The New Prior User Rights Defense: How Often Will It Be Asserted?

Before the America Invents Act (AIA), the prior-user defense to infringement was limited to “method[s] of doing or conducting business.” While rarely relied on during litigation, the defense allowed the continued use of a business method in secret despite a later issued patent. Under the AIA, congress sought to expand the scope of the prior user rights under 35 U.S.C. § 273 to be commensurate with protections in many other countries.

The prior user defense now applies to any process, as well as any “machine, manufacture, or composition of matter used in a manufacturing or other commercial process,” so long as this subject matter is “commercially used” at least one year before the effective filing date of the claimed invention. But will this broadened language substantially expand the use of § 273? Possibly no.

During consideration of the AIA, Senator Leahy commented on the scope of the revised defense, noting that “[t]he phrase ‘commercially used the subject matter’ is intended to apply broadly, and to cover a person’s commercial use of any form of the subject matter.” 157 CONG. REC S5440 (daily ed. Sept. 8, 2011). But even interpreted broadly, the defense would likely not be relevant to trade secrets embodied in products sold to consumers because, “[a]s soon as the product is sold to the public, any invention that is embodied or otherwise inherent in that product becomes prior art and cannot be patented by another party, or even by the maker of the product after the grace period has expired.” Id. Further, the requirement for clear and convincing evidence of good faith “commercial use” without derivation or abandonment; the exception for certain University-related patents; the increased risk of paying attorney’s fees; and other provisions will make trade secret holders pause before asserting the defense.

In the end, the § 273 defense will likely be limited to processes or devices whose use is confined within the walls of businesses—in other words, inventions that have long been, and will continue to be, the typical subject of trade secret protections. As patent holders rarely know whether their competitors are practicing such inventions in secret, they will continue to infrequently become the subject of patent litigation. Thus, despite the broadened scope of § 273, the assertions of the prior user defense may be rare.