The plight of pre-patent procedures

To ensure IP protection, pre-filing should get as much consideration as filing for a patent
Working Mechanism Concept

Inventions can be extremely valuable, yet it is impossible, and in most cases premature, to apply for a patent the moment it is conceived.

For example, time may be required to develop the nascent invention into a fully fleshed-out system or method, to evaluate its market potential, and to determine whether it can be manufactured and ultimately sold at a price point that would support a business. For these and other reasons, weeks, months or even years may pass before you are ready to file for patent protection.

Trade secrets

While you may not be ready to proceed with a patent filing right away, it is never too early to seek the advice of patent counsel, and there are many steps that you can take even on your own to protect your rights. For instance, trade secrets can be used without any formal government filing being required.

Trade secrets are an important type of intellectual property that allow individuals and organizations to retain exclusive rights to their inventions. Generally, a trade secret must be secret, have commercial value due to its secrecy, and the secrecy must be reasonably protected.

The reasonableness of any protective measures is judged according to the value of the trade secret, with very strong measures being required for those that are particularly valuable. A public disclosure ends protection and makes the invention available to all.

Trade secrets, if they satisfy the three requirements above, can be a basis for misappropriation actions against infringers in the U.S. and abroad.

In some cases, trade secrets can provide ongoing protection on their own while, in others, they are a short-term precursor to patent protection. In other cases, trade secrets can be used in conjunction with patents to protect aspects of the invention — know-how, for example, in its most basic form, because such information is required to be disclosed in any patent filing, but nevertheless increases the value of the invention and gives the owner an advantage in the marketplace. Documentation during the pre-patenting stage is essential to prove the lineage of company information as trade secrets and as the basis for later patents.

Where the details of the invention are apparent from an inspection of a product or method embodying the invention, keeping the invention a trade secret indefinitely would not be a viable strategy.

However, where the details of the invention can remain a secret indefinitely, a trade secret, which has no fixed expiration date as long as the trade secret remains a secret, can be the better choice.

For instance, the recipe for Coca-Cola is a trade secret of enormous value, exceeding that even of a patent by allowing a monopoly on the invention (the recipe) to continue indefinitely.

A secret-secret is no secret, however.

More specifically, if trade secret information is provided to individuals who are not aware of the confidential nature of the information, it would lose its status as a trade secret.

Such individuals need to know, and, practically speaking, agree to in writing, the confidential status of the information conveyed to them. This is generally where nondisclosure and employment agreements come into play.

Nondisclosure agreements

Nondisclosure agreements (NDAs) are typically used to deal with the disclosure of information and inventions, including trade secrets, that have already been developed. NDAs need to be signed, specifically identify the confidential information to be shared under the agreement, identify the reason(s) the parties to the agreement have decided to share the information, and be of a reasonable term to be enforceable.

Employment agreements

In contrast, employment agreements are typically forward-looking, addressing inventions and proprietary information that the employee may develop during their employment. Employment agreements should address the role of the putative employee, their handling of confidential information, define the ownership of intellectual property that may result from activities of the employee during the course of their employment, and address any limitations on work for competitors: noncompete clauses.

Noncompete clauses, to be enforceable, should be drafted in a manner that does not prevent the employee from engaging in gainful employment in their field for a lengthy period (more than one to three years, depending on context and jurisdiction). Further, agreements with all participants in a given project that may lead to the generation of intellectual property, including students and consultants, is a best practice.

NDAs and employment agreements are governed by state law. For this reason, it is best to consult with an attorney licensed to practice in the state you are operating in to draft agreements that would be enforceable in your jurisdiction.

Public disclosure grace period

Where a decision is made to protect the invention using a patent, one relatively common situation that can occur is the inventor making a public disclosure of the invention, such as by presenting at a trade show.

While this would be problematic in many countries, the U.S. offers a “grace period” for public disclosures of the inventor. More specifically, an inventor’s disclosure cannot be used against them during the patent application process, which is also referred to as patent prosecution, in the United States, for one year after a public disclosure of the invention.

After the grace period, the obviousness and novelty of the invention, both of which are required to be shown to have the patent application granted, would be judged against the applicant’s own public disclosure, generally preventing issuance of a patent covering the invention.

Foreign jurisdictions

In most foreign jurisdictions, this standard is even stricter, with any patent filing needing to be completed before the public disclosure. Additionally, while the one-year grace period protects the applicant from their own disclosure(s) and those of third parties, it does not prevent publication of details of the invention by a third party, where those details were independently invented, from being used to show obviousness of the invention, since the United States and most foreign jurisdictions award a patent to the first inventor to apply.

For these reasons, the determination of which countries where you would like to protect your invention must be made prior to any public disclosures. Even where only the U.S. is of concern, the date of the disclosure and associated one-year filing deadline must be noted to avoid a loss of rights.

Public use or experimental use

Another special situation that can occur is the public use of the invention that is still being developed. In some cases, this use may be considered experimental and not a public disclosure that would trigger the start of any grace period.

The availability of the so-called experimental use exception is very fact-specific, however, and even a secret/private offer for sale can trigger the statutory bar. Especially here, a patent attorney can assist.

Education institution rights

While there several special situations can arise, there are also special categories of inventors. One is the student or faculty inventor, due to the involvement of their educational institution, which likely will have rights to the invention.

The delicate balance of academic publication vs. confidential control for patent protection can be achieved, but requires careful timing to stay within the aforementioned grace period and retain the ability to file for patent protection.

For these reasons, a discussion with your organization’s technology transfer office and/or outside counsel is suggested as soon as practicably possible, certainly in advance of any public disclosure, the date of which should be noted for purposes of ensuring that any patent filing is made no more than one year thereafter.

Government contract requirements

As if the added layer of educational institutes was not enough, much academic research also entails government funding. Under the Bayh-Dole Act, most government contracts require filing patent applications on inventions derived from their funding if the contractor wants to keep title to the subject invention. This can include defense-related contracts and encompass subcontracted consultants’ work as well.

Obviously, a contractual requirement to apply for a patent on government-funded research results requires filing a patent application, but there can be routes to trade secret protection on aspects that were independently funded or are ineligible for patent protection.

Achieving business objectives in these scenarios requires advance and ongoing attention. This includes clearly segmenting and documenting invention ideas to avoid ownership questions and define responsibilities.

For instance, if government funding is used, the Bayh-Dole Act requires disclosing every subject invention for which the applicant intends to file a patent, within two months, electing title within two years, and filing within one year, or sooner if there are statutory bars.

A review of your specific contractual obligations as well as those imposed by the default provisions of the relevant statutes by counsel is suggested where such a situation arises.

To ensure that your organization is able to protect its intellectual property worldwide, your pre-patent filing strategy should get as much deliberate consideration as the patenting path itself, and trade secrets, which can fill an important niche in a company’s IP portfolio, should be strongly considered alongside patent filings. Additionally, IP counsel should be consulted with early in the process, in advance of any public disclosures of the invention or offers for sale.

David Rardin is a registered patent attorney with the Nashua-based law firm of Maine Cernota & Rardin.

Categories: Law