887 F.3d 1309
Fed. Cir.2018Background
- Droplets owned U.S. Patent No. 8,402,115 (the ’115 Patent), filed Jan. 26, 2009, which expressly claimed priority to a 2003 application (the ’838 Patent) and incorporated the ’838 disclosure by reference; the ’115 specification also cross-referenced a 1999 provisional (the ’917 Provisional).
- The ’838 Patent itself claimed priority to an intervening 2000 nonprovisional (the ’745 Patent) and to the 1999 provisional, so Droplets argued the ’115 should inherit the 1999 provisional date via incorporation.
- E*TRADE petitioned for inter partes review (IPR) asserting the ’115’s effective filing date was Nov. 24, 2003 (the ’838 date), making a March 2001 Franco PCT publication prior art; the PTAB instituted and found all claims of the ’115 invalid as obvious.
- The PTAB held the ’115 satisfied §120 only with respect to the ’838 Patent because §120 requires a “specific reference” to each prior application and incorporation by reference of the ’838 did not supply specific references to the ’745 or the provisional.
- The Federal Circuit affirmed: incorporation by reference under 37 C.F.R. §1.57 cannot substitute for the §120-specific-reference requirement; because the ’115 lacked specific references to earlier applications, the effective date was 2003 and the Franco PCT was prior art.
- Droplets’ constitutional and delegation challenges to IPR were preserved but rejected as foreclosed; E*TRADE’s cross-appeal was dismissed as improper because it sought alternative grounds while the final judgment already favored it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether incorporation by reference can satisfy §120’s “specific reference” requirement to claim earlier priority dates | Droplets: incorporation of the ’838 patent by reference imports the ’838’s priority chain (including the 1999 provisional) into the ’115 | E*TRADE/Director: §120 (and 37 C.F.R. §1.78) requires an explicit, specific reference to each prior application in the claiming application; incorporation cannot substitute | Held: No — incorporation by reference does not satisfy §120’s specific-reference requirement; the ’115 only claimed the ’838 date (2003) |
| Whether 37 C.F.R. §1.57 (incorporation by reference rules) allows asserting priority via incorporation | Droplets: §1.57 permits incorporation of material and thus can supply omitted priority language by reference | Director: §1.57 addresses §112 disclosure (essential/nonessential material) and explicitly presupposes a proper §1.78 claim; it does not authorize importing a §120 priority claim | Held: §1.57 does not allow substituting an incorporated priority claim for the statutorily required §120 specific reference |
| Whether the PTAB’s IPR procedures violate Article III or the Seventh Amendment | Droplets: non-Article III judges finding invalidity of issued patents and the Director’s delegation to the PTAB are unconstitutional | Director/E*TRADE: precedent forecloses these attacks; the Court previously upheld IPR process and delegation | Held: Arguments rejected as foreclosed by this Court’s prior decisions |
| Whether E*TRADE may cross-appeal alternative invalidity grounds after prevailing on priority | E*TRADE: seeks affirmance on alternate grounds for some claims if priority decision were reversed | Droplets: cross-appeal unnecessary; E*TRADE already prevailed on judgment | Held: Cross-appeal dismissed as improper because accepting it would not enlarge E*TRADE’s rights under the judgment |
Key Cases Cited
- Medtronic CoreValve, LLC v. Edwards Lifesciences Corp., 741 F.3d 1359 (Fed. Cir. 2014) (explains §120 requires specific references in each intermediate application and rejects a “reasonable person” test)
- Sampson v. Ampex Corp., 463 F.2d 1042 (2d Cir. 1972) (requires strict compliance with priority-reference formalities to protect public notice)
- Zenon Environmental, Inc. v. U.S. Filter Corp., 506 F.3d 1370 (Fed. Cir. 2007) (defines incorporation-by-reference standards: must identify with detailed particularity)
- Harari v. Hollmer, 602 F.3d 1348 (Fed. Cir. 2010) (addresses sufficiency of incorporation language; did not resolve §120 incorporation question)
- Hollmer v. Harari, 681 F.3d 1351 (Fed. Cir. 2012) (construed incorporation language and continuity requirement in priority chain)
- Sticker Indus. Supply Corp. v. Blaw-Knox Co., 405 F.2d 90 (7th Cir. 1968) (discusses public burden and rationale for strict priority disclosure requirements)