United States: PTAB Failed to Properly Apply Incorporation by Reference Doctrine

In Paice LLC, The Abell Foundation, Inc., v. Ford Motor Company, Appeal No. 2017-1406 (Fed. Cir. Feb. 1, 2018), the Federal Circuit reversed a PTAB decision for failing to properly apply the doctrine of incorporation by reference, thereby reminding the PTAB as well as practitioners alike of the proper standard for invoking and applying that doctrine.

Paice owns several patents directed to a torque-based algorithm for choosing operating modes in a hybrid vehicle, including U.S. Patent No. 7,237,634 ("the '634 Patent") and U.S. Patent No. 8,214,097 ("the '097 Patent"). Paice sued Ford for infringement, and, in turn, Ford filed twenty-five IPR petitions against the '634 Patent, the '097 Patent, and other similar patents owned by Paice. Those twenty-five IPR petitions led to the six IPR proceedings at issue here.

During these proceedings, the PTAB found various claims of the '634 Patent and various claims of the '097 Patent unpatentable as obvious over two prior art references, including a PCT publication ("the '455"). Importantly for purposes of this post, the '455 PCT publication published more than one year prior to the filing of a continuation-in-part application (i.e., the '866 application) to which the '643 Patent and the '097 Patent claim priority, but after another, earlier application in the priority chain (the '817 application). The ability of the '817 application to provide written description support for the issued claims was critical.

The PTAB's finding rested in part on the PTAB's rejection of Paice's argument that the '455 PCT publication was not prior art to the '634 Patent. In particular, Paice argued that the '817 application incorporated another reference ("Severinsky") by reference., Severinsky predated the '455 PCT publication. Paice argued that Severinsky provided written description support for the challenged claims and that, therefore, the '455 PCT publication was not available as prior art. In support, Paice pointed to the following passage from the '817 application:

"[t]his application discloses a number of improvements over and enhancements to the hybrid vehicles disclosed in ... [Severinsky], which is incorporated herein by this reference. Where differences are not mentioned, it is to be understood that the specifics of the vehicle design shown in [Severinsky] are applicable to the vehicles shown herein as well."

The PTAB rejected Paice's arguments, holding that the second sentence of this passage limits the incorporated material to only that material from the Severinsky reference that is not different from the material in the '817 application. the PTAB found differences between the disclosures of Severinsky and the challenged claims. The PTAB determined that those differences were expressly excluded from the language of incorporation found in the '817 application. Thus, the PTAB concluded that added disclosures in Severinsky could not provide written description support for the challenged claims.

On appeal, the Federal Circuit reversed. The Court agreed with Paice that Severinsky was incorporated by reference in its entirety. First, the Court addressed the proper standard for incorporating a document by reference: "[t]o incorporate material by reference, the host document must identify with detailed particularity what specific material it incorporates and clearly indicate where that material is found in the various documents." Slip op. at 20 (citing Advanced Display Sys., Inc. v. Kent State Univ., 212 F.3d 1272, 1282 (Fed. Cir. 2000)." Applying this standard, the Court determined that the first sentence of the passage above broadly and unambiguously incorporates Severinsky in its entirety, because it identifies with detailed particularity the specific material to be incorporated and where that material is found (Severinsky as a whole). The Court took issue with the PTAB's interpretation of the second sentence of the passage above, finding that it "ha[d] no bearing ... on the extent of incorporation." Slip op. at 22. Instead, according to the Court, this sentence "refers only to the applicability of certain features of Severinsky's invention to the '817 application's new and improved hybrid vehicle ... ." Id. Thus, the Applicant is able to describe the invention of the '817 application by leveraging Severinsky but without having to again describe each and every feature of Severinsky.

Further, the Court noted that even if the second sentence narrowed the broad and unambiguous incorporation effectuated by the first sentence, the PTAB's conclusion would be foreclosed by the Court's holding in Harari v. Lee, 656 F.3d 1331 (Fed. Cir. 2011). In Harari, the patent application at issue similarly included two incorporation clauses, one that stated that "the disclosures of two prior art applications are hereby incorporated by reference" and another one that stated that "only the relevant portions of the disclosures are incorporated." Id. at 1335. The Harari court held that the first clause broadly and unequivocally incorporated the entire disclosures of the two prior art applications, and the second clause did not serve to diminish the scope of incorporation. The Court therefore found Harari applicable to the facts at hand, whereby the first sentence of the passage above broadly and unequivocally incorporates Severinsky in its entirety, and the second sentence did not serve to negate or limit the scope of incorporation effectuated by the first sentence.

The Federal Circuit thus concluded that the PTAB erred in finding that the '817 application did not incorporate Severinsky in its entirety. However, because the PTAB did not determine whether the '817 application, with Severinsky so incorporated, provides sufficient written description support for the relevant claims in question, the Federal Circuit remanded the case back to the PTAB for such a determination.

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