The Leahy-Smith America Invents Act of 2011 (AIA) provides a "prior use defense" to patent infringement. Specifically, a party may defend a patent infringement suit by establishing it commercially used, in good faith, a process, machine, manufacture, or composition of matter that is asserted to infringe the patent at least 1 year before the effective filing date of the claimed invention, or the date on which the claimed invention was disclosed to the public (whichever is earlier). This substantially broadens the prior use defense, which formerly applied only to business method patents. The new prior use defense provision applies to any patent issued after September 16, 2011.
The defense applies to commercial uses and certain other uses, specifically (1) uses by nonprofit entities, such as universities and hospitals, so long as the public is the intended beneficiary of the use and any continuing use of the claimed invention is for noncommercial use, and (2) use of a drug product subject to a premarketing regulatory review period (such as an investigational new drug (IND)) during that period.
The defense, as codified under 35 U.S.C. §273, includes a number of limitations, such as that (1) it must be proved by clear and convincing evidence, (2) the commercial use must be in good faith, have occurred at least a year before the asserted patent was filed or the patented invention was disclosed, and must be in connection with an internal commercial use or an actual arm's length sale or transfer, and (3) it is a personal defense. In addition, a number of issues are expected to arise about the defense, not least of which includes the meaning of "commercial use." Setting aside those limitations and issues, companies that want to avail themselves of the prior use defense need to act now to preserve the factual evidence that will be used to establish their prior use. Companies should:
- Institute a policy to retain detailed records and documentation, including materials showing the conception, design, development, testing, and initial release or commercial use of its technology.
- Maintain records on a regular ongoing basis to show continuous commercial use of the technology.
- Be sure to document ALL commercial processes, especially the internal procedures that might not result in a tangible product or service.
- If the commercial use is partly performed by other companies (such as a distributor, supplier, or end-user), those companies should also document their commercial use.
- Laboratory notebooks can be used to record research activities as a technology is designed, tested, and reduced to practice. Entries should be made in ink, without blank spaces, and in chronological order. The notebook pages should be
- 6. All materials regarding prior commercial uses should be stored in a secure area. Photographs, technical specifications, user manuals, operating procedures, receipts, order forms, canceled checks, samples, invoices, and test results can be affixed into laboratory notebooks, or separately bound and witnessed. Computer data should be archived or stored.
A company might be tempted to ignore the prior use defense and instead create "defensive disclosures" to ward off competitive patents. After all, defensive disclosures (such as a publication or patent application) is prior art that can be used to invalidate a competitor's patent, and requires less effort than the ongoing process of preserving factual evidence. And any patent would increase the company value and potentially provide a monopoly advantage in the marketplace. Indeed, one advantage of this is that the defensive disclosure only needs to pre-date the accuser's patent (or earlier disclosure) by a day (under the new first-to-file law which takes effect in March 2013), rather than the one year needed for the prior use defense. And a defensive disclosure could potentially be combined with other prior art.
But there are also potential problems with relying on defensive disclosures to invalidate a patent. For instance, if the disclosure does not reveal the entirety of the technology that is commercially used, a competitor's patent could fall within that technical gap. And, a defensive disclosure may not include all the details needed to completely invalidate a patent. For instance, a journal publication is directed to a sophisticated audience and may exclude minor details that are critical to defend against a patent. In addition, many companies fail to appreciate that a technology could be patented, and therefore may not file for a patent or otherwise create a defensive disclosure.
In addition, the defensive disclosure approach may not be suitable for technologies that remain secret when commercially used, such as certain manufacturing methods, services, or computer processes. Trade secret protection may be more appealing to companies having those "secret sauce" technologies.
Accordingly, both offensive (patenting) and defensive (documenting commercial use) measures are needed to best defend against a patent infringement action. A proactive patent program may not be sufficient to ward off competitor patents by itself, so that it is prudent for companies to document their commercial activities. Establishing a process for documenting prior use may be a critical backup to those defensive disclosures, and is even more valuable to defend against patents covering those secret sauce technologies.