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Issue 5                                                                               July/August 2001

In this Issue


Welcome

This is the fifth issue of Directions, a newsletter from TechRoadmap Inc. discussing intellectual property issues and ideas. With everyone enjoying summer vacations we have made this a double month issue - July and August. Monthly issues resume in September. As always, we hope to stimulate you to examine and improve your own IP practices.

In this month's issue we look at the dark side... that is, what may happen when we decide to keep the world in the dark concerning our invention. Most everyone knows that the patent system is set up as a kind of Faustian bargain; you can operate as a very limited monopoly, preventing others from practicing your invention IF you are willing to teach everyone, including your competitors about your invention. But what if you don't like that deal?

Feel free to share this newsletter (see copyright notice below) and to provide feedback by e-mail to: bruceahz@techroadmap.com


Mass High Tech: The main article in May's Directions was picked up by Mass High Tech for inclusion in their July 9th issue, as part of the IP law feature section. If you did not receive May's Directions, you may read the original on our web site at enews.techroadmap.com

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Technology RoadmappingSM

Shhh, it's a trade secret!

One issue that many clients face is whether they will be better off applying for a patent on their invention or trying to maintain it as a trade secret. There are many facets to this issue ranging from who your competitors are (and what technology approaches are they pursuing) to how confident are you that your application will succeed.

One rough rule of thumb that some people apply is that you should patent inventions that can be easily reverse engineered and hold as trade secrets inventions for which infringement would be hard to identify. The logic here is pretty clear; patent things you can't keep secret and keep secret things whose patent you can't enforce. In this month's patent case it appears that Merck effectively followed this rule. Reading the court decision we see that Merck patented the actual compound that was medically effective (since a tablet can be chemically analyzed) but elected to hold as a trade secret (at least initially) the manufacturing process for producing "a stable solid formulation" of the compound (since it's hard to know what process is used inside someone else's factory).

But this month's case also points out a lesser know aspect of the decision to hold an invention as a trade secret; that you might find yourself sued for infringement for using your own invention! Most people know that a patent is a bargain with society; if you are willing to teach society about your invention, society will allow you a monopoly to practice your invention. But like Dr. Faustus we learn there is a little more to this deal; something just a bit darker. The Appeals Court says that when it comes to keeping a trade secret "...though there is no explicit disclosure requirement...the spirit and policy of the patent laws encourage an inventor to take steps to ensure that 'the public has gained knowledge of the invention which will insure its preservation in the public domain' or else run the risk of being dominated by the patent of another. [emphasis added]  ... Thus, prior, but non-public inventors yield to later inventors who utilize the patent system." 

In this month's case Merck dodged that bullet when, after 5 years of court-defined concealment, it disclosed just enough information, at just the right time, to turn back the infringement case by having the Apotex patents invalidated. As Apotex was entering the market (for the same drug) Merck, either knowingly or not, released enough additional information about their hitherto secret process  to permit reverse engineering of that process. Merck's timing was superb, if coincidental, since Apotex's inventor admitted that the process in question "...'immediately occurred' to him" after he learned the just disclosed Merck information. Thus, ruled the court, the Apotex patent was invalid because of the (now public) prior art.

So, were does this leave you in your dealings with the patent system? If you want to avoid Dr. Faustus's fate (it wasn't pretty), here are some tips to keep in mind. As always, TechRoadmap recommends consulting with your patent attorney.

  • Internally, document all inventions. Prepare a disclosure that covers all the important aspects of the invention; who invented it, when, how is it distinguished from the prior art, etc. These documents prepare you to act intelligently.

  • Identify trade secret candidates. Review your disclosure(s) to get a feel for how easily a competitor could design around an issued patent. How difficult would it be to infringe invisibly? What does the public prior art look like (that is, how likely is anyone to get a patent on this material)? Are other companies fishing in the same pond? Will they be anytime soon?

  • Develop a disclosure plan.  If the major economic benefit of your trade secret is achieved by being first to market, think about disclosing your secret once you've pocketed that benefit. Or maybe your field changes so quickly that you can plan to disclose in a couple years. Can you find venues in which you can publicly disclose key aspects of the trade secret without opening a floodgate of competition? Discuss the implications of filing a patent with your attorney, knowing it will be disclosed in 18 months. Track your competitors - might they be patenting the same invention sometime soon?

Nothing in the preceding article should be construed as legal advice. TechRoadmap Inc serves as an interface between companies and their legal counsel.

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Interesting Patent Case
When is enough, enough (disclosure, that is)?

            In Apotex v. Merck (No. 00-1272), Apotex appeals a District Court ruling in favor of Merck in which the claims of Apotex's patents (US 5,573,780 and US 5,690,962) were held invalid based on prior invention - in this case, prior invention by Merck. The patents in question deal with a process for making "a stable solid formulation" of a blood pressure medication. Merck owns both U.S. and Canadian patents covering the compound itself but does not own a patent covering the manufacturing process for making it into phamaceutical tablets. Apotex's '780 and '962 patents, on the other hand, are for the manufacturing process (one for the production for tablets and one for any "solid pharmaceutical dosage form") and not for the compound itself.

Apotex sued Merck for infringement of its patents, but Merck won the invalidity judgement based on the obvious and acknowledged fact that it had prior (but unpatented) inventorship of the process - after all, Merck had been producing the medication in tablet form since 1983, a full 8 years prior to Apotex's claimed invention date.

Apotex's argued that Merck prior invention did not apply because under the law an inventor is "entitled to a patent unless...before such person's invention thereof, the invention was made in this country by another, prior inventor who had not abandoned, suppressed, or concealed it" (emphasis added). Apotex contended that Merck had indeed suppressed or concealed the process for making the tablets, making it (Apotex) the legitimate patent owner.

The court first addressed the question of who has what burden of proof in cases considering suppression or concealment negating prior invention. The court found that when a patent has already issued the presumption of validity places a higher burden of proof on the challenger (Merck in this case) than would be applied in, say, an interference case in which the patent office must award the patent to the first-to-invent-without-suppression. For cases like this one, the patent holder need only produce evidence of suppression or concealment "sufficient to create a genuine issue of material fact [that suppression/concealment took place]". The prior inventor, the court said, must rebut [the produced evidence] "by clear and convincing evidence to the contrary."

The court agreed with Apotex that they had evidence to create a genuine issue of concealment. Merck never filed for a patent on the production process, had produced their drug for five years before publishing the ingredients, and could not claim that the commercially available tablets were capable of being reverse engineered.

However, the court disagreed with Apotex's contention that Merck failed to rebut this evidence. First, Apotex had claimed that Merck's disclosures of information in an earlier Canadian case (where Merck sued Apotex for infringement of its compound patents) were not applicable because of the "in this country" restriction highlighted above. The court used both the legislative history and the plain language of the law to determine that it was only the act of invention that had to take place in this country and that foreign disclosures of the invention were adequate to rebut suppression or concealment.

Second, the court found that, even though the combined failure to file for a patent and 5 years of secrecy was indeed suppression or concealment, nevertheless, "as long as it [Merck] 'resumed activity' (i.e., made the benefits of its invention known to the public) before Apotex's entry into the field, it cannot be deemed to have suppressed or concealed the invention within the meaning of" the law

Finally, the court determined that, Apotex's argument to the contrary, Merck's disclosures before Apotex's invention date were proof that Merck made the knowledge available to the public, thereby satisfying its burden to rebut Apotex's evidence of concealment.

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IP Links
US Patent office Searchable database of all US Patents and, now, published patent applications.
The Patent Cafe - an on-line source of interesting insights into current IP issues.
EKMS Inc. - a company with whom we've worked that provides a range of IP management services including portfolio analysis, deal-making, and process improvement.

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IP Glossary

Industry's Best Glossary

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