Source: http://cychanglaw.com/index.php?url=archives/74-Expanded-prior-use-defense-under-AIA.html&serendipity%5Bcview%5D=linear
Timestamp: 2017-10-24 01:55:34
Document Index: 527836395

Matched Legal Cases: ['§273', '§273', '§273', '§273', '§273', '§273', '§273', '§273', '§273', 'art_2', '§4302', '§273', '§271', '§273']

Expanded “prior use” defense under AIA - Rebuttable
- Trade secrets +1; patents -1
The America Invents Act[1], enacted on September 16, 2011, amended the Patent Act in several critical areas. One of the amendments was directed to §273, which provides a defense to infringement for “prior use” of a patented invention.
Generally, §273 allows an entity that has been accused of infringing certain types of patents to escape liability if the entity has first used the patented invention at least 1 year before the effective filing date of the patent. The permissible “prior use” can be either internal or public. Even before the enactment of the previous §273 in 1999, there had been calls for a broad “prior use” defense for all patentable inventions since at least as early as the 1960s[2], but Congress was not able to act on these calls. Primarily because of the commercialization of the internet, the proliferation of business method patents, and the 1998 State Street decision[3] where the Federal Circuit explicitly held that business methods were patent eligible, Congress was able to gather enough votes in 1999 to pass a “prior use” defense under the previous §273, but only for the narrow scope of “methods of doing or conducting business.”[4]
As an example, Company A began using a business method internally as a trade secret in 1995. Company A did not apply for a patent for the method, having determined that business methods generally were not patentable. In 2000, however, Company B obtained a patent on the same method, and accused Company A for infringing the patent. In such a case, Company A can raise the “prior use” defense pursuant to the previous §273 to prove that it is not liable for infringement.
Under the previous §273, however, if Company A had used a method of manufacturing, instead of a method of conducting business, it would not have been able to avail itself to the “prior use” defense. Because of this, proponents for a broader scope of the “prior use” defense had argued that the absence of such a broader defense would lessen the competitiveness of US manufacturers with foreign competitors, and encourage US corporations to move manufacturing overseas[5].
In the amended §273, Congress was finally able to expand the “prior use” defense to virtually all patentable subject matters, including processes, machines, manufactures, or compositions[6]. Under the amended §273, an entity accused of infringing a patent can escape liability if it had invented and commercially used the patented invention at least 1 year before the earlier of the effective filing date of the invention or the date when the invention was disclosed to the public.
In practice, the expanded “prior use” defense under the amended §273 will further encourage inventors to use trade secrets, instead of patents, to protect their inventions. In this round of disclosure against secrecy, therefore, secrecy has scored a win. In terms of public policy, however, we should keep in mind that one of the primary rationales for granting patents is to encourage public disclosure of inventions, so the general public can share and build on the fruits of individual intellectual endeavors. We should continue to monitor and assess the practical implications and impacts of such a shift from disclosure to secrecy.
Additionally, AIA includes many other provisions to improve the patent system, such as prior art submission, post-grant review, inter partes review, and fee-setting power of USPTO. USPTO has also embarked on several initiatives, such as incorporations of crowdsourcing for prior arts. Let’s hope these and other future changes will achieve the right balance between disclosure and secrecy in encouraging innovations and ensuring competitions.
[1] Public Law 112-29.
[2] See, e.g., Joe Matal, A Guide to the Legislative History of the America Invents Act, Part II of II, 21 Fed. Cir. B. J. 539, 555 (2012), available at http://www.uspto.gov/aia_implementation/guide_to_aia_part_2.pdf.
[3]State Street Bank and Trust Company v. Signature Financial Group, Inc.,149 F.3d 1368 (Fed. Cir. 1998).
[4] §4302(a) of the American Inventors Protection Act, Public Law 106-113, titled the First Inventor Defense Act, codified as 35 U.S.C. §273(a)(3).
[5] If US manufacturers used patents to protect their inventions, the patents would be difficult to enforce overseas. On the other hand, if US manufactures used trade secrets for protection, they would be subject to attacks by others who obtained patents on the inventions. See, e.g., Matal, at 552. §271(g) of Patent Act, enacted in 1998, partially alleviated this concern by providing that an imported product made overseas using a process patented in US would be liable for infringement. See, e.g., http://www.finnegan.com/resources/articles/articlesdetail.aspx?news=c9459d08-6491-4e06-8ab2-aa12db3045b7.
[6] “IN GENERAL. -- A person shall be entitled to a defense […] with respect to subject matter consisting of a process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process, that would otherwise infringe a claimed invention being asserted against the person[.]” Sec. 5(a) of the America Invents Act, codified as 35 U.S.C. §273(a).
Posted by Chia-Yu Chang in Patent at 16:05