Secret prior art after America Invents Act: are lost opportunities revived?

Introduction
Background
Enter the America Invents Act
But what if...
Comment

Introduction

Sweeping changes effected by the America Invents Act continue to percolate through the patent world. First-to-file, post-grant review, covered business methods, commercial use defence – all are new terms insinuating themselves into the patent practitioner's day-to-day lexicon.

One of the changes effected by the America Invents Act, whose existence is still being debated by the commentators, is the possible elimination of secret prior art. Under Section 102(b) before the America Invents Act, secret prior art disentitled an inventor from ever seeking a patent if he or she waited too long before filing, even though the secret prior art might be a non-informing public use or sale. Examples of secret prior art include commercial sales of products made by a secret process: the sale is non-informing as to the nature of the underlying process, which remains secret, but for those who delay too long the commercial nature of the sale prevents grant of a patent.(1) Before the America Invents Act, an inventor contemplating such an activity was confronted with a choice: file for a patent within one year or forego patent protection forever. Interestingly, most courts would hold that these activities were patent-defeating prior art only to the inventor, and not to his or her competitor, who was free to file for a patent on the exact same invention if developed independently.(2)

What if the America Invents Act eliminated secret prior art? If it did, is there now an opportunity to rethink decisions to forgo patent protection – decisions that perhaps might have been made long in the past – and to decide now to file for a patent?

Background

Pre-America Invents Act Section 102 defined a number of patent-defeating activities that would result in the loss of right to patent. Among them was Section 102(b):

"A person shall be entitled to a patent unless…(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patenting in the United States."

In Pfaff v Wells Electronics(3) the Supreme Court added the gloss that an invention must be "ready for patenting" before the on-sale bar would apply, but otherwise affirmed the statutory breadth of Section 102(b).

Court cases throughout the years made it clear that, besides its reliance on patents and printed publications, Section 102(b) created a special class of prior art that was personal to the inventor and thus not available against third parties. One example is a non-informing, public commercialisation of the invention. In this public use, the nature of the invention cannot be discerned to the public at large and might, for example, resist efforts at reverse engineering. In this circumstance, the inventor who placed his or her invention in public use must file for a patent within one year or is forever disentitled from doing so. However, as against third-party inventors who might independently develop the same invention, the inventor's public use was not prior art because of its secret status.

As another example, consider an inventor's trade-secreted method for producing articles of manufacture which are sold commercially. Under such circumstances, the inventor was obligated to file a patent on the method within one year or was forever barred from doing so. Again, however, such secret prior art was not prior art against third-party inventors who independently developed the same method.

The statutory bar of pre-America Invents Act Section102(b), and the decisions interpreting it, were intended to encourage the prompt disclosure of inventions using the incentives of the patent system. At least partly because of Section 102(b), before embarking on commercialisation of an invention, even if the commercialisation was non-informing as to the nature of the invention, inventors were faced with a stark choice: apply for a patent within a year or forever forgo the possibility of obtaining one.

Enter the America Invents Act

The America Invents Act's counterpart to pre-America Invents Act Section 102(b) is found at Section 102(a)(1): "a person shall be entitled to a patent unless (1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention."

Many commentators have focused on the phrase 'otherwise available to the public'. According to these commentators, the phrase 'otherwise available to the public' is a modifier to the preceding phrases of 'public use' and 'on sale'. Thus, they reason that 'otherwise available to the public' means that for an invention to qualify as in public use or on sale under the new statute, the nature of the invention must be available to the public; hence, the America Invents Act effectively eliminated the notion of secret prior art.

Legislatively, history seems to provide some support for the notion that secret prior art has been eliminated, as explained by Senator Kyl on the Senate floor:

"As chairman Smith most recently explained in his June 22 remarks 'contrary to the current precedent, in order to trigger the bar in new 102(a) in our legislation, an action must make the patented subject matter "available to the public" before the effective filing date.'"(4)

Other commentators argue that the phrase 'otherwise available to the public' is merely a catch-all reservation, seeking to capture other unspecified disclosures so long as they were available to the public. According to these commentators, the phrase 'otherwise available to the public' stands by itself and does not alter prior precedent concerning secret prior art. From this point of view, secret prior art is still available against the inventor unless he or she files a patent application quickly.

One such commentator is Professor Mark A Lemley, a respected academic and practising attorney who criticised the US Patent and Trademark Office's (USPTO) view that the America Invents Act had somehow unworked the notion of secret prior art:

"[T]he proposed Guidelines [from the USPTO] take the position that the [America Invents Act] has reversed an unbroken line of precedent of both the Federal Circuit and the regional circuits tracing back to Judge Learned Hand's decision in the Metallizing case. Those cases hold -- for impeccable policy reasons -- that the term 'public use' in old section 102(b) should be interpreted to prevent an applicant from making a secret commercial use for more than a year while delaying the filing of a patent application. A contrary conclusion, as the [US]PTO now proposes, will enable inventors to keep their process inventions secret for years or even decades, and then surface and file a patent application. That is directly contrary to the goals of first-inventor-to-file in the [America Invents Act], which encourage early filing of patent applications."(5)

For its part, the USPTO has come down squarely on the side that the America Invents Act eliminated secret prior art:

"Residual clauses such as 'or otherwise' or 'or other' are generally viewed as modifying the preceding phrase or phrases. Therefore, the Office views the 'or otherwise available to the public' residual clause of the [America Invents Act]'s 35 U.S.C. 102(a)(1) as indicating that secret sale or use activity does not qualify as prior art."(6)

But what if...

For the sake of argument, assume that the USPTO and the first group of commentators are correct, and that secret prior art has been eliminated by the America Invents Act. If so, does this provide an opportunity to revisit past decisions, perhaps made years ago under pre-America Invents Act Section 102(b), and to file for a patent application now?

For example, under this scenario, in 2010 company X was commercialising a new product according to secret prior art. Perhaps the new product was machinery manufactured according to a trade-secreted method that could not easily be reversed engineered, or included new software, including obfuscated code that could not easily be decompiled. In 2010 company X might have decided against filing for a patent. Its reasons might have included any of a number of different scenarios, such as unavailability of funds, uncertainty over the commercial viability of the product or uncertainty over the patentability of the method (in the former case) or the software code (in the latter).

One year after commercialisation, under pre-America Invents Act Section 102(b) in 2011, the statutory bar took effect and company X could no longer obtain a patent on its invention. Today, company X has maintained secrecy of its invention and the public use (or sale) of the invention remains non-informing as to the nature of the underlying invention. Perhaps funds are now available for patenting, or perhaps the product is commercially successful. If secret prior art has been eliminated by the America Invents Act, and if there have been no intervening advances in the state of the art that otherwise might render the invention unpatentable, might it perhaps be feasible for company X to revisit its 2010 decision to forgo a patent and to apply for a patent now?

Lemley suggested that such an outcome would be an undesirable part of the USPTO's decision to eliminate secret prior art: "[Overturning Metallizing] will enable inventors to keep their process inventions secret for years or even decades, and then surface and file a patent application."(7) But, according to the USPTO's view on the elimination of secret prior art, applying for a patent becomes a distinct possibility.

Whether such an application would ultimately issue as a patent remains an open question. For example, would it be necessary for the inventor to file an information disclosure statement during the course of the application process to describe its prior non-informing uses or sales? The USPTO's view on this is ambiguous:

"[One] comment suggested that if the Office does adopt the position that Metallizing Engineering is overruled, and that any sale under the America Invents Act 35 U.S.C. 102(a)(1) must be public, the Office should promulgate a rule requiring that any secret commercial use of the claimed invention more than one year prior to the effective filing date be disclosed to the Office."

Comment

With respect to suggestions concerning what information concerning patentability must be disclosed to the USPTO (secret commercial sale or use), 37 CFR 1.56 provides that applicants have a duty to disclose all information known to be material to patentability as defined in 37 CFR 1.56, and there is no reason to treat public or non-public commercial sale or use or activity differently from other information.(8)

Even if a patent issued, other questions remain, such as whether a court would uphold validity of the patent in the face of the inventor's non-informing public uses or sales. Perhaps courts might apply the forfeiture reasoning used in Metallizing, or might rule that once the pre-America Invents Act statutory bar of Section 102(b) became effective, it was irrevocable. No court has yet decided on whether the America Invents Act indeed eliminates the notion of secret prior art and any such case is unlikely to find its way through the court system within the near future.

It nevertheless remains an interesting debate, and those companies that made a pre-America Invents Act choice to shelve patent protection might consider it attractive at least to try.

For further information on this topic please contact Michael O'Neill at Fitzpatrick, Cella, Harper & Scinto? by telephone (+1 714 540 8700), fax (+1 714 540 9823) or email ([email protected]). The Fitzpatrick, Cella, Harper & Scinto website can be accessed at www.fitzpatrickcella.com.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.

Endnotes

(1) See Metallizing Engineering v Kenyon Bearing, 153 F2d 516, cert denied, 328 US 840 (2d Cir 1946), in which Judge Learned Hand applied a rationale based on forfeiture to conclude that a patent applicant who had commercialised a product made by a secret process "forfeits his right [to a patent] regardless of how little the public may have learned about the invention". Id at 520.

(2) See, for example, OddzOn v Just Toys, 122 F 3d 1396 (Fed Cir 1997).

(3) 525 US 55 (1998).

(4) See 157 Congressional Record S5431 (daily ed, September 8 2011) (statement of Sen Kyl), quoting 157 Congressional Record H4429 (daily ed June 22 2011) (statement of Rep Smith). These comments were not directed per se to the notion of secret prior art, but instead were intended to reinforce a correct view of the America Invents Act's grace period.