Addressing the issues of priority and incorporation by reference, the US Court of Appeals for the Federal Circuit upheld the Patent Trial and Appeal Board’s (PTAB’s) prior art rejection of a patent based on the priority date to which the patent was entitled. Droplets, Inc. v. E*TRADE Bank, Case No. 16-2504; -2602 (Fed. Cir., Apr. 19, 2018) (O’Malley, J). The PTAB concluded that once a patent issues, it must contain a specific reference to a previously filed application to be entitled to the earlier filing date of that application, and that an alleged priority date based only on incorporation by reference cannot satisfy the specific reference requirement.

In 2014, E*TRADE petitioned for inter partes review of Droplets’ patent, asserting that the patent was only entitled to the priority date of one specifically referenced patent. Based on that priority date, E*TRADE argued that the patent was invalid over a previously filed PCT application. Droplets argued that its patent should be entitled to an earlier filing date because a priority claim is within the scope of material that can be made using incorporation by reference, and that since the challenged patent specification specifically references an earlier filed provisional application, the priority date of the earlier filed provisional was claimed under principles of incorporation by reference. The PTAB disagreed and explained that a claim for priority must contain a specific reference to a previously filed application and cannot rely on incorporation by reference. Droplets appealed.

The Federal Circuit affirmed, explaining that in order to claim the benefit of an earlier US filing date, § 120 requires that the patent application “contain a specific reference to the earlier filed application” to which it purports to claim priority. The Court noted that § 119(e)(1) recites parallel requirements to claim priority from an earlier filed US provisional application, stating that “[n]o application shall be entitled to the benefit of an earlier filed provisional application . . . unless an amendment containing the specific reference to the earlier filed provisional application is submitted at such time during the pendency of the application as required by the Director.” Similarly, a US Patent and Trademark Office regulation implementing §§ 120 and 119, 37 CFR § 1.78 (d)(3), requires that an application contain a specific reference to each prior-filed application to which the application seeks to claim priority, wherein the specific reference includes each prior-filed application’s number and familial relationship.

As the Federal Circuit explained, “[a]lthough § 120 might appear to be a technical provision,” courts have long recognized that “it embodies an important public policy.” Sampson v. Ampex Corp. (1972). The information disclosed must “enable a person searching the records of the Patent Office to determine with a minimum of effort the exact filing date upon which a patent applicant is relying to support the validity of his application or the validity of a patent issued on the basis of one of a series of applications.” Section 120 and its specific reference requirement are “necessary to eliminate the burden on the public to engage in long and expensive search of previous applications in order to determine the filing date of a later patent.” Sticker Indus. Supply Corp. v. Blaw-Knox Co. (1968).

Here, the Court concluded that it would be “improper to place the burden on the public to unearth and decipher a priority claim when the patentee is the person best suited to understand the genealogy and relationship of her applications and a requirement for her to clearly disclose this information should present no hardship.” Since the Droplets patent only contains the required specific reference to one earlier filed patent, and the § 120 “specific reference” requirement does not contemplate incorporation by reference to any other earlier filed application, the patent was found to be obvious over an earlier filed provisional application.