Among the many changes in U.S. patent law produced by the Leahy-Smith America Invents Act of 2011, the elimination of secret prior art has received little attention.
Many of us have been bombarded by publications, electronic releases and CLE opportunities to prepare us for the many changes in U.S. patent law that became effective, or will become effective shortly, with the passage of the legislation commonly referred to as the AIA. Perhaps most significantly, in only limited circumstances will a patent applicant be able to overcome prior art dated prior to the effective filing date of its application.
But the act also redefines the term "prior art," insofar as it relates to the patentability of applications with an effective filing date after March 16. For applications having a claim with a later filing date, the AIA, in 35 USC §102, effectively defines prior art as anything "patented, described in a printed publication, or in public use, on sale, or otherwise available to the public." With the AIA, Congress added the latter phrase, "or otherwise available to the public," to the pre-AIA definition of prior art. In this way, the AIA expanded prior art to include the variety of ways information can now be published, not the least of which is publication via the Internet. This would seem to indicate congressional intent to broaden the definition of prior art.
But from a literal reading of the statute, it is not clear whether the phrase "or otherwise available to the public" merely defines (or at least describes, if not defines) still another class of prior art or, in addition, modifies the earlier statutory categories of prior art. Guidelines published by the U.S. Patent and Trademark Office (PTO), as to how it will interpret the AIA, indicate that the PTO will interpret the phrase both ways; that is, as a potentially new category of prior art and as a modifier of the categories identified just before that phrase. Thus, "on sale" activities, such as offers for sale or commercial use of invention, that do not amount to a public disclosure of the invention, will not be considered prior art by the PTO.
This is a significant change, overruling decisions that had heretofore been considered settled patent law. Under pre-AIA law and with only minor exceptions, information disclosed privately to an inventor qualified as prior art for both anticipation and obviousness analyses, as ruled in OddzOn Products v. Just Toys, 122 F. 3d 1396 (Fed Circuit, 1997). Similarly, an inventor’s own commercial use of an invention, more than a year before the inventor applied for a patent on the invention, qualified as patent-precluding prior art, even if the commercial use did not in effect disclose the underlying invention to the public, as decided in Metallizing Engineering v. Kenyon Bearing and Auto Parts, 153 F. d 516 (2d Cir. 1946). More recent U.S. Court of Appeals for the Federal Circuit cases are similar.
Neither pre- nor post-AIA patent law includes a statutory provision specifically covering either of these fact patterns. Both pre- and post-AIA 35 USC §102 lists "on sale" as a factor precluding patentability. Pre-AIA 35 USC §103 excludes from prior art private disclosures from persons having a common duty of assignment or in the course of a formalized joint research contract. Post-AIA 35 USC §103 includes no such explicit exclusion. Neither the pre-AIA 35 USC §103 nor the post-AIA 35 USC §103 defines prior art. Case law generally infers a definition, for §103 purposes, based on the factors that §102 lists as factors precluding patentability.
In its Examination Guidelines for Implementing the AIA (77 Federal Regulations, 43765), the PTO indicated that it would take the view that the "or otherwise available to the public" residual clause of the AIA’s 35 USC §102(a)(1) indicates that secret use, offer for sale, or other commercial activity does not qualify as prior art. In its response to certain comments on this point in the guidelines, the PTO acknowledges that the question of the availability of secret prior art will ultimately be addressed in the courts. The PTO supports its interpretation by reference to remarks in the congressional record that may or may not be considered part of the legislative history. At least some of these remarks became part of the legislative history, according to the PTO interpretation, only when they were referred to in other parts of the legislative history.
As a practical matter, this makes it possible, if the PTO interpretation is correct, for a manufacturer to use a secret commercially important process indefinitely and then to file a patent application only when it becomes expedient to do so.
Since we are often asked to advise on the merits of maintaining potentially patentable but secret processes as trade secrets, we will likely be called upon to assess the risks involved in doing so, in light of the new law. That calls into question as well a company’s policies and procedures regarding trade secrets and employee, consulting, collaboration, supplier and customer agreements.
The risks associated with a company’s reliance on trade secrets to protect a commercially important, and possibly patentable, secret process do bear consideration. While the prior commercial user defense of 35 USC §273 protects the secret user against the possibility of a third party later getting a patent assertable against the secretly used process, there remains risks associated with proving the dates and details of the prior secret use and the inadvertent loss of secrecy due to inadequate trade secret protection. These risks can and should be minimized, such as by a competent intellectual-property audit. Such an audit, if comprehensive, will review a company’s business to identify commercially and technically important intellectual property generally and trade secrets particularly. Once identified, sources of possible inadvertent external disclosure of those trade secrets can be locked down. This, of course, is a good business practice, entirely apart from the additional reason for doing so if the company is depending on the PTO’s interpretation of the AIA’s definition of prior art.
With respect to the risk of relying on the PTO’s interpretation of the provision that may eliminate secret prior art, one may also question the policy implications of permitting another form of submarine patents that may surface long after a technical innovation has reached commercial viability. And one may view the deliberately deferred filing as an unwarranted extension of the time-limited period of exclusivity envisioned in the constitutional underpinning of the patent system. With these caveats, courts may take a different view of the new law. Surely, courts will be encouraged to do so by those charged with infringement of a patent filed long after a secret process has been used commercially.
Still another aspect of the PTO’s interpretation of AIA prior art, the reduced availability of private disclosures to inventors as prior art in an obviousness analysis, favors many patentees in the current environment of informal but collaborative research among corporate, government and research institution scientists. Even if the PTO interpretation is overruled, some explicit protection for the patentee remains under AIA for private disclosures in the course of a formalized joint research agreement or from a person under a common duty of assignment. However, this explicit exclusion is apparently narrowed by the AIA, as discussed below. In any event, accused infringers will likely attack the PTO’s interpretation to expand the scope of prior art they may rely upon in trying to invalidate a patent. Accused infringers may also benefit from what appears as an anomalous omission from the AIA.
In the pre-AIA version of 35 USC §103, prior art for obviousness purposes excluded all subject matter developed by another person under a common duty of assignment or working in the course of a formalized joint research agreement. Post AIA, 35 USC §103 refers to prior art but includes no explicit exclusions for what may be considered prior art. Typically, as indicated above, a definition of prior art, for §103 purposes, is inferred from §102. Reading Sections (c), (b)(2)(C) and (a)(2) of AIA §102 together, that definition excludes from prior art the disclosure by a person under a common duty of assignment or working under a formalized joint research agreement with the inventor, only when such disclosure occurs in a patent or application with an earlier effective filing date. Seemingly not excluded from prior art, assuming the PTO’s interpretation is overruled, are private disclosures, such as among collaborating scientists, even scientists in the same company. One possible explanation for this is that the drafters did intend deliberately to remove prior secret disclosures from the collection of information referred to as prior art as indicated by the definition of prior art in §102. If so, this is not clear from the legislative history cited by the PTO to justify what it would consider prior art under the AIA.
The AIA, in general, has been described as a full employment undertaking for patent attorneys. Whether prior nonpublic disclosures are disqualified as prior art, as the PTO’s interpretation of the AIA indicates, will likely be one of the questions to be litigated. •
Paul F. Prestia is senior counselor and strategic adviser at RatnerPrestia, the firm he co-founded and led as CEO for many years. His current practice is focused largely on IP counseling for risk management due diligence, strategic IP protection and IP value realization.