State of Innovation

Patents and Innovation Economics

Why the Publication Requirement for Patents Hurts Startups

This case, TEWARI DE-OX SYSTEMS, INC., v. MOUNTAIN STATES/ROSEN, L.L.C., in Texas shows the damage done by the publication rule for patents applied for a patent on a method of extending the shelf life of meat in a retail setting on May 8, 2003.  The patent application was published on April 15, 2004 (earlier than 18 months because it was based on a provisional).  In March of 2005 Tewari approached Mountain States on how they could increase the shelf life of meat products.  Mountain States signed a Non-Disclosure Agreement (NDA) and Tewari explained how their process extended the shelf life of meat.  Subsequently, Mountain States started practicing Tewari’s process.  Tewari sued Mountain States for theft of their trade secrets.  Mountain States claimed no trade secret existed at the time of the NDA because Tewari’s patent application had already been published and the court agreed.

If theU.S.had not adopted the publication rule, Tewari’s process would have been (probably) a trade secret.  It is likely that Tewari eventually found that it was just too expensive to fight the “rejection equals quality” mentality of the Patent Office at the time they would have been arguing their case, although I did not examine the prior art.  But, because of the publication rule Tewari did not have this choice.  (If they did not foreign file, they could have opted out of publication, but the rules make this onerous.)  As a result, Mountain States was free to steal Tewari’s trade secrets.  This allowed a large company to free load off of the efforts of an innovative startup.  Even if Tewari was legitimately denied a patent, it most likely would have had a defensible trade secret.  Note that the Tewari’s patent application was published before they received their first office action.  Tewari had no opportunity to determine if it was going to get a fair deal from the patent office before their invention was publicly disclosed to the world.  The publication rules were sold under the theory that most patent application issue within 18 months.  Now days the pendency time for the first office action is 25.2 months – seven months after the patent application is published.

Tewari was denied the rights to their intellectual property because of the publication requirement.  A large, lazy, non-innovative company was the benefactor of this theft.  This undermines investment in start-up technology companies that create most emerging technologies and provide high quality, high paying jobs.  The publication requirement should be abolished.

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May 11, 2011 Posted by | -Law, Patents, Uncategorized | , , , , , , , , | 5 Comments