What Will Prior User Rights Mean for Patent Litigators?

By Gene Quinn
December 5, 2011

On September 16, 2011, U.S. patent laws embarked upon the most significant overhaul of the patent laws ever; the America Invents Act was signed into law by President Barack Obama. The new patent law will be phased in over time, some coming on line immediately, still more coming on line shortly after enactment, more yet coming online on September 16, 2012, and the largest piece being phased in on March 16, 2013. Meanwhile, the United States Patent and Trademark Office will begin to implement rules associated with the AIA, but are already well underway with new substantive rules rules relating areas not impacted by the AIA, such as Appeals and Reexaminations, for example.

By the time we get to March 16, 2013 the day to day patent practice, the rules and litigation of patents will be quite different than what we have today. Thankfully we have at least a little while to figure things out, but not as long as you might expect, but save that topic for another day. One of the things that has been much talked about in many corners since the enactment of the AIA is the inclusion of prior user rights, which was done at the last minute without much of any debate or discussion.  While there are numerous pitfalls for the unwary hidden within the AIA, one particularly thorny issue is the issue of prior user rights.

Supporters of prior user rights say that they make sense and the detractors (of which I am one) are making a mountain out of a mole hill. They say that prior user rights are likely never to come up and are quite limited in nature. For those that actually believe that prior user rights are insignificant and don’t deserve discussion you have permission to keep your head firmly planted in the granular silicon dioxide at your feet. Everyone else keep reading.

Prior user rights is a defense to patent infringement that will prevent those who have previously used the patented invention from being liable for patent infringement, assuming the defense can be successfully proved. Essentially, you cannot sue one who has prior user rights for patent infringement because they have been using the patented innovation as a trade secret prior to it being patented. What the means, however, is that the law now favors the party that kept the trade secret over the party that disseminates the information for the benefit of the public.

Enter section 5 of the America Invents Act, now codified at 35 U.S.C. 273. The section titled “Defense to infringement based on prior commercial use,” pertains to all inventions except those that were at the time of invention owned or subject to an obligation of assignment to either an institution of higher education, or a technology transfer organization whose primary purpose is to facilitate the commercialization of technologies developed by one or more such institutions of higher education. Confused? Don’t be. Prior user rights are such a bad idea the only way that it could get through the intense lobbying to derail it was to include an exception relative to university technologies. Query: if prior user rights is so wonderful why was it necessary to carve out a university exception?

The prior use defense can be raised if a person, acting in good faith, commercially used the subject matter in the United States and the commercial use occurred at least 1 year before the earlier of either a patent application filing or disclosure to the public. Further, the defense is a personal defense that cannot be conveyed to others, unless it is acquired through a bona fide transfer of the entire enterprise or line of business to which the defense relates. Still further, the defense will only apply to those sites where the commercial use was is in use before the later of the effective filing date of the claimed invention or the date of the assignment or transfer of such enterprise or line of business.

Prior user rights only becomes an issue when the prior use is a secret use because if it were not a secret use it would be prior art and otherwise capable of invalidating the claim being used to establish patent infringement. Given that a prior user rights defense will need to establish that there was, in fact, infringing activity it seems likely that most patent litigators would advise clients against asserting the defense, admitting to activity commensurate with infringement (depending on timing) and basically going all-in with an untested defense. If it fails and the activity were continuing after the patent issued then the very establishing of prior use would be an admission to infringement. The thought of all eggs in one basket with the basket being dropped from the top of the Empire State Building comes to mind. Not a good idea. Thus, prior user rights will almost certainly only be asserted where there is a very good reason to believe that the use was, in fact, secret and an invalidity defense would not be useful.

But is anything ever really a “trade secret”? History, as well as human nature and corporate culture, suggests that companies typically want to argue they have a trade secret right up until they don’t want it to have really been a trade secret, at which point they point to all the things that were not done that could have reasonably been done to keep a secret. In other words, trade secret law has always been a delicate balance between protection and knowing that you can always do more, which has had its advantages from time to time in the cake and eat it too department.

Before I tie this all together allow me to also point out four more things. First and foremost, the person or entity asserting a prior user rights defense has the burden of establishing the defense by clear and convincing evidence. Second, the person or entity asserting the defense cannot have derived what was used from the patentee or persons in privity with the patentee. Third, if the commercial use were abandoned there is no prior user rights defense. Finally, unreasonable assertion of a prior user rights defense requires the finding that the case is “exceptional,” which almost certainly means the losing infringer will pay the legal fees for the victorious patentee.

Do you get the sense for the number of issues that will be interjected into a standard patent infringement litigation if and when the defendant raises a prior user rights defense? What is that going to mean for discovery? It seems to mean that the defendant that raises a prior user rights defense will be opening themselves up to all kinds of sensitive discovery requests that typically don’t arise during a typical patent infringement litigation, if there is such a thing.

In essence, every patent infringement litigation that raises a prior user rights defense will become a trade secret litigation within a patent infringement case. Think of all the things that the patentee will be able to ask about the internal protocols, who had access to what, where, when, why and how? Was it really a trade secret or not, which may be a double edge sword for the patentee — unless the Federal Circuit were to ultimately rule someday that it is possible for something not to be a trade secret because it was briefly disclosed but not prior art because it wasn’t reasonably findable, but let’s save that hornets nest of a law school essay exam for another day.

Think of all that will  easily be fair game in discovery.  The defendant has the burden of proof, and they will be the ones in control of all the evidence.  This means Judges are going to have to allow for liberal discovery on such a critical issue, particularly where the evidence is uniquely held by the defendant and cannot otherwise be obtained by the patentee.

Think about all the questions and requests that will deal with derivation? If you thought you were going to get away with not having to document conception and reduction to practice in a first to file era think again! Even if you are not going to document conception and reduction to practice just in case you need it for a derivation proceeding at the USPTO or in responding to a 102(b) rejection, you had better have particularly detailed evidence if you are going to ever consider relying on prior user rights. And obviously you are going to have to turn over those pristine notes to the patentee so they can probe for themselves who had what when.

Then there is the question about whether what would have otherwise been a prior user was abandoned and whether the defense was raised unreasonably. Raised unreasonably? Have you read any Answers to patent infringement complaints lately? Not only is everything denied, or deferred because there is not sufficient information at the moment to confirm or deny, but every defense that can ever be conjured up is listed. Can’t you just see some of those, shall we say over zealous litigators, just throwing a prior user rights defense into every Answer? Of course you can and you know it is likely to happen, if not virtually guaranteed.  After all, the overwhelming percentage of patent litigations settle anyway.  See Patent Litigation Statistics: 1980 – 2010.

But why would any litigator raise prior user rights as a defense not knowing? Can you imagine the malpractice involved if you don’t raise it and it could have been raised? Well maybe I’ll raise it later after there is at least some reason to suspect it is possible after I’ve done my own due diligence. Will the Judge allow you to raise it after you have reason to raise it reasonably? Who knows? We can level guesses based on how district courts handle the Federal Civil Rules of Procedure, but we won’t know in the prior user rights scenario for quite a while. There have never been any prior user rights cases in the United States, and the defense is only available to be applied against any patent issued on or after September 16, 2011. So far we have about 10 weeks of patents issued that could have the defense raised. It will be a while before we have any law on this issue.

What are patent litigators to do? Clients aren’t going to be happy if you raise the defense and it is later determined to have been unreasonably raised, but clients aren’t going to be happy if you don’t raise it and could have. Let’s face it, if you lose clients won’t be happy. So you can, and should, make sure you have your malpractice policy paid up, but no malpractice policy covers the enormous damage that bad patent lawyering or bad patent litigating can cost these days. So my advice is to make sure that you get the client to sign off on the strategy. Explain the pros and cons of raising versus not raising the defense and the possibility that it might not be allowed to be added — no matter how unlikely you think that is.  Then let the client decide.

The AIA is going to present numerous opportunities to consult strategically with clients, which also means that there are going to be a lot of pitfalls and a ton of possible Monday morning Quarterbacking.  I have a suspicion that the prior user rights defense is going to be a trap that ensnares patent litigators because of the several catch-22 decisions that await unsuspecting clients.

So litigators, do yourself a favor.  Make sure you thoroughly discuss what your clients need to be doing from a proactive position to make sure they have the evidence necessary to raise a prior user rights defense and then hope you never have to use it.  If you do, set out all the unsavory details as if you are the patient and the pharmaceutical rep is listing out all the hideous things the drug you were just prescribed could do to you.

For goodness sakes, for your own good and the viability of your firm, make sure you have all those CYA communications signed, counter-signed, witnessed and stored in a climate controlled environment with a constant, reasonable temperature and humidity controls.  Because we all know the stakes for making a mistake are only getting higher, we live in a world where no one accepts personal responsibility, and the things your clients are going to need to do to even reasonably make a prior user rights defense will be costly to implement on a widespread basis.  That means when things go wrong it will be the lawyers who are at the short end of the pitch-fork.  Don’t let that be you!

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 33 Comments comments.

  1. EG December 6, 2011 5:35 am

    Gene,

    Prior user rights was a bad idea when it came in with 35 USC 273, and its a very bad idea to expand it now in the AIA (Abominable Inane Act). It really only benefits the Goliaths in the computer/software and financial industry who are too lazy and uninnovative to bother with getting patent rights.

  2. Toronto December 6, 2011 8:46 am

    Thanks for the article, Gene. Another thing I think is very confusing is subsection (e)(5)(B) (the exception to the university exception, “could not have been undertaken using funds provided by the Federal Government”)? Does that refer to subject matter that is excluded from federal funding, like some stem cell research? Or does it refer to a situation where the research that produced the invention was not covered by federal funding? If the latter, people who have worked in university labs are well aware that labs often receive funding from multiple sources, sometimes both governmental and non-governmental, and that there is often some discretion allowed in funding different projects or experiments from the different sources. What if just one of the ‘critical’ experiments was performed using shared departmental equipment that was purchased with federal funds some years ago? What if one of the researchers was a postdoc or grad student who was being paid (or partially paid) from a federal grant (like a graduate program training grant)? This sort of thing could take a very long time to sort out, to say the least.

  3. Anon December 6, 2011 9:05 am

    At first I thought likewise, EG.

    But then, I took a closer look.

    It is not that prior user rights protect the lazy and uninnovative. Not at all. The benefactor of the secret use still had to come up with that use.

    What Prior User Rights do protect is those who who rather ply in Trade Secrets than contribute to the patent system. The benefactor of the secret use just did not have to share that use, and they still reap the rewards of others who would share that use.

    After all, to use the Prior User “Rights” defense, one does have to prove (with C & C) that one did posess – and use – the claimed invention a year prior to the patent filing in a public manner.

    What I have not yet seen explained anywhere by anybody is why this “defense” is labeled a personal defense rather than what in any other manner is a patent killer. The defense must include the public as a ceipient, and yet it is only the entity that plies the Prior User Defense that gets by the Patent Holder’s restrictions. Clearly, if the public is involved more than a year prior to the patent application, then the patent has taken something out of the public domain.

    So my qualm is mainly with the public and a “bad” patent on the personal use side of the coin in the first instance, and in the second instance the peception (if not in fact the actuality) that patent law has been writtent to advance Trade Secrets. It is not that Trade Secrets are of themsleves “bad,” but promoting Trade Secrets is not within the mandates of patent law. I have not yet come to a conclusion on the degreee of this seemingly ultra vires and at cross purpose provision means in regards tot the constitutionality of the law, but supposedly Congress did investigate and approve this as meeting constitutional scrutiny.

  4. EG December 6, 2011 9:30 am

    “What I have not yet seen explained anywhere by anybody is why this “defense” is labeled a personal defense rather than what in any other manner is a patent killer.”

    You raise an interesting question, anon. As noted by Paul Morgan in the article I wrote on the Teva Pharmaceuticals decision, “new” 102 under the AIA does away with “old” 102(g)(2) as a novelty bar (which would also leave you to believe it should not be treated as “prior art” under “new” 103, but that assumes the courts agree with Paul’s position). But perhaps the answer is the defense has to be “personal” to the prior user, otherwise the omission of “old” 102(g)(2) as a novelty bar (and likely no longer “prior art” under “new” 103) would make no sense, i.e., why grant a “prior user” defense if the prior use qualifies as a novelty bar under “new” 102. That may seem weird to you, but then again the AIA (the Abominable Inane Act) is very weird to me and others.

  5. American Cowboy December 6, 2011 10:06 am

    Another thought:
    In settlement negotiations, the defendant will say something like “I did so and so more than a year before the filiing date of your patent application. Mr. Patentee, would you rather that I assert that I did them publicly and therefore invalidate your patent or should I assert that they were not public but give me a prior user defense?” As the defendant, I would prefer the latter in many cases, but the patentee can then go harass third parties with the patent, giving us a duopoly.

    Another though yet:
    Since the defense will only apply to those sites where the commercial use was is in use before the later of the effective filing date of the claimed invention or the date of the assignment or transfer of such enterprise or line of business, what happens to the infringer who has a legitimate prior user defense, but who has added new infringing capacity that is not entitled to the defense? Does he raise the defense, thereby protecting his protected turf but admitting liability on the expanded use?

  6. Gene Quinn December 6, 2011 10:29 am

    Toronto-

    You put your finger on something that is worded extremely poorly. Those who were involved in lobbying for the legislation have told me that the wording relative to funds could not have been used was intended to address the stem cell situation where federal funding is prohibited. Of course, federal funds can be used if Congress says so, so the way they worded it is just terrible. Federal funds can always be used if Congress allows it.

    The university exception is also not as broad because, as you suggest, universities frequently get funding from a variety of sources. Just another example of Congress not really understanding the industry they are regulating really. But how and why the universities didn’t protest I’ll never know.

    The making of legislation has little or nothing to do with merit, at least as far as I can tell.

    -Gene

  7. Paul F. Morgan December 6, 2011 10:43 am

    Thank you for clearly setting forth the many good reasons why the prior commercial user provision of the AIA will rarely need to be asserted and will be even more rarely sucessfully asserted. [Note also tthat the present prior user statute already covers all business method patents yet has NEVER been successfully used.]
    However, it is the COMBINATION of this statute with the alleged elimination in AIA 102(a)(1) of the present law [and strongly expressed public policy] as to secret commercial use being an equitable “forfeture” to obtaining patents [under the Metallizing Engineering doctrine] that is the real problem, and public harm. That combination [if AIA 102 is so interpreted] would undesirably both protect and reward keeping technological progress secret from the public until that secret is finally about to be exposed yet still then be able to file patent applications on it, to add a long period of patent protection on top of a long period of trade secret protection. Even the Sup. Ct. has made it clear that one should not be able to benefit from both IPL protections and must make an election between them.

  8. Paul F. Morgan December 6, 2011 11:08 am

    Re: the above question as why this AIA prior commercial user “defense” is labeled a personal defense rather than what in any other manner is a patent killer”:
    Because [just as in the present statute] 35 USC 273 IS purely personal, and purely a defense – it is expressly stated in the statute itself that it is useable solely by the secret prior commercial user itself and its own products customers. Furthermore, this statute expressly states that it cannot invalidate any patent. It does not and cannot prevent any patent from being asserted against anyone else unless they also can meet the difficulty and danger of proving prior secret commerical use of the same invention.
    As Gene notes, this statute has no value for prior PUBLIC use, which is much more effective conventional prior art and also does not have the statutory cost-penalties for losing that this statute does.

  9. Michael December 6, 2011 11:42 am

    Gene,

    Is it really necessary to admit to activity commensurate with infringement in order to take advantage of the prior user rights defense? Is it possible to argue that the prior commerical use is non-infringing while arguing that, even if infringing, the prior commercial use occurred at least 1 year before the earlier of the patent application filing or disclosure to the public?

  10. Gene Quinn December 6, 2011 11:56 am

    Michael-

    You can certainly argue that the use is non-infringing, but that is a dangerous argument to make. It seems extremely likely that you would have to raise the defense and provide discovery prior to the outcome of the Markman hearing, so you wouldn’t know how the claims will be interpreted. You might think it is non-infringing but based on the outcome of a Markman hearing you might be wrong. Then all your defense could be used against you as an admission. It is a really dangerous argument to make unless you know it is going to prevail. Yet, I have a suspicion that zealous litigators will raise it in every case as part of the kitchen-sink defense strategy.

    -Gene

  11. Anon December 6, 2011 12:13 pm

    Paul,

    Yes I am aware that the Statute is express in its designation of the defense as personal

    Because [just as in the present statute] 35 USC 273 IS purely personal, and purely a defense – it is expressly stated in the statute itself that it is useable solely by the secret prior commercial user itself and its own products customers

    My point is why is it personal? As I pointed out, any such successful defense means that something that is affected with public interest has been made into a patent right, and only a special person has what – by right – the entire public should have. Don’t forget tha tthe basis of the 273 provsionis something used in a manufacturing or commercial process, which means that whatever it is, it has been out in the public at least a year before the patent application was even filed. What should happen is that if the Prior User Defense is successful (and let’s not forget that the defense must be proven by C &C), then the Patent should be revoked instantly – for everyone’s benefit because it has just been proven that the patent should not have been granted in the first place. The whole notion of making the defense special and personal is what is irksome. To me, this indicates that if you are large enough, powerful enough and document your “stuff” with the intent for Trade Secret, you get a free pass. You get to ride o nthe coattails of someone else’s patent, a patent that you have just proven should not have been granted in the first place.

    Not only does this reward the Trade Secret route, it penalizes society by making them adhere to patent rights that should not exist.

    My point is precisely that the express statutory provision just seems so wrong!

  12. Paul F. Morgan December 6, 2011 2:17 pm

    Anon, I would have to respectfully disagree with that, as have the courts, consistently. The whole point of a patent system to to give its limited protection as a reward for advancing the useful arts by a public disclosure of the invention in the patent. What you are suggesting would reward those who prevent public knowlege of inventions [and further progress based thereon] by keeping them secret. If secret commercial use could invalidate patents of others, it would prevent well deserved patent rewards for those who independently re-invent the same invention and DO disclose it to the public. Furthermore, throughout ancient history, before patent systems, there are many stories and examples of inventions maintained as trade secrets that became perminantly lost to civilization.

  13. EK December 6, 2011 2:28 pm

    I’m not sure why people are discussing trade secret when the statute merely says “commercial use” and doesn’t distinguish between public or secret use. And yes, I see why it is only a personal defense if it is a first to file system–isn’t that the point or am I missing something? Someone else may obtain the patent but if I made a commercial use of the invention at least one year prior to their application, I should have a personal defense and not be penalized just because I didn’t participate in the land grab. Am I missing something?

  14. Stan E. Delo December 6, 2011 2:32 pm

    Thanks for the very informative article Gene- Good grief, what a huge mess! I sure hope Paul M is right, and that PUR’s issues will be extremely rare to virtually non-existent. What sorta scares me a bit though, is what the courts will make of the issues, given their recent tendencies to go in who knows which directions? My first thought was that in using a PUR defense, the defendent is demonstrating in no uncertain terms that the invention described in the patent is in fact not truly new and novel, and logic would seem to suggest that the patent describing the invention is objectively invalid, despite what this confused legislation has to say or not in the matter.

    I can imagine a prior user getting their personal exception from infringement successfully established in court, whereupon a third party could come along later and point out that the Emperor isn’t wearing any clothes, and that the patent is thus invalid because it was not new and novel when the patent right was awarded. (Not a Real invention) Am I missing something here that would prevent this scenario?

    Stan~

  15. Anon December 6, 2011 5:43 pm

    EK,

    Do you understand the view expressed by Stan? The point simply is that there should be no such personal “right” granted to something that has been in the public domain. And to prove Prior User Rights, you need to show the invention in the public domain (used in commerce). You talk about not being penalized because you don’t want to play the game, but that’s just like sharing the reward of victory with everyone, even those who do not want to play the game. That makes no sense. There is both a carrot and a stick tothe patent world. You want carrots for all. But in such a system, why go through the pains of development AND sharing? Why not just develop and keep as secret as possible? Let someone else front the patent keep out game. Let that someone else clear out any other competitors. Let that someone else pay for the prosecution costs and pay for the enforecment costs. Free Ride!

    Stan,

    Do you understand that the law was written expressly so that such objective evidence (objective as in meeting the high C & C standard) is not allowed to be used to show what it plainly does show – that at least one member of the publlic was using the invention – in public – more than a year prior to the patent application.

    I think you grasp quickly how unfair that is to the public at large.

    Clearly, any such proof – under any normal understanding of patent law would raise an insurmountable patent bar. Yet the law is written to not only NOT allow the obvious but to protect the party that would maintain that prior knowledge as a Trade Secret.

    Paul, I do not think you are reading my comments correctly – it is the law as it is now that promotes Trade Secret behavior. Nothing of what I propose goes in that direction. I am opposed to that direction. The law NOW does reward those who would not share. That’s the entire point of Prior User Rights – allowing someone who did not want to share to escape the consequence of that action by excusing them from the rights of soemone who did want to share.

    Your historical view of the courts leaves out the elephant in the room – that the courts did not countenance Prior User Rights. – There was no such thing as a “get out of infringement free” card exactly because if you did not want to share (play in the patent game) you placed everything at risk to those who did want to share.

    With AIA, this is no more. As I have posted previously, with AIA, there is a reward for not sharing in that you get to have free-rider effects of someone else’s patent (and as has been explained, a patent that given the public use more than a year prior should not even exist). The free-rider effects include not only someone else’s patent keeping yet others out, but the AIA even grants your customers a patent-exhaustion effect on the patentee’s rights. That’s right – you as the free-rider get the money from the sale, and the patent holder gets his patent rights exhausted.

    Please re-read my post at 11 because I do not think you are understanding what I am saying.

  16. Stan E. Delo December 6, 2011 9:46 pm

    Anon-
    I think this is just a very large carve-out for large corporations to be able to avoid having to actually have to pay the cost for patenting their *inventions* for the benefit of us all. Actually it is a double-doom scenario for guys like me, as I might have spent upwards of $12,000 for my application in good faith, only to discover that someone else had Not, and could both escape responsibility and invalidate my patent rights at the same time? They pay zero, the public isn’t enriched by the technology, and my $40,000 plus is gone forever….. This is a classic carve-out for some legislators’ constituent, and if you can’t figure out who, you might have a somewhat limited imagination. My impression is that we may have to just throw ourselves on the mercy of the court, and see what happens. Perhaps not an attractive option for potential licensees or investors or myself, for that matter. So why is this better for us all?

    Stan~

  17. step back December 7, 2011 6:40 am

    “avoid having to actually have to pay the cost for patenting their *inventions*”

    Stan,
    Not only the cost, but also the pain of having to define what the invention is.

    On the other hand, one can appreciate the dilemma that a large corporation is placed into when developing a complex product such as a large scale integrated circuit (VLSI) or large scale software that has millions of transistors or lines of code where the corp, becomes committed to a particular design that they cannot easily back out from once it’s on the assembly line (so to speak).

    The real question will be how the PUR defendant gets to define the scope of their PUR. What is the scope of their earlier in time “invention” if they never (publicly) defined the thing?

  18. Anon December 7, 2011 9:02 am

    one can appreciate the dilemma that a large corporation is placed into when developing a complex product

    It’s called business risk and everyone faces it.

    One way to mitigate that risk (and benefit society) is to “join the patent game.”

    If you do not want to pay to play, you can always publish your results so that they serve as prior art and no one later can obtain a patent on the stuff.

    It is only when you want your cake and to eat it too that I lose sympathy for you. You want to play the “secret” game? You want not to share? That’s fine – just accept the risks and the consequences of that decision – don’t pay off Congress to stick this pro-Trade Secret clause into patent law.

    OK.

    I will step off my soapbox and I realize that this clause is part of patent law now.

    In order to minimize damage, I recommend that all material that will ever be allowed to be used in the application of the Prior User Defense must be submitted to the Patent Office within 18 months of a patent being issued (or whatever the time frame is for that second window of review). After that, the patent record is sealed and no new evidence can be used in the case.

    This sounds drastic, but I believe that it has substantial merit for several reasons, chief amongst them is clarity of patent rights. As it is now, a patent can be granted, and a different company can have a small inocuous use of that patent and allow the patent holder to build the market by the patent holder’s expense of enforcing the patent (after paying to procure the patent) to eliminate all other competition and develop the market, then that different company can step in and wage a large scale takeover that the patent holder is helpless to stop. As I have posted previously, this scenario naturally means that the value of any patent is diminished and the risks of all patents are increased.

    If instead, the window of challenge is closed at a certain point, then several things happen – all of them good.

    1) The patent has security and a lower risk. It becomes a more alienable asset and something more worth while having, thus promoting the desire to have patents and the concurrent part of the bargain – more sharing of information with the public.

    2) If there is art or practice out there that shows the patent should not have been granted, then we find out sooner rather than later and the damage to the patent holder is at least reduced and the free-rider effects are also reduced.

    3) This means that companies will have to spend time and effort actually watching what items are being patented and evaluate those itesm against what they do and make. While some may think this onerous, I think that this is the gem of my idea. People should be paying attention to what is coming out of the patent office, because that is what the patent office is for – to put forth these new ideas. This is behavior that we should want to reinforce! We should want people poring over every week’s new patents and evaluating them. This would reduce duplicate efforts, and greatly spur innovative work-arounds.

    I realize that we have an issue with the treble damages portion of infringement, which (I actually know for a fact) prompts some large companies to actually ban their employees from investigating the latest state of the art as shown in patents and published applications. I would change this to a presumption that any published patent is known, thus even more spurring a careful review of published patents (and greater respect for other people’s intellectual property). I have read that the government will be broadcasting a series on the dangers of intellectual property theft soon – and my ideas would go well with that campaign.

  19. EK December 7, 2011 11:16 am

    I disagree that a company would deliberately free-ride as it seems it would be a huge gamble that the company would meet the 1 year requirement. I think it would probably be more likely that someone (even an NPE perhaps) would file an application near the time of commercial use and the company would end up having to license for the same amount or more of patent prosecution. Since it is a first to file and not a first to invent system, why would the patent applicant lose their application costs and why would the patent not be granted as long as the application were timely? I don’t view it as wanting your cake and eating it too but more a different patent strategy and probably only employed where the “invented technology/method” is not your core business, otherwise, I hope the company would seek patent protection. Thanks for the dialogue everyone. I am not a patent attorney (if that were not completely obvious) but am in-house and learning to deal with these issues (slowly.)

  20. Blind Dogma December 7, 2011 2:59 pm

    I disagree that a company would deliberately free-ride

    EK,

    Let me guess, you have no expereience in running a company or making Trade Secret decisions.

    Just a wild guess.

    otherwise, I hope the company would seek patent protection

    I’ll pull back on the sarcasm a little bit since you admit that you are just learning. Basically, (and I won’t charge you MBA prices for this), there are pro’s and con’s to a variety of IP tactics, including Trade Secrets. It’s not that any one is “better” than another, just different. There are times where the Trade Secret route is very much preferred. Anon’s point, if I may speak so boldly, is that with the AIA, those routes have very much been augmented.

    And people will take the free-ride if they can. Everytime. People are still people and still want something for nothing.

  21. EK December 7, 2011 3:39 pm

    “Let me guess, you have no expereience in running a company or making Trade Secret decisions.”
    (It was my attempt to be humble and engender productive conversation but no, have not taken the patent bar but am an IP attorney. Thanks for pulling back on the sarcasm.)

    My point is that the free ride doesn’t seem to exist when I’m getting hit up by trolls for the lamest patents and have to justify costs to continued use of non-core business functionality that everyone with a computer practices.

  22. Blind Dogma December 7, 2011 3:57 pm

    Let me break this to you gently,

    If you have not taken the patent bar, you are not an IP attorney.

    Other than that, did my comments on the various forms of IP protection make sense to you?
    Do you recognize that Trade Secrets can be a valuable route to take? (and much more so now that the AIA has been signed into law).

  23. Stan E. Delo December 7, 2011 4:53 pm

    A classic example of the value of Trade Secrets is Coca Cola’s use of trade secrets to protect their recipe, which has lasted for well over a hundred years, and nobody has been able to figure out how to reverse engineer it, shall we say. To be able to defend a Trade Secret right, you need to satisfy diligence in actively Trying to Keep it secret, or you will have no case if it ever goes to court. Just a Post-It note on a moniter screen of a computer that has the password to access the *Secret* contained in the computer is enough to blow your Trade Secret rights forever, but Trade Secrets are governed by State Law, if I am not mistaken, so it is more of a tort type of issue in my humble opinion.

    Coca Cola keeps their formula secret by having 4 different parts of the recipe kept and made in 4 different locations, so Nobody in the company can possibly give it away accidentally or whatever. What concerns me a Lot about PUR’s is that the practice is arguably being endorsed by a Federal Law, and there is little we can all do but wait for Federal courts to decide our fate.

    BtW EK- I can’t think of a better place to learn about IP law and the latest developments than right here, as several of the regular posters here have decades of real world experience. I happen to be just a home-schooled lowly inventor, who has to be a bit careful about where I venture, to avoid taxing the patience of some of the real pros around here.

    My latest Trade Secret gambit is for a new flavor of Kook-Aid, that I am thinking of Trademarking as Gravitus Gooseberry, with a fair dash of candied Ginger to help make the medicine go down a little easier. (Gooseberries tend to be very Sour, but have a lot of flavour) A free round to all, as long as you Act Now to order! But wait! There’s more! With your Free sample, you will also get a Free Kool-Aid pitcher with a frosted-on smile, that won’t just evaporate when the pitcher gets warm. Why wait? Why not order Today?

    Stan~

  24. EK December 7, 2011 5:28 pm

    “Let me break this to you gently,
    If you have not taken the patent bar, you are not an IP attorney.”

    🙂 Love it. I won’t knock the patent bar but just say that like any other bar, it’s just a bar and measures the minimum competence. Sharp patent attorney are impressive though, yes.

    Yes, TS is a valid method of protection but strategically, I don’t know that it is more valuable under AIA. After commercializing my invention, I would have to sit and sweat for a year, hoping that no one else files a patent application in order for my PUR to kick in. Pretty risky given that it is a home grown innovation and my exposure then couldn’t be passed off to a vendor.

  25. Stan E. Delo December 7, 2011 6:02 pm

    EK-

    Exactly the point of the legislation. One of the Senators writing the *Bill* happens to be from Vermont, so he was just helping some of his corporate constituents to be able to make larger profits. When they start bending IP law in their favour though, I tend to have a problem with that. You can’t visually See new code or flavour ingredients, so PUR’s tend to sorta work OK. In my case though, much like Fulton’s steam engine, if you can see it you could probably grasp it and build it if you were a bit talented and reasonably perceptive.

    The really hard part of this, is that Small Businesses create about 70% of all new jobs here in the US, and still Senator Patrick Leahy seems to think this is a good thing for American inventors? Just watching him *present* his ~America Invents Act~ banner before the Senate sorta militated my opinions, and I sincerely hope Senator Leahy will consider retiring from the Senate soon. It will probably take about ten years to *fix* this huge mess he orchestrated, but why should he care at all? Millions in the bank, and no worries!

  26. Anon December 7, 2011 8:10 pm

    Let’s get back to what we can do to mitigate the damage.

    Let’s have my suggestion at 18 made a part of the technical corrections laws that must be passed to make this whole AIA not come apart at the seams.

    Who has arguments against changing the law as I suggest? (and better yet, please comment on the benefits/drawbacks of not changing the law as I offer).

  27. Paul F. Morgan December 9, 2011 5:23 pm

    Before gettting too exercised on this topic, note that there are not that many inventions that can be commercialized and still be maintained as trade secrets outside of some chemical processes, etc.

  28. Anon December 9, 2011 6:24 pm

    With all due respect, Paul, let’s DO get exercised on this topic.

    You are looking at a major change and trying to say that today’s actions don’t merit a closer look, while neglecting that the change may invoke a very different methodology and may spur a different form of behavior that would merit a closer look.

    Let’s look now while we can. Let’s look now and mitigate while we can rather than wait and then say “Oh sh!t!, we should have done something, but it didn’t seem that big of a deal then…”

    And if that does not invigorate, then at least for the principal of the matter, we should get exercised – after all, law is our life and this is some bad law.

  29. Stan E. Delo December 9, 2011 7:36 pm

    As Anon suggests, why Not consider the issues before it is way too late to change anything? If the Emperor is in fact not wearing any clothes, wouldn’t we be somewhat remiss if we didn’t say so when we had the chance? Bad law produces bad consequences, which might take many years to fully appreciate.

  30. Anon December 10, 2011 8:47 am

    After further consideration, I have to ask Paul, is there some other reason why my suggestions seem to spur your desire to take the topic off the table?

    The mitigation I proposed is the best (and so far only) attempt to minimize the dangerous free-rider effects that I have outlined. Do you have an issue with my proposal? If so, let’s hear the issue itself, instead of tabling and shoo-shooing my proposal.

    If, as you indicate, the occurence will be rare, then why not invoke a rigorous (or even more rigorous) protection against easily foreseen side effects? Better yet, if the occurence will be so rare, why have PUR at all?

    The logic (and the efforts at establishing PUR) just do not add up – this is a real issue and deserves attention – NOW. This is the time for technical corrections to be heard and made into the law – NOW.

  31. Stan E. Delo December 10, 2011 7:15 pm

    Anon-
    I am beginning to wonder if PUR’s are just part of a larger picture, and hence might not seem to be of much value or significant import on the face of it. However, if it was just meant to support a later Post Grant Review challenge, it might make a lot more sense. The PGR will be very cheap, and allow others than the Prior User to challenge the patent in their stead. (The good ole boys club) At least PGR will be limited to 9 months if I remember right, much like the limit you are suggesting for PUR’s. Perhaps a bit paranoid of me, but then again I actually really Have invented a few things after all. What bothers me about my theory is that the patent is allowed to be challenged both Prior to and Post the granting of the patent right. Whatever happened to the concept that patents have some degree of presumed validity if they were issued by the USPTO? It seems to me like a clueless Congress and some large corporations and some courts are trying to put training wheels on my patent rights, and ipso facto seeming to suggest that the USPTO needs some oversight in granting valid patent rights? Perhaps looking into what the new PGR rules might entail in some detail might be worth while before too many moons go by.

    Cheers,
    Stan~

  32. Stan E. Delo December 14, 2011 8:35 pm

    I thought an opinion in this regard might be of some interest to some that attend here. I attended the webinar produced by Wolf Greenfield, apparently mostly in New Hampshire, as near as I can tell. The discussion was very interesting in several respects, but it took the whole hour and a half to address the relevant issues that they had studied. The Inequitable Conduct discussion was very good and comprehensive, and seemed to hint at better times ahead, but the reexamination gambit seemed a little murky to me. Viz:

    ~~~~~~~~~~~~~~

    On behalf of Wolf Greenfield, thank you for attending our recent webinar “Recent Developments in Patent Litigation: Important Court Decisions and Their Intersection With The Patent Reform Act”. I hope you gained valuable insights from our presenters. As we could address only a small portion of the cases impacting inequitable conduct, indirect infringement, reexamination and damages, please do not hesitate to contact me or your Wolf Greenfield attorney if you have questions about your specific situation.

    Many of you asked if the webinar is available for replay, and if the presentations can be downloaded. Both are now accessible on the Wolf Greenfield website at: http://event.on24.com/r.htm?e=380720&s=1&k=CF7A2224331B124F697715C581D6F2BD

    ~~~~~~~~~~~~~~

    Just before the webinar started, I asked about the possibility of using the new Prior User Rights provision of the AIA to enable others than the Prior User to invalidate patent claims independently after the initial PUR fact. It appears as if my theory presented in message #31 is in fact a very real possibility, according to an attorney from WG that answered my question personally yesterday, since they didn’t have time to answer it during the webinar. He said something like this, which I have edited quite a bit, but he didn’t request that I keep it confidential. I thought it was very insightful, but only time will tell I suppose.

    ~~~~~~~~~~~~~~

    You raised a good question, particularly since the AIA makes clear that defendants will need to prove prior use defenses by clear and convincing evidence (i.e., the same standard required to invalidate claims). In theory, part of the idea seems to be to give “earlier inventors” some protection even when their work may not qualify as prior art. Still, there are a number of cases suggesting that earlier activities can still be relevant for purposes of obviousness (e.g., evidencing the level of skill in the art) even if they do not technically constitute prior art under 102. So yes, if one defendant succeeds in establishing prior user rights at trial or on summary judgment, it would offer future defendants a good start (documents, witness testimony, etc.) for proving invalidity even if they themselves do not have a prior use claim. On the other hand, it may be harder to convince a jury that “the patent experts at the PTO made a mistake and issued an invalid patent” than it is to convince the jury that “my company was doing the exact same thing that the patent claims a year before the application was even filed.”

    ~~~~~~~~~~~~~~

    Happy Holidays!

    Stan~

  33. Anon December 15, 2011 8:53 am

    Stan,

    Thanks for the link and the thought pattern as well.

    I still have not seen any reasoning put forth as to why the AIA explicitly calls out that the C & C evidence which is necessary to sustain a PUR does not automatically invalidate the Patent as a matter of law, but rather shields what is obviously an invalid patent. No one has explained to any level of satisfaction how a private right can ensue when to establish that private right the public must be involved.

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