Defendants accused of patent infringement are often bewildered to learn that their use of technology they developed themselves may nonetheless constitute patent infringement – even when their development and use predates the patent itself. The recently enacted America Invents Act of 2011, however, provides a new “prior use” defense for parties that can prove by clear and convincing evidence that they have been continuously engaged in the commercial use of the patented technology for more than one year prior to the filing date of the patent they are accused of infringing.

A Brief History of the Prior Use Defense

The purpose of the U.S. patent system is to promote innovation by motivating inventors to disclose their inventions to the public. In exchange for the disclosure of an invention meeting all other statutory requirements, the U.S. government will grant an inventor a limited right to exclude others from using the technology in the form of a patent. On the other hand, an inventor that develops technology, but elects to use it in secret instead of pursuing a patent thereby abandons his right to later seek a patent on that technology. By choosing to use his invention in secret, the inventor prevents or delays its public disclosure, thus reducing any value the public might have gained from the “patent bargain.”

When an inventor elects to maintain his invention as a trade secret and use it in secret, he runs the risk of another inventor independently developing the same technology and securing a patent on it. Traditionally, the first inventor could be found liable for patent infringement, even if he invented the technology before the patent owner. To many, this seemed a harsh consequence for merely forgoing one’s right to seek a patent – particularly for inventors who have no interest in excluding others from using their technology.

In 1999, the American Inventors Protection Act created a prior use defense (35 U.S.C. § 273) for those accused of infringing “methods of doing or conducting business.” The 1999 prior use defense was perceived as Congress’s reaction to the then-new influx of patent applications covering various methods of doing business. Many business method patent applications were being filed in the wake of the Federal Circuit Court of Appeals’ State Street Banki decision, which putatively extended patent coverage to business methods. The 2011 Act modifies the prior use defense by, most significantly, extending its applicability beyond business method patents.

Application of the Prior Use Defense

Prior to its recent amendment, Section 273 was expressly limited such that it could not be asserted “unless the invention for which the defense is asserted is for a method.” The 2011 Act purports to extend the defense to include subject matter “consisting of a process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process.” Although the 2011 Act can be read to expand the defense to all infringement allegations – e.g., for making and selling a device – courts are likely to limit the application of Section 273 to uses of a device in manufacturing or some other commercial enterprise. While the application of the prior use defense has clearly been extended beyond business methods, it is not clear that it is intended as a defense to every allegation of infringement.

Like its 1999 predecessor, the amended Section 273 requires that the party asserting the defense demonstrate that its prior use is commercial and that its use has been continuous for more than one year prior to the filing date of the patent.

Relationship with Invalidity Defense

Presumably, because of substantial overlap between the elements of the prior use defense and the defense of invalidity on the basis of a prior public use, Section 273 specifies that a “patent shall not be deemed to be invalid . . . solely because a defense is raised or established under this section.” As with the invalidity defense, the prior use defense must be proven by clear and convincing evidence. An accused infringer may invalidate a patent by proving that the subject matter of the patent was publicly used by anyone – including the patent holder – more than one year before the filing date of the patent. A key difference between public use invalidity and the prior use defense is the public nature of the use. When the prior use is public, the invalidity defense may provide the most comprehensive defense, as it offers the possibility of rendering the patent invalid.

Practical Considerations

The prior use defense has been criticized for impairing the value of the patent bargain by reducing the motivation for inventors to seek patents. An inventor may forgo pursuing patent protection, knowing that any subsequent efforts to enforce a patent could be stymied in the event that another inventor happens to be secretly using the same invention. It is too early to tell whether the prior use defense will deter inventors from seeking patents. In the meantime, however, companies that choose not to seek patents for the technologies they are using should take special care to regularly document their commercial uses of those technologies. ____________