Incorporation By Reference Does Not Establish Priority

Droplets, Inc. v. E*TRADE Bank, Nos. 2016-2504, 2016-2602, 2018 U.S. App. LEXIS 9895 (Fed. Cir. Apr. 19, 2018) (Before Dyk, O’Malley, and Wallach, J.) (Opinion for the court, O’Malley, J.).

In an IPR brought by E*Trade in response to an infringement suit by Droplets, the Board found that the Droplets ‘115 patent was invalid due to obviousness. The patent properly claimed priority to the ‘838 patent but also attempted to claim priority to an earlier ‘917 provisional patent application and an intervening ‘745 patent through incorporation by reference. The Board concluded that these priority claims were not proper, and the Federal Circuit agreed.

A claim for benefit of the filing date of an earlier application must include a specific reference to an earlier filed application. See 35 U.S.C. § 120. Because the ‘115 Patent expressly claims priority only to an immediately preceding application, and not the provisional application before that, the Federal Circuit explained that the Board correctly determined that an earlier-filed reference—an international publication with the same specification—invalidated all claims of the ‘115 Patent.

It was undisputed that the ‘115 Patent properly claims priority from the earlier-filed, copending ‘838 Patent and thus it was entitled to the benefit of the November 24, 2003 filing date of the ‘838 Patent. The question on appeal was whether the ‘115 Patent was also entitled to the ‘917 Provisional’s priority date by virtue of the language in the ‘115 Patent that incorporates the ‘838 Patent by reference.

The Federal Circuit cited 35 U.S.C. § 119(e)(1) and §120 for their requirements of co-pendency and a specific reference to claim priority of provisional and non-provisional applications. Additionally, 37 C.F.R. § 1.78 requires an identification of all prior applications by relationship (i.e., continuation, divisional, or continuation-in-part) and by their application number. Despite Droplets’ contention that these are “hypertechnical” requirements, the Court pointed to the importance of clear notice to the public. The public should not have the burden of unearthing and deciding priority claims when the patentee is best suited to understand and set forth the relationship of his applications.

Droplets further argued that the PTO initially sent three filing receipts with the desired priority data. However, the PTO later sent a corrected filing receipt reflecting priority only to the ‘838 patent. After receipt, Droplets submitted an amendment, a request for continued examination, and withdrawal of notice of allowance all without correcting the priority data. Because the burden was with the applicant, and the MPEP provides clear guidance for priority claims, Droplets could not rely on Patent Office error.

Droplets next argued that, if incorporation by reference is adequate for § 112, it is also adequate for § 120. The Court disagreed, citing the important § 120 purpose of providing clear notice to the public of the patentee’s claimed priority date.

Take Away

In the interest of providing the public clear notice of a patent’s claimed priority date, 35 U.S.C. § 120, as promulgated by 37 CFR § 1.78, requires a patent applicant to include a specific reference (i.e., relationship to an earlier application and the earlier application number) to claim a benefit of priority. Simply incorporating an earlier application by reference is insufficient.

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