IP: Value of trade secrets bolstered by new prior commercial use defense

The AIA offers extra protection to trade secrets

The passage of the Leahy-Smith America Invents Act (AIA) brought change not only to U.S. patents, but also to trade secrets. Under the AIA, a trade secret owner can now, under certain conditions, use a trade secret as a defense to patent infringement.

Upon the invention of a new technology, a company or research institution will choose between protecting the invention by filing a patent application or maintaining the invention as a trade secret. Trade secrets work best when the invention is not readily observable and cannot be reverse engineered when a product is released. Trade secrets also are generally less expensive to maintain, at least initially, as the company does not incur costs for filing and prosecution of a patent application.

While the power of trade secrets is strengthened by the new law, the  defense may be challenging to employ because it requires a high burden of proof of clear and convincing evidence. Much of the evidence to support this defense will be documentation that occurred at the invention and development stage. That evidence typically is found in laboratory notebooks, research reports and memorandum, correspondence, raw data printouts, nondisclosure agreements and invention review committee minutes.

It is worth noting that another AIA provision, the move from the first-to-invent to the first-to-file system, at first glance suggests that inventors do not need to preserve invention records. That evidence was typically relied upon in interference proceedings to establish earlier dates of conception, reduction to practice and diligence. Although interferences are being phased out, the need to preserve research and development documentation remains in view of the new prior use defense, as well as for other AIA provisions such as derivation proceedings.

author image

Janelle Waack

Janelle Waack is a partner at Novak Druce + Quigg LLP and focuses on interference matters before the United States Patent and Trademark Office Board...

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.