Placeholder Banner

Prior User Rights and Trade Secrets

June 19, 2012
By Joe Allen, President, Allen and Associates

One theme of the day is the cloud of uncertainity overhanging the US patent system. This was underscored in the Prior User Rights and Trade Secrets session at the 2012 BIO International Convention as well.

The new prior user rights defense which came into effect with enactment of the America Invents Act (AIA) was very differently viewed by the small biotech company perspective given by Mary Ann Dillahunty (Oncolytics Biotech, Inc), and the large company perspective presented by Brian Barnett with Eli Lilly.

Mary Ann sees the uncertainity on how the provision will be applied as a real challenge to small companies highly reliant on their patents to attract venture funding, while driving up internal costs required to fully document sensitive know-how.

Brian felt that for companies involved in international sales like Eli Lilly, the new law is an important tool and will encourage domestic manufacturing. From his experience, prior user rights are almost never asserted abroad when Eli Lilly patents are challenged.

Andrew Torrance, from the MIT Sloan School of Management, confirmed that the prior user rights defense incorporated in AIA is common internationally, and rarely results in litigation.

Further, the requirements to trigger this defense (such as showing commercial use at least one year prior to subsequent patent filings) coupled with the threat of being assessed costs associated with frivolous lawsuits will prevent misuse of this new provision.

Still unclear are details on geographic limitations on where prior use was practiced and whether such rights can be transferred.

This appears as another case where those relying on the value and reliability of US patents may have to wait and see how the courts interpret and enforce the new provision. It seems clear that the large company and small company perspectives, hopes and fears are quite different on the value of prior user rights to innovation.