Cyberlaw 2013

Blake Steel

Privacy Implications of the Recently Revised Patent Laws in the United States On March 16, 2013, the central provisions of the Leahy-Smith America Invents Act (AIA) went into effect. The AIA implements the most substantial changes to the patent laws of the United States since the Patent Act of 1952. Specifically, the AIA changes the U.S. patent system from a first-to-invent scheme to a first-to-file scheme, thus modernizing the U.S. patent system to more closely resemble the majority of national patent systems used by countries throughout the world1. The first-to-file system not only changes how patent examiners at the United States Patent and Trademark Office perform their jobs, the first-to-file system drastically affects the patent procurement strategies of inventors and other patent practitioners. Specifically, whereas under the old patent laws inventors could simply retain notes and records documenting the conception and reduction to practice of their ideas as evidence that they were the first to invent, under the new system (AIA), inventors may need to disclose their ideas early and often throughout the innovation process in order to obtain patent protection. This disclosure-intensive approach will most likely have profound effects on the privacy

http://gigaom.com/2013/03/18/first-to-file-patent-law-starts-today-what-it-means-in-plain-english/

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Blake Steel

of individual inventors, especially those inventors employed by an entity which owns, or at least has an interest in, the patent rights of the inventors work. I. Brief Overview of Patent Laws In order to better understand the privacy effect that the AIA will have on individual inventors, a brief overview of the patent laws in the United States is included below. A) What Is a Patent? A patent is a contract with the government, provided for in the U.S. constitution2, in which an inventor discloses an invention to the public in consideration for limited monopolistic rights in the invention. The rights granted to a patent holder are the rights to exclude others from making, using, selling, offering for sale, or importing the invention3 for a period of 20 years4. In other words, a patent is a negative right that permits the patent holder to exclude others from using the patented invention but does not necessarily give the patent holder the right to use the patented invention himself5. The law relating to trade secrets, although not addressed at length in this paper, provides a useful contrast to patent laws and that contrast proves helpful in understanding the role of disclosure in the patent system.

2 3

USCS Const. Art. I, 8, Cl 8 35 USCS 154(a)(1) 4 35 USCS 154(a)(2) 5 Herman v. Youngstown Car Mfg. Co., 191 F. 579, 584-85, 112 CCA 185 (6th Cir. 1911)

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Blake Steel

A trade secret is any confidential information that is the subject of reasonable measures to keep secret and that derives independent economic value from not being generally known.6 In other words, a trade secret is never disclosed and only remains valid so long as the owners of the information are undertaking reasonable measures to maintain the information secret. Therefore, patents and trade secrets represent opposite avenues for protecting and/or commercializing valuable information. Patents require disclosure while tradesecrets require non-disclosure. For example, if a person had developed and idea (e.g., formulation, recipe, method, composition), he generally would have two mutually exclusive options for commercially exploiting that idea: pursuing patent protection by disclosing the information in a patent application or engaging in reasonable efforts to maintain the information secret. B) Novelty Requirement and the Definition of Prior Art With a basic understanding of patent laws in the United States, the present analysis now turns to the privacy implications of pursuing a patent under the new patent laws of the AIA. There are various statutorily defined requirements for obtaining a patent in the United States. For example, the invention must fall within a defined category of patentable subject matter7, the invention must be novel8 and

6 7

18 USCS 1839(3) 35 USCS 101 8 35 USCS 102

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Blake Steel

non-obvious9, and in applying for a patent the inventor must satisfy certain disclosure formalities10. Although the grant or denial of patent rights often turns on the non-obvious requirement (i.e., whether or not the invention is obvious in light of prior art), the novelty requirement and the corresponding definition of what constitutes prior art under the AIAs newly revised 35 USCS 102 are the key provisions affecting the privacy of individual inventors. Specifically, there are two main aspects of the AIAs novelty provision that have the potential to decrease the privacy of employee-inventors. 1. The Rule

First, as summarized above, the AIA novelty provision essentially changes the U.S. patent system from a first-to-invent scheme to a first-to-file scheme by eliminating the concept of invention date. Under the old law, if an inventor ran into trouble during the patent prosecution process because a patent examiner found prior art (a reference with a date before the inventors filing date and disclosing the inventors invention), the inventor could have at least attempted to swear back of the reference11. Swearing back involved filing an affidavit with the patent office and attempting to prove, possibly via the introduction of evidence in an interference proceeding, that the inventor had actually conceived of the invention

35 USCS 103 35 USCS 112 11 37 CFR 1.131

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Blake Steel

before the date of the prior art reference. In other words, under the old patent system, inventors had a grace period that allowed them extra time to disclose their invention to the patent office without the risk of forfeiting prospective patent rights. However, since the AIA is a first-to-file system, under the new law it is essentially a race to the patent office.12 Inventors can no longer take their time in filing a patent application because, absent the application of a few exceptions discussed below, if an inventor is not the first one with an application to the patent office, he will lose the ability to patent his invention. With the increased pressure to file patent applications earlier, inventors will prepare patent applications that are incomplete or that do not sufficiently disclose all the aspects of their inventions, thus limiting inventors in their ability to sufficiently support their patent claims and possibly causing inventors to forfeit patentable subject matter. This race to the patent office may especially affect employee-inventors that are under the obligation to assign all invention rights to their employer. Corporations are currently analyzing their internal idea disclosure procedures and looking for ways to shorten the gap between invention conception and patent filing.13 One way for a corporation to expedite its internal idea disclosure reporting

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http://westreferenceattorneys.com/2013/03/on-your-mark-get-set-go-the-race-to-the-patent-office-is-on/ http://www.wnj.com/Publications/The-America-Invents-Act--A-Race-to-the-Patent-Offi

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Blake Steel

is to implement advanced monitoring systems that detect potentially patentable ideas and alert an internal patent committee. For example, an extensive and intrusive email monitoring system may be implemented among employees in an R&D division of a corporation. The email monitoring system may parse all emails and other communications sent over the local network to automatically collect information relating to new developments. While such a monitoring system would most likely decrease the delay between idea conception and patent filing, the individual privacy of employee-inventors may be sacrificed. The AIA, therefore, incentivizes inventors to quickly file patent applications with the United States Patent and Trademark Office. However, the AIA also provides a few exceptions to the first-to-file rule and these exceptions may be even more detrimental to the privacy of employee-inventors than the rule. 2. The Exception

The second aspect of the AIAs novelty provision that affects the privacy rights of inventors is the exception to what constitutes prior art. The statute recites that a disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if the disclosure made was made by the inventor or joint inventor or the subject

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Blake Steel

matter disclosed [was derived] from the inventor or joint inventor.14 This exception, combined with a similar exception relating to previous disclosures contained in patent applications, introduces a slight, but significant, deviation away from a true first-to-file system. The exception allows for a filed patent application to essentially point back in time, up to 1 year before filing, and claim the benefit of an earlier disclosure. In other words, even if inventor A filed a patent before inventor B, but inventor B had disclosed her invention before inventor A filed a patent application, inventor B would be entitled to a patent, absent other obstacles. However, the AIA statute failed to define disclosure. Accordingly, inventors and patent practitioners are scrambling to grasp what constitutes an adequate disclosure under the AIA novelty exception so as to adequately plan their patent procurement strategies. Therefore, in order to examine the privacy implications of this exception, a brief analysis of the potential definitions of disclosure is included below in the following pages. II. Disclosure under the AIA A) Definition of Disclosure Disclosure is defined as the act of making known, revealing, uncovering, allowing to be seen, laying open to view, or exposing something.15 Although this definition may initially seem helpful in discovering what the term disclosure
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35 USCS 102(b)(1) Disclosure, Black's Law Dictionary (9th ed. 2009)

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Blake Steel

means under the AIA, it really just brings up additional questions that need to be answered. For example, to what extent must something be revealed to legally qualify as being disclosed? To whom and how must the revelation take place? These questions can only be answered by looking at the different connotations of the word disclosure in various legal contexts in order to ascertain the legislatures intended and practicable definition of the word disclosure. First, the present analysis will look to patent laws and patent precedent to establish a possible framework for defining disclosure. The analysis will then look to other areas of the law, such as securities law/business law, criminal law, and constitutional law, to further clarify the meaning of the word disclosure as recited in the AIAs exception in the novelty provision. B) Patent Law Disclosure The word patent originates from the Latin word patere, which means to lay open or to make available for public inspection.16 Thus, by its very definition the word patent connotes a sense of disclosure. As discussed briefly above, a patent is granted by the government in consideration for a disclosure of the new technology. Therefore, it would seem that at the very least patent would qualify as a valid disclosure under the AIA. However, this statement isnt as trivial as it first appears, for a patent application, under U.S. laws, isnt published

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http://www.merriam-webster.com/dictionary/patent

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Blake Steel

until 18 months after its filing date (if at all) or until it issues. Therefore, it would seem that even a patent application, containing a full disclosure of a certain technology, would not qualify as a disclosure under the AIA exception if general public awareness was a requirement for valid disclosure. Similarly, a discontinued practice at the United States Patent and Trademark Office involved the submission, by inventors, of disclosure documents (the documents including a full description and specification of the details of the invention) that were preserved in confidence for up to two years.17 Therefore, it seems that the patent office has used the word disclosure to refer only to the contents of a document and not to the level of publicity or openness that a document achieves. However, the AIA does actually provide a specific provision that qualifies a patent application as a valid disclosure under the novelty exception. Accordingly, while patent applications may comprise the quintessential format (detailed description, drawings, abstract, etc.) for what material constitutes or is contained within a disclosure, it can be inferred, from the fact that a separate provision in the AIA statute was explicitly drafted to include patent applications as viable disclosures, that the legislature was intending disclosures to be directed, at least to a minimal degree, to a public audience of some sort. This inference, that the legislature intended for a disclosure to be accompanied by at least a minimal

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http://www.uspto.gov/patents/law/disclosure_document.jsp

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Blake Steel

degree of public awareness, is further bolstered by referring to the definition of other forms of prior art, as described below. The novelty provision recites several types of references that qualify as prior art. For example, issued patents, printed publications, evidence of public use, evidence the invention was on-sale, or other evidence that the invention was available to the public likely qualify as prior art.18 Each of these categories is examined in greater detail below in order to collect additional indications as to the legislatures intended meaning of the word disclosure. 1. Issued Patents and Printed Publications

Issued patents are required by statute to contain a sufficient amount of detail so as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the [invention].19 Also, issued patents are posted and maintained on a publicly accessible website. Similarly, printed publications qualify as prior art when they have been disseminated to the extent that persons interested and ordinarily skilled in the subject matter or art, exercising reasonable diligence, can locate [them].20 For example, a doctoral thesis indexed and shelved in a library is sufficiently accessible to the public to qualify as a

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35 USCS 102(a)(1) 35 USCS 112(a) 20 In re Wyer, 655 F.2d 221, 210 USPQ 790 (CCPA 1981)

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Blake Steel

printed publication.21 Case law has further clarified that the printed qualifier before the word publication is not to be construed to exclude references that may be stored on a database in digital form.20 Even an oral presentation in a forum open to all those interested can qualify as a printed publication, provided that written copies are disseminated without restriction.22 Therefore, it would seem that the relevant disclosure standard extracted from this look at issued paten ts and printed publications is that a disclosure should be publicly accessible, at least to the niche of people that are interested in discovering such information. 2. Public Use

Another category of prior art previously recognized under the old novelty provision is that of public use. Public use, although substantially similar to the printed publication standard of accessible to the public, contains further clarifications for what constitutes prior art. For example, even if the invention was hidden from view (e.g., article of underclothing, component of a larger machine, hardware/software in a smartphone), the invention is still deemed to be publicly disclosed. In other words, the public need not understand the significance and/or

21 22

In re Hall, 781 F.2d 897, 228 USPQ 453 (Fed. Cir. 1986) Massachusetts Institute of Technology v. AB Fortia, 774 F.2d 1104, 1109, 227 USPQ 428, 432 (Fed. Cir.

1985)

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the technical complexities of an invention for it to constitute a public use under the law.23 Additionally, public use does not have a certain minimum number of people threshold. In other words, regardless of how few people are using the invention/device, if those people are not under some sort of confidentiality agreement or non-disclosure agreement, then their use of the product qualifies as public use.24 Case law, however, has made an exception for experimental use in public. For example, if an invention requires extensive testing, such as a component in an automobile or a new exterior coating for buildings, the mere fact that such components are out in public during experimental testing will not qualify as public use. Additionally, if the inventor/developer uses the invention in a location where he has a reasonable expectation of privacy, such a use will not rise to the level of public use. Therefore, up to this point in the analysis, disclosure can be construed to include the limitations that it be accessible to the niche of people that are interested in the technology and/or that disclosure can be found regardless of the publics (no minimum threshold of people can be a single person) knowledge of the specific details of the invention.

23 24

Egbert v.Lippmann,104 U.S. 333, 336 (1881) In re Smith, 714 F.2d 1127, 1134, 218 USPQ 976, 983 (Fed. Cir. 1983)

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Cyberlaw 2013 3. Evidence of On-sale

Blake Steel

Evidence of a product being on-sale is similar to the previously discussed categories of prior art. It is interesting to note, however, that under the new AIA provisions, it seems to imply that, whereas private sales under the old law would qualify as prior art, private sales do not qualify as prior art. Therefore, this observation would seem to suggest that, yet again, private interactions between parties does not constitute disclosure and that there must be a general offer for sale, made known at least to those who would be reasonably interested in purchasing such an invention. Previous case law has also established the standard that, in order for evidence of something on-sale to qualify as prior art, the thing being sold must be ready for patenting. In other words, the invention must be at a stage in the development at which a patent could have been filed, regardless of whether one actually has been filed or not. Accordingly, a vague offer for sale that an inventor will have a perpetual motion machine ready for shipment by the end of the year would not qualify as prior art because (although an extreme example), the perpetual motion machine was not ready for patenting (defies laws of nature). Finally, the seemingly catch-all category listed in the novelty provision, reciting anything that is otherwise available to the public will qualify as prior art. Once again, previous case law seems to suggest that, in order for some reference to qualify as prior art under this broad category, the information disclosed must be 13

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Blake Steel

sufficiently reduced to practice so as to be substantially ready for patenting. Thus, in summary of the patent related disclosure laws, it seems that the general standards for disclosure are: generally accessible to the group of people that are interested in the technology, the term public is not defined as having a certain minimum number of people in order for something to be in public use, on-sale and otherwise known require that the disclosure/invention have sufficient detail so as to enable someone to reasonably file a patent application. III. Analysis and Conclusion In conclusion, it is substantially apparent that disclosure under the new AIA requires reasonable amount of detail so as to at least enable a hypothetical reasonable person with the ability to file a patent application. Also, the level of openness or public awareness is relative. In other words, depending on the technology involved, disclosure may constitute making the information accessible to a few people/organizations (high-tech, pharmaceuticals) or if the disclosure is relating to a more basic invention it may require a more profound disclosure to a larger group of people. Nevertheless, because the AIA allows for this disclosure exception, corporations may further violate the privacy of employee-inventors as they strive to disclose any relevant information relating to their potential patents in an attempt to secure their place in the front of the line at the patent office. Similar to the 14

Cyberlaw 2013

Blake Steel

analysis contained above, corporations may implement extensive monitoring practices to detect any patentable information in order to quickly file a patent application on such material or at least make some form of disclosure in order to prevent others from patenting that same subject matter. This disclosure-intensified patent system will result in fewer privacies at work for those employed by innovating companies.

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