Posts Tagged ‘Patent Reform’

Prior Use Rights – a double-edged sword

Chess piecesOne interesting aspect to the new patent law is the section relating to prior use rights.

If you are a small company who hits on a great way of doing things but can’t afford to patent it, and someone, years later, gets a patent for that exact same technology and tries to sue you for infringing their patent, you can now defend yourself against infringement with the expanded prior use rights. You couldn’t do this before except in very limited circumstances involving business method patents and the new law has expanded this right. To take advantage of the defense, you yourself have to have been using the invention in commerce for at least a year before the patent holder filed her application – you can’t just assert that “everybody” was using it although you yourself weren’t. If you can do this though, you have a defense to infringement.

Prior use rights is a double-edged sword however. There are two related ways in which misuse of this right can impact companies:
1) “Stealth Prior Art” – A competitor can invent technology, keep it a trade secret, and then later prevent a patent holder from enforcing a patent by showing that the competitor used the technology in commerce before the patent holder filed for the patent. In this way, the competitor acts as “stealth prior art” – no one knew how their technology worked or that they were using it in this way, the market wasn’t benefiting from having knowledge about this technology, and when a party that actually did disclose the technology to the public tries to enforce their patent, they are now faced with this secret prior use that weakens the utility of their patent, at least as to the stealth competitor. There’s something unsavory about the potential for abuse in this type of scenario. For a more detailed discussion of the ways in which prior use rights can be misused, you should check out IP Watchdog’s series of articles on this topic.
2) Pressure to file earlier – one clear way to deal with the possibility of stealth competition is to file as soon as you possibly can, which puts more pressure on already-constrained patent budgets.

Prior use rights can be an extremely helpful way in which small companies can defend themselves against companies that have more funding and can afford more robust patent portfolios. Unfortunately, as is often the case, there are still ways in which a useful tool can backfire. This is a potentially troubling, and somewhat controversial, aspect of the new law that the industry will be watching with interest.

What “First-to-File” Means for You

Keyboard button with the word "learn" on it There’s been a lot of talk about the new Patent Reform Act of 2011. Congress has been talking about reforming the patent laws for a number of years now and earlier this year got to work on the latest round of revisions. Although they had discussed some really exciting changes, the actual law that passed was disappointingly modest. However, one of the most talked-about changes did make it into the new law – the move from first-to-invent to first-to-file.

First-to-Invent meant that if you invented something and a competitor filed an application for that exact same invention before you filed your application, there was a court proceeding you could undertake to prove you invented first (it was called an interference).

First-to-File means that if you invent something and a competitor filed an application for that exact same invention before you filed your application, you don’t get to patent your invention.

This might sound like bad news. But the reality is that interference proceedings are actually terribly expensive, time consuming, and challenging to win. Most companies don’t have the resources to undertake what’s effectively a small law suit. If you were a large company with over 500 employees and significant resources, you might have had a budget for interferences. But on average, over the last ten years about 100 interference proceedings are started every year – contrast that with an average of 210,000 patent applications getting filed every year. So not even large companies operating in a great economy were making use of this process with any great regularity.

A lot of people, unaware of the costs and the high burden of proof, have the illusion that a first-to-invent system would have protected them against competitors who can file applications more quickly. I’d say we’re better off with a more honest system that doesn’t hold out this kind of false hope. Developing a valuable patent portfolio is hard enough without that.

PTO Reform may be minutes away

Posted on March 3, 2011 by

After years of waiting for patent reform, and agonizing over whether it would be good or bad or useless, the patent world may soon find out that Congress has actually passed a reform act. I hear the Senate is voting as we speak and that very soon we’ll have some interesting changes to discuss! Two of the more exciting things from my perspective would be:
– that the Patent Office would have the authority to set fees – and define the filing discounts smaller companies get!
– that the Patent Office can keep the fees it collects, instead of being required to give the majority of the fees over to Congress.

I’m going to go back to hitting “refresh” on the web sites and will post an update when there’s news.