Trojan Horse Patent Reform, About Prior User Rights All Along

President Obama announces of new Commerce Secretary. Secretary Gary Locke (left) and Secretary Designate John Bryson (right).

Earlier today President Obama announced the nomination of John Bryson as the next Secretary of Commerce. Bryson, the former CEO of Edison International and co-founder of the Natural Resources Defense Council, will replace current Secretary of Commerce Gary Locke who has been tapped as the next United States Ambassador to China. Meanwhile, earlier in the day Secretary Locke continued to work patent reform, sending letters to Congressman Lamar Smith (R-TX), who is Chair of the House Judiciary Committee, and to Congressman John Conyers (D-MI), Ranking Member of the House Judiciary Committee, which set forth the Administration’s position on patent reform.

Notably, but not surprisingly, Secretary Locke explained: “The Administration continues to strongly support the bipartisan efforts of Congress to enact patent reform legislation that will accelerate innovation, and create new jobs, new industries and new economic opportunities for Americans.” Secretary Locke went on to elaborate more specifically about some of the specific provisions of the America Invent’s Act, explaining the Obama Administration supports first to file provisions, supports giving the Patent and Trademark Office the ability to set fees and keep the fees collected to be used to run the agency, supports post grant review and supports allowing individuals to submit prior art references to patent examiners. Unfortunately, however, Secretary Locke explained that the Administration generally supports prior user rights given that it is, on balance, a good policy.  I respectfully dissent!

First to File versus First to Invent

I have been a supporter of moving from first to invent to first to file because it seems to me that we already have a de facto first to invent system. It is incredibly difficult, if not practically impossible, to demonstrate that you as the second filer are the first inventor and rightfully entitled to receive a patent.

There are valid concerns raised by some in the community about no longer being able to demonstrate a prior date of invention in order to overcome certain rejections, but it is undeniably correct that applicants, whether they be independent inventors, start-up businesses, small businesses, Universities or large corporations, are always better served under the patent laws by filing sooner rather than later. We say there is a 1 year grace period under 35 U.S.C. 102(b), but that clock can start running with unknown third-party activities so it is foolish to assume that you ever have a full 1 year grace period from the happening of a trigger event because you simply cannot control where someone else engaged in a public use or offer for sale, for example, that would start the clock running. Likewise, under 35 U.S.C. 102(e), a U.S. patent or U.S. patent application is considered prior art as of the date it is filed, even though there would be no way that anyone could ever know about such filing for a full 18 months due to the fact that the application remains secret, as required by law, for 18 months. So there is simply no advantage from a patentability perspective to wait to file. Business realities can dictate less than ideal behavior from a priority and filing date perspective, but there is no denying that filing earlier is better.


Prior User Rights

In his letter to Congressman Smith and Congressman Conyers, Secretary Locke explained:

[W]e believe that innovators who independently create and commercialize technology should not be penalized for,  or deprived of, their investment.  As a result, we believe that the availability of  a prior user defense is, on balance, good policy.

But what about the innovators who independently create and invest, choosing to grow upon a patent?  They couldn’t know about the secret held by the innovators the Obama Administration doesn’t want to penalize because it was precisely kept a secret.  Those unsuspecting individuals, businesses, Universities and investors explain the innovation such that those of skill in the art will understand what the innovation is, how to make it, how to use it and what preferences exist, if any.  They disclose this information to the public, bringing it out of the shadows of secrecy, invest and build upon this disclosure only to learn that their country appreciates bringing the invention out of the shadows by it cannot be enforced against those who covered up the innovation.  That doesn’t sound fair to me, it doesn’t sound like good policy, and it seems that the party truly being penalize is the party that should be rewarded from outing the innovation so society benefits, as is the purpose of a patent system.

You see, a prior user rights defense prevents those who have previously used the patented invention from being infringers. In many parts of the world there are strong prior user rights, which allow those who keep innovation as a trade secret hidden away from the public to later use those trade secrets as a defense to a patent infringement lawsuit. You can’t sue me for patent infringement because I have been hiding, using that innovation you patented as a trade secret. So the party that disseminates the information for the benefit of the public loses in favor of the party that kept the innovation a closely guarded secret. This has never struck me as fair, nor a good idea nor in keeping with the Constitutional purpose for patents. In fact, if a prior user rights regime is put in place it would tip the balance in favor of patents and disclosure to favoring trade secrets. The entire Constitutional purpose for our patent system is to disseminate information and knowledge for the betterment of society. When trade secret uses can preempt patent owner rights that frustrates the Constitutional quid pro quo and is a detriment to the incentive created to disclose innovations.

So exactly how did this prior user rights emerge? That is a good question and one for which there is not really a satisfying answer. It was never mentioned by anyone in the Senate, and I had not heard anyone raise it as an issue until after the Senate passed patent reform by a vote of 95-5. Then all of the sudden it appeared in the House version of patent reform, and then those in the industry from the technology giants started explaining to the House Judiciary Committee that you absolutely have to have a prior user rights regime if you are going to have a first to file system. Every other country except for Greece that has a first to file system has prior user rights, and you don’t want to be like Greece, do you?

For the life of me I couldn’t understand why the technology giants supported a first to file system. Despite the cries of independent inventors and small businesses, a first to file system disproportionately will benefit individuals and small businesses. Corporate giants are like aircraft carriers. You simply cannot get them to turn on a dime. There is a widespread misconception that large corporations are nimble and move quickly and will change their ways and file everything instantly in a race to the Patent Office. That won’t happen. That mythology that says large corporations have their acts together obviously isn’t familiar with the large corporation ecosystem. There are still going to be just as many layers between idea and green light, all the red tape, and with diminishing financial resources the same (if not more) consideration will be needed because no corporation can afford to file on everything. Compare that with little or no red tape, the innovators being the ones who can give the green light to file and the simplicity of a first to file rule that everyone can understand. Those who will be nimble to the detriment of the large corporations are the individuals and small businesses.

So why would large companies be such supporters of first to file? What if first to file was the Trojan Horse that carried prior user rights? Prior user rights will not benefit the individual or the small business. Prior user rights unambiguously will benefit the large corporations who innovate and then shelf technology for one reason or another, or those who exploit the technology in secret. Perhaps they choose not to pursue a patent because it isn’t perceived to be a meaningful innovation, or worth the cost and time of pursuing a patent. Perhaps the innovation gets weeded out along the way, never getting green-lighted past a certain point. These trade secrets today are not prior art thanks to 102(g). Remove 102(g) and insert a prior user rights regime and all those secrets that large companies hide, fail to pursue or willfully keep from the public will allow them to ignore the patent rights of those who innovate and actually disseminate that information to the public.

Don’t get me wrong, everyone has the right to keep secrets, but today that right to keep secrets comes with consequences. Under a prior user rights regime keeping secrets not only won’t have consequences, it will have benefits, which strikes me as anything but good policy, despite what Secretary Locke wrote in his letter explaining the Obama Administration policy. Prior user rights is definitively a bad policy that favors large corporations. Since overwhelmingly job growth comes from small businesses it is a bad policy to advocate for a policy that will make innovating a greater risk for individuals, start-up businesses and small businesses.

While there is nothing wrong with first to file in concept, there is a lot wrong with prior user rights. We do not need prior user rights in a first to file system. In fact, a first to file system without prior user rights would without question promote the Constitutional objective of disseminating knowledge and information for the betterment of society.

While I largely think patent reform has devolved into nothing more than “patent change,” I remain largely supportive of the pending legislation.  It is a huge spoon full of sugar to have the U.S. Patent and Trademark Office getting to set fees and keep the fees the collect, rather than having their user fees raided by the General Treasury for unrelated spending.  That enhancement is likely the only reason this “patent change” legislation has made it this far, and don’t underestimate just how meaningful it will be to have a law in place that guarantees the Patent and Trademark Office the financial resources it so desperately needs to run as a going concern.  Nevertheless, prior user rights is a terrible idea; a real debacle.  They will weaken the patent system and place a burden on those most likely to create the jobs we need: technology based small businesses.


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Join the Discussion

16 comments so far.

  • [Avatar for patent enforcement]
    patent enforcement
    June 6, 2011 05:18 pm

    I know I’m not alone in being completely in favor of abolishing the practice of fee diversion, but completely against certain other provisions of the House’s patent reform bill. While I’m on the fence regarding first-to-file, I think that the provisions limiting the traditional grace period (which inventors need in order to gauge market value) are certainly problematic. What’s more, the post-grant review and prior user rights provisions are a nightmare waiting to happen. In other countries where such processes are permitted, there lurks always the strong potential for larger and better-funded entities to harass (and even financially destroy) inventors. If these provisions are not changed, then we can only hope that patent reform will not happen this year.

  • [Avatar for tifoso]
    June 5, 2011 09:11 am

    Perhaps I do not understand the proposed changes or even the current law, but it seems that the change to first to file will lead to the exact opposite of what it is touted to provide.

    A invents a widget but lacks the funds to obtain a patent immediately. Six months after A invents, well-funded B devises (for B cannot, by definition, be the inventor) the same widget. B files for a patent. A then files, not knowing of B’s filing due to the secrecy rules. A’s application is denied because B was first to file. B’s application must be denied under 102(a) since the invention was known to A prior to B’s filing. If this is correct, then neither will obtain a patent. Is that a correct vision of the future? If so, won’t that mean that there will be less, not more, protection of inventions?

  • [Avatar for New Here]
    New Here
    June 3, 2011 10:39 am

    “But what about the innovators who independently create and invest, choosing to grow upon a patent? They couldn’t know about the secret held by the innovators the Obama Administration doesn’t want to penalize because it was precisely kept a secret.”


    With all respect may I ask what I believe is fair question with regard to this point: How many developments by those choosing to grow upon a patent before file an application make such developments known ? It is after the fact that anyone finds what has been created. Secret until then ? Nothing known about any patent until such protection as even an application is in place !

    Those not choosing to grow upon a patent are not by law — required to follow patent law. It seems to me that the real and only problem with prior user rights is that they allow the development of prior art that often is real innovation, and that would only impact patent applications that happen to cross in the path of such innovation “land-mines” on the way to the patent office. Odd, this is exactly what happens today that business and non-patent inventors are stepping on patent (secret) land-mines that they were not aware of existed until their sued from under them by unknown owners.

    If everyone is to have no secrets then one current problem is in need to be addressed.

    The balance of the scales in the law that at present has an independent non-patent inventor with a blindfold on, because *he* isn’t allowed to gain knowledge about what is patented serving as information to be used as a guide in *his* developments. If such a developer were to go to Court would end in jail not shy of having the key thrown away.

    So these secrets (patents) as they appear to be must be open to everyone not allowing such secrets to be land-mines by law that often sees such research as illegal on the side of patent owners.

    So Gene do I misunderstand, is it really to be that patent owners and the community as a whole be allowed the knowledge of developments of everyone else because they wish to avoid “land-mines” ? While the law as is protects the developments of patent owners at every corner ?

    I believe the patent system can be better then is today, and without law that doesn’t allow equal rights and protection to independent non-patent developers. It is the U.S. A. ?

  • [Avatar for LP]
    June 3, 2011 08:20 am

    The current discussion on prior user rights reveals an unfortunate lapse in policy debates by the U.S. patent bar, a failure to give fair and full consideration to what is an integral part of other patent systems serving other very sophisticated markets. Regardless of whether prior user rights are a good policy choice for the U.S., they are an integral part of the patent law in highly industrialized nations such as Germany and the UK. Thus any complete comprehensive discussion of the policy implications of prior user rights should reflect that they do not necessarily undercut the objectives of a patent system in a highly industrialized nation with advanced technology.

    On the merits the prior user rights of HR1249 require commercialization ” at least 1 year before the effective filing date of the claimed invention that is the subject matter of the patent.’’. Thus it would not be helpful to a “large corporation” who wanted to just put technology on the shelf. In this regard, the provision can be fairly viewed as providing more protection to a patentee than current 102(g). The current case law certainly does not unambiguously establish what time lapse is necessary before an invention is considered “abandoned, suppressed or concealed” under 102(g). Therefore under current law a patentee can not make a well informed assessment of whether a prior inventor who put an invention on the shelf for a bit and then took it down and started it on its way to the public by commercialization or publication represents a threat to the patentee’s exclusive rights ( and a threat which could destroy his patent rights entirely as opposed to just creating a co-user).

  • [Avatar for Patentology (Mark Summerfield)]
    Patentology (Mark Summerfield)
    June 2, 2011 08:02 pm

    Blind Dogma

    Your basic English comprehension skills seem to be lacking — this is the second time in this exchange that you have taken a perfectly plain statement, misinterpreted it, and then used your misinterpretation as a basis for an attack on my credibility.

    ‘Subject to debate’, i.e. ‘is something about which people disagree’. I am not stating my position on the matter. I am, in kind with American Cowboy, making the point that the statement may attract dissenters (‘nutcases’ or otherwise). I am well-aware that the patent laws of most countries deem patents to be ‘property’, principally so that they can be bought and sold like property. But just as a patent is not a ‘monopoly’, in the sense in which the term might be used in economics or antitrust law (which I think was American Cowboy’s point), it is also not ‘property’, in the sense in which the word might be used in other branches of the law, or in everyday discourse.

    Can you rent/license your house to an unbounded number of non-exclusive users? Can the owner of another house prevent you from quiet enjoyment of your own home because they happen to own an existing property over the road? Conversely, can somebody come along, develop a property next door that is an improvement on your property, but then be forbidden from moving in without your permission/license? Is there a natural limit on the number of patents that might be granted in a particular field?

    There are numerous ways in which patents are unlike other forms of property, and a simple Google search will show you that the issue is, as a matter of incontestible fact, subject to much debate. And if we are concerned about using terms that might attract ‘nutcases’, then ‘property’ has at least the same power as ‘monopoly’.

    As for the ‘vegetarian’ comment, search this page for ‘red meat’.

    You seem to have a problem with me. Why is that?


  • [Avatar for Blind Dogma]
    Blind Dogma
    June 2, 2011 07:00 pm

    The question of whether, and to what extent, patents are property is also one that is subject to debate.

    Mark. That is clear error – Factually, Legally. There is ZERO room for debate. Such statements tend to take your credibility down to ZERO as well.

    I do not know what type of “nutcases” you are hoping to attract, but you should because your position is nuts.

    And your comment about vegetarians is not really clear – vegetarians are allowed to eat nuts, just as non-vegatarians…

  • [Avatar for Patentology (Mark Summerfield)]
    Patentology (Mark Summerfield)
    June 2, 2011 06:33 pm

    American Cowboy

    The question of whether, and to what extent, patents are property is also one that is subject to debate.

    If we must split hairs, let us say instead that a patent provides an exclusionary right. But whatever words you use, the fact remains that a patent provides a legally-sanctioned right to engage in various activities that would otherwise violate principles of free competition in general, and fair trading and antitrust laws in particular. And my point remains that there should be a sound justification for this kind of interference in the market.

    Oddly, I seem not to have attracted any ‘nutcases’ as yet. Perhaps they are all vegetarians?!


  • [Avatar for Joe]
    June 2, 2011 04:55 pm

    So is this bill ever going to go for a vote? and then what?

  • [Avatar for American Cowboy]
    American Cowboy
    June 2, 2011 09:52 am

    Mark, patents are almost NEVER monopolies. Please don’t muddy the water by using that word; you supply red meat to the nutcases when you do so. Patents are property. Unless the property forcloses commercially reasonable alternatives (i.e. occupies the entire relevant market) it is not a monopoly.

  • [Avatar for Patentology (Mark Summerfield)]
    Patentology (Mark Summerfield)
    June 2, 2011 12:17 am

    Blind Dogma,

    I never said there was a basis in US law for that statement.

    To say that something is not necessary in order to achieve a particular economic benefit is plainly not the same thing as saying that there is a basis in law for either doing it, or not doing it. This is just basic logic.

    Of course, the US might (and does) choose to grant monopolies anyway. But the Constitution surely does not require the US Government to grant patent monopolies,does it? My understanding is that it merely confers the exclusive right to do so, for the specified purpose of advancing the useful arts.

    Everything in my statement that you have quoted is self-evidently true. It is not necessary for governments to grant monopolies at all, and certainly not where there will be no net benefit to the nation. A monopoly does represent a restraint on free competition. And trade secrets are sometimes a more effective commercial choice than exchanging disclosure for a limited-term monopoly (e.g. the formula for Coca-Cola).

    So what is your point? Do you consider that, on the contrary, there is a basis in US law for the proposition that the patent system should be designed not only to reward disclosure, but to penalise non-disclosure? The absence of prior user rights may certainly have this effect, which was the main point of my comment. I am simply challenging the notion that this is necessarily, on balance, a desirable thing. Does this notion offend you somehow?


  • [Avatar for Andrew Cohn]
    Andrew Cohn
    June 1, 2011 11:48 am

    Letter to AUTM Directors from Carl Gulbrandsen

    Dear fellow AUTM members and colleagues:

    I am writing in response to the letter sent out by the AUTM board on May 17, 2011 (the “AUTM Letter”) encouraging the membership to support H.R. 1249, the House of Representatives patent reform bill. As director of an office that has been extensively involved in working with Congress and a number of stakeholders in the patent reform effort, I was very disappointed to read the AUTM Letter. The letter does not fairly represent the impact the proposed legislation will have on universities, start-up companies, small businesses and independent inventors (hereafter, collectively, “innovators”) if it becomes law. The bill does represent a compromise as indicated by the AUTM Letter, as do all bills; and compared to the legislation as originally proposed, it is an improvement. But compared to the present patent law, it is anything but an improvement. Rather than benefit universities and strengthen patents as claimed in the AUTM Letter, H.R. 1249 promises to increase the cost of obtaining, maintaining and enforcing patents. Directly and indirectly this proposed legislation would weaken patents and greatly reduce the incentive for licensing, changes that will frustrate innovation by favoring big business over innovators. It conflicts with the statutory objectives and spirit of the Bayh-Dole Act and is of dubious constitutionality.

    The reform proposed in this legislation includes the most significant changes to the U.S. patent law in over a century – and they are not good changes. There are five major changes proposed which individually and in concert weaken patents and make it more difficult and expensive for universities to obtain, maintain, license and enforce patents.

    First, the proposed legislation moves the U.S. patent system from a first to invent system to a first inventor to file system. The AUTM Letter states that this enables “U.S. inventors to compete more effectively and efficiently in the global marketplace.” How does moving from a first to invent, which has been part of the U.S. patent system from its beginning, to a race to the patent office make U.S. inventors more competitive? It doesn’t. Moving to a first to file system favors large businesses and in particular, well-financed, large foreign businesses over innovators. Operating effectively in a first to file system requires financial and staffing resources that are generally not available to universities or other small entities. Most universities today need a licensee willing and able to pay the patent cost before an application is filed. Under a first to file system, that will often mean the university loses the race.

    Second, the proposed legislation weakens the grace period that has been such an important and valuable right for U.S. inventors. For universities the grace period has been particularly important. Under present law, the inventor need not do anything affirmative other than having made the invention to be entitled to the grace period. The inventor is entitled to swear behind any prior art created during the grace period and still be entitled to obtain a patent. Under the proposed law, the inventor must affirmatively disclose the invention to be entitled to a grace period. Thus under the proposed law, a disclosure of the invention not made by the inventor or another acting on information from the inventor will act as a bar even if within a year of filing the application. Moreover, if the purpose of the proposed legislation is harmonization with the rest of the world, then the disclosure grace period is effectively non-existent. A disclosure before filing acts as an absolute bar in most jurisdictions outside the United States so the grace period only becomes useful if one does not intend to file globally.

    Third, the proposed legislation effectively shifts the constitutional balance between trade secrets and patents to favor trade secrets. Under present law, a person needs to choose between protecting an invention through trade secret and filing a patent application. If the inventor chooses trade secret, the law today holds that the inventor abandons his right to obtain a patent. Under section 35 U.S.C. section 102(c), a person is barred from receiving a patent if that person has abandoned the invention. The proposed legislation does away with section 102(c), so if this proposed legislation becomes law, a person can keep the invention a trade secret until it becomes clear that it would be better to have a patent and then file a patent application effectively extending their competitive advantage 20 years.

    Fourth, the proposed legislation further shifts the constitutional balance in favor of trade secrets by expanding prior user rights. Under present law, a patent owner holding a patent covering a trade secret that is not a business method can sue the trade secret user, and if successful, receive just compensation including in some circumstances an injunction. Under the proposed legislation, the trade secret owner could assert the prior user defense and if successful receive a free, paid-up license under the patent for the patented invention and any products made using the patented invention. In essence, the trade secret holder receives a free ride on the rights of the patent owner and what was thought by the patent owner to be exclusive rights as required by the Constitution becomes non-exclusive. Of course, if the trade secret owner is a large company able to control the market, the patent rights may become commercially worthless to the patent owner. As open environments, universities ordinarily do not deal in trade secrets, which is one of the reasons why WARF has consistently opposed expansion of prior user rights. AUTM, until the letter of May 17, was a partner in opposing expansion of prior user rights, but now has shifted sides for reasons stated in the AUTM letter-reasons we believe are largely political and not in the best interests of universities.
    Fifth, the proposed legislation adds more opportunities to challenge the validity of patents. Today, patent validity can be challenged through reexamination (ex parte and inter partes) and through infringement litigation. Currently, it is more difficult to challenge a U.S. patent than a foreign patent, which we believe is good for U.S. universities and for U.S. innovation because it means that U.S. patents are considerably stronger than foreign patents. Strong patents are critical to start-up companies trying to raise venture dollars. Strong patents are also good for licensing. The proposed legislation, however, adds both a post grant review procedure where patents during the 12 months following issuance can be challenged on any grounds and an enhanced inter partes reexamination procedure. The net result is valuable patents will be more subject to challenge which increases costs for the patent owner, weakens the value of the patent, and makes it more difficult to license or raise capital funds necessary to starting a company and creating jobs.

    As stated above, each of these changes acts to weaken our patent system to the disadvantage of innovators and especially university innovators. Taken together, these changes strike a terrible blow to innovation in the United States. Times are hard enough as is to start a company. The last thing investors want is uncertainty, which is exactly what will happen if this proposed legislation becomes law.

    This uncertainty is enhanced by legitimate questions of the constitutionality of this law. In shifting the constitutional balance, the expansion of prior user rights runs counter to the constitutional purpose of our patent law which is to promote the progress of the useful arts by securing for a limited time exclusive rights to the inventor in return for disclosure of the invention. It also fails to respect the express limitations in Article 1, Section 8, clause 8 of the U.S. Constitution. The movement to a first inventor to file from the present first to invent system may also be constitutionally prohibited (see attached article by Jonathan Massey). Any patent reform that runs counter to the constitutional text and underlying purpose will face legal challenges that will call into question the validity of any patents granted under that legislation. These concerns decrease the value of patents, make it more difficult to license and increase the cost of enforcement, which impacts innovators disproportionately more than large companies.

    We encourage you to take a hard look at the legislation in light of what you and your offices are trying to do to commercialize university inventions. I believe this proposed legislation strikes at the heart of what we are all trying to do and I am convinced it will make our jobs significantly more difficult. We have attached materials that add additional information to the comments made above. If you share our concerns, now is the time to act. The Chairman of the House Judiciary Committee has stated publicly that he expects H.R. 1249 will be scheduled for consideration by the full House of Representatives during the middle of June. Please ask your congressional representatives to oppose the bill or if you cannot do that directly, ask your governmental affairs people to do so for you. Feel free to provide a copy of this letter to anyone you believe will be interested and helpful. For example, provide a copy of this letter to the start-up companies you are working with, other local entrepreneurs and venture capitalists and ask that they oppose this legislation for the reasons stated in this letter. Any assistance at all that you can provide will be very much appreciated. Thank you for taking the time to read and carefully consider this letter.


    Carl E. Gulbrandsen
    Managing Director
    Wisconsin Alumni Research Foundation
    614 Walnut Street
    Madison, Wisconsin 53726

    Phone: 608-263-9395
    web site:

  • [Avatar for Blind Dogma]
    Blind Dogma
    June 1, 2011 08:38 am

    Clearly, it is not necessary for a government to grant monopolies (which, after all, goes against every principle of free competition) in cases where innovators have other options for protection of their investments, such as trade secrecy.

    There is NO basis for this statement in US law.


  • [Avatar for Open Source Trade Secrets]
    Open Source Trade Secrets
    June 1, 2011 06:36 am

    Trade secrets are BAD.

  • [Avatar for bo]
    June 1, 2011 06:01 am

    i am not sure if the law makes a distinction between prior user rights and trade secrets. Not all prior user rights need to be classified as trade secrets.

  • [Avatar for bo]
    June 1, 2011 05:57 am

    i have changed my stance on prior user rights. I believe that anyone who independently came up with an invention should still try to disclose the invention in a publication of sufficient public authority (eg patents)

  • [Avatar for Patentology (Mark Summerfield)]
    Patentology (Mark Summerfield)
    May 31, 2011 10:25 pm


    Your arguments against prior user rights make sound sense… if you assume that a primary purpose of the patent system is to grant monopolies in return for disclosure. Certainly, a monopoly should not be granted without requiring disclosure, but this is not the same thing as making the disclosure itself a goal of the system.

    However, the patent system can equally be seen as having the primary purpose of providing an incentive, in the form of a monopoly, for investment in the development of technologies that would not be as attractive or economically feasible if they were immediately open to free competition upon disclosure.

    Either, or both, of these objectives can be seen as promoting the progress of the useful arts. But, as with all aspects of patent law, a balance must be struck between competing considerations.

    Clearly, it is not necessary for a government to grant monopolies (which, after all, goes against every principle of free competition) in cases where innovators have other options for protection of their investments, such as trade secrecy. This is a perfectly valid commercial choice to make, and it cannot be said that the public does not benefit if the end result of a confidential process is a better or cheaper product. This increases choice and competition in the marketplace, which provides incentives for competitors to innovate also.

    So there is a good case to be made that, in such circumstances, the ordinary mechanisms of the free market work well enough to promote innovation (or the progress of the useful arts). Until somebody else comes along and obtains a patent on a process that their competitor(s) have already been using. At this point, competition is stifled, and consumers lose the benefit that they have been gaining from free-market mechanisms.

    The only viable solution in this situation is a workable prior user right.

    The experience in jurisdictions (such as Australia) where prior user rights exist is not necessarily as dire as you imply. The right may extend only to the prior user continuing the activities in which they were already engaged. They may not be permitted to expand their use, or to develop and use an improved process that nonethless falls within the scope of the later patent claims. So there is still an incentive, in terms of risk mitigation, to choose patenting over trade secrecy in cases where both options exist.