First Inventor Defense Act, Pub. L. No. 106-113, 113 Stat. 1536 (1999), codified at 35 U.S.C. § 273(b).
In 1999, Congress enacted the First Inventor Defense Act as part of the American Inventors Protection Act. That statute provides an earlier inventor of a “method of doing or conducting business” that was later patented by another to assert a defense to patent infringement in certain circumstances.
In enacting the Act, Congress recognized that some firms may have operated under the view that business methods could not be patented prior to the State Street Bank decision. As a result, they may have maintained their innovative business methods as trade secrets. Having used these trade secrets in furtherance of their marketplace activities for a period of time, however, these firms may be unable to obtain a patent upon their business method.
Further, should a competitor later independently invent and patent the same business method, the trade secret holder would potentially be liable for patent infringement. Following the confirmation of the patenting of business methods by the State Street Bank court, the creation of the first inventor defense was intended to provide a defense to patent infringement in favor of the first inventor/trade secret holder.
By stipulating that the first inventor defense applied only to a “method of doing or conducting business,” Congress arguably recognized the validity of these sorts of patents. The Act did not define the term “method of doing or conducting business,” however, and to date no published judicial opinion addresses the precise scope of this defense.
Subsequent legislation has proposed to expand of the first inventor defense to all sorts of patentable subject matter.