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Failure to Properly Incorporate by Reference Material from Parent Patent Rendered Grandchild Patent Invalid

06-1266
November 07, 2007

Decision icon Decision

Last Month at the Federal Circuit - December 2007

Judges: Lourie (author), Newman (dissenting), Linn

[Appealed from: S.D. Cal., Judge Brewster]

In Zenon Environmental, Inc. v. U.S. Filter Corp., Nos. 06-1266, -1267 (Fed. Cir. Nov. 7, 2007), the Federal Circuit reversed the district court’s judgment of no invalidity, finding the patent at issue invalid. In so holding, the Federal Circuit found that a particular “gas distribution system” claimed in U.S. Patent No. 6,620,319 (“the ’319 patent”) was not disclosed in its grandparent patent, U.S. Patent No. 5,910,250 (“the ’250 patent”), and that the ’250 patent failed to properly incorporate that feature by reference from its own parent, U.S. Patent No. 5,639,373 (“the ’373 patent”). The Court therefore held that the ’319 patent was not entitled to the priority date of the ’373 patent, and was in fact anticipated by the ’373 patent. The Court declined to reach the cross-appeal seeking reversal of the district court’s grant of SJ of noninfringement.

Zenon Environmental, Inc. (“Zenon”) owns the ’319 patent, entitled “Apparatus for Withdrawing Permeate Using an Immersed Vertical Skein of Hollow [Fiber] Membranes.” The ’319 patent relates to the field of water treatment and filtration systems and is directed to “relatively large systems for the microfiltration of liquids.” The ’319 patent discloses the use of a vertical skein and all of the asserted claims require a particular type of gas distribution system. The ’319 patent is the sixth patent to issue from a series of connected applications—including two CIPs and a provisional application—that were filed by the same assignee.

Zenon filed suit against US Filter Corporation (“US Filter”) asserting infringement of three of its patents. Following the district court’s claim construction ruling, Zenon conceded that the accused products did not infringe the asserted claims of the ’319 patent. After a bench trial on validity, the district court concluded that US Filter failed to prove that the ’319 patent was invalid by clear and convincing evidence. Integral to the district court’s holding was the finding that the chain of priority was not broken between the ’319 patent and the earliest filed application in the series, which issued as the ’373 patent. Because of that finding, the district court rejected US Filter’s argument that the ’373 patent was prior art and that its disclosure anticipated the asserted claims of the ’319 patent.

On appeal, US Filter argued that one of the intervening patents, the ’250 patent, did not describe the gas distribution system claimed in the ’319 patent, but instead claimed an entirely new and different gas distribution system. The Federal Circuit agreed with US Filter that the district court erred by concluding that the ’319 patent was entitled to the priority date of the ’373 patent and, thus, clearly erred in concluding that the ’319 patent was not anticipated by the ’373 patent. The Court reasoned that “in order for the ’319 patent to be entitled to priority from the ’373 patent, continuity of disclosure must have been maintained throughout a chain of patents from the ’373 patent leading up to the ’319 patent.” Slip op. at 11.

The Federal Circuit noted that because the parties had stipulated that the ’373 patent disclosed each and every element of the ’319 patent, the sole question before the district court was whether the intervening ’250 patent maintained the continuity of disclosure by incorporating by reference the gas distribution system disclosed in the ’373 patent, entitling the ’319 patent to an earlier filing date. The Court explained that the incorporation by reference determination is a matter of law, which is reviewed de novo using the reasonable person of ordinary skill in the art standard.

The Federal Circuit disagreed with the district court’s conclusion that the gas distribution system disclosed in the ’373 patent was incorporated by reference in the ’250 patent. Although the ’250 patent stated that “[further details relating to the construction and deployment of a most preferred skein are found in the parent U.S. Pat. No. 5,639,373 and in Ser. No. 08/690,045, the relevant disclosures of each of which are included by reference thereto as if fully set forth herein,” the Federal Circuit agreed with US Filter that the gas distribution system disclosed in the ’373 patent was not a detail that relates to the construction and deployment of a vertical skein, and thus was not incorporated by reference by this language. First, the ’373 patent makes clear that the vertical skein and the gas distribution system are two separate and distinct elements of the claimed invention of the ’373 patent. The ’373 patent expressly states that the vertical skein consists of three distinct elements: fibers, a pair of headers, and a permeate collection means. Thus, the Court concluded, by definition, that a skein does not include a gas distribution system.

Second, the Court noted that throughout the ’373 patent, the inventors used the specific term “gas-scrubbed assembly” to describe the combination of a skein and a gas distribution means. The Court concluded that, as such, a reasonable person of ordinary skill in the art would understand that the gas distribution system covered by the ’373 patent is not a detail relating to the construction and deployment of a vertical skein, but rather is a separate and distinct element of the invention, and thus was not incorporated by reference in the ’250 patent.

Third, the Court reviewed the ’250 patent disclosure and concluded that the ’250 patent disclosed a gas distribution system different from that disclosed in the ’373 patent. The Court hypothesized that, in filing the ’250 patent application, the gas distribution system disclosed in the ’373 patent was replaced with a different gas distribution system, but, when the ’319 patent application was filed, the original gas distribution was restored. Thus, the chain of continuity was broken.

Fourth, the Court distinguished the incorporation by reference language used in the ’250 patent from the language used in Cook Biotech Inc. v. ACell, Inc., 460 F.3d 1365 (Fed. Cir. 2006), because the plain language in Cook Biotech identified the particular procedure as incorporated. In contrast, the Court found that the ’373 patent’s gas distribution system was not covered by the chosen incorporation language. Thus, the language in the ’250 patent was not sufficiently clear to incorporate the ’373 gas distribution system.

Finally, the Court rejected Zenon’s contention that the skeins cannot be deployed without the ’373 patent’s gas distribution system and that, therefore, the gas distribution system must be a detail relating to the skein. The Court found that contention to be belied by claims 1-9 of the ’373 patent, which included a skein, but not a gas distribution system.

Accordingly, the Federal Circuit concluded that because the ’250 patent failed to incorporate by reference, with sufficient particularity to one reasonably skilled in the art, the gas distribution system disclosed in the ’373 patent, a lack of continuity of disclosure thus existed in the family chain and the ’319 patent was not entitled to the filing date of the ’373 patent. Because the ’373 patent was filed more than one year prior to the filing of the ’319 patent and it was undisputed that the ’373 patent disclosed each and every limitation of the claims of the ’319 patent, the Court found the ’319 patent invalid as anticipated by the ’373 patent. On a closing note, responding to a criticism by the dissent, the Court stated that “patent draftsmanship is an exacting art, and no less care is required in drafting an incorporation by reference statement than in any other aspect of a patent application.” Slip op. at 18 n.3.

In a dissenting opinion, Judge Newman criticized the majority for converting facts into law, ignoring the findings of the district court as well as the agreed and undisputed facts, and misapplying the rules of incorporation by reference. Judge Newman accused the majority of turning the district court’s factual findings regarding what would be reasonably conveyed to a person skilled in the relevant art into a question of law, thereby avoiding having to determine whetherthey were clearly erroneous. Finally, Judge Newman argued that this result brings uncertainty into what was a routine practice (incorporation by reference) and casts doubt on its reliable use in the future.