The inventor of new technology has two choices\nfor protection: patents or trade secrets. \nThey are generally mutually exclusive, because the disclosure\nrequirements to obtain a valid patent, or inconsistent with the secrecy needed\nto have a protectable trade secret. For\nmost inventions, the choice is easy. Because\ntrade secrets only last while the invention is secret, they are not good\nprotection for inventions that are revealed to the public when the invention is\ncommercialized. However, for inventions that\nare not disclosed by commercialization — typically inventions related to the\nmanufacture of the product like recipes, manufacturing processes, and\nmanufacturing equipment \u2013 trade secret protection may be a reasonable choice. It is hard to detect infringement of a patent\nthese types of patents inventions, so keeping the inventions out of the hands\nof competitors by keeping them secret may offer the best protection.<\/p>\n\n\n\n
However, trade secrets have a critical weakness \u2013 the loss of secrecy destroys them.\u00a0 Thus while trade secrets have a potentially infinite life, their life can also be disappointingly brief if the secrecy is lost \u00a0or if the it is independently developed.\u00a0 But independent creation has another possible consequence \u2013 the second inventor might decide to patent the invention, and enforce it against the first inventor who decided to keep it a trade secret. <\/p>\n\n\n\n
The first inventor could be vulnerable, as its activities may not constitute \u201cprior art\u201d that can be used to challenge the second inventor\u2019s patent.\u00a0 However the AIA created a prior user defense in 35 USC 273, which was tailor-made for this circumstance.\u00a0 The defense applies to a patent on a process, or a machine, manufacture, or composition of matter used in manufacturing or other commercial process.\u00a0 The defense requires that the prior user, (1) acting in good faith, (2) commercially used in the invention, (3) in the United States, (4) either in connection with an internal commercial use or a sale or transfer, (5) at least one year before the earlier of the patent filing date or first public disclosure.<\/p>\n\n\n\n
The first inventor has the burden of proof, and thus should keep records sufficient to be able to established the defense.\u00a0 The defense is also personal, and can only be asserted by the person who performed or directed the performance of the commercial use, or by an entity that controls, is controlled by, or is under common control with such person.\u00a0 The defense can be transferred, but only ancillary and subordinate part of a good-faith assignment or transfer for other reasons of the entire enterprise or line of business to which the defense relates.\u00a0 Moreover, when transferred, the defense is limited to the uses at sides where the invention was used before the later of the effective filing date of the claimed invention or the date of the assignment or transfer of such enterprise or line of business.<\/p>\n\n\n\n
Of course asserting the prior user defense takes fortitude, be it is basically conceding infringement, and depending on the circumstances, willful infringement if the defense does not succeed. \u00a0Further, there are a number of limitations that make the prior use defense unreliable:<\/p>\n\n\n\n
For these reasons, a prior inventor who decides to rely on trade secret protection for an invention may wish to set up a invalidity defense should a second inventor come along and get a patent.\u00a0 The first inventor might do so by making a public disclosure of just enough information to make the invention unpatentable without revealing the trade secret itself.\u00a0 This disclosure might prevent a third party patent from issuing, or if it did issue, could be used to invalidate it. Such a strategy is fraught with uncertainty in striking the balance of invalidating subsequent patents while not disclosing enough to destroy the trade secret.<\/p>\n\n\n\n
Another strategy might be to leverage the Supreme Court decision in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc., and arrange for a non-disclosing sale of the invention.\u00a0 Since it should not make a difference who is the buyer and who is the seller, the first inventor could contract to buy the invention from a vendor bound by a confidentiality agreement.\u00a0 Should a patent issue to a third party, this non-disclosing sale would be prior art as long as it occurred before the third party filed its patent application.\u00a0 (Note that none of the exceptions in 102(b) appear to apply to a non-disclosing sale.). <\/p>\n\n\n\n
It\u2019s amusing to contemplate even more devious ways to hide prior art in plain sight, maintaining relative confidentiality while setting up a prior art road block to third party patents. Although such gamesmanship may not guarantee the desired result.\u00a0 For example, in In re Wyer, 655 F.2d 221 (C.C.P.A. 1981), a patent application was filed with the Australian Patent Office, resulting in the publication of a printed abstract of the application, and microfilm copies being retained by the Australian Patent Office, available for the public to view and copy.\u00a0 As a result, the application was found to be a prior art printed publication by the Federal Circuit\u2019s predecessor, the CCPA. <\/p>\n\n\n\n
In In re Hall, 781 F.2d 897 (Fed. Cir. 1986), a dissertation was submitted to the Department of Chemistry and Pharmacy at Freiburg University in Germany, indexed in a special dissertations catalog which was part of the general users\u2019 catalog, and stored in the stacks in a special dissertation section.\u00a0 As a result, the dissertation was found to be a prior art printed publication by the Federal Circuit.<\/p>\n\n\n\n
In Mazzari v. Rogan, 323 F.3d 1000 (Fed. Cir. 2003) , a report was indexed, cataloged, and available to the public at the Ontario Power Generation Resource Center.\u00a0 Another report was written in German, but also available at a library.\u00a0 The court simply held, with respect to the German reference, that a publication printed in a foreign country can act as a statutory bar.\u00a0 As a result, the report was found to be a prior art printed publication by the Federal Circuit.<\/p>\n\n\n\n
In re Klopfenstein, 380 F.3d 1345 (Fed. Cir. 2004), a fourteen-slide presentation was printed and pasted onto poster boards and displayed continuously for two and a half days at an American Association of Cereal Chemists meeting, and then put on display for less than a day at an Agriculture Experiment Station at Kansas State University. As a result, the presentation was found to be a prior art printed publication by the Federal Circuit.<\/p>\n\n\n\n
Finally, in Bruckelmyer v. Ground Heaters, Inc., 445 F.3d 1374 (Fed. Cir. 2006), a Canadian patent application included two figures that were cancelled during prosecution and not included in the patent that issued from the application.\u00a0 The application, including the two cancelled drawings, was found to be a prior art printed publication by the Federal Circuit.<\/p>\n\n\n\n
Conclusion<\/p>\n\n\n\n
Deciding to treat an invention, particularly one relating to the manufacture of a product, as a trade secret, rather than patenting it, is often a good decision.\u00a0 This is particularly true, if infringements would be hard to detect. However, the inventor should consider the ability to keep the invention secret, and the likelihood that a third party might subsequently make the same invention.\u00a0 The inventor should also consider the likelihood that the third party might obtain a patent, and if the prior user defense should fail, what the inventor can do to be prepared to invalidate that patent.<\/p>\n","protected":false},"excerpt":{"rendered":"
The inventor of new technology has two choices for protection: patents or trade secrets. They are generally mutually exclusive, because the disclosure requirements to obtain a valid patent, or inconsistent with the secrecy needed to have a protectable trade secret. … Continue reading