Prior User Rights Defense Overview

Section 5 of the America Invents Act creates a defense for accused infringers of a process or “machine, manufacture, or composition of matter used in a manufacturing or other commercial process.” This provision replaces the old 35 U.S.C. § 273, which was established by the American Inventors Protection Act of 1999.

The prior user rights defense allows for an individual (or an entity that controls, is controlled by, or is under common control with the individual) to escape liability for patent infringement if the patented subject matter was commercially used by the individual or entity in the United States at least one year before the effective filing date or first disclosure. Commercial use includes internal commercial use or an arm’s length transfer of the final end product of such commercial use.

Before the America Invents Act, 35 U.S.C. § 273 contained a limited prior user rights defense available to those charged with infringement of a business method patent. As stated above, the America Invents Act expands the subject matter on which the defense may be asserted to include all methods or processes.

The defense allows the individual or entity to increase the quantity or volume of use of the subject matter and also extends to improvements upon such subject matter if those improvements are not claimed in the patent.

The defense contains a number of limitations on when it may be used. First, the defense is personal in nature so it may only be asserted by the individual or entity that performed or directed the performance of the commercial use. Second, the right to assert the defense cannot be licensed or transferred, except through the good-faith transfer of part or all of the business in which the commercial use exists. Third, the defense may only be asserted at the sites where the commercial use was present before the later of the effective filing date of the claimed invention or the date of assignment or transfer of the business in which the commercial use exists. Fourth, abandonment of commercial use of the subject matter ends the individual or entity’s ability to assert the defense unless the commercial use was resumed more than one year before the effective filing date or first disclosure.

The prior user rights defense also contains an exception in which the defense is not able to be asserted, even if all other factors are satisfied. The defense cannot be asserted against a claimed invention that was owned or subject to assignment to a university or technology transfer organization at the time the invention was made. In order to qualify for this exception, the technology transfer organization’s primary purpose must be to facilitate the commercialization of technologies developed by universities. The university exception does not apply if the activity required to reduce the invention to practice is research the federal government is prohibited (by statute, regulation, or executive order) from funding.

Key Dates

The expanded prior user rights defense became effective on September 16, 2011, and applies to any method or process patent issued on or after such date.