Putting the "public" Back in "public Use" Interpreting the 2011 Leahy-smith America Invents Act

• Publication year: 2015

Putting the "Public" Back in "Public Use" Interpreting the 2011 Leahy-Smith America Invents Act

Joseph A. Lingenfelter

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PUTTING THE "PUBLIC" BACK IN "PUBLIC USE" INTERPRETING THE 2011 LEAHY-SMITH AMERICA INVENTS ACT

Joseph A. Lingenfelter^*

INTRODUCTION

Eolas¹ Technologies (Eolas) approaches you, a potential investor, and explains that Michael Doyle and his University of California San Francisco team invented the first web browser that supports plug-ins.² After the investment pitch, you realize the importance of the invention. You perform due diligence on the claimed invention and the patent looks legitimate. After some back and forth with the United States Patent and Trademark Office (USPTO) and some amended claim language, Eolas secures a patent on this monumental innovation to website development.³ You decide, "I'm in."

Several years later, after a jury awards Eolas $520 million in damages against corporate giant Microsoft Corporation, three judges decide that a conversation Pei-Yuan Wei had with two engineers at Sun Microsystems can invalidate the patent.⁴ "Who is Wei?" you might wonder. Wei invented a similar software design that supported

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plug-ins.⁵ No, Wei did not file for a patent.⁶ No, Wei did not share his invention with the world.⁷ All Wei did was show two engineers that he developed a browser that supported plug-ins.⁸ And there goes your investment.⁹ The patent is invalid, and Eolas cannot exclude others from using its revolutionary web-browsing tool.¹⁰

The goal of the patent system, as defined by America's founding fathers, is "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."¹¹ The right to exclude others from making, using, and selling the patented technology in the United States, granted by 35 U.S.C. § 154, creates a limited monopoly, which in turn provides a financial incentive to the inventor or assignee of the patent rights.¹² The promise of this

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reward is often essential to the development of technology in the first place.¹³ Accordingly, without confidence in the patent system's promise to reward, many inventors would not invent and many investors would not finance developments in "Science and useful Arts."¹⁴ In the Eolas example,¹⁵ the one hundred investors would not have purchased stock in the company if they did not believe there was a substantial likelihood that they would be financially rewarded. In the last twenty years, at least twenty-four other cases before the Federal Circuit involved alleged third party "public use."¹⁶ At least eight of these patents were invalidated by hidden, inaccessible, third party use.¹⁷ Many more cases involving alleged third party public use occurred in the federal district courts throughout the United States.¹⁸ Examples like Eolas stifle innovation because they make it difficult to predict whether a patent satisfies the novelty requirement and make investing in technology too risky.¹⁹

The Leahy-Smith America Invents Act of 2011 (AIA), which took effect on March 16, 2013, poses a serious threat to the efficacy of the U.S. patent system.²⁰ The AIA converted the patent system from a first-to-invent into a first-inventor-to-file system,²¹ harmonizing the American system with the rest of the world. Accompanying this major transition, the AIA removed the automatic, one-year grace

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period for third party public use events and removed the "in this country" limitation on the public use statutory bar.²² These changes dramatically increase the scope of activity that may erect the public use statutory bar.²³ For example, to invalidate the Eolas patent, Wei's conversation with his colleagues must have occurred in the United States and more than one year before Doyle filed the patent application.²⁴ After the enactment of the AIA, that conversation could have taken place anywhere in the world and just moments before Doyle filed the patent application. Although the problem of hidden, inaccessible, private third party public use has not noticeably suppressed innovation in the past,²⁵ the new breadth of the AIA public use category threatens to do so in the future because nearly secret uses of technology, occurring anywhere in the world, will invalidate dramatically more patents. Thus, retaining the old definition of public use may be "fairly disastrous for the U.S. patent system."²⁶

Part I of this paper discusses the development of the § 102(b) public use statutory bar and reveals that the pre-AIA interpretation of "public use . . . includes any public use of the claimed invention by a person other than the inventor who is under no limitation, restriction, or obligation of secrecy to the inventor."²⁷ Under that definition, hidden, inaccessible, private third party uses of the patented technology constitute patent-invalidating prior art under the public use statutory bar. Part II argues that the plain language and the legislative history of the AIA support a narrower interpretation of the term public use. Moreover, Part II advocates that employing the pre-AIA definition of public use will make it impossible to predict whether a patent issued by the USPTO satisfies the novelty requirement because a third party may have nearly secretly used the

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patented-technology anywhere in the world.²⁸ To increase notice and predictability in the patent system, public use under the AIA should exclude these hidden, inaccessible, private actions by third-parties. Part III discusses issues raised by such an interpretation: should the same definition of public use apply when dealing with first party nearly secret uses?²⁹ Should an inventor's own secret commercial exploitation of his invention forfeit his or her right to patent the invention? Should the "on sale" bar under the AIA exclude hidden, inaccessible, private sales of an invention by a third party? If the term public use excludes these nearly secret uses, how should courts define public use under the AIA?

I. THE PUBLIC USE STATUTORY BAR

A. Novelty, Statutory Bars, and Nonobviousness

To receive patent protection—the right to exclude others from making, using, selling, and offering to sell the patented technology—the invention must satisfy the five basic conditions of patentability: the invention must be (1) patentable subject matter,³⁰ (2) useful,³¹ (3) new,³² (4) nonobvious,³³ and (5) the patent application must

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adequately disclose the invention.³⁴ To satisfy the third requirement (the novelty requirement), the claimed invention must be new relative to the activity of others prior to the critical date.³⁵ Before Congress enacted the AIA, the Patent Act provided that a person is not entitled to a patent if:

(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or
(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States . . . .³⁶

The pre-AIA § 102(b) requirements are referred to as statutory bars and the pre-AIA § 102(a) requirements embody the priority right—the first person to invent something new has the exclusive right to patent his invention.³⁷

When an invention is in public use in the United States or described in a printed publication anywhere in the world more than a

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year before the inventor files his patent application, the claimed invention is anticipated.³⁸ The public use event or printed publication description is referred to as a prior art reference.³⁹ For a prior art reference to anticipate an invention, it must satisfy the all elements rule.⁴⁰ The all elements rule requires that a single prior art reference includes each element of the claimed invention⁴¹ and courts strictly apply this rule.

If a prior art reference does not satisfy the all elements rule (i.e. it is missing one or more of the limitations in the claimed invention) the patentee may still not be entitled to a patent because, in addition to being novel, the invention must be nonobvious. The nonobviousness requirement provides that a claimed invention is not patentable if the differences between the new invention and the prior art reference would have been obvious to a person having ordinary skill in the art.⁴² In some circumstances, a patent examiner or a court can combine different prior art references to render the claimed invention obvious.⁴³

B. Patent Policies Underlying the Public Use Statutory Bar

Four patent law policies justify application of the public use statutory bar: quid pro quo, channeling, prompt disclosure, and detrimental public reliance.⁴⁴ The quid pro quo rationale advocates

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on behalf of the general public, demanding that society receive a benefit in exchange for the benefits granted to the inventor.⁴⁵ The patentee reaps the exclusive right to make, use, sell and offer to sell the claimed invention.⁴⁶ In return for this limited monopoly right, society profits from the use of the new invention (made and sold by the patent holder) and from future improvements made to the invention.⁴⁷ Society also receives the benefit of unrestricted manufacture and use of the patented technology after the patent term expires.⁴⁸ The public use statutory bar ensures that the patented innovation was not already publicly used.⁴⁹ This rationale presumes that if an invention is in public use, society already has these benefits.⁵⁰

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Second, the channeling rationale forces inventors to choose either secrecy (i.e. trade secret protection) or disclosure (i.e. patent protection).⁵¹ This prevents inventors from effectively extending the duration of the statutorily granted monopoly right and increases the rate at which technology...