35 U.S.C. § 273 — Defense to infringement based on prior commercial use

(a) In General — A person is entitled to a defense under section 282(b) against a claim that a process, or a machine, manufacture, or composition of matter used in a manufacturing or other commercial process, infringes a patent, if: (1) that person, acting in good faith, commercially used the subject matter in the United States, either through an internal commercial use or an actual arm's-length sale or other arm's-length transfer of a useful end result of that use; and (2) that commercial use happened at least one year before the earlier of (A) the effective filing date of the claimed invention, or (B) the date the invention was disclosed to the public in a way that qualifies for the section 102(b) exception to prior art. (b) Burden of Proof — A person asserting this defense must prove it by "clear and convincing evidence" — a higher standard of proof than simply showing something is more likely true than not. (c) Additional Commercial Uses (1) Premarketing regulatory review — If something is subject to a government safety or effectiveness review before it can be marketed or used — such as the review period referenced in section 156(g) — that review period is treated as commercial use for purposes of subsection (a)(1). (2) Nonprofit laboratory use — Using the subject matter at a nonprofit research laboratory or entity, such as a university or hospital, for the public's benefit, is also treated as commercial use for purposes of subsection (a)(1). But the defense can only be asserted, under this paragraph, for continued, noncommercial use inside that same laboratory or entity. (d) Exhaustion of Rights — If a person entitled to this defense sells or otherwise disposes of a useful end result connected to the patent, that sale exhausts the patent owner's rights over that result to the same extent as if the patent owner itself had made the sale. (e) Limitations and Exceptions (1) Personal defense — (A) Only the person who performed or directed the commercial use, or an entity that controls, is controlled by, or shares common control with that person, may assert this defense. (B) The right to assert this defense generally cannot be licensed, assigned, or transferred to someone else — except for any transfer back to the patent owner, or as an ancillary and subordinate part of a good-faith transfer of the entire business or line of business the defense relates to. (C) When the defense is acquired as part of such a business transfer, it can only be asserted for uses at sites that were already using the subject matter before the later of the invention's filing date or the date of the transfer. (2) Derivation — A person cannot assert this defense if the subject matter it is based on was derived from the patent owner or from someone in privity with the patent owner. (3) Not a general license — This defense is not a blanket license to the whole patent. It extends only to the specific subject matter for which a qualifying commercial use has been established, though it also covers changes in the quantity or volume of that use, and improvements to the subject matter that do not infringe other, specifically claimed parts of the patent. (4) Abandonment of use — A person who has stopped their qualifying commercial use cannot rely on activity from before they stopped to establish this defense for actions taken on or after the date they stopped. (5) University exception — (A) A person generally cannot assert this defense if the claimed invention was, at the time it was invented, owned by or subject to an obligation to assign it to an institution of higher education, or to an organization whose main purpose is commercializing technology developed by such institutions. (B) That block does not apply if any of the work needed to reduce the invention to practice could not have been done using federal government funding. (f) Unreasonable Assertion of Defense — If a person raises this defense, is found to infringe the patent anyway, and later fails to show a reasonable basis for having raised the defense, the court must find the case "exceptional," which allows the court to award attorney fees under section 285. (g) Invalidity — A patent is not automatically invalid under section 102 or 103 just because someone raises or establishes a defense under this section.