Patenting manufacturing technology or keeping it secret: decisions and records in anticipation of process changes

1 Past disclosures and future uses

Identify the recipients of past disclosures, the conditions of disclosure, and the scope of the information disclosed. Consider joint development partners, contractors, component suppliers, exhibitions, and academic conferences. Was a confidentiality arrangement in place, and what did it cover? The assessment differs depending on whether the disclosure consisted only of drawings or extended to formulations and process conditions.

Next, consider future manufacturing and use. Will production remain within the company's own factories, be outsourced, or take place at overseas sites? Is increased production or a transfer of production sites planned?

The form of protection can be decided only on the basis of these facts. Technology may be kept secret while it is used on the company's own equipment, but that premise changes if process conditions must be provided to a contractor to increase production.

2 Allocating patent protection and secrecy to different parts of the technology

Even for a single product, consider patent filing and secrecy separately for different parts of the technology.

A patent has the advantage that, subject to exceptions such as prior user rights, the holder may seek an injunction against another company's use within the patent's scope even if that company developed the technology independently. However, the application is generally published, potentially giving other companies information they can use to design around the patent. How to prove infringement is a separate question from obtaining the right. There is a mechanism under which use of a patented manufacturing process may be presumed in certain circumstances, but its application is limited. The invention for which patent protection is sought must also be described clearly and sufficiently in the description to enable a person with ordinary knowledge in the relevant field to carry it out.

For undisclosed technology to be protected as a trade secret, it must be managed as secret, be useful, and not be publicly known. Keeping information within the company is not the same as managing it as secret.

Table: what can and cannot be established from outside the company for each part of the technology

Part of the technology	What can be established externally	What cannot be established externally	Technical records to retain
Structure and dimensions	Shapes, measured dimensions, and component arrangements identifiable through disassembly, cross-sectional observation, X-ray CT, or similar methods.	Design tolerances, machining and assembly sequences, and the jigs used.	Drawings including tolerances and revision histories, machining and assembly conditions, and dimensional measurements.
Materials and composition	Components, their amounts, and crystalline states in the product, depending on the analytical method and detection limits.	Raw material quantities before reaction or evaporation, the order of addition, and processing conditions at intermediate stages.	Raw material specifications and lots, quantities and order of addition, processing conditions, and analytical methods and results.
Manufacturing conditions	Product characteristics, such as metallurgical structure and hardness, that may indicate processing conditions.	The actual combination of temperature, time, and pressure among combinations capable of producing similar characteristics.	Process sequences, equipment settings, time histories such as measured material temperatures, and comparative tests before and after changes.
Equipment and controls	Mechanisms described in public materials, movements observable in demonstrations, and responses to inputs and outputs.	Details of internal jigs, control logic, and sensor calibration values.	Equipment and jig drawings, modification histories, programs and their versions, settings and calibration values, and operating logs.

Note: what can be established depends on the subject and the measurement or analytical method. The examples in the third column are matters that cannot be uniquely identified from the observations or analyses in the second column alone.

3 Whether the requirements for prior user rights have been met

If another company independently makes the same invention and obtains a patent, prior user rights may provide a basis for continuing activities within its scope. The relevant time is generally the filing of that patent application, but the priority date applies to an invention entitled to the benefit of priority. The company must have made the invention without knowing the content of the invention in the other party's application, or learned it from someone who made it in that way, and must have been carrying on or preparing to carry on a business involving the invention in Japan at the relevant time. Preparation requires an intention to put the invention into practice immediately to have been manifested in an objectively recognizable form. A company may choose to keep completed technology secret without deciding to commercialize it, but records of completion alone do not establish prior user rights. Starting preparations later does not cure a shortfall at the relevant time. Consider both the benefit of non-disclosure and the fact that future use may not yet be secured by prior user rights.

4 Whether process changes remain within the same invention

Use under prior user rights is limited to the purposes of the business at the relevant time. Once mass production begins, operating conditions may be adjusted, materials replaced, and equipment upgraded. Prior user rights are understood not to be fixed to the precise form of implementation used at that time; they may extend to changes that do not cause the invention embodied in it to lose its identity. However, there is no uniform rule allowing a particular percentage change in materials or allowing a change merely because performance remains the same.

There are four steps in an internal review.

First, identify the technology that provides the basis for comparison. The reference point is not the process immediately before the change. It is the specific technology that the company was using, or preparing to use, at the relevant time identified in section 3. Use the drawings, formulations, process conditions, and test results from that time to establish what was ready to be implemented.

Second, identify changes at a level that makes their technical significance clear. Descriptions such as a change of raw material supplier or an equipment upgrade are insufficient. For materials, consider components, impurities, and particle size. For equipment, identify changes in heating, pressurizing, and mixing conditions that relate to the technology concerned. A trace component is not necessarily immaterial, and equipment of the same model is not necessarily identical in the relevant respect.

Third, compare the mechanism by which the technical problem is solved and the resulting functions and effects. Which combination of features or process steps achieves the objective before and after the change? The fact that the final product satisfies the same quality specification does not by itself establish that the technical concept remains the same.

Fourth, examine the relationship with the other party's patent.

Even if an equipment temperature setting remains the same, the temperature actually experienced by the material and the duration of heating may change. After a furnace is replaced, operating it at the same settings does not necessarily reproduce the material's thermal history if the atmosphere or placement of workpieces changes. Retain the specifications before and after the change, the reasons for the change, and comparative test results in a way that connects them, and examine these together with the patent concerned.

5 Records connecting the technology and the business

Retain technical and business records in a connected chronology so that they can establish both the technology at the relevant time and the state of the business or its preparations. Apply version control to technical documents and make it possible to trace which version was used for manufacturing, and when, through purchase order numbers or production lots. For test results, retain the measurement method, the time of measurement, and the conditions in which samples were stored. Results obtained by testing an old sample later do not necessarily establish its condition when manufactured.

Proof of a date alone does not establish all the facts required for prior user rights. The records must show who knew what, when decisions were made, and how far the work had progressed. Also decide whether the development or intellectual property department is responsible for bringing the records together, and whether someone will remain able to explain the history after the personnel involved transfer or leave.

6 Terms to agree with recipients and contractors

When manufacturing is outsourced, agree specifically with the contractor which records must be retained, including specification versions, materials, process conditions, and inspection results. In addition to retention periods, the contract should address when and in what format records will be provided to the company, their use as evidence in disputes, and cooperation in providing documents and explanations after the contract ends. Obtain important records while the business relationship is ongoing, and ensure that return or deletion provisions on termination do not result in the loss of necessary materials. The same applies where a subcontractor holds the records.

Set limits on the purposes for which disclosed technology may be used, addressing the possibility of its use in manufacturing for other companies (see Responding to the misuse of trade secrets by a competitor). In joint development, agree in advance on ownership of inventions and rights and on the handling of patent applications (see When a patent application has been filed without authorization).

Where manufacturing takes place overseas, check the business activities or preparations involving implementation of the invention in Japan, such as importation into Japan. Consider patents in the country of manufacture separately from prior user rights in Japan.

The appropriate form of protection depends on past disclosures and future manufacturing arrangements. Where the company relies on prior user rights, records and contracts need to support that reliance. We advise on protection strategies for individual technologies, the design of records supporting prior user rights, and agreements with recipients and contractors concerning confidentiality and the provision of records.

For our intellectual property practice, please see Intellectual property, IT and data.

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This article is provided for general informational purposes only and does not constitute legal advice on any specific matter. Please consult us regarding your specific situation. The content is based on the laws and regulations in effect as of the date of the last update.