Monday, June 06, 2011

The linking of "prior user rights" and "first to file"

On March 31, 2011, the inventivestep blog had noted that prior user rights are contrary to the purpose of the patent system itself:

Prior user rights reward parties that keep innovation secret and such rights weaken the value of patents. This is contrary to the goal of the patent system, which is the public disclosure of new inventions to add to the public knowledge. To be sure, trade secrets have their place, but the owner of a trade secret holds the technology in secret with the risk that it could be patented by someone else. An expanded prior user rights defense would provide an incentive to keep new inventions secret. Why bother with the patent system when you can simply practice your technology in secret and be shielded from liability for infringement of other parties’ patents?


On the other side of the issue, Mark Chandler, senior vice president and general counsel of Cisco Systems, argued that switching to a first-to-file regime requires a robust prior user rights defense. Otherwise, challengers can hold companies hostage with bogus claims on improvements to existing products. PTO Director David Kappos argued that the defense is helpful to manufacturers and small businesses. The expanded defense is necessary to stop companies that are moving from the US to other countries that have a stronger prior user defense.

One suspect that companies like GE, IBM, and Cummins, who have moved operations to India and/or China did not do so because of the presence of stronger prior user defense.

With the linking of "first to file" and "prior use defense", one sees there are a number of reasons not to endorse first to file.

These include

** favoritism to companies with greater resources, who can file frequently, over companies with fewer resources, for whom filing represents a considerable stake

** the companies who file frequently can include companies making incremental improvements on older technologies, rather than game changers. [Note also the "Atlantic City" phenomenon.]

** a disincentive to the smaller resourced inventors, who, on spending resources to obtain a patent, discover that an entity has been practicing "in secret" and is immune from their patent. The prior user defense becomes another barrier in the road (in addition to post grant oppositions) to the smaller resourced inventor.

Keep in mind, it is the smaller companies, not the bigger ones, who create more jobs for the country.

Previous IPBiz posts:
[ An expansion of prior user rights would discourage inventors from sharing their knowledge and reward those who "don't contribute to the progress of science," said Representative Jim Sensenbrenner, a Wisconsin Republican.

The expansion of prior user rights would apply to companies outside the U.S. and would reward the theft of U.S. intellectual property, Sensenbrenner added. "How does that help America compete?" he said. "The prior user rights expansion is going to end up giving China a get-out-of-jail-free card." ]


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