In our last issue, we wrote about intervening rights under U.S. patent law. The term "intervening rights" refers to the rule that if you broaden the claims of your patent through a reissue, you cannot sue someone for infringement if that person relied in good faith on the scope of your patent as originally issued. The doctrine of prior user rights, on the other hand, provides a defense to patent infringement if the accused infringer can prove that he practiced the invention-and made commercial use of it-prior to the earliest priority date of the patent holder. In this context, the phrase "earliest priority date" means the date on which the patent holder first filed a patent application covering the invention.
The doctrine of prior user rights is set forth in Section 273 of the Patent Act, which provides that if a person, acting in good faith, reduces an invention to practice at least one year before the filing date of a patent application, and if that person commercially uses the invention before the filing date (it does not have to be one year before), then that person cannot be sued for patent infringement. Thus, there are two requirements: the first is that the accused infringer actually built, made or practiced the invention at least a year before the patent holder’s earliest priority date, and the second is that the accused infringer actually made commercial use of the invention (as opposed to simply reducing it to practice and doing nothing with it) at any time prior to the earliest priority date.
The phrase "commercial use" has two different definitions under Section 273 of the Patent Act. For most commercial entities, commercial use means an "internal commercial use" (such as using a software program in-house) or an actual arm's-length sale or other arm's-length commercial transfer of a "useful end result." Thus, a sale that is rigged for purposes of asserting the prior use defense will not satisfy this requirement.
The term "useful end result" is not defined in the statute, but presumably this was Congress's attempt to exclude business method patents that do not constitute patentable subject matter under Section 101 of the Patent Act. For nonprofit research laboratories or nonprofit entities such as universities, research center, and hospitals, any use that is intended to benefit the public is considered a commercial use.
The significant limitation of the prior use defense, however, is that it currently applies only to business methods. The statute defines a business method as a "method of doing or conducting business." Given the substantial controversy surrounding the definition of a business method patent, the scope of Section 273 is not at all clear.
The American Bar Association Section of Intellectual Property Law has taken the position in its Section White Paper entitled "Agenda for 21st Century Patent Reform" (click here for a copy) that the prior use defense should be expanded to include all inventions-not just business methods. Recognizing that business methods can be claimed in a number of different ways (not necessarily always as a method claim), the Section rightly states in the white paper that restricting the prior use defense to business methods may place form over substance. The Section further argues that although the prior use defense to business methods rewards inventors who seek and obtain patents, inventors who decide to benefit the public by commercializing their inventions without patenting them are no less worthy of protection.
If you receive a cease and desist letter concerning a patent, and if you believe the prior use defense may apply, you should contact a qualified patent attorney to assist you in determining the applicability of this defense to your situation.
