Paice LLC, The Abell Foundation, Inc., v. Ford Motor Company (Fed. Cir. Feb. 1, 2018)

In Paice LLC, The Abell Foundation, Inc. v. Ford Motor Company,  the Federal Circuit vacated the Patent Trial and Appeal Board’s (PTAB) obviousness determination following inter partes review (IPR) proceedings related to patents for hybrid vehicles.  The decision was the latest in several legal disputes between Ford Motor Company, Paice LLC, and Abell Foundation Inc. (a Baltimore philanthropic organization and Paice investor).

A key issue in the case was the priority date for the patent claims.  The asserted prior art preceded the patent’s application date, but the patent claimed priority to an earlier-filed application (the “’817 application”), which predated the prior art.  The court noted “[f]or 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.”

The ’817 application itself did not provide written description support for the asserted claims.  But it purported to incorporate another patent (“Severinsky”) by reference, and Paice asserted that the ’817 application, with Severinsky included, provided the necessary written description support for the claims at issue.  Thus, a critical issue was the extent to which Severinsky was incorporated by reference.

The ’817 application had two adjacent sentences concerning Severinsky.  The first clause purported to incorporate Severinsky by reference.  The second clause indicated that the invention was based on, but offered differences from, Severinsky.  The PTAB held that—based on the second clause—Severinsky was only incorporated by reference to a limited extent, and not in its entirety.  Based on that conclusion, the PTAB held that the ’817 application lacked the necessary written description support for the claims at issue.  Therefore, the patent claims at issue could not claim priority to the ’817 application, and were invalid over the asserted prior art.

The Federal Circuit reversed, concluding that the language in the ’817 application was “plainly sufficient” to incorporate Severinsky in its entirety.  The court’s analysis emphasized the scope of the language’s incorporation function: it distinguished language that refers only to the applicability of certain features of an invention versus that which incorporates textual portions of a document.  The Federal Circuit described the nuances between the two, asserting that “[t]he applicability of a document’s disclosed features and the incorporation of the document itself are distinct concepts, and one does not imply the other.”  That one sentence incorporated the entire disclosure and the second sentence was more narrow did not “negate or otherwise limit the broad incorporation effectuated by the first sentence.”

The Federal Circuit remanded the case for the Board to determine whether the ’817 application, with Severinsky incorporated therein in its entirety, provided sufficient written description support for the challenged claims.

In a separate portion of the opinion, the Court also addressed whether the Board adequately explained its rationale for finding certain other claims invalid.  The Federal Circuit has heard numerous appeals from the PTAB in which the appellant argued that the PTAB failed to create an adequate record identifying its findings and conclusions.  The Supreme Court held in Securities & Exchange Commission v. Chenery Corp., 318 U.S. 80 (1943) that administrative agencies must provide a reasoned basis for their decisions.   In previous appeals, the Federal Circuit has remanded IPR decisions to the PTAB to meet this standard.  In this case, however, the Federal Circuit held that the PTAB satisfied Chenery, in part relying on the fact that 25 different IPRs are pending between the parties concerning the same basic technology, and that the PTAB had articulated a sufficient rationale on related points in some of these related actions.  The PTAB had also referenced relevant portions of Ford’s briefing, which “explain[ed] how the prior art discloses the relevant claim limitations.”  On these grounds, the Federal Circuit affirmed.

The Board had also made certain claim construction rulings, and found that yet other claims were obvious over various combinations of prior art references based on those claim constructions.  The Federal Circuit affirmed those rulings and the PTAB’s related claim constructions.

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