Prior User Rights

Prior user rights (35 U.S.C. § 273) provide a defense to patent infringement for parties who commercially used the patented subject matter before the patent's effective filing date. Under § 273(a), a party who 'commercially used' the subject matter in good faith at least 1 year before the earlier of (1) the effective filing date of the claimed invention or (2) the date the claimed invention was disclosed to the public, has a defense to patent infringement for that specific use. The AIA significantly expanded prior user rights in 2012 — before the AIA, only business method patents had this defense; now it covers any subject matter (processes, machines, compositions).

Under § 273(c)(1), 'commercial use' includes: (1) use in commerce in the United States; (2) an arms-length sale or transfer of a useful end result of such commercial use; (3) research and development use that is public, because required by law or regulation, for testing purposes, or to prepare regulatory submissions. The commercial use must be in the United States — foreign use before the U.S. filing date does NOT qualify for § 273 unless the use was in the United States. The use must be genuine commercial use, not experimental or pre-commercial. Keeping a process as a trade secret while commercially using it qualifies — this is the core use case for § 273.

The § 273 defense is personal to the prior user — with limitations. Under § 273(e)(1), the defense can be transferred with the good faith commercial use and relevant infrastructure, but ONLY in connection with a transfer of the entire enterprise or line of business to which the prior use relates. It cannot be transferred or licensed separately. A company that acquires another company's manufacturing operation (including the prior use) can rely on § 273 for that operation. A company that simply buys a license to use the process (without acquiring the business) does NOT inherit the § 273 defense.

Key limitations: (1) GEOGRAPHIC — only applies to uses in the United States; (2) SCOPE — defense covers only the specific subject matter and scale of the prior use; cannot expand use beyond what was commercially practiced; (3) TRANSFERABILITY — can only transfer with the entire enterprise or line of business, not as a separate right; (4) UNIVERSITY EXCEPTION — § 273(e)(5): the defense is not available if the patent was owned by or subject to an obligation of assignment to an institution of higher education or its technology transfer organization; (5) PERSONAL — the defense does not entitle the prior user to license others or grant any affirmative rights.

Section 273 is particularly valuable for manufacturers who kept manufacturing processes as trade secrets rather than filing patents. Under a first-to-file system, a competitor who independently discovers and patents the same process can potentially block the original manufacturer — even though the manufacturer was first. The § 273 defense addresses this inequity by allowing the original commercial user to continue using the process without a license. The defense requires 'good faith' — the prior user cannot have derived the invention from the patent owner. If the prior user learned of the process through the patent applicant's disclosure, § 273 does not apply. The process need not have been publicly known — the secret commercial use is what qualifies, not public disclosure.