The CAFC addresses "incorporation by reference" in Paice v. Ford Motor

In 2017-1406 , the CAFC addressed appeal issues related to
final written decisions in six inter
partes review (“IPR”) proceedings, in which the Patent
Trial and Appeal Board (“PTAB”) held certain challenged
claims of U.S. Patent Nos. 7,237,634 (“’634 patent”) and
8,214,097 (“’097 patent”) unpatentable.1

The result in Paice v. Ford Motor:


In particular, we vacate the Board’s obviousness determinations
as they relate to the ’634 patent’s “electrical” claims
and remand for the Board to determine whether those
claims find written description support in the priority
applications and the references incorporated therein. We
affirm the Board’s obviousness determinations as to all
other claims.



Of the written description matter:


For claims to be entitled
to a priority date of an earlier-filed application, the application
must provide adequate written description support
for the later-claimed limitations. Id.; see also Progressive
Cas. Ins. Co. v. Liberty Mut. Ins. Co., 625 F. App’x 552,
558 (Fed. Cir. 2015). Here, Paice asserts that the ’817
application incorporates by reference Severinsky, which
itself provides the requisite written description support.5
The Board rejected that argument, concluding that the
’817 application does not incorporate Severinsky, and that
the electrical claim limitations lack written description
support in the ’817 application standing alone. The
threshold question on appeal, therefore, is whether the
Board’s incorporation ruling is in error. We conclude that
it is.

Incorporation by reference provides “a method for integrating
material from various documents into a host
document[] . . . by citing such material in a manner that
makes clear that the material is effectively part of the
host document as if it were explicitly contained therein.”
Advanced Display Sys., Inc. v. Kent State Univ., 212 F.3d
1272, 1282 (Fed. Cir. 2000). “To 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.” Id. Whether and to what extent material
has been incorporated by reference is a question of law
that we review de novo. Harari v. Lee, 656 F.3d 1331,
1334 (Fed. Cir. 2011). “[T]he standard of one reasonably
skilled in the art should be used to determine whether the
host document describes the material to be incorporated
by reference with sufficient particularity.” Advanced
Display, 212 F.3d at 1283.

The ’817 application expressly incorporates Severinsky
in the following passage:
This application discloses a number of improvements
over and enhancements to the hybrid
vehicles disclosed in the inventor’s U.S. Pat. No.
5,343,970 (the “’970 patent”) [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
the ’970 patent are applicable to the vehicles
shown herein as well.
J.A. 11,174 (emphasis added) (also appearing in the
issued ’634 patent at col. 10, ll. 40–47)



The issue:


The Board reached a contrary conclusion, however, by
relying on the subsequent sentence in the passage, which
states: “Where differences are not mentioned, it is to be
understood that the specifics of the vehicle design shown
in the ’970 patent are applicable to the vehicles shown
herein as well.” According to the Board, this sentence
limits incorporation to only those disclosures in Severinsky
that are not different from disclosures in the ’817
application. Because the Board found differences between
Severinsky’s disclosures related to the electrical limitations
and the ’817 application’s corresponding disclosures,
the Board determined that Severinsky’s disclosures are
not incorporated into the ’817 application. The Board’s
conclusion is incorrect.


How the CAFC reasoned that PTAB's interpretation was incorrect:



This statement provides an expedient way for
the applicant to describe the invention vis-à-vis Severinsky
without describing every feature of Severinsky that is
subsumed within the invention.
The sentence has no bearing, however, on the extent
of incorporation. It refers only to the applicability of
certain features of Severinsky’s invention to the ’817
application’s purportedly new and improved hybrid vehicle,
rather than to which textual portions of the Severinsky
document are incorporated in the ’817 application.
The applicability of a document’s disclosed features and
the incorporation of the document itself are distinct
concepts, and one does not imply the other. See Modine
Mfg. Co. v. U.S. Int’l Trade Comm’n, 75 F.3d 1545, 1553
(Fed. Cir. 1996) (“[I]ncorporation by reference does not
convert the invention of the incorporated patent into the
invention of the host patent.”); see also Fifth Generation
Comput. Corp. v. Int’l Bus. Machs. Corp., 416 F. App’x 74,
80 (Fed. Cir. 2011) (agreeing that certain prior art references
were incorporated into the host patent but disagreeing
“that every concept of the prior inventions is
necessarily imported into every claim of the later patent”);
S. Clay Prods., Inc. v. United Catalysts, Inc., 43 F. App’x
379, 383–84 (Fed. Cir. 2002) (finding incorporation notwithstanding
the host patent’s criticism of the incorporated
patent’s invention).



In addition to a general criticism of PTAB's interpretation of
incorporation by reference, the CAFC noted:


Even if the second sentence in the ’817 application’s
incorporation clause could be read as a narrow incorporation,
our holding in Harari v. Lee would foreclose the
Board’s conclusion. The patent application at issue in
Harari contained two incorporation clauses. In the first
clause, the application stated that “[t]he disclosures” of
two prior art applications “are hereby incorporate[d] by
reference.” Harari, 656 F.3d at 1335. In the second
clause, the application stated that only the “[r]elevant
portions” of the disclosures are incorporated. Id. We held
that the “broad and unequivocal language” of the first
clause “incorporates the entire disclosures of the two
applications,” and that the second clause’s narrower
language did not diminish the scope of incorporation.



Of Ford's argument on Harari, the CAFC noted


At oral argument before this court, Ford sought to distinguish
Harari on grounds that, in that case, there were
two incorporation clauses separated by several paragraphs
of text, in contrast to this case, where the two
sentences in dispute appear in a single incorporation
clause. Oral Arg. at 26:45–27:12, Paice LLC v. Ford
Motor Co. (No. 2017-1387), http://oralarguments.cafc.
uscourts.gov/default.aspx?fl=2017-1387.mp3. According
to Ford, the “juxtaposition of the two sentences back-toback”
in the ’817 application would inform a skilled artisan
that differences are not incorporated therein. Id. at
27:53–28:20.
Ford’s purported distinction of Harari on the basis
that the incorporation clauses at issue were separated by
text is not persuasive. We said nothing in Harari about
the proximity of the incorporation clauses, predicating our
holding instead on the “broad and unequivocal language”
of the first incorporation clause, and notwithstanding that
the incorporation “occurred during a discussion of” particular
teachings. And, while we agree with Ford that
Harari commands that incorporation clauses be read in
context, we disagree that the sentences at issue here limit
the scope of incorporation when so read. The ’817 application’s
incorporation passage provides no nexus between
the “differences” referenced in the second sentence and
the incorporation referenced in the first sentence, in
contrast to cases in which we have found incorporation to
be limited.



Also


Ford also asserted for the first time at oral argument
that our decisions in Callaway Golf Co. v. Acushnet Co.,
576 F.3d 1331 (Fed. Cir. 2009), and Husky Injection
Molding Systems Ltd. v. Athena Automation Ltd., 838
F.3d 1236 (Fed. Cir. 2016), support the Board’s ruling.
But, in both cases, we found that the incorporation clauses
at issue did in fact incorporate the relevant passages of
the prior art into the host documents. And, in any event,
those cases are inapposite



Of the remand



The written description inquiry is a highly factintensive
one that “requires fact findings this court is not
permitted to make.” Bilstad v. Wakalopulos, 386 F.3d
1116, 1126 (Fed. Cir. 2004); Union Oil Co. of Cal. v. Atl.
Richfield Co., 208 F.3d 989, 1000 (Fed. Cir. 2000) (noting
that “written description questions are intensely factual,
and should be dealt with on a case-by-case basis, without
the application of wooden rules”). We therefore remand
for the Board to determine in the first instance whether
the ’817 application, with Severinsky incorporated therein,
supplies the requisite written description support for
the ’634 patent’s electrical claims. In other words, the
Board must consider Severinsky for that purpose on
remand.7



UPDATE. March 20, 2018

The PatentlyO blog has a post of relevance to
"incorporation by reference."
Consolidating Briefs and Word Limits , concerning Indivior v. Dr. Reddy’s (Fed. Cir. 2018)


One problem with the Court’s approach here is that it made no determination as to whether the incorporation-by-reference was problematic in this situation. In particular, Federal Rule Appellate Procedure 28(i) permits incorporation by reference in consolidated cases involving multiple appellants or appellees. In a parallel case, the 8th Circuit indicated that incorporation-by-reference in this situation does not count toward the word-limit. In re Target Corp. Customer Data Security Breach Litig., 855 F.3d 913 (8th Cir. 2017) (“Nothing in Rule 28(i) suggests that parts of briefs adopted by reference should be treated as literally incorporated into a party’s principal brief for wordcount purposes.”). In Microsoft Corp. v. DataTern, Inc., 755 F.3d 899 (Fed. Cir. 2014), the Federal Circuit barred a party from incorporating-by-reference (finding the incorporated argument waived). However, that case did not fall under R. 28(i) and so is distinguishable from this situation.