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Trade Secret vs. Patent Protection

After AIA: Making the Choice Understanding AIA's Impact on Trade Secrets, Evaluating

the Protection Options, Weighing the Benefits and Risks

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WEDNESDAY, MARCH 26, 2014

Presenting a live 90-minute webinar with interactive Q&A

R. Mark Halligan, Partner, Nixon Peabody, Chicago

Pejman F. Sharifi, Partner, Winston & Strawn, New York

Steven M. Cohen, Senior Intellectual Property Counsel, Open Text, Burlington, Mass.

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TRADE SECRET V. PATENT PROTECTION AFTER THE AIA: TRADE SECRET PERSPECTIVES

R. MARK HALLIGAN, PARTNER | NIXON PEABODY LLP MARCH 26, 2014 | STRAFFORD

• THE MODERN DEFINITION OF A TRADE SECRET

Restatement Third Unfair Competition:

“A trade secret is any information that can be used in the

operation of a business or other enterprise and that is

sufficiently valuable and secret to afford an actual or

potential economic advantage over others.” [Section 39]

5

• BROAD PROTECTION AVAILABLE IN US

— Both technical and non-technical information are

protectable as trade secrets

— Negative know-how ("what doesn’t work") is protectable

as a trade secret

— Actual or potential economic advantage derived from

secrecy

6

• US LAWS PROTECTING PROPRIETARY INFORMATION

— Uniform Trade Secrets Act (UTSA)

— Restatement (Third) Unfair Competition

— Economic Espionage Act of 1996 18 USC Section 1831

et seq. (EEA)

— Computer Fraud and Abuse Act 18 USC Section 1030

et seq. (CFAA)

— State Laws Enforcing Confidential Information and

Trade Secret Agreements With Employees

7

• INTERNATIONAL TRADE COMMISSION (ITC)

TianRui Group Co. Ltd. v. US International Trade

Commission, 661 F.2d 1322 (Fed. Cir. 2011)

— Under Section 337 of the Tariff Act of 1930, the ITC is

authorized to exclude imports when it finds “[u]nfair

methods of competition and unfair acts in the

importation of [those] articles.”

— Now US corporations can seek expedited relief from the

ITC without having to bring suit in a foreign jurisdiction.

8

• FEDERAL LEGISLATION PENDING 113TH CONGRESS

— S. 1770: Future of American Innovation and

Research Act

— H.R. 2466: Private Right of Cause of Action Against

Theft of Trade Secret Act

9

• TRADE SECRETS/PATENTS IN THE 21ST CENTURY

The birth of every patent starts out as a trade secret

Thereafter, a subsequent decision needs to be made to

determine whether or not to convert the trade secret asset

into a patent if “patentable”--NUN factors: new, useful

nonobvious

10

• TRADE SECRETS: YOUR SECRET WEAPON UNDER THE AIA

— 35 U.S.C. Section 273: Prior User Rights

— PUR protects the trade secret owner from patent

infringement claims

— The AIA recognizes that trade secret assets should be

on the same playing field as patent assets

— Major advancement for trade secrets

11

• TRADE SECRETS VERSUS PATENTS: THE NEW CALCULUS

The life cycle of a patent asset versus the life cycle a trade

secret asset

Weakened patent protection

Today—patents are more difficult to obtain and defend

In contrast, trade secret law is flourishing….

12

• INDEPENDENT ECONOMIC ADVANTAGES DERIVED FROM THE SECRECY OF TRADE SECRET ASSETS

Critical considerations:

— The ease or difficulty in detecting patent infringement

— The ease or difficulty in reverse engineering the “trade

secrets”

— “A trade secret once lost is lost forever”

13

• THE “CATCH-22” SITUATION

If you elect to prosecute a patent application under US

law—trade secret protection will be lost upon publication of

the patent application in 18 months [if filing foreign].

The risk also exists that the patent will be disallowed or the

patent protection will be too narrow.

14

• NEGATIVE ASPECTS OF POST-GRANT REVIEW

There is now a post-grant review system under the AIA.

Competitors and potential infringers now have an incentive

to lay in the weeds and sit on potential prior art as a patent

goes through the patent allowance process and then

challenge patent validity post-issuance.

15

• NEGATIVE KNOW HOW: WHAT DOESN’T WORK

The classic example is WD-40

“WD-40” represents the 40th try by scientists in 1953 to

come up with a “water displacement” formula to use as a

rust-prevention solvent and degreaser in the aerospace

industry.

A patent [would] disclose the 40th experiment

16

• TRADE SECRETS AND THE ELIMINATION OF THE BEST MODE REQUIREMENT

Before the AIA, failure to disclose the “best mode” in the

patent application could be grounds for invalidating the

resulting patent and any alleged trade secret rights.

Now, the AIA changes this: patents cannot be invalidated

for failing to include the best mode.

17

• COSTS: PATENTS VERSUS TRADE SECRETS INTELLECTUAL PROPERTY

Patents cost thousands of dollars and years to obtain

Trade Secrets require an internal inventory/registration

system and security. Clear and convincing evidence.

[This is going to happen: NIST—Framework for Improving

Critical Infrastructure Cybersecurity]

The rebirth of the laboratory notebook

“Clear and convincing evidence”

18

•

— Practice Areas: Intellectual Property, Intellectual Property Litigation, Litigation & Dispute Resolution, Technology

— Accomplished trial lawyer focused in intellectual property litigation and complex commercial litigation in federal and state courts

— Experienced patent litigator focused on protection and enforcement of trade secrets

— Frequent author and lecturer on intellectual property issues; Adjunct Faculty of The John Marshall Law School in Chicago where he teaches trade secrets law.

Publications

— Chambers USA: America’s Leading Lawyers for Business for Intellectual Property

— “Top-flight IP strategist” in IAM 250: A Guide to the World’s Leading IP Strategists, 2011 and in IAM 300: A Guide to the World’s Leading IP Strategists, 2012

— Illinois “Super Lawyer” for consecutive years since 2005

— Legal 500 Leading Lawyer in Trade Secrets Litigation

— Best Lawyers 2013 and 2014 for Intellectual Property

— “IP Star” by Managing Intellectual Property magazine, 2013

R. MARK HALLIGAN ESQ.

Partner

Chicago

Education

Northwestern University School of Law, J.D.

University of Cincinnati, B.A., summa cum laude

PRESENTER BIO

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This presentation may be considered advertising under certain rules of professional conduct. The content should not be construed as legal advice, and readers should not act upon information in this publication without professional counsel. ©2014. Nixon Peabody LLP. All rights reserved.

THANK YOU R. Mark Halligan Esq.

T 312-425-3970

[email protected]

Nixon Peabody LLP 300 S. Riverside Plaza 16th Floor Chicago, IL, 60606-6613

Trade Secret v. Patent Protection After

the AIA – Patent Perspectives Pejman Sharifi

© 2014 Winston & Strawn LLP 22

• This presentation and the associated paper contained in the course book

solely express my views and should not be attributed to Winston & Strawn

LLP, its partners, or its clients.

• It will likely be many years before we know how the courts are going to

interpret the statute.

Disclaimer


• AIA section 102 is keyed to activity that is public, available to the public.

• 35 U.S.C. 102(a).

• (a) Novelty; Prior Art.— A person shall be entitled to a patent unless—(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or

• (2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122 (b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

Is it Public – Consider Benefits and Consequences

http://www.law.cornell.edu/uscode/text/35/151

http://www.law.cornell.edu/uscode/text/35/122

http://www.law.cornell.edu/uscode/text/35/usc_sec_35_00000122----000-#b


• The section also permits a form of antedating using public activity within a

year of filing a patent application.

• (b) Exceptions.—(1) Disclosures made 1 year or less before the

effective filing date of the claimed invention.— 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—(A) the disclosure

was made by the inventor or joint inventor or by another who obtained the

subject matter disclosed directly or indirectly from the inventor or a joint

inventor; or

• (B) the subject matter disclosed had, before such disclosure, been publicly

disclosed by the inventor or a joint inventor or another who obtained the

subject matter disclosed directly or indirectly from the inventor or a joint

inventor.



• Pre-AIA, internal documents, confidential information, or trade

secrets, were relied upon by patentee in litigation to move the

invention date behind asserted prior art.

• Pre-AIA, defendants would run down both public (e.g., conference

presentations, public use) and secret activity (e.g., section 102(g)(2))

of third parties to establish invalidity case.

• AIA impacts these litigation-related strategies and patent-related

development activity.

• AIA changes the issue to be about what’s considered “public,”

“available to the public.”

• Not addressing whether AIA overrules case law related to section 102

and secret commercial use or sale; research so far indicates

overruled.



• Looking back in time, during litigation, earlier actions can have

significant value for plaintiff or defendant if it is determined that the

action is public.

• Existing case law addresses the circumstances for when there is a

publication or activity that is sufficient to be a public disclosure; the

activity can be less than a published article in newsletter.

• Existing case law, includes activities that I will refer to as “gray” public

activity — something less than a published patent or an article in a

well-established technical journal.

• Defendants will be motivated to run down this gray public activity.

• Plaintiffs will be motivated to rely on their own pre-filing activity (within

one year of their patent filing) to shield their patent from prior art.



• Pre-AIA, with the exception of section 102(b), patentee could avoid

prior art by providing internal evidence of conception and/or reduction

to practice. No requirement that these activity be public.

• Pre-AIA, patent applicants try to avoid risk of forfeiting foreign rights

and triggering one-year grace period in U.S., which would arise from

public disclosure.

• Pre-AIA, activity of the patentee more than one year before their

effective filing date would be examined closely to see whether it rose

to the level of being considered prior art under section 102.

• AIA Patentee – left without reliance on internal invention

documentation.

• AIA Accused Infringer – left without certain forms of secret prior art to

defend against infringement.



• Printed Publication (MPEP)

– Can be electronic – on a website.

– Sufficiently accessible to the public – Some case law states sufficient if

some portion of the public concerned with the art would know of the

invention.

– Under AIA, publication in any language.

– Orally presented paper can be a publication if copies were available for

dissemination upon request. Massachusetts Institute of Technology v.

AB Fortia, 774 F.2d 1104, 1109, 227 USPQ 428, 432 (Fed. Cir. 1985)

(only six copies were disseminated).

– Public display can be a printed publication. In In re Klopfenstein, the

court held that “the display was sufficiently publicly accessible to count

as a ‘printed publication.’” 380 F.3d at 1350, 72 USPQ 2d at 1120. This

was even though there was no indexing or dissemination. The court

evaluated the expertise of the target audience, the existence (or lack

thereof) of reasonable expectations that the material displayed would not

be copied, and the simplicity or ease with which the material displayed

could have been copied.” Id. (emphasis added).



• Public Use (Harmon On Patents)

– The nature of the activity that occurred in public; public access to the

use; confidentiality obligations imposed on members of the public who

observed the use; and commercial exploitation.

– The totality of the circumstances is considered in conjunction with the

policies underlying the public use bar. The circumstances may include:

the nature of the activity that occurred in public; the public access to and

knowledge of the public use; whether there was any confidentiality

obligation imposed on persons who observed the use; whether persons

other than the inventor performed the testing; the number of tests; the

length of the test period in relation to tests of similar devices; and

whether the inventor received payment for the testing.

– The presence or absence of a confidentiality agreement is not

dispositive of the public use issue, but is one factor to be considered in

assessing all the evidence.



• Other forms of “public” prior art will likely rely on this precedent.

• Can create uncertainty about validity because it is not a bright line

test; it includes prior art that is difficult to locate.

• The pre-AIA underlying policy favored the prompt and widespread

disclosure of inventions.

– Designed to pressure companies to file as soon as possible or within the

one-year period.

– It can help defendants.



• Legislative intent: Statements by Sen. Jon Kyl

– “Public uses and sales of an invention will remain prior art, but only if they make

the invention available to the public. An inventor’s confidential sale of his

invention, his demonstration of its use to a private group, or a third party’s

unrestricted but private use of the invention will no longer constitute private art.

Only the sale or offer for sale of the invention to the relevant public or its use in a

way that makes it publicly accessible will constitute prior art.” Cong. Rec., Vol.

157, No. 130, S5320, Sep. 6, 2011 (emphasis added).

– “There is no reason to fear “commercialization” that merely consists of a secret

sale or offer for sale but that does not operate to disclose the invention to the

public.” Sen. Kyl, Cong. Rec., Vol. 157, No. 34, S1371, Mar. 9, 2011.

• If the public threshold is metered more in one direction, it can give

rise to third-party prior art that is difficult to find pre-application filing

but could be developed during litigation.



Best Practice/Strategy

• Maintain good records of activity

• Decide on IP strategy as early as possible

• If already commenced with some use, presentation, or other potentially

public activity, docket a safe deadline for U.S. patent application and file as

soon as possible (or decide whether to hold as a trade secret)

• Evaluate importance of foreign patent protection

• Consider risk/reward: Could potentially engage in some activity (ambiguity in

whether activity is public; is it arguable; would it raise a bar in foreign

countries; will it serve as invalidating action or will it be helpful evidence of

earlier invention?)

– presentation to a small group, no handouts, U.S., public? Foreign?



• A publication, prov. filing, or other public action under section 102 is prior art

to other applicants (under either section 102 or 103).

• Prior art can invalidate the same invention and obvious variations by itself or

in combination with other references.

• A publication or other public action under section 102 gives you a one-year

grace period to file a patent application.

• The publication or other public action can only provide a grace period for the

disclosed invention, not variations (inherent or implicit aspects of the

disclosed invention are covered by grace period) but not trivial or nontrivial

variations.

• Public actions can invalidate (block) others from patenting your idea (or

obvious variations) but with respect to the grace period triggered for you by

your publication action, you can only benefit your later filed patent application

to the extent it claims the same invention.

Grace Period v. Prior Art Effect – Asymmetry Promotes

Disclosure


• Your publication will trigger the opportunity for others to consider and

file for their own variations (try to patent non-obvious variations) and

beat you to filing for those non-obvious variations.

• There is a risk that if you do not disclose/publish “as much as you

can” that you will have a “narrow” focus and be boxed in by those

filing around you.

• For example, your application may encounter prior art during

examination or may not be able to survive due to scope of the initial

idea being broad or examiner finding prior art that covers the idea.


Disclosure


• In some instances, preventing others from getting a patent may be

more important to the company:

– Prevent others from getting a patent if your market position,

technology resources (capital and expertise), and type of

technology (trivial)? Gives you significant business edge/likely to

get the revenue (and want to avoid) litigation risk.

– Joint work, business discussions under NDA are breaking

down/going in the wrong direction; want to file or publish as soon

as you can to possibly block other party.


Disclosure


• If technology is not published but is disclosed under confidentiality

(NDA) sufficient to avoid being prior art, risks are higher.

Counterparty can file for insubstantial variation of your idea and

declare that he or she invented something new; likely not subject to

derivation proceeding; can be managed by way of contractual terms

such as:

• “If the Receiving Party conceives of any invention or improvement

as a result of the use of the Disclosing Party’s Confidential

Information, the Receiving Party shall assign all rights, title and

interest in and to such invention or improvement to the Disclosing

Party.”

• Require review of any patent filings prior to filing.

• Preclude patent filing on disclosed technology.


Disclosure


• If objective is to get a patent (not a defensive move to create prior

art):

– File on initial concept if you have a reasonable clear understanding of

how to make and use, and have a reasonable expectation of distinction

over prior art – at the minimum, pursue core concept that will be

distinguishing business driver – file as prov. (can be first prov. or second

after a first prov. acting as a conception document).

• Publish or trade secret – patent ineligible or expect to be difficult to

patent.

– Use first prov. to essentially be “your conception date” document (has

risks but creates prior art effect to others).

– Evaluate invention to determine whether to conduct prior art search and

whether to do it before filing a provisional application.

– Revaluate when process, system, product have further gone through

development and implementation process – file for difference from

original filing.

When and What to Disclose


• Overdisclose – (meaning disclose beyond core business-driven concept into

features or potential future variations or combinations) – may be able to

prevent others from boxing you into the core idea because your

“overdisclosure” will have prior art effect to other either under section 102 or

103.

– Risk – e.g., may not be able to capitalize on disclosure (becomes

available to public).



• Underdisclose – (meaning disclose core business-driven concept or concepts that are sufficiently developed such as one's having well-developed enablement position and understanding of business application) – advantage – wait to better understand/analyze the retained idea, the relevant prior art, commercial value, strategy for patenting, which will in turn affect the scope and content of the patent application:

– Experience, development, implementation, and reduction to commercial product gives inventors insight and clarity about uniqueness and importance of invention.

– Can potentially stack ideas in time sequence to extend protection (subject to double patenting and validity issues from own or third party prior art).

– Risk losing rush to patent office (may be less of a concern if you have a large enough queue).

– Can potentially rely on prior user rights – depends on breadth and scope of defense.

– AIA prior art exception for commonly assigned prior art.



• Prior user rights rarely used by defendants.

• Pre-AIA prior user rights limited to business methods.

• Admits infringement –

– if you do not meet all of the requirements to establish the defense

of prior user right under the statute (e.g., clear and convincing),

admit infringement.

• Opinion: The one-year requirement and commercial use means that

the effectiveness of the statute more likely will be towards avoiding

“nuisance” or “low-value” patent claims.

Prior User Rights


• In practice, core/cutting edge/significant ideas arise close in time by

different people (companies) trying to solve the same

problems/develop the same or similar product (because of market or

technological needs)"

– In these situations, AIA rewards the first filer (or first “publisher”) – the

contemporaneous (within one year) developer who lost the race to file or

publish will face infringement, even though he or she may have been

ahead in conceiving and making the product or system.

• The defense is not equivalent to section 102(g)(2).

Prior User Rights


• Scope of Actions

• Statute is explicit that the defense is available if the defendant used the

subject matter, a process, apparatus, composition, or article of

manufacture, patented by the plaintiff, before the one-year date.

• “Subject matter” that would otherwise infringe a claimed invention being

asserted against the defendant.

• However, companies will likely press to broaden scope to be closer in

protection to section 102(g)(2) – arguing that this was the intent of

Congress.

• Will commercial use of subject matter be understood to include actions

that would have sufficed in establishing a 102(g)(2) defense?

Prior User Rights


• Even if interpreted broadly, still has risks:

– Must prove by clear and convincing evidence while at the same time

may have met the plaintiff's burden of proving infringement by

preponderance of the evidence.

– It is not prior art.

– Only protects the same use – not if infringement is because of variation

of that earlier use.

– Must not have abandoned.

– If company is part of assignment/transfer, the right is limited to site it was

used.

– Failure to establish a reasonable basis for defense can cause the case

to be exceptional (e.g., treble damages).

Prior User Rights


• Limited value if someone uses a publication or public activity by you

to file patent applications on variations, improvements, or feature-add

combinations.

– If the competitor can file shortly after your publication, there is a good

chance the one-year window required under the statute will not be

satisfied.

– A new industry can arise that will capitalize on this.

– Risk of underdisclosing can find the business potentially boxed in from

areas of natural expansion.

– However, if first publication is later, such as the publication of the patent

application, there is a better chance that there are prior user rights

arising from commercial use of subject matter that was not included in

the patent application.

Prior User Rights


• There can be uncertainty about whether you are inside or outside the

one-year window. May need to estimate two years as a safe date;

because the one year is based on filing date or public date, the public

date may be difficult to determine from investigation; this depends on

whether “public or otherwise public” is broadly interpreted.

• Transferability specifically addressed. Cannot be transferred as a

separate and independent right; can be transferred or assigned as

part of the good-faith transfer or assignment for other reasons of the

entire enterprise or line of business to which it relates.

Prior User Rights


• Important to maintain documentation of activity.

• Loss of section 102(g) prior art defense; motivates to publish or file

patent application.

• The defense is not available against a university or technology

transfer institution.

• Statute explicitly states that commercial use includes nonprofit

laboratory use and premarketing regulatory review.

Prior User Rights


• Possibly replace section 102(g)(2) with patent application filing strategy, but

management of the process can be complex.

• Under AIA 102, a disclosure in a patent application has its filing date as the

effective prior art date against others.

• Can file a provisional application (maintains technology confidentiality).

• File nonprovisional application with nonpublication request (maintains

confidentiality).

• Regardless of how long nonprov. stays pending, when it issues, the

description is prior art back to its filing date.

• Can file any type of document as a provisional application and later claim

priority and incorporate by reference into a nonprovisional application that

focuses on one invention in the prov. application; the entire disclosure of the

prov. will be prior art.

• Could do this for new platforms, for invention disclosures, etc.

• The point is more about creating prior art and replacing section 102(g)(2)

than offensive patent rights.

Section 102(g)(2) Alternative


• Possible to get a second patent and extend patent coverage beyond

initial 20 years of first application (e.g., patent process and then

range to use in process).

• Not subject to invalidity attack in D Crt, all PTO proceedings, but

statute still includes the best mode requirement:

– Explain to client risk and benefit of waiting and best mode requirement in

general.

– If attorney is informed there is a “best mode,” do you have an ethical

obligation to disclose? This technicality is not clear, since violation

appears to be inconsequential.

Best Mode – If You Hold Back – Risk/Reward


• Publishing can have prior art effect to others in foreign countries that a patent

application alone will not. In certain countries, such as Europe, a pending

(first-filed) application can only be used for anticipation purposes against

another patent application if the first-filed application is not yet published at

the time the second application is filed.

– Publishing an article would allow the subject matter to be applied for anticipation

and obviousness.

• In the software field, should you also open source? Businesses such as Red

Hat are directed to obtain commercial revenue from open-source software. A

patent could cover the use of open-source software, but as a matter of IP

right, it would maximize commercial value to open-source the software

yourself, rather than to depend on a later patent licensing campaign against

the software developer.

Patent and Publish – What Else?


Pejman Sharifi is a partner in Winston & Strawn LLP’s New York office who advises clients

on patent transactional, counseling, and litigation matters. Mr. Sharifi’s focus is in

representing clients in electrical, electromechanical, software, and business-method

technologies.

Mr. Sharifi’s experience in patent transactional matters includes representing clients in

protecting and prosecuting patent applications in the U.S. and abroad; managing patent

portfolios; counseling clients with respect to strategy; developing patent portfolio mining

programs; assisting with post-grant proceedings; developing patent application assets for

assertion or licensing programs; developing corporate patent programs; advising with

respect to patent eligibility and patentability; developing strategies for protecting software

and business-related inventions in the U.S. and abroad; advising with respect to design

patents; and assisting start-up enterprises in protecting core assets.

Mr. Sharifi’s experience in patent counseling matters includes providing invalidity and non-

infringement opinions; developing patent clearance strategies; assessing and responding

to patent notification letters; evaluating intellectual property assets in the context of

assertion or investment; providing IP due diligence for transactions; identifying and

addressing core intellectual property issues in M&A transactions; drafting and negotiating

agreements or intellectual property terms; conducting diligence to identify patent assets for

acquisition; assisting clients with patent evaluation and acquisition; advising clients with

respect to changes in patent law; advising with respect to copyright or trade secret risks in

connection with reverse engineering or technology development programs.

Pejman F. Sharifi Partner

+1(212) 294-2603

[email protected]

Intellectual Property

Practice

IP/IT Transactions &

Licensing

Intellectual Property

Mergers & Acquisitions

Patent Litigation

Patent Prosecution

Patent Trial and Appeal

Board Proceedings

Law School

Catholic University, JD 1997

Bar Admissions

New York

U.S. Patent & Trademark

Office

mailto:[email protected]

Trade Secret vs. Patent Protection After the AIA – Making the Choice

AGENDA – In-House Reflections

• Innovation at Open Text Corporation

• What we do

• Types of IP

• Why seek trade secrets?

• Why obtain patents?

• AIA: Impact on Strategy

WE'RE INFORMATION EXPERTS You can be too. Steven M. Cohen

OPENTEXT – What We Do

52

• At a glance

• Founded 1991, Canada’s largest software company, hundreds of

products and services sold worldwide

• $1.3 billion in rev, 2013

• 100K+ global customers, 8200 employees across globe

• Enterprise Big Data Life-Cycle Management:

• Capture, View, Analyze, Leverage, Manage, Archive

• Business Process Management, B2B Trading Grid

• Customer/Web Experience Management

• Managed File Transfer, Cloud Computing, +++

WE'RE INFORMATION EXPERTS You can be too.

Types of Intellectual Property

53

Types of IP OpenText Best way to protect

Productized innovations (in software)

Yes Patents

Customer lists, pricing strategies, databases, product roadmaps

Yes TS/Patents (based on Roadmaps)

In-house production, staging and testing techniques

Yes TS/Patents

Black box – algorithms, match.com, research

No TS

Secret formulas - Coke No TS

Secret manufacturing processes

No TS

R&D incubators Yes TS/Future Patents


Why seek trade secrets?

54

• ADVANTAGES

• Maintain private competitive edge

• Protect R&D, know-how, embryonic ideas

• No prosecution costs

• But, no protection against another inventor

• Hard to police, hard to spot

• Reverse engineering – no protection

• Employee turnover – non-compete law varies

• Difficult to identify and extract

• Once it’s out, it’s out (seek damages)


Why obtain patents?

55

• ADVANTAGES

• Market exclusivity, protect core innovations

• Revenue opportunities: license, sell

• Leverage in negotiations, litigation

• Deter/disrupt competitors, protect market share, hard-

earned customer base, marketing & sales fodder

• Promote with incentive programs

• But, expensive to prosecute and maintain

• Difficult to identify ideas for patenting

• Can be difficult to obtain meaningful protection

• Public disclosure of ideas, know-how

• Like TS, can be difficult to spot infringement


AIA: Impact on strategy

56

• Prior Use Rights: Trade secrets can serve as

shield in patent infringement suits

• Relates to a commercial use of the claimed invention,

can be internal use, arm’s length sale, commercial xfer

• Use must be > 1 year prior to filing of patent appl’n

• A personal defense, many exceptions re who can use

this defense, e.g. assignees, relate to privity/control

• Must provide C&C evidence of use



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• Some IP will always be best protected with

trade secret

• Some IP starts with trade secret, possibly

migrates to patent protection upon reduction to

practice and/or inclusion in products/services

• How to identify and document IP

• TS and patent harvesting; group-by-group, incentive

programs, informal

• Implement documentation practices; notebooks,

technical documents, docketing, dates and signatures



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• Patents may be more vulnerable due to extension of

post grant proceedings; lower hurdles for initiating

proceedings; expansion of qualifying prior

art/behaviour, more ways to challenge (112); softening

of estoppel provisions; similar to mini-trials

• Inter-partes Review (IPR): Challenge claimed invention using

patents and printed patent appl’ns based on s102 and s103;

reasonable likelihood of prevailing; estopped on grounds that

were raised or could have been raised (but only re s102 & s103)

• Post Grant Proceedings (PGP): Available only for claims

w/priority after Sep 2013; can challenge claimed inv’n based on

wide range of grounds; more likely than not to prevail; estopped

on grounds that were raised or could have reaz been raised

(hard to discover prior art) (estoppel applies to more grounds)



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• Patents may be more vulnerable due to extension of

post grant proceedings; lower hurdles for initiating

proceedings; expansion of qualifying prior

art/behaviour, more ways to challenge (112); softening

of estoppel provisions; similar to mini-trials

• Covered Business Methods: Available now, like PGP, claimed

invention must relate to financial product/service. Possible

expansion to broader range of claimed inventions.

• Don’t forget about pre-issuance challenge using Third Party

Submission: Submit relevant patents, published patent appl’ns,

publications before Notice of Allowance; must include an

explanation of the relevance; no participation after submission;

let examiner do his job; kill before issuance; but submitted art

“used up” if doesn’t work.



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• Patents can no longer be invalidated in litigation for

failure to disclose best mode/preferred embodiments

• Protect preferred embodiment with trade secret (no disclosure)

• Protect broader invention with patent (dual protection)

• What is the risk for failing to disclose best mode; best mode

must be disclosed to obtain a patent, but this has no teeth

without invalidation, is there an ethical obligation to disclose

best mode? Best mode usually only figured out in discovery


Presenter bio

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Mr. Cohen concentrates his practice on patent prosecution and litigation, IP transactional work, copyright

and trademark protection, open source licensing, IP due diligence for acquisitions, trade secret practice,

and more. He is currently responsible for developing, managing, protecting and enforcing the IP rights

and assets of his corporate client. Mr. Cohen advises and educates clients on facets of IP law, strategy,

and asset development and utilization.


Steven M. Cohen Senior Intellectual Property Counsel OpenText Corporation 3 Van de Graaff Drive Burlington, MA 01803-5188 1-781-253-3381

Documents

Trade Secret vs. Patent Protection After AIA: Making the ...media.straffordpub.com/products/trade-secret-vs... · 26/03/2014 · •Pre-AIA, defendants would run down both public