Exam Question: Prior User Rights?

The currently pending patent reform bill would create an expanded prior user defense to patent infringement.  Under the proposal, an accused infringer would not be liable for infringement if it had been commercially using the invention at least one year before the patent application filing date. The defense would extend to affiliates and assigns.

However, an invention that in commercial use more than one year before the filing date would usually be found unpatentable as anticipated. Can you provide example situations where prior user rights might be important?

32 thoughts on “Exam Question: Prior User Rights?

  1. 32

    Max,

    Perhaps I have missunderstodd what you are saying but I am a little confused here. How is believed that ROW stealing US innovations?

    On a separate note:
    I am an EP practiotioner and so work within the “First to File” arena. In that arena as you correctly pointed out, the secret prior user has the right to continue doing as they did before. However, the right is very tight indeed. It is limited to more or less exactly what he was previously doing. He cannot license the right to third parties for example (but he can pass it on with the section of his business that was involved in carrying out the activity)he can of course continue to sell product, but it is unlikely for example that the would be able to develop improvements that still fell within the scope of the new right.

    The reward for not filing is therefore rather limited, but within the cope of natural justice. After all, it makes no sense at all to suggest that some one could be sued for infringement when continuing an activity that was done before, surely that person is then being deprived of the fruit of his labours….

  2. 31

    Just out of curiousity, is anyone aware of any judicial interpretation of the “method” definition in sec. 273? The legislative history is not particularly helpful in establishing where a method of conducting business ends and other methods begin.

  3. 30

    Absolutely right, me. If it ain’t broke, don’t fix it. Screwing “everyone else”, for no good enough reason, is surely to be deprecated. Let the US keep its coherent patent law and let ROW keep its, and let there be no foul compromise. You write that patenting novel, useful and non-obvious software, film scripts, tax avoidance schemes and business methods, is a “problem”. I had thought it was the opposite, a vital US national interest, to leverage where the US has an edge over ROW. I’m not expecting 101 to get curtailed any time soon, but I’m interested that you are.

  4. 29

    Max-

    Absolutley true, but proving derivation may be the problem in my case.

    As for stealing of manufacturing or other inventions that can be held as trade secrets, your point is a good one but I still have alot of trepidation about rewarding people for not filing.

    I still think most of the problems that are attmpting to be addressed by the changes to the law are really not problems for most filers in most technology areas, the problems are in software and biz methods so the only change to the law I would propose would be to change 101 so that software and biz methods are no longer patentable and leave the rest of the law alone. Go fix the problem, don’t fix the problem by screwing everyone else for whom the system generally works well.

  5. 28

    Thanks again, me. The prior user right is intended to protect those who are caught by a patent claim that is valid. In the typical fact scenario, both parties make the same invention, but independently (it happens all the time). Party A decides (for good logical reasons) to keep it a trade secret. Party B decides to file, gets a valid patent then finds out that A is “infringing”. A defends himself with his prior user right. The patent remains effective against everybody else. Encouragement to file is all very well, but in these days of lament in USA that the rest of the world is stealing all the US’s innovation, one would have thought that US law ought to leave some room for an informed decision by a US corporation to keep secret manufacturing technology as a trade secret, rather than always having to file at the USPTO purely for reasons of clearance to continue to practise. The facts you set out constitute the rarer case, of misappropriation of another’s of trade secrets, rather than unconnected parallel innovation. On your facts, the claim you face is invalid or unenforceable, one way or another, so in the end should (in theory anyway) be no threat.

  6. 27

    Yes Max, that is exactly what I meant – and said. I was answering Dennis’ question of why and when prior use rights would matter – and provided a real world example of why and how they matter. Prior use rights might be a good idea, but it does seem to reward the non-filer of patents and thus goes against the public policy underlying patents (public disclosure).

    BTW – the patent reads exactly on the client’s process, exact step by exact step, so we think it likely the filer knows the client’s process, making the filing of suit much more likely – but how they know will be a matter for discovery.

  7. 26

    Your point, me? First, the filer has to get issued to him a not invalid claim that your client falls within. Then, the patent owner has to bring an accusation of infringement against your client, and prove it. How will he know that your client is infringing? Were there to be a European-style prior user right in force, why shouldn’t your client pray in aid (as a defence to infringement, and whether or not the claim is valid) his prior user right to continue to do that which he was already doing before the date of the patent claim asserted against him. Where’s the issue? You don’t allude to it but, in Europe, it is usually that the prior user right isn’t extensive enough to cover the current acts, accused of infringement, which under the spotlight turn out to be, in substance, very different from the acts done prior to the date of the patent claim.

  8. 25

    “How about trade secrets in manufacturing processes?”

    This is exactly where they it would effect a client of mine. They have kept a process for manufacturing a generic pharma a trade secret (for other interesting reasons) and now another has filed a patent directly reading on their process.

  9. 24

    Common sense and natural justice dictates that (in a First Inventor to File environment) a party in commercial operation BEFORE the date another lodges an enabling disclosure for the first time at a Patent Office should not be stopped by that later event from continuing to do indefinitely exactly what he was already doing before the app was filed. The right is personal to the prior user. The right does not affect the validity of the patent. The right is limited to the territory where the prior user had occurred. The personal prior user right extends to parties who had already made (before the filing date) serious and effective preparations for commercial use. Talk about re-inventing the wheel. Europe has been harmonised on this standard since as long ago as 1978. There is any amount of jurisprudence, for anybody interested (although it doesn’t come up often because everybody files promptly on everything new, these days, and trade secrets stay trade secrets). I guess Dennis has already researched it.

  10. 23

    102(b) says “the invention was … on sale in this country.” Proposed legislation has no limitation that the sale need be in the U.S.

  11. 22

    If the inventor can not file for a patent protection of his invention within one one year of commercilization due to some personel circumstances, Then a ptent office should grant patent to that inventor.

  12. 21

    “The problem with 102 is that it doesn’t say what it means.”

    I believe that’s called “life in a common law jurisdiction.”

  13. 20

    The problem with 102 is that it doesn’t say what it means.

    102a on its face does cover the trade secret use. “unless..the invention was known or used by others in this country …”. Now explain to your Grandma why that doesn’t cover the trade secret use. You can’t by just pointing to 35 USC 102.

  14. 19

    “I’m having trouble with 35 USC 102(f); “he did not himself invent the subject matter sought to be patented…”

    Something can be “invented” multiple times. 102(f) would not apply to a legitimate and independent reinvention by a second inventor. In that case the second reinventor is regarded to have invented the subject matter. Instead 102(f) kicks in where a second person derives from the first invention. In that case the 2nd person is not an inventor.

    The provision which awards a patent only to a first inventor (who does not conceal, abandon, etc.) rather than a second one is 102(g). But even then, in some cases the patent can be awarded to a diligent inventor who is second in time.

  15. 18

    I’m having trouble with 35 USC 102(f); “he did not himself invent the subject matter sought to be patented…”

    And I confess to being unable to conceive of an example of commercial use (secret or not) here or elsewhere, by an earlier third-party inventor that could not be asserted as prior invention under 102(f) to void the claim to inventorship by a later independent inventor filing an application.

    However, if such secret use were undertaken by a later independent third-party, the proposed rule appears to grant him prior user rights against the earlier inventor who (with proper diligence) delays the application filing for more than a year after such third-party use began.

  16. 17

    TJ – thanks for reinforcing what I already said in a previous post. ;) Of course, at least you seem to grasp the concept of “prior user rights” – unlike several of the other posters on this topic. Frankly, some of you need to go back and study 102 and 273 before you get yourselves in trouble.

  17. 16

    Yo, what in the world are you talking about? First of all, this change has absolutely nothing to do with prior art – it would not change or affect ANYTHING in 102. Secondly, your suggested change to 102a is absurd.

  18. 15

    This seems like too much of a change. 102a already covers known or used by others before the invention. They should just change 102a to say more than 1 year before the filing date of the patent application (like 102b). Then we won’t have to relitigate all 102a law again.

  19. 14

    Metoo, one note is that the prior user right applies only to business methods, not all methods. The section’s definition of “method” is somewhat awkward.

    Kevin, the incentive to patent a method that you could keep using if there was a broad prior user defense is to *exclude* any future independent-inventor competitors. Otherwise, your happy trade-secret monopoly dissolves into a not-so-happy duopoly if an independent inventor comes along. Granted, that incentive is not as strong as if there was no prior user defense at all; but the incentive is still there.

  20. 13

    Of course, the purpose of not permitting prior user rights broaddly is that it would remove one of the inventives for patenting – the risk that if someone else patents the undisclosed method you might be putting your manufacturing capacity at risk. This isn’t an issue merely for older manufacturing technologies – if you produce a recombinant cell for producing protein X (used as a pharmaceutical), and the recombinant has patentable properties (VERY high yield, for example), what is your incentive to patent it (absent best mode issues) if the law permits you to show you were a prior user. It seems this has the potential to actually extend the scope of exclusivity, and of course it vitiates the other gaol of the patent system, disclosure.

  21. 12

    Snitty – prior user rights (at least under current 35 USC 273) is limited to prior commercial use of a method in the U.S. prior to the effective filing date of the patent. I have not seen anything recent which would suggest that might be changed.

  22. 11

    And keep in mind that the current statutory provision on prior user rights (35 USC 273) is limited to “methods of doing or conducting business.” The legislative history includes the following: “the defense will not be available if the subject matter itself is a useful end product or service that constitutes one or more claims in the patent.” I do not believe that he current patent reform bill changes the limited applicability of prior user rights (i.e., applies only to method of doing or conducting business).

  23. 10

    just visiting – I believe that a secret, but commercial use of an invention in the U.S. more than one year prior to the filing date by the applicant of the applicant’s assign is a bar to patentability in ALL cases (not just some). The classic example is the secret use of a method of producing products which are sold, wherein the method cannot be determined from the product. That’s a commercial use of the method and the 102(b) clock starts ticking. But, 102(b) also applies to the secret use of something which is not directly related to a product or service which is sold. For example, if the invention is a new cleaning solution and the applicant’s (inventor or assign) janitor uses the solution in secret every night to clean the floors of the car factory, it is a commercial use which starts the one year clock running.

    On the other hand, a secret commercial use by a third party (i.e., not the inventor or assign) is not prior art under 102(b). Thus, in my example of the new cleaning solution, it would be possible for someone else to independently invent that cleaning solution years later and still obtain a patent. Under current law, it would even be possible for that third party inventor to enforce the patent against the prior user who invented earlier and even used it commercially – albeit in secret.

    So, prior user rights would be important for anyone that commercially used an invention in secret more than one year prior to another’s filing date. And such prior user rights would not in any way affect the validity of a patent – i.e., secret commercial use by someone other than the inventor is not prior art under 102(b)

  24. 9

    What about one year of prior use in another country prior to filing, then infringing use in America after issue? If it’s the same company would that work as a defense? I’m not familiar enough with the proposed amendment to know.

  25. 8

    “However, an invention that in commercial use more than one year before the filing date would usually be found unpatentable as anticipated. Can you provide example situations where prior user rights might be important?”

    In some cases an invention used as a trade secret for a party’s commercial benefit acts prior art preventing that party from getting a patent, but would not prevent others from independently inventing and patenting that same invention. A prior use right would then prevent the situation where the first party would be forced to stop using an invention.

    The current prior user rights are limited to business method inventions because Congress felt that the patentability of business methods was new and that someone might legitimately have failed to file a patent on such an invention because they were unpatentable. That rationale would not apply generally to user rights and a more general right would seem to partially undermine the incentive to file for patents.

    Of course prior user rights reduce the penalty for attempting to exploit an invention as a trade secret an thus do lessen the incentive to file for patents and disclose inventions.

  26. 7

    In addition to those already listed by other readers, one example that comes to mind for me is a public use in a foreign country more than a year before the filing of the application, which is not currently anticipatory prior art under either 35 USC 102(a) or (b).

  27. 6

    If the commercial use of an invention is kept as a trade secret and does not yield any publicly disclosed product, I think there would not be any 102 art. But please correct me, if there is any caselaw to the contrary.

  28. 5

    Ha! Ain’t Dennis beginning to sound like a prof now??

    My experience from 20 years ago is still etched in my mind. That first year teaching was a nightmare — writing endless lecture notes, producing endless handouts, grading endless papers, and coming up with bullet-proof exam questions, then grading the exams.

    Good luck with your coming school year, Dennis. It looks like you’re off to a great start!

    Babel Boy

  29. 4

    Trade secret comes to mind. Many such prior art uses may not be demonstrable with the clear and convincing evidence, but a weaker showing may improve the odds.

    Also, experimental uses are likely to be an important category as they also tend to be on the edge of commercial and experimental use. Often, it takes no more than an admission to turn putative experimental use into commercial use.

    The change may allow a serious choice between (i) trade secret, (ii) experimental use, (iii) commercial use, instead of filing for a patent. This may also solve the problem of too many patent applications to examine.

  30. 3

    > Can you provide example situations where prior user rights
    > might be important?

    How about the situation where the claimed invention is a method of making a widget, where the widget itself is old? The accused infringer has been making the widget using this method for several years before the filing date of the patent, but has kept the method as a trade secret.

    That wouldn’t be a publication or public use, and might not be a “sale”, since the product which was sold is old and there is no way the consumer can tell what method was used to produce it. Prior user rights would allow the infringer to avoid liability as a defense, while not invalidating the patent as to third parties.

  31. 1

    Presumably the burden under this defense is simply preponderance of evidence, which would at least make it technically distinguishable from the clear and convincing standard for proving invalidity. Apart from this, I do not presently see how the defense is meaningfully different from asserting invalidity.

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