead’s expert’s report. Upon review of their reports, I find that the following matters are also part of the skilled person’s common general knowledge, notwithstanding any disagreement or omission by either expert: 1 .

Modular design – it was known that a facility’s constituent units may be constructed separately at different locations and then put together during final assembly; 2 . Sensors, automation, and containment – it was known that LNG facilities, including FLNG facilities, use sensors and control systems to monitor the facility, automate operations, ensure safety, and contain hazards and spills; 3 . Nearshore FLNG facilities – the skilled person would have been aware of the concept of an FLNG facility operating nearshore and the potential benefits associated with such a concept; 4 .

Marine systems – the skilled person would have been aware of the main components of a marine vessel; and 5 . Offloading – the skilled person would have been aware of offloading systems used on an FLNG facility, particularly offloading " “arms” " or hoses. (

c) Construing the Claims [ 78 ] The relevant date for the purposes of claim construction is the date of publication: February 8, 2019. [ 79 ] Both experts state that the elements of each claim are all essential to that claim. I agree. [ 80 ] The experts also generally agree on the proper construction of the claims, except with respect to two phrases: (1) " “water-based apparatus” " , and (2) " “void space… capable of containing” " . I adopt the construction agreed upon by the experts and apply it as necessary. As for the areas of disagreement, I resolve them as follows. (

i) The meaning of " “water-based apparatus” " [ 81 ] Arc’s expert adopts a broad

interpretation of the term " “water-based apparatus” " . Specifically, he interprets it to include not only a barge, a ship, and a floating platform, but also a gravity-based platform – meaning a vessel that is floated to position and then grounded on the seabed. Steelhead’s expert takes a narrower view. To him, the term refers to a facility that is continuously floating on the water. He therefore excludes gravity-based platforms from the definition. [ 82 ] I agree with Steelhead’s expert that the term " “water-based apparatus” " excludes gravity-based platforms.

The disclosure of the 085 Patent and the independent claims state that the " “water-based apparatus” " would be " “moored” " to a location on-shore. This would be understood by the skilled person to be a method of keeping a floating vessel in place – one that is not used on gravity-based platforms. (ii) The meaning of " “void space… capable of containing” " [ 83 ] Claim 29 speaks of a " “void space… capable of containing” " fluid with a weight similar to the AER System.

Arc’s expert interprets this to mean that the void space must always be able to contain that fluid, including when the AER System is installed on the vessel. In contrast, Steelhead’s expert understands the term to mean that the void space would only be used during manufacturing. [ 84 ] I accept that there is ambiguity here, one that arises from the use of the word " “capable” " . Essentially, Arc’s expert’s view is that " “capable” " here means " “able at all times” " , while Steelhead’s expert’s opinion is that it means " “able when needed” " .

Steelhead’s expert resolves this ambiguity by citing page 16 the 085 Patent’s disclosure, which states at lines 11 to 21 that the void space would be filled " “during manufacturing” " of the vessel to " “simulat[e]” " the weight of the AER System and, second, that the fluid would be incrementally " “releas[ed]” " as the AER System is loaded on the vessel. [ 85 ] Arc argues that it is not necessary to review the patent’s disclosure if claim 29 is read along with the claims that it depends on.

Once claim 29 is so read, there will be no ambiguity, since it will be evident that the void space must be capable of carrying the fluid after the AER System is installed. [ 86 ] I have reviewed claim 29 along with the claims that it depends on. I have also reviewed the portions of the disclosure that Steelhead’s expert cites. I find that the correct view is that expressed by Steelhead’s expert, that the void space is meant to be filled with fluid during manufacturing and not after the AER System is installed. B.

Anticipation [ 87 ] An invention is anticipated if (1) there is citable prior art that discloses the essential elements and special advantages of the invention, and (2) that disclosure enables a person skilled in the art to perform the invention without undue burden ( Sanofi at paras 24- 27 ). [ 88 ] The cut-off date for citable prior art is prescribed in

section 28.2(1) of the Patent Act . Relevant here are the following two cut-off dates: (1) one year prior to the filing date, if the prior art was disclosed by the patentee or by a person who acquired the information from the patentee, and (2) the claim date, if the prior art was disclosed by any other person. [ 89 ] The application for the 085 Patent was filed on December 10, 2018. The patent claims priority as of June 1, 2018. The cut-off date

for citable prior art made by Steelhead is December 10, 2017. For all other prior art, the cut-off date is June 1, 2018. The pieces of prior art relied on here (i.e. the Sullivan presentations and the Talib papers) all precede the earliest of those dates and are therefore citable. [ 90 ] Where the Court is satisfied that any individual piece of citable prior art discloses the elements of the invention, the Court must also be satisfied that this disclosure would enable a person skilled in the art to perform the invention.

The skilled person is assumed to be willing to engage in some trial and error, but without undue burden. What constitutes undue burden will differ from one case to the next ( Sanofi at para 37 ). [ 91 ] The Court must apply the test for anticipation to each individual piece of prior art that is alleged to anticipate the invention, separate from any others. Anticipation cannot be established by assembling together components from various publications ( Western Oilfield Equipment Rentals Ltd v M-I LLC , 2021 FCA 24 at para 85 , citing Free World Trust at para 26 ).

(1) Optionality and Anticipation [ 92 ] Steelhead argues that the disclosure of options in an individual publication would not disclose their various configurations. Consequently, no prior art can be anticipatory here by simply disclosing a set of options that include within their possible configurations the subject matter of the 085 Patent. The prior art must disclose that particular configuration to anticipate it. In essence, Steelhead’s argument is that optionality precludes anticipation.

I disagree. [ 93 ] Steelhead rests much of its argument on the following passage from Beloit Canada Ltée/Ltd v Valmet Oy , [1986] FCJ No 87, 8 CPR (3d) 289 at 297 (FCA) [ Beloit ] : One must, in effect, be able to look at a prior, single publication and find in it all the information which, for practical purposes, is needed to produce the claimed invention without the exercise of any inventive skill. The prior publication must contain so clear a direction that a skilled person reading and following it would in every case and without possibility of error be led to the claimed invention.

Where, as here, the invention consists of a combination of several known elements, any publication which does not teach the combination of all the elements claimed cannot possibly be anticipatory. [ 94 ] The Court’s comments in Beloit , taken in their proper context, discuss a combination of elements melded together from distinct pieces of prior art, not an individual one. In fact, the paragraphs that follow the above passage make this clear: It is difficult to discern with precision the trial judge's findings on anticipation.

At one point, he identifies four of the publications which had been pleaded as anticipatory and states: "With respect to anticipation one cannot rely, as already stated, on a combination of elements found in several prior art publications , but must rely either on Black Clawsen (sic), Heys, Millspaugh, or Goodwillie." (Case, p. 2141) Later, in his

Summary of Conclusions, he says: "5.On the issue of obviousness and anticipation (prior art) I find that neither patent should have been registered in Canada the invention being obvious. It is also likely that there was sufficient prior art disclosed in prior patents or publications as to give directions to inventors in question and all men skilled in the art, to enable them to make the two inventions." (Case, p. 2150) I find this latter passage extremely difficult. Since it is all that he says about anticipation in his

summary, I have to assume that the first sentence relates to obviousness and the second, to anticipation. If so, the second sentence is clearly erroneous, for it not only allows the compounding of "prior patents or publications" but also sets as a test the making of the invention rather than the production of the results disclosed by the invention. [Emphasis added] [ 95 ] Steelhead also relies on the principle that there is " “no room for experimentation or trial and error at the disclosure stage” " . Steelhead cites Sanofi , at paragraph 32 , to argue this point.

However, a close reading of that decision shows that it is distinguishable from the case at hand. Sanofi was concerned with experimentation that results in the discovery of a new use or benefit . In fact, the very paragraph that Steelhead cites demonstrates this distinction: [32] In the context of disclosure as explained in Synthon , “the absence of the discovery of the special advantages” to which Lord Wilberforce was referring in Witsiepe’s means that the genus patent does not disclose the special advantages of the invention covered by the selection patent .

Where there is no such disclosure, there is no discovery of the special advantages of the selection patent as compared to the genus patent, and the disclosure requirement to prove anticipation fails. At this stage, the person skilled in the art is reading the prior patent to understand whether it discloses the special advantages of the second invention. No trial and error is permitted.

If in reading the genus patent the special advantages of the invention of the selection patent are not disclosed, the genus patent does not anticipate the selection patent . [Emphasis added] [ 96 ] Phrased more broadly, the patentee must discover a new use or enhanced benefit from the selected invention when compared to the wider genus of known inventions. It is therefore incorrect to say, as Steelhead suggests, that a skilled person offers something novel by simply selecting one combination from a number of options disclosed by a piece of prior art. Something more is needed for novelty.

That combination would have to offer a benefit or use that was not yet known or disclosed. [ 97 ] It is clear that Steelhead’s expert did not make this distinction. Instead, he applied the wrong legal standard for anticipation in his analysis, assuming that the disclosure of options cannot disclose specific configurations. In paragraph 352 of his report, for example, Steelhead’s expert states that:

352. A skilled person would recognize that these [the options in Talib 2014] are options for various different components of LNG facilities. The skilled person would not consider the disclosure of different options for the key components of a facility to be the disclosure of a particular facility design .

The Talib papers describe only two specific barge-based configurations which the papers say have been “advanced through the front-end engineering and design (FEED) stage.” [Emphasis added] [ 98 ] In fact, as Arc points out, Canadian case law is now clear that a piece of prior art need not disclose the " “exact invention” " that is claimed. Disclosure merely requires that the skilled person is able to discern the elements of the claimed invention from the piece of prior art ( Sanofi at paras 23-26 ).

Selecting one combination from a variety of known options is not novel unless that combination offers a unique benefit that was previously unknown. Put another way, if a person carrying out the prior disclosure in a piece of prior art would infringe a claim, then the test for anticipation would be met ( Schering-Plough Canada Inc v.

Pharmascience Inc , 2009 FC 1128 at para 87 ). [ 99 ] Notably, Steelhead’s expert acknowledged during cross-examination that Table 1 of Talib 2014 (which is identical to Figure 7 of Talib 2013) discloses a flexible set of options precisely because of the diversity of uses and benefits they offer. In other words, the configurations disclosed allow a skilled person to accommodate a given project’s specifications: Q. Well, what it [Talib 2014] says is, and I don't think we're that far apart, that the owner selects the best options depending upon its specific application. A. Yes. Q. Good.

Let's focus on those words, "select the best options for its specific application." This recognizes that it's the owner's selection and it's driven by what its end goals are given the specifications. Fair? A. Fair. Q. And specific application contemplates that decisions will be driven, for example, by things like proximity to land, need to protect the seawater, things like that? A. There are a lot of considerations that go into selecting the ultimate configuration. Q. The decision is made by the owner. That's what it says on this page? A. That’s correct. […] Q. Let's go to page 45.

Top of page 45, left column in green we see Table 1. Do you see that? A. Yes. I see that. Q. And it, again, speaks about available options. Do you see that? A. Yes. Q. And available options would mean the same thing here as what was meant earlier, meaning they're available to the owner to choose from? A.

Yes. [ 100 ] Steelhead’s expert also admitted on cross-examination that, if the correct articulation of law is that the disclosure of options discloses their various configurations, then Sullivan 2017 discloses the elements of the 085 Patent’s independent claims: Q. […] So I want you to assume that, under Canadian law, the presentation of four options is the disclosure of each option. If you assume that, then you would agree with me that all of the essential elements of 1, 21, 56 and 67 have been disclosed in Sullivan, if you accept my proposition? A.

My understanding was that if the invention is disclosed in its entirety with all the components shown, it means it has been disclosed. If not all the components are disclosed, then not. Q. And I'm asking you to assume that the disclosure of the four compressor drivers, each one has individually been disclosed. So I'm asking you to assume that when there was disclosure on Slide 11 of four drivers, that includes a disclosure of the electric drivers. I'm asking you to assume that. And my friends and I will argue about the law on Friday.

But if you assume that, then you would agree with me that Sullivan 2017 discloses all of the elements of the claimed invention in independent claims 1, 21, 56 and 67? A. I think I -- in my report and even this morning, I explicitly stated what has been disclosed and what has not been disclosed. If you say that what has not been disclosed as part of an option table, and assuming that an option table means disclosure -- Q. Yes.

A. -- then those elements have been shown . [Emphasis added] [ 101 ] Steelhead says that the configuration claimed by the 085 Patent is a novel invention. Based on the above, the patent must disclose a new use or enhanced benefit to the combination that was not previously known. I am unable to discern any such new use or enhanced benefit from the evidence before the Court. In fact, the background

section to the 085 Patent describes the intended use and purported benefit of the claimed invention as access to natural gas in shallow waters for commercial purposes.

Each of Sullivan 2017, Sullivan 2016, Talib 2014, and Talib 2013 contemplates such use and benefit. [ 102 ] Therefore, the only way for any of the claims of the 085 Patent to be novel is if they include elements in their configuration that were not part of the options or configurations disclosed by any given piece of prior art. (2) Implementation and Feasibility [ 103 ] Separately, Steelhead’s expert also assumes that a prior art cannot be anticipatory in the absence of a proof of concept (i.e. a project in an advance stage of design or construction).

For example, in paragraph 353 of his report, he explains that: 353. Although Talib states that they [the papers’ subject matter] were advanced to FEED, the skilled person would not consider these two papers to be disclosing a design at the level of detail and maturity that would be found in a design that has gone to FEED . As I noted above at paragraphs 146 to 147, FEED represents a significant degree of maturity, and FEED design packages would normally include hundreds of documents such as detailed engineering specifications for equipment, processes, operating conditions, and drawings.

In contrast, these two papers only show three basic schematic drawings for each of the two designs and a high-level brief description of each concept contained in two paragraphs. [Emphasis added] [ 104 ] A generous

interpretation of Steelhead’s expert’s views is that, in the arena of FLNG facilities, a document that fails to provide a detailed design of the claimed invention would not enable the skilled person to perform the invention, notwithstanding their experience and common general knowledge. This

interpretation disregards that the purported invention in this case is itself nothing more than a concept for an FLNG facility – that is the claimed invention. All that is necessary is for the disclosure to allow the skilled person to arrive at that claimed invention without undue hardship. It is not a pre-requisite for that piece of prior art to enable full commercial implementation.

The fact the prior disclosure has not proceeded through pre-FEED or FEED is not the proper question. [ 105 ] Given Steelhead’s expert’s assumptions on implementation, as well as his incorrect approach to the law on optionality, I prefer Arc’s expert’s analysis in relation to anticipation, which is more consistent with the applicable legal principles.

(3) Multiple Dependencies [ 106 ] Arc does not allege that any one of the Talib papers or the Sullivan presentations anticipates all the claims in the 085 Patent. Where Arc does not allege that a prior art anticipates a claim, I take no view with respect to that prior art and that claim. That said, in some instances, the claims on which I take no position are in fact partly relied on by other claims that Arc says were anticipated. In such instances, where I find that the dependent claim is anticipated, I do so only insofar as that claim’s prior dependencies are also anticipated.

(4) Does Sullivan 2017 or Sullivan 2016 anticipate the subject matter of claims 1-3, 5, 7, 8, 13, 14, 21, 26, 36- 39, 41, 42, 56, 58, 59, 64 and 65 of the 085 Patent? (

a) Independent Claim 1 [ 107 ] Independent claim 1 claims " “a system for liquefaction of natural gas,” " essentially comprised of: 1. an external source of electricity and feed gas (the " “external source” " ); and 2. a " “water-based apparatus” " connected to the external source and moored to an on-shore location, itself comprising: a. a hull containing a bow, a stern, and a centerline axis connecting the bow and stern; b. an " “air-cooled electrically-driven refrigeration system (‘AER System’)” " – that receives electricity and gas from the external source and that uses: 1. electrically-driven compressors, and 2. air cooling to convert the feed gas into LNG and discharge the resulting thermal energy to ambient air; and c. a " “plurality of LNG storage tanks” " in a single row along the hull’s centerline axis, configured to: 1. receive the LNG from the AER system; and 2. output it to an LNG transport vessel. [ 108 ] The elements of claim 1 are all anticipated by each of the Sullivan presentations.

In Sullivan 2017 in particular:

Slide 9 shows a schematic of an FLNG facility that includes: a. external " “power cables” " connected to the FLNG facility, which the skilled person would understand to be an external source of electricity; b. a floating vessel with a barge structure on which multiple liquefaction trains are placed; c. a description of the facility as " “at-shore” " , from which the skilled person would understand that the facility is moored for operation nearshore; d. liquefaction trains using cooling fans with no associated gas turbines/generators, indicating to the skilled person that they rely on air coolers and (by process of elimination) electrically-driven compressors; and e.

LNG offloading arms next to an LNG carrier adjacent to the facility, from which the skilled person would understand that the facility has on-barge LNG storage tanks below deck that are configured to be offloaded to a transport vessel; 2. Slide 11 shows a list of " “proven technologies” " for compressor drivers, which includes electric motors; 3.

Slides 12 and 13 show schematics of an " “at-shore” " FLNG facility that is moored " “proximate to land” " and " “not permanently manned” " , and that includes: a. multiple liquefaction modules; b. cryogenic heat exchangers; c. air coolers; d. no gas turbines/generators, from which the skilled person would understand by process of elimination that the systems use electrically-driven compressors; and e. a " “single row” " of " “LNG storage” " tanks placed below deck along the hull’s centerline axis; and 4 .

Slides 14 and 15 show a table describing a number of features of an " “at-shore LNG” " facility design, including: a. " “onshore” " source of electricity; b. " “air-cooling” " ; c. " “conditioned gas” " from a pipeline, which the skilled person would understand as an external source of feed gas; d. a " “barge or ship shape vessel” " structure, with " “integrated storage” " ; e. " “on barge” " liquefaction; and f. " “jetty based loading arm” " to be used for offloading. [ 109 ] In Sullivan 2016, slides 9, 13, 14, and 15 show the same information as slides 11, 9, 14, and 15 of Sullivan 2017, respectively.

Sullivan 2016 therefore presents the same elements as those slides in Sullivan 2017. [ 110 ] The above list discloses all the elements of claim 1. I note in particular that from slide 9 of Sullivan 2017, the skilled person would clearly observe an external source of electricity, a barge with all its marine elements, multiple liquefaction trains, and a separate LNG carrier for offloading. Any element that may be missing in slide 9 of Sullivan 2017 is explicitly mentioned in slide 11 (i.e. electric motors) and slides 14 and 15 (i.e. external feed gas, air cooling, and a single row of tanks).

Again, all of those slides are in Sullivan 2016. [ 111 ] The disclosures above would enable the skilled person to understand and find disclosure of the subject matter of independent claim 1 without undue hardship. Indeed, most of the disclosed elements are presented together in one slide, and whatever elements remain are listed among other design options in subsequent slides. (

b) Independent Claims 21 and 56 [ 112 ] Independent claim 21 claims the water-based apparatus essentially as described in claim 1, adding that the LNG storage tanks " “are on the lower deck of the hull” " . Independent claim 56 claims the AER method essentially as described in claim 1.

Any prior art that anticipates all of the essential elements of the system of claim 1 also anticipates the water-based apparatus and the AER method of claims 21 and 56. [ 113 ] Since the Sullivan presentations each disclose and enable the subject matter of claim 1, and since slide 9 of Sullivan 2017 and slide 13 of Sullivan 2016 each disclose the existence of storage tanks below deck, I am satisfied that the Sullivan presentations also anticipate the apparatus of claim 21 and the method of claim 56. (

c) Dependent Claims 2 and 3: Pre-treatment [ 114 ] Claim 2 includes the system of independent claim 1 and adds that the source gas would be pre-treated to remove " “unwanted elements” " . Claim 3 includes the systems of claims 1 and 2 and specifies that pre-treatment would remove heavy hydrocarbons.

[ 115 ] Slide 14 of Sullivan 2017 and slide 14 of Sullivan 2016 both disclose that the feed gas would be a " “pipeline specification conditioned gas” " . A skilled person would understand this to mean that the feed gas is pre-treated to remove impurities and heavy hydrocarbons. I note as well that the same slide says that further treatment would be " “required, but to a lower duty specification due to… gas pre-conditioning” " .

It also states that pre-treatment could occur on barge or onshore. [ 116 ] The skilled person would therefore understand that the pre-treatment can be implemented to varying degrees and specifications, and may occur in different locations. This discloses the elements of claims 2 and 3. And given that this disclosure is embedded among a list of other design options for an FLNG facility, the skilled person would be able to arrive at the claimed system with little trial and error and without undue hardship. (

d) Dependent Claims 5 and 65: Onshore Generation & Onshore Location [ 117 ] Claim 5 includes any of the systems of claims 1 to 4 and adds that (1) the external source of electricity and gas would generate " “a portion” " of the " “received electricity” " , and (2) the at-shore location would comprise a jetty, a quayside, a shoreline or a position proximate to a shoreline location.

Claim 65 includes any of the methods of claims 56 to 64, adding that the external source of electricity would generate " “all of” " that electricity. [ 118 ] Slide 15 of Sullivan 2017 and slide 15 of Sullivan 2016 disclose that the power supply could be " “arranged from [the] onshore grid” " . However, this simply discloses that the source of electricity could be external to the FLNG facility, that it could be onshore, and that it could rely on the grid. I do not read that as disclosing that the source itself is generating electricity.

Slide 9 of Sullivan 2017 and slide 13 of Sullivan 2016 disclose a power generator, but that generator is not external to the facility. [ 119 ] It bears repeating for emphasis here that claims 5 and 65 specify, respectively, that " “the external source generates a portion of the received electricity” " and that it " “generat[es] all of the received electricity with a power generator ” " [emphasis added]. I understand the term " “generate” " here to mean that the external source engages in some process that converts a source of fuel into electricity in proximity to the water-based apparatus.

That electricity is then supplied to power the water-based apparatus. [ 120 ] Neither one of the Sullivan presentations discloses onshore power generation or any other form of external power generation. Therefore, in the absence of that disclosure, claims 5 and 65 are not anticipated by the Sullivan presentations. (

a) Dependent Claims 7 and 8: Mooring [ 121 ] Claim 7 includes any of the systems of claims 1 to 6 and adds that (1) " “one of a port side or a starboard side of the water-based apparatus is moorable to a structure anchored or otherwise affixed or connected to the shore” " . Claim 8 includes the system of claim 7, adding that (2) " “one of the port side or the starboard side is engageable with a walkway structure” " . [ 122 ] Slide 16 of Sullivan 2017 shows a number of FLNG facilities moored along their port side or starboard side to a walkway connected to the shoreline.

Slide 20 of Sullivan 2016 also shows three FLNG facilities moored along their port side or starboard side to a walkway connected to the shoreline. Each of these slides discloses the elements of claims 7 and 8 and enables the skilled person to understand their subject matter. These claims are anticipated. (

b) Dependent Claim 13: Knock-out Drum [ 123 ] Claim 13 depends on any of the systems of claims 1 to 12, adding that (1) " “the AER System comprises one or more refrigeration trains” " , and (2) " “each refrigeration train of the one or more refrigeration trains comprises a portion of the electrically-driven compressors, a portion of the air coolers, and knock-out drums” " . [ 124 ] Slide 9 of Sullivan 2017 and slide 13 of Sullivan 2016 each show a nearshore FLNG facility with multiple liquefaction trains.

And as discussed above, each of the Sullivan presentations discloses electrically-driven compressors and air coolers as options for the liquefaction system. [ 125 ] Arc’s expert says that the skilled person would know that a liquefaction train necessarily includes multiple knock-out drums, since they are used to separate liquefied gas from gas vapour. Steelhead’s expert adds that " “a skilled person would also appreciate that generally one would have a knock-out drum per compressor or per compression stage” " .

I agree. [ 126 ] Therefore, in addition to disclosing the other elements of claim 13, the Sullivan presentations also each disclose knock-out drums by merely disclosing the existence of liquefaction trains. The disclosures would also enable the skilled person to understand and arrive to the subject matter of claim 13. It is therefore anticipated. (

c) Dependent Claims 14, 38, and 64: DMR Process [ 127 ] Claim 14 includes the system of claim 13, where the refrigeration trains are " “operatively configured to perform a [DMR] process” " . [ 128 ] Claim 38 claims any of the apparatuses of claims 36 or 37, where each refrigeration train " “comprises a pre-cooling heat exchanger, a warm-mixed refrigeration circuit, a cold-mixed refrigeration circuit, an expander, and an end flash vessel” " .

Both experts agree that these are elements of the DMR process, and that this refrigeration process is essentially the subject matter of claim 38. [ 129 ] Claim 64 includes any one of claims 56 to 63, where the AER System performs a DMR process. [ 130 ] The DMR process is disclosed in slide 11 of Sullivan 2017 and Slide 9 of Sullivan 2016 as one option among three liquefaction processes. I have already concluded that the DMR process is part of the skilled person’s common general knowledge. Therefore, the

skilled person would be able to understand how the DMR process disclosed by the Sullivan presentations applies to the FLNG facility concept. The skilled person would thereby be able to perform the subject matter of claims 14, 38, and 64. The claims are anticipated. (

d) Dependent Claim 26: Membrane Tanks [ 131 ] Claim 26 includes any one of the apparatuses of claims 21 to 25, where each LNG storage tank is a membrane tank, and each membrane tank comprises a lower membrane that defines a storage volume and an upper membrane that seals the storage volume. In my view, the distinction between a tank’s lower membrane and its upper membrane is redundant. I explain this further in my analysis of the Talib papers’ anticipation of claims 19, 20, and 26. [ 132 ] Membrane tanks are disclosed in slide 15 of both Sullivan 2017 and Sullivan 2016.

Both presentations disclose that " “standard membrane [tanks] may be feasible” " as LNG storage options. Arc’s expert also points to slide 13 of Sullivan 2017, which has no counterpart in Sullivan 2016. Slide 13 depicts LNG storage tanks that Arc’s expert says a skilled person would understand to be membrane tanks from their shape and design. I agree. [ 133 ] These disclosures enable the skilled person to arrive at the claimed subject matter. Claim 26 is therefore anticipated. (

e) Dependent Claims 36 and 37: AER Components [ 134 ] Claim 36 includes any one of the apparatuses of claims 21 to 35, where (1) the AER System’s modules " “comprise one or more refrigeration trains” " , (2) each refrigeration train " “comprises a portion of the electrically-driven compressors and a portion of the air coolers” " , and (3) " “the cryogenic heat exchanger comprises a separate cryogenic heat exchanger for each” " refrigeration train.

Claim 37 includes the apparatus of claim 36 and adds that the refrigeration trains comprise (4) " “a first refrigeration train operatively configured to receive a first portion of the feed gas and output a first portion of the LNG” " , and (5) " “a second refrigeration train operatively configured to receive a second portion of the feed gas and output a second portion of the LNG” " , the two trains being independent of one another. [ 135 ] I have already found that the Sullivan presentations each disclose multiple refrigeration trains that use electrically-driven compressors and air coolers.

Arc’s expert says that the skilled person would understand that the presence of multiple refrigeration trains is indicative of the fact that they operate independently of one another. I agree. [ 136 ] The elements of claims 36 and 37 are thereby disclosed, and the skilled person would be able to understand and arrive at the subject matter of those claims without undue difficulty. Claims 36 and 37 are anticipated. (

f) Dependent Claim 39: Balanced Topside Configuration [ 137 ] Claim 39 includes the apparatus of claim 37, where (1) " “the hull defines a port side, a starboard side, and a mid-ship axis extending between the port and starboard sides at a center of the hull” " , (2) " “a substantial portion of the first refrigeration train is aft of the mid-ship axis and a substantial portion of the second refrigeration train is forward of the mid-ship axis” " , and (3) " “the weights of the refrigeration trains are balanced against one another around the mid-ship axis to stabilize the apparatus” " . [ 138 ] The Sullivan presentations both disclose various examples of FLNG facilities, all of which have a hull with a port side, a starboard side, and a mid-ship axis.

However, only Sullivan 2017 discloses an example where two liquefaction trains are counterbalanced across the mid-ship axis. Namely, slides 12 and 13 of Sullivan 2017 show a nearshore FLNG facility design where two DMR liquefaction trains are counterbalanced accordingly. Therefore, only Sullivan 2017 discloses the elements of claim 39. In my view, that disclosure would enable to the skilled person to understand and arrive at the subject matter of claim 39. [ 139 ] Claim 39 is therefore anticipated by Sullivan 2017, but not Sullivan 2016. (

g) Dependent Claim 41: Pre-treatment & Land-based Source [ 140 ] Claim 41 includes any of the apparatuses of claims 21 to 40, adding that (1) the feed gas would be " “at least partially pre- processed” " , and (2) the external source comprises at least one land-based source " “in communication with the water-based apparatus” " . [ 141 ] I have already discussed pre-treatment above (see claims 2 and 3), where I found that pre-treatment was disclosed. The same conclusion applies here. [ 142 ] As for the second element, the experts understood it to mean that one or more of the sources of electricity or gas would be onshore and that said source(

s) would be connected to the water-based apparatus. This is disclosed in slides 14 and 15 of both Sullivan 2017 and Sullivan 2016, which note that the feed gas would come from a " “pipeline” " , the pre-treatment location could be onshore, and the power supply would be the onshore grid. This discloses the second element, and the skilled person would be able to perform the subject matter of claim 41 from that disclosure. [ 143 ] Therefore, claim 41 is anticipated by each of the Sullivan presentations. (

h) Dependent Claim 42: Separate Sources & Non-Propulsion [ 144 ] Claim 42 includes any of the apparatuses of claims 21 to 41, adding that (1) " “the water-based apparatus is configured to operate without requiring a propulsion system and without requiring a non-emergency power generation system” " , and (2) " “the external source comprises a first source for the electricity and a second source for the feed gas” " . [ 145 ] The experts agree that claim 42 means in part that the water-based apparatus would not be self-propelled, either by having no

propulsion system altogether or by not engaging it. They also agree that claim 42 excludes the apparatus from having any power generation system on the vessel itself, unless that system is for emergency use. The experts also agree that the reference to a " “first source” " and a " “second source” " means that the source of electricity is distinct from the source of feed gas. [ 146 ] Slides 14 and 15 of Sullivan 2017 and slides 14 and 15 of Sullivan 2016 disclose that the FLNG facility could be powered by the onshore grid and that the source of gas could be a pipeline.

This enables the skilled person to understand that the FLNG facility could be powered entirely by the onshore grid. The skilled person would also be able to understand that the onshore grid and the gas pipeline are two distinct sources. [ 147 ] I agree with Arc’s expert that the skilled person would know through their common general knowledge that a nearshore FLNG facility could be towed to place and that it therefore does not need a propulsion system.

Since the FLNG facility designs described by Sullivan 2017 and Sullivan 2016 do not explicitly require a propulsion system, the skilled person would be able to understand that a propulsion system is not required. [ 148 ] Claim 42 is therefore anticipated. (

i) Dependent Claims 58 and 59: Outputting LNG [ 149 ] Claim 58 includes the method of any of claims 56 or 57, where the method also comprises " “routing the LNG through the upper deck when outputting the LNG from the AER System and the plurality of LNG storage tanks” " . Claim 58 essentially refers to one or more openings through the upper deck that connect to the LNG storage tanks below deck. The LNG produced at the end of the liquefaction method would be routed into the storage tanks through those openings.

LNG that is being moved out of the tanks and into an LNG transport vessel would also be routed through those openings. [ 150 ] Claim 59 includes the method of claim 58, where the method also comprises " “routing the LNG through an [input-output] port proximate to a mid-ship axis of the apparatus when outputting the LNG from the plurality of LNG storage tanks to an LNG transport vessel that is separate from the water-based apparatus” " . I understand claim 59 to essentially refer to an input-output ( " “IO” " ) port near the middle of the vessel that connects to the LNG storage tanks.

LNG can then be routed from the LNG storage tanks, through the port, and into an LNG transport vessel. [ 151 ] As I have already discussed, slide 9 of Sullivan 2017 and slide 13 of Sullivan 2016 both show three liquefaction trains and allude to the existence of storage tanks below deck. Arc’s expert argues that the skilled person would know using their common general knowledge that routing LNG from the liquefaction trains to the storage tanks necessarily requires the existence of openings that connect the upper deck to the storage tanks.

I agree that this amounts to disclosure of the routing mechanism claimed by claim 58, one which would enable the skilled person to understand and arrive at the subject matter of the claim. [ 152 ] Slide 9 of Sullivan 2017 and slide 13 of Sullivan 2016 both show an " “offloading arm” " . Arc’s expert explains that the skilled person would understand the term " “offloading arm” " to refer to a type of hose or group of hoses that can withstand cryogenic temperatures and that is used to route LNG from the facility’s storage tanks to an LNG transport vessel.

I am satisfied that this discloses the " “IO port” " claimed by claim 59 so as to enable the skilled person to understand and arrive at the subject matter of that claim. [ 153 ] The Sullivan papers therefore anticipate claims 58 and 59.

(5) Does Talib 2014 or Talib 2013 anticipate the subject matter of claims 1-3, 5, 13-16, 18-22, 26, 36-38, 41, 42, 56-59, 64-67, 70 and 82-84 of the 085 Patent? (

a) Independent Claim 1 [ 154 ] Independent claim 1 is anticipated separately by each of Talib 2014 and Talib 2013. [ 155 ] In Talib 2014: 1.

Table 1 lists " “onshore grid/generation” " as an option for powering the facility; 2. the last paragraph of page 41 and the first paragraph of page 43 explain that the proposed nearshore FLNG facility would be used to convert " “pipeline gas” " and that facility would serve " “multiple pipelines” " and " “many locations” " ; 3. the last paragraph of page 41, Figure 7, and the paper as a whole focus on FLNG facilities that have a " “barge structure” " and that are " “nearshore, in protected waters and/or dockside” " ; 4.

Figure 7 provides an " “[e]xample of a barge layout with an electric motor drive and aerial cooling” " ; 5. the second to last paragraph of page 44 discusses " “multiple [liquefaction] trains” " and " “smaller liquefaction modules” " ; 6. Figures 2 discloses a refrigeration process whereby pre-treated " “feed gas” " is a process input and compressors are powered by electric motors; 7. the third paragraph on page 41, the last three paragraphs on page 44, and the first two lines on page 46 discuss the SMR process, multiple liquefaction trains; 8.

Figures 2, 3 and 5, as well as the first few paragraphs of page 42, disclose a " “main [heat] exchanger” " , a " “refrigerant heat exchanger” " , and various liquefaction methods like SMR, DMR, and C3-MR that rely on cryogenic heat exchangers;

9. Talib 2014 as a whole is concerned with floating LNG facilities; 10. Figure 7 and Table 1 both propose the use of air coolers; 11. Figures 2 and 5 indicate that the LNG produced by the facility would go into storage; 12. Table 1 and page 45 disclose on-barge storage tanks below deck, and Figure 6 illustrates an example where those tanks are placed in a single row along the hull’s centerline axis; and 13. Figure 9 and the second and sixth paragraphs on page 45 indicate that LNG tanks on the facility could be offloaded periodically onto LNG carriers. [ 156 ] In Talib 2013: 1.

Figure 7 lists " “onshore grid/generation” " as an option for powering the facility; 2. the last paragraph in the Abstract

section explains that the proposed nearshore FLNG facility would be used to convert " “pipeline gas” " ; 3. Figures 9 to 11 all show various designs of barges, and the second paragraph of the Abstract

section discloses that an FLNG facility could be placed nearshore; 4. Figure 9 provides an " “[e]xample barge layout with [an] electric motor drive and aerial cooling” " ; 5. the third paragraph in the Abstract

section discloses the possibility using multiple liquefaction trains; 6. Figure 2 discloses a refrigeration process whereby pre-treated " “feed gas” " is a process input and compressors are powered

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