No! Don’t confuse the title of this post “rights of a prior user” with the “prior user” of the Indian trademark law. Here we are discussing the prior user right under patent law.
Let’s start with a question: you filed a patent infringement case in India and the defendant filed a counter-claim that he had secretly used the patented technology before the priority date of your patent application. What would happen?
Without going into the intricacies of the law, at the outset the court would revoke the patent for secret use of the invention in India under Section 64(1)(l) of the Indian patents act, 1970. But what would happen if the same situation occurs in a country like Germany and USA where the patent laws recognise the prior user right? Below is an attempt to answer it.
What is a prior user right? Section 12 of the German patent act and Section 282 of US AIA Act recognise the prior user right. According to these sections, any third party using a patented technology before a priority date of the patent can claim defence of the prior use in a patent infringement case and continue using the said technology subject to certain limitations. To claim the defence, the “use” can either be a public use or a secret use.
One may ask, if the prior use is made in public before the priority date of the invention, then it should cause anticipation of the patent. The question is intriguing, but the concept of prior user right means that the prior use lacks an enabling disclosure; if the prior use in PUBLIC was sufficient to provide an enabling disclosure, then only it might cause anticipation of the patent.
Benefits of the prior user right? This is a defence available to a defendant in a patent infringement case only if he is acting in good faith. The burden of proof lies with the defendant to establish that he has used the invention IN THE COUNTRY before the priority date of the patent. A successful defence allows the prior user to continue using the patented technology, limited ONLY to his own business unchanged. In order to enable others to use the prior user defence, it can only be transferred with the complete sale of the business.
Further, the prior user would not be obligated to pay a royalty to the patent holder. However, the prior user obviously cannot exclude anyone from using the patented technology. The policy consideration to allow prior user right is to balance the theory of exclusive rights and the third party rights who has invested his money in good faith.
What is more to consider here is that the burden of proof first lies on the defendant to prove that he is the prior user. However, if once it is proved, would the burden of proof shift to the patentee to in-turn prove that the prior use lacked enabling disclosure and hence, his patent should not be invalidated? We need to look into the question separately. If you know the answer, please reply in the comment section below.
US Law on prior user right
The prior user right was first introduced in the US by the court’s decision in the landmark case of State Street Bank & Trust Co. v. Signature Financial Group, Inc. This was introduced with the objective of safeguarding the interest of the domestic prior business owners using a patented business method. Eventually, section 273 was introduced. The scope of the prior user right was extended (check 35 USC Sec. 282) to all technologies with the enactment of the America Inventors Act (AIA), 2011. The prior use must have occurred at least one year before the priority date or filing date and an exception applies to this defence if the applicant is the University.
The position of India on this point appears clear, i.e. the Indian patent law does not recognise the rights of the prior user. It follows the system of First-To-File like mostly other countries. In any such situation arising, the user instead of claiming to be a prior user must take the ground of prior use or secret use in India.
In comparison, the Indian patent act provides a broader defence and no chances of a win-win situation between the patentee and the prior user. In fact, the question “what is an invention” was answered in the case of Raj Parkash vs, Mangat Ram Choudhary as, “Invention is to find out…… by anyone before …..so long as it is something novel or new, would be an invention….and the claims for anticipation by the defendant has to be either by prior user or by prior publication”. Thus, if someone proves a prior use, then it would cause revocation of the patent.
However, what is intriguing here is that in Lallubhai Chakubhai v. Shamaldas Sankalchand A.I.R., 1934. Bom. 407, it was held that if an article manufactured under a secret process is of such a character that anybody by examining it can find out the secret of that manufacture, then the sale of that article in public would amount to public use of the process. Wait! Does it mean that if the secret use of the invention was secret enough not to provide an enabling disclosure to the skilled person or anyone examining it, then that secret use would not anticipate the invention and hence, no revocation under section 64(l) of the Act? If yes, then the patentee can freely exercise his rights against the prior user – even when the invention was secretly used in India before the priority date – and it would also question India’s position on the First-To-File system.
In view of the above, I understand that recognition of the prior user right is a solution to maintain a balance between the prior trade secret user and the patentee. There is a thin line of difference that lies between the secret use that will constitute a “prior use” in the Indian patent law and the secret use that will not, i.e. if the “prior use” was sufficient to be interpreted as enabling disclosure. Though India’s position on this issue appears settled, in light of the questions raised above, it leaves me amused! Your suggestions are greatly welcome.