Incorporation by reference is not sufficient to satisfy specific reference to each prior-filed patent application to be entitled to an earlier priority date (Droplets, Inc. v. E*Trade Bank (887 F.3d 1309 (2018)). This appeal to the Federal Circuit stems from a dispute between Droplets, Inc. and E*TRADE Bank, over a patent (U.S. Patent No. 8,402,115 (“the ’115 Patent”)) owned by Droplets. At issue is the effective filing date of Droplets’ ‘115 patent.

The ‘115 Patent had a claim of priority to another patent (U.S. Patent No. 7,502,838 (“the ‘838 Patent”)), which contained a priority claim to U.S. Provisional Application No. 60/153,917 (“the ‘917 Provisional”), and to an intervening patent (“the ’745 Patent”). The claim of priority and a cross reference to related documents were included in the ‘115 patent specification, col. 1, ll. 5-24, as follows:


The present application is a continuation of allowed U.S. patent application Ser. No. 10/720,728, entitled “SYSTEM AND METHOD FOR DELIVERING REMOTELY STORED APPLICATIONS AND INFORMATION” filed on Nov. 24, 2003 now U.S. Pat. No. 7,502,838, the di[s]closure of which is hereby incorporated by reference in its entirety.


Priority is herewith claimed under 35 U.S.C. § 119(e) from copending Provisional Patent Application No. 60/153,917, filed Sep. 14, 1999, entitled “METHOD AND SYSTEM FOR DELIVERING APPLICATIONS IN CLIENT/SERVER ENVIRONMENT,” by Louis M. Franco et al. The disclosure of this Provisional Patent Application is incorporated by reference herein in its entirety.

E*TRADE filed a petition for IPR in 2014 challenging claims 1-25 of the ’115 Patent by asserting that the ’115 Patent claims priority only to the ’838 Patent and thus is only entitled priority to its November 24, 2003, filing date. Based on that date, E*TRADE relied on prior art that published after the 1999 filing date of the ‘917 Provisional referenced in the application. Droplets argued in response that the ’115 Patent is entitled to the filing date of the ’917 Provisional (i.e., September 14, 1999) because the ’115 Patent’s priority claim incorporates the ’838 Patent by reference. The Board found that (1) the ’115 Patent’s incorporation by reference of the ’838 Patent failed to qualify as a “specific reference” to either an earlier filed patent (i.e., the ’745 Patent ) or the ’917 Provisional and, thus, the ’115 Patent failed to enumerate a priority claim sufficient to avoid the prior art E*TRADE asserted; and (2) incorporation by reference is insufficient to satisfy a patentee’s burden of providing notice of the asserted priority date under 35 U.S.C. § 120.

The court confirmed that it was undisputed that the Droplets ‘115 patent properly claimed priority from the ‘838 patent, and the parties agreed that the ‘838 Patent contained a valid priority claim to the ‘917 provisional. The question on appeal was whether the ’115 Patent is entitled to the ’917 Provisional’s filing date by virtue of the language in the ’115 Patent that incorporates the ’838 Patent by reference.

Droplets argued that the Board erred in holding that “Droplets failed on a technicality: it ‘incorporated by reference’ a critical link in the priority chain instead of mechanically reproducing the same exact words in the patent itself.” Droplets also argued that the Board incorrectly concluded that a priority claim falls outside the scope of material that can be incorporated by reference. E*TRADE countered that the Board correctly found that incorporation by reference is not sufficient to meet the “specific reference” requirement in establishing priority, that the court’s case law interprets 35 U.S.C. § 120 strictly, and that, consistent with § 120 the governing regulations and the Manual of Patent Examining Procedure (“MPEP”) allow incorporation by reference only for limited purposes. The Director intervened and defended the Board’s decision in part by stating that (1) a patent must contain “specific reference” to a previously filed application to be entitled to that application’s earlier filing date, and (2) incorporation by reference cannot satisfy the specific reference requirement.

In determining that the Board’s decision was correct, the court agreed with the Director in that (1) “specific reference” is required to claim priority under 35 U.S.C. §120 and, because the ’115 Patent contains specific reference only to the ’838 Patent, the’115 Patent’s earliest effective filing date is November 24, 2003, the filing date of the ’838 Patent; and (2) incorporation by reference cannot satisfy the “specific reference” requirement of § 120.

The lesson to learn from Droplets is to make specific reference to each and every document in a priority claim to ensure an application is entitled to its earliest filing date. A drafter should err on the side of caution and include all details in a chain of priority even if the task may seem arduous.