Patents can also be leveraged against a competitor's trade secrets. Historically, the law has treated patents more favorably
than trade secrets when the two are pitted in a head-to-head contest. For instance, even if a competitor was the first to
discover an invention, the law prohibits the competitor from later obtaining a patent on the invention if he "suppressed"
or "concealed" it as a trade secret. Additionally, a competitor's secret commercialization of the trade secret triggers a
one-year statutory bar that prohibits the competitor from later obtaining a patent on that invention. Fortunately, your competitor's
secret activities do not prohibit you from seeking patent protection on the same invention, so long as you independently discovered
the invention. One significant point needs to be made: there are no clear cases under US law, where a prior user (of a trade
secret) has been successfully sued by a patentee for patent infringement. There is no legal prohibition, but perhaps the specific
factual scenarios to date have illustrated potential prior art problems for the patentee based on the earlier uses by the
trade secret holder, that resulted in negotiation strategies for dispute resolution rather than litigation. Nevertheless,
despite a prior user holding a trade secret, the patentee may still enforce his or her after-acquired patent against third
parties. It wouldn't be outside the realm of possibilities that a prior user and a subsequent patentee may team up to enforce
the patent generally in the marketplace against third party infringers. Antitrust issue may appear in this scenario.
EXCHANGING INFORMATION WITH BUSINESS PARTNERS
Many business agreements provide either explicit or implicit declassification of information as "confidential" when it falls
into certain common categories. For example, information often is excluded from confidential treatment when it becomes known
to the marketplace, without fault of the contracting party. Another common exclusion is information that was in the party's
possession before disclosure by the disclosing party, as evidenced by written records. For this reason, it is important to
memorialize trade secrets. One of the best ways of doing this is to describe these in provisional patent applications. A provisional
patent application is essentially a placeholder application, and must be affirmatively moved into the examination process
by the applicant. If a provisional application is not refiled as a regular utility application, or otherwise converted before
the one-year anniversary of its filing date, it automatically lapses. Therefore, the information contained in that application
is not disclosed to the public.
One very important point needs to be made. If the provisional application is moved into the examination process, unless certain
precautions are taken, the utility application will eventually publish. If a patent issues from this application, the entire
prosecution history, including the original provisional filing, will be accessible by the public. Therefore, the contents
of provisional filings must be carefully tracked, and if a patent will eventually be sought for the invention, it should be
based on provisional applications having only the appropriate information, not one disclosing globally the company's more
Before entering into any discussions with another party regarding potential business relationships, it is essential to do
pretransactional due diligence on the other party. The appropriate level of investigation and its focus will necessarily depend
on the particular transaction type, but with respect to IP, there are common steps. First, investigate the potential partner
or target. Determine their key products, and inventory the patents, patent applications, trademarks, and all other publicly
accessible information to gain insight as to their level of protection.
Against this background, a company must inventory its own information to determine areas of overlap, synergy, or competition
and then must take steps to secure any gaps in its IP rights. There is a narrow window to cure deficiencies before commencing
any negotiations. Where there is likely to be a significant exchange of information, and where trade secrets are involved,
these need to be memorialized and inventoried in order to protect the confidential information of the company before commencing
negotiation. It may also be appropriate to file provisional patent applications on more speculative ideas that involve the
combined technologies of the two companies. Doing this before signing an NDA increases the strength of any argument that your
company had developed these concepts prior to talking to the other company. This may also minimize a company's risk in a patent
interference or litigation, should the relationship be less than amicable.