How Your Trade Secret Could Help To Defend Against Claims Of Patent Infringement

• Published date: 09 February 2024
• Subject Matter: Intellectual Property, Patent, Trade Secrets
• Law Firm: Mintz
• Author: Mr Adam Samansky, Peter Cuomo, Nicholas Armington and Stephen Chen

For companies that need to protect their valuable intellectual property, the choice between trade secret and patent protection can be a difficult one. There are benefits to either approach. Patents can provide a limited monopoly in exchange for a public disclosure while trade secrets offer the potential for perpetual propriety, provided that appropriate protective measures are taken and no competitor independently develops the same technology. But regardless of the choice, companies must appreciate that industries often advance with great speed, and there's always the possibility that a competitor will independently develop the same technology, and then seek patent protection for it. When faced with that situation and a threat of infringement from a competitor that has patented an original developer's trade secret (or other prior use, even if not a trade secret), there's a potent but little used remedy available under 35 U.S.C. ' 273 - a defense to patent infringement based on a prior commercial use.

Originally created in 1999 and expanded by the AIA, the current law provides a prior-use defense for defendants who can demonstrate that they "commercially used" a claimed "process" or "machine, manufacture, or composition of matter used in a manufacturing or other commercial process" at least 1 year before the earlier of the effective filing date of the claimed invention, or a previous public disclosure by the patentee. This defense is available not only to the person who performed the prior commercial use, but also any entity who conducted or directed that performance as well as agents, contractors, vendors, parent and subsidiary companies, and may be transferred to a purchasing company if the right to the prior user defense is a subpart of a good faith purchase of the underlying company. The one caveat is that the defense is unavailable where the asserted patent has been or is subject to an obligation of assignment to either an institution of higher education or a technology transfer organization whose primary purpose is to facilitate the commercialization of technologies developed by one or more such institutions of higher education.

At the time of the AIA's passage, the new prior use defense received much fanfare with many commentators expressing great excitement over this potential "secret weapon" and potent new defense to patent infringement. Many pontificated that this newly updated section 273 would allow accused infringers to not only avoid...