While most provisions of the Leahy-Smith America Invents Act do not take effect until September 16, 2012 or March 16, 2013, several litigation-related provisions took effect immediately, on September 16, 2011. Among those is the newly expanded prior commercial use defense, which includes terms that are directly relevant to the pharmaceutical industry.

Defense To Infringement Based On Prior Commercial Use

The America Invents Act changed the title of 35 USC § 273 from "Defense To Infringement Based On Earlier Inventor" to "Defense To Infringement Based On Prior Commercial Use." The Act also expands the defense from applying only to method claims to applying to a process, machine, manufacture or composition used in a process:

(a) IN GENERAL.—A person shall be entitled to a defense under section 282(b) 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 . . . .

To invoke the defense, a person must show by clear and convincing evidence that

(1) such person, acting in good faith, commercially used the subject matter in the United States, either in connection with an internal commercial use or an actual arm’s length sale or other arm’s length commercial transfer of a useful end result of such commercial use; and

(2) such commercial use occurred at least 1 year before the earlier of either—

(A) the effective filing date of the claimed invention; or

(B) the date on which the claimed invention was disclosed to the public in a manner that qualified for the exception from prior art under section 102(b).

The previous version of the defense required the person to have reduced the subject matter to practice at least one year before the effective filing date, but only required the commercial use to have occurred at any time before the effective filing date. Now, the commercial use must have commenced at least one year before the effective filing date.

Like the previous version, the defense is personal, non-transferable, and does not render the patent invalid.

Defense To Infringement Based On Pre-Marketing Regulatory Activities

Like the previous version of the statute, the revised statute expressly includes pre-marketing regulatory review in the definition of "commercial use":

(1) PREMARKETING REGULATORY REVIEW.—Subject matter for which commercial marketing or use is subject to a premarketing regulatory review period during which the safety or efficacy of the subject matter is established, including any period specified in section 156(g), shall be deemed to be commercially used for purposes of subsection (a)(1) during such regulatory review period.

Defense To Infringement Based On Nonprofit Laboratory Use

Like the previous version of the statute, the revised statute also includes a defense for nonprofit laboratory use:

(2) NONPROFIT LABORATORY USE.—A use of subject matter by a nonprofit research laboratory or other nonprofit entity, such as a university or hospital, for which the public is the intended beneficiary, shall be deemed to be a commercial use for purposes of subsection (a)(1), except that a defense under this section may be asserted pursuant to this paragraph only for continued and noncommercial use by and in the laboratory or other nonprofit entity.

No Defense Against University-Owned Inventions

New to the statute is an exclusion of patents to inventions that were owned by a university at the time the invention was made:

(5) UNIVERSITY EXCEPTION.—

(A) IN GENERAL.—A person commercially using subject matter to which subsection (a) applies may not assert a defense under this section if the claimed invention with respect to which the defense is asserted was, at the time the invention was made, owned or subject to an obligation of assignment to either an institution of higher education (as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)), or a technology transfer organization whose primary purpose is to facilitate the commercialization of technologies developed by one or more such institutions of higher education.

The statute appears to include a carve-out to the exception if the invention was made using federal government support:

(B) EXCEPTION.—Subparagraph (A) shall not apply if any of the activities required to reduce to practice the subject matter of the claimed invention could not have been undertaken using funds provided by the Federal Government.

(This clause may need a technical amendment--I think there may be a word missing?)

Scope Of Defense Is Limited By Specific Patent Claims

Like the previous version, the scope of the defense is limited by the scope of the prior commercial use and by the scope of the specific patent claims at issue:

(3) NOT A GENERAL LICENSE.—The defense asserted by a person under this section is not a general license under all claims of the patent at issue, but extends only to the specific subject matter for which it has been established that a commercial use that qualifies under this section occurred, except that the defense shall also extend to variations in the quantity or volume of use of the claimed subject matter, and to improvements in the claimed subject matter that do not infringe additional specifically claimed subject matter of the patent.

This clause makes it important to keep detailed records of internal processes (to be able to establish the defense), and also indicates the potential value of patent claims that recite specific details of an invention (to avoid the defense).

Effective Date

The changes to 35 USC § 273 took effect on September 16, 2011 and apply to any patent granted on or after September 16, 2011.