39
Implications of the America Invents Act: Reliance on Trade Secrets vs. Patents Jayme Partridge and George W. Jordan III Fulbright & Jaworski LLP October 11, 2014
Implications of the America Invents Act: Reliance on Trade Secrets vs. Patents Jayme Partridge and George W. Jordan III Fulbright & Jaworski LLP October 11, 2014
Trade Secrets vs. Patents Kewanee Oil (1974)
Patents Do Not Preempt Trade Secrets Trade Secrets
Not Patentable
Questionable
Patentable
Trade Secrets: “Far weaker protection”
2
Trade Secrets vs. Patents
Kewanee Oil (1974)
“In most cases of genuine doubt as to patent validity the potential rewards of patent protection are so far superior to those accruing to holders of trade secrets, that the holders of such inventions will seek patent protection, ignoring the trade secret route.”
3
Trade Secrets vs. Patents
Protects Duration Public Disclosure Prohibits
Reverse Engineering/ Independent
Creation
Patent Patent Eligible
Inventions 20 Years Required Infringement Not Allowed
Trade Secret
Valuable Information Not Known
Potentially Unlimited Prohibited Misappro-
priation Allowed
4
Trade Secrets vs. Patents AIA Factors
Prior Use Defense
Post-Issuance Proceedings
Non-AIA Factors Patent Eligible Subject Matter
Trade Secret Case Law
5
AIA Factors
Prior Use Defense
6
Prior Use Defense Defense to Infringement
Prior Commercial Use of Patented Invention
Enacted 1999 Response to State Street (1998)
7
Prior Use Defense Pre-AIA
Business Method Patents Commercial Use/Reduction to Practice
U.S. Timing Secret Good Faith
Personal Defense Not General License Clear and Convincing
8
Prior Use Defense
Post-AIA (Sept. 16, 2011) All Patents Commercial Use
U.S. Timing Secret Good Faith
Site Restriction Personal Defense (User/Control) Not General License University Exception Clear and Convincing
9
Prior Use Defense
USPTO 2012 Report AIA Should Provide Appropriate Balance Between Trade Secret and Patent Protection Legally Co-exist to Provide Competitive Advantages
Without Defense, Later Independent Inventor Can Obtain Patent and Sue Earlier Trade Secret Owner Provides U.S. Businesses Same Advantages As Foreign Businesses
10
Prior Use Defense
Pre-AIA Post-AIA Subject Matter Business Methods All Patents
Proof Commercial Use/ Reduction to Practice Commercial Use
Who Can Assert User User/Those Controlled
or Controlling University Exception No Yes
Site Restriction No Yes
11
Prior Use Defense Advantages
Potentially No Claim Construction Secret Use
Disadvantages Lack of Clarity Higher Potential for Exceptional Case Effectively Admit Infringement Does Not Invalidate Patent Personal Defense Restricted Scope
12
Invalidity Defense Advantages
Not Personal Not Site Restricted Invalidates Patent No Infringement Admission Clarity
Disadvantage No Secret Use
13
AIA Factors
Post-Issuance Proceedings
14
Post-Issuance Proceedings
Alternative to Litigation
Faster
Less Expensive
12% Petitions Denied 2088 Filed 256 Denied
Potential Stay of Litigation
15
Post-Issuance Proceedings
CBM
First-to-Invent and First-to-File Patents Subject Matter
Financial Product or Service
Excludes Technological Inventions
Sued/Charged With Infringement 101, 102, 103, 112 Grounds
16
Post-Issuance Proceedings
Inter Partes Review
First-to-Invent and First-to-File Patents
Any Subject Matter
No Declaratory Judgment
File Petition Within 1 Year of Service of Complaint
102, 103 Grounds (Patents, Printed Publications)
17
Post-Issuance Proceedings
Post-Grant Review
First-to-File Patents
Any Subject Matter
No Declaratory Judgment
File Petition Within 9 Months of Patent Issuance
101, 102, 103, 112 Grounds
18
Non-AIA Factors
Patent Eligible Subject Matter
19
Business Methods Bilski v. Kappos
Federal Circuit (2008) Machine-or-Transformation Test Replaced State Street: Useful, Tangible, Concrete Result Test
Supreme Court (2010) Hedging Risk in Energy Markets Abstract Rejected Machine-or-Transformation Test As Sole Test
20
Business Methods Alice Corp. v. CLS Bank (2014)
Applied Mayo Framework
Abstract Idea Long Prevalent Fundamental EconomicPractice Method for Intermediated Settlement Abstract
21
Business Methods
Alice Corp. v. CLS Bank (2014)
Meaningful Limitation
More Than Well Understood, Routine, and Conventional Activities
Generic Computer Implementation Not Enough
22
Business Methods
USPTO Guidelines
Abstract Idea
Fundamental Economic Practices Methods of Organizing Human Activities An Idea of Itself Mathematical Formulas
23
Business Methods
USPTO Guidelines
Meaningful Limitation
Improvement to Another Technology or Technical Field Improvement to the Functioning of theComputer Itself Beyond Generally Linking Use of Abstract Idea to a Particular Technological Environment
24
Business Methods Applying Mayo Framework: Abstract
U.S. Bancorp. v. Ret. Capital Access Mgmt. Co. (P.T.A.B. Aug. 22, 2014): Methods and Systems ofAdvancing Funds Based on Future RetirementPayments Planet Bingo v. VKGS (Fed. Cir . Aug. 26, 2014): Methods and Systems for Managing Bingo Game
buySafe v. Google (Fed. Cir. Sep. 3, 2014): Idea of Creating a “Transaction Performance Guaranty” Loyalty Conversion v. American Airlines (E.D. Tex. Sep. 3, 2014): Method and Computer Program forCurrency Exchange
25
Business Methods
I/P Engine v. AOL (Fed. Cir. 8/15/14) Judge Mayer, concurring “[A]dvances in non-technological disciplines, such as business, are irrelevant.” “A patentee does not uphold his end of this bargain if he seeks broad monopoly rights over a fundamental concept or basic idea without a concomitant contribution to the existing body of scientific and technological knowledge.” “[I]f claims are drawn to the application of principles outside of the scientific realm—such as principles related to commercial or social interaction—no amount of specificity can save them from patent ineligibility.”
26
Diagnostics
Mayo v. Prometheus (2012) Unpatentable Law of Nature
Relationship Between Metabolite Concentrationand Drug Dose
No Meaningful Limitation Administering
Determining
Well Understood, Routine, Conventional Activity
27
Diagnostics AMP v. Myriad (2013)
Composition Claims to DNA and cDNA
DNA Claims Not Patentable Product of Nature
cDNA Claims Patentable Not Naturally Occurring
28
Non-AIA Factors
Trade Secret Case Law
29
Trade Secrets Altavion v. Minolta (2014)
Patentable Idea Can Be Protected as Patent or Trade Secret
Wellogix v. Accenture (2013) Trade Secrets Available on Same Technology If Patent Does Not Disclose Trade Secrets
30
Trade Secrets vs. Patents
Trade Secret Patent
Phillips v. Frey
Hunting Stand Manufacturing Process Hunting Stand
Wellogix v. Accenture
Workflow Software’s Source Code,
Architecture, Design, Product Maps and Process Workflows
Workflow System and Process
Carbo Ceramics v. Keefe
Proppant Manufacturing Process
Jury: Patent Did Not Disclose Trade Secrets
31
Implications
32
Implications Business Methods
Case Law Invalidating Patents
CBM Review Easier Validity Challenge
Diagnostics Case Law
Narrowing Eligible Subject Matter
33
Implications Shift To Trade Secrets
Business Methods Diagnostics
Reduced Incentive to Disclose
Incremental Innovations
34
Implications Other Areas
Analysis Unchanged Importance of Technology Life Cycle Ability to Maintain Secrecy
Reverse Engineering Disclosed in Product/Process
Difficulty to Police Prior Use Defense
Unknown Potential Downsides
35
Implications Trade Secret Program
Recordkeeping Practices Trade Secret First Use
Protection Measures
Employee Agreements
Non-Disclosure Agreements
Confidentiality Policies
36
Questions?
37
Disclaimer Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity, are members (“the Norton Rose Fulbright members”) of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal services to clients. References to “Norton Rose Fulbright”, “the law firm”, and “legal practice” are to one or more of the Norton Rose Fulbright members or to one of their respective affiliates (together “Norton Rose Fulbright entity/entities”). No individual who is a member, partner, shareholder, director, employee or consultant of, in or to any Norton Rose Fulbright entity (whether or not such individual is described as a “partner”) accepts or assumes responsibility, or has any liability, to any person in respect of this communication. Any reference to a partner or director is to a member, employee or consultant with equivalent standing and qualifications of the relevant Norton Rose Fulbright entity. The purpose of this communication is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of any Norton Rose Fulbright entity on the points of lawdiscussed. You must take specific legal advice on any particular matter which concerns you. If you require any advice or further information, please speak to your usual contact at Norton Rose Fulbright.
