Posts Tagged: "prior user rights"

Prior user rights also implicate free rider problems with respect to a subsequent patent that an inventor obtains covering the subject matter of the secret prior user. At the point of publication the prior user no longer maintains a trade secret. At the point of issuance, the patentee and the prior user relatively co-exist with each other in the market. The patentee excludes others from the market except for the prior user. The prior user then enjoys the benefits and advantages associated with the patentee excluding others from operating in the market, while being free from liability to the patentee. In this regard, the prior user enjoys the period of time operating the technology in secret in addition to 20 years of excluding others provided by the competitor.

However, if prior users are keeping their technology secret while being protected, that leap-frogging from one breakthrough to the next be impeded. Disclosure is the backbone of the progression of the sciences for this reason. “[T]he ultimate goal of the patent system is to bring new designs and technologies into the public domain through disclosure.” Bonito Boats v. Thunder Craft Boats, 489 U.S. 141, 151 (1989). Sharing ideas allows others to improve upon the state of the art and as a result, better products such as medicine and consumer electronics are brought to market thereby driving our economy and benefiting the welfare of the U.S. as a whole. Prior user rights, on the other hand, will inhibit this progression.

If you believe that prior user rights are insignificant and don’t deserve discussion you have permission to keep your head firmly planted in the sand. Everyone else keep reading. Think of all that will easily be fair game in discovery. The defendant has the burden of proof and controls the evidence. Judges are going to allow liberal discovery, particularly where the evidence is uniquely held by the defendant and cannot otherwise be obtained by the patentee. 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!

Exactly who is to blame if a pharmaceutical company, say Eli Lilly, decides to invest billions of dollars and build a facility when they haven’t adequately protected their own intellectual property? Moreover, who is to blame if that company consciously chooses to resort to trade secret protection, which we all know is exceptionally fragile, as the foundation to build a multi-billion dollar investment? For crying out loud, the very premise that a patentee could force the closure of a manufacturing facility employing hundreds or thousands of people and interrupt the production and distribution of anything, let alone something as consequential as a pharmaceutical, is nothing more than fantasy. Talk about chicken little! Only someone unfamiliar with the evolution of the law relative to preliminary and permanent injunctions in patent litigation could with a straight face much such an argument. Indeed, the mother of all straw arguments!

The United States Patent and Trademark Office (USPTO) released two Federal Register Notices on October 7, 2011, seeking written comments and announcing two public hearings for two studies the agency is required to conduct under the America Invents Act. Specifically, Congress is requiring the USPTO to study and report on the availability of prior user rights in foreign countries as well as options to aid small businesses and independent inventors in securing patent protection for their inventions. The USPTO reports for both studies are due in mid-January 2012.

I have done quite a bit of writing about the America Invents Act, but I have been a bit derelict in providing the sequel to America Invents: A Simple Guide to Patent Reform, Part 1. Part of the reason, if not the entirety of the reason, is that the major parts of the American Invents Act that remain are anything but simple. On this note I embark upon Part 2, which will seek to make sense of prior user rights, post-grant review, preissuance submission and patentability changes. This will leave inter partes review, supplemental examination and derivation proceedings for the finale — Part 3.

It is fair to say that enactment of the AIA is not what most stakeholders championed early on. Many small inventors and innovation companies feel that some of the provisions are not in their best interest. IT would have preferred a bill that did more to change how patents are valued and enforced. Nevertheless, to most stakeholder, the final version of the bill is an improvement over previous versions of patent legislation. When patent reform legislation was first introduced in 2005, its primary objective was to reduce the infringement liability of large technology aggregators by significantly limiting equitable and monetary remedies, restrict venue, and make issued patents far easier to invalidate through post-grant review. In addition, earlier versions of the bill would have given the USPTO unprecedented substantive rulemaking authority and increased the cost and burden of filing a patent application. In combination, these measures would have significantly undermined the enforceability and value of patent rights, while increasing the cost, complexity, and uncertainty of obtaining patents. All of these reforms were advanced by a IT interests set on weakening the ability of small innovators to obtain and enforce patents.

The America Invents Act, which just recently passed by the Congress and sent to the White House for President Obama’s signature, is the most significant patent reform legislation in decades, and it promises to change virtually all of patent practice as we know it over the next 18 months. Some pieces of the legislation will go into effect almost immediately,…

United States House of Representatives passed H.R. 1249, which is known as the America Invents Act by a vote of 304-117. This bill differs from the Senate version of patent reform, S. 23, so there will be no bill going to the desk of President Obama just yet. There are important differences between the two bills, chief among them is funding for the United States Patent and Trademark Office.

Shortly after 2pm Eastern Time the United States House of Representatives voted on the Managers Amendment to the America Invents Act, H.R. 1249. The Managers Amendment passed by a vote of 283 – 140. The House then proceeded to address several amendments to H.R. 1249. The handwriting seems to be on the wall. The House is poised to pass H.R. 1249, together with prior user rights and without giving the United States Patent and Trademark Office access to the fees it collects without the blessing and approval of appropriators.

The man who secretes his invention makes easier and plainer the path of no one. He contributes nothing to the public. Over and over has it been repeated that the object of the patent system is, through protection, to stimulate inventions, and inventors ought to understand that this is for the public good. Where an invention is made and hidden away, it might as well never have been made at all,–at least so far as the public is concerned. The law owes nothing to such an inventor, and to permit him to lie in wait, so to speak, for one who, independently and in good faith, proceeds to make and disclose to the public the same invention, would be both unjust and against the policy of the patent laws. In the eyes of the law he is not the prior inventor.

The ink is hardly dry on the Supreme Court decision in Stanford v. Roche and already those who oppose patent reform are concocting one of the most ridiculous arguments I have ever seen to oppose first to file provisions. There are some, including at least one Member of Congress, that have started saying that the Supreme Court’s decision in Stanford v. Roche makes it clear that the first to file provisions of patent reform are unconstitutional. Just sit right back and allow me to explain to you exactly why that is perhaps the most specious argument I have ever heard.

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.

Both the House and Senate bills create the opportunity for continual and constant challenges, one right after another. For example, challengers could tie up issued patents in post-grant review, followed by inter partes review and subsequently, or simultaneously, by challenges in one of the Federal District Courts. Thus, the settling of patent rights seems a distant dream if a well funded challenger wants to tie up a patent. The only hope for the patent owner is that with every subsequent challenge it becomes more difficult to challenge. That is what S. 23 sets up by having a “substantial new question of patentability” standard to initiate a post-grant review and then a much heightened “likelihood of success” standard to institute inter partes review.