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98 p r a c t i c a l w i n e r y & v i n e ya r d n O v e M B e r 2 0 1 4 Lance D. Reich, Miller Nash LLP, Seattle, Wash. BY N one can argue against technol- ogy now pervading every aspect of wine production, stor- age and shipment—from pat- ented grapes, harvesting machinery and methods, to bottling and packaging. Many stories on these topics in Wines & Vines itself illustrate this point. This march of technology is not unique to wine; many other industries have been subject to an exponential growth of tech- nology. This "technology curve" has affected numerous industries, from the computer sector to medicine to finance. Because of these technology curves in other industries, we have a bit of a crystal ball to envision what will happen with patents in the wine industry. Further evidence of the wine technol- ogy curve is shown by the fundamental scientific research occurring in viticul- ture and enology, such as that currently being done at the University of Califor- nia, Davis, and the soon-to-open Wine Science Center of Washington State Uni- versity in Richland, Wash. This basic research will build a knowledge foun- dation that will undoubtedly accelerate the use of technology. While all can be happy that this tech boom will improve wine production, we can forecast several negative issues in the wine industry based on experiences of other industries hit by the technology curve. One of these is that patents, as legal instruments commonly associated with new technology, come with a threat of infringement that is likely to become more common. Other industries that hit the technology curve An excellent example that the wine industry can learn from is the finance industry in the United States. Finance had operated in the U.S. for a very long time with the assumption that its "busi- ness methods" could not be patentable subject matter. Based on an appellate court decision in 1998, however, the specific patenting of business-method patents was allowed for the first time. The financial industry did not antici- pate this change and was unaware that its specific financial methodologies (then mostly trade secrets) could be pro- tected by patents. It is only a matter of time before patents pervade wine production and distribution. Consequently, many financial compa- nies unknowingly destroyed their pat- ent rights because they did not timely file applications. At that time, the U.S. law was that one had to file a patent application within one year after an offer to sell an invention or it becomes "public use." If a company had publicly used or offered an inventive financial methodol- ogy for sale without filing a patent appli- cation within one year afterward, the patent rights were lost. For example, a hedging strategy for buying natural resource futures was patented, and the patent was later asserted against financial companies that claimed that they were internally using similar methodology and that this use would bar anyone from getting a U.S. patent. In 1999, Congress legis- lated a "prior-use" defense to infringe- ment of a business-method patent based on this commonly used defense in the financial industry. Is wine hitting technology curve at the wrong time? The law in the United States changed in March 2013 to limit inventors from filing patent applications that lack "absolute novelty." Now the timely patenting of an invention is more problematic for the wine industry as it hits the technology curve with constant workplace innova- tions. There is no longer a grace period to file patent applications on technology that is publicly used or on sale. It is likely that those in the "wine space" that would otherwise be inventors of patentable subject matter are going to unknowingly destroy their U.S. patent-filing rights Technology will cause to become an issue in the wine industry w i n e m a k i n g 100 Wine industry leaders adapt by Robert Smiley and Michelle Nishikubo 107 Preserving East Coast vineyards while catching tax breaks by Erika Piccirillo 109 IRS § 1031 like-kind exchanges for vineyards and wineries by John C. Pardes 111 Why wooden barrels? by Henry Work T E C H N I C A L R E S O U R C E F O R G R O W E R S & W I N E R I E S Don Neel, Editor practicalwinerylibrary.com Access Practical Winery & Vineyard article archives online.