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Legislating creativity--feds plan patent reform

Proposed law could make sweeping changes in the nation's patent system. But some say it's still not enough. Image: Patenting PB&J


Patent bill would make sweeping changes

By Declan McCullagh
Staff Writer, CNET News.com
September 13, 2005 4:00 AM PT

When Gordon Gould was a graduate student at Columbia University in 1957, he sketched out the concept of a concentrated beam of light amplified in a gas-filled chamber and coined the term "laser" to describe it.

But Gould waited to seek a patent on his discovery, believing incorrectly that a working prototype was necessary. Eventually, two other researchers were awarded the basic patents instead.

After a decades-long legal tussle, Gould finally reveled in victory when a federal court ruled that the patent application it had approved did not anticipate the common uses of lasers. The U.S. Patent and Trademark Office then granted Gould lucrative rights to the invention, in part because as a graduate student he had his original research notebooks date-stamped and notarized.

The legal standard that was applied awards patents to the person who invented a concept first, and it has long been a unique feature of the U.S. patent system. This year, however, Congress is about to consider a controversial proposal from Rep. Lamar Smith, a Texas Republican, that would grant a patent to the first person to submit the paperwork
--a standard that's common outside the United States.

The legislation suddenly has become a flash point about everything that's right with the U.S. patent system--and everything that's wrong with it. Technology companies fighting expensive patent cases are hoping the bill will reduce litigation, while open-source advocates say it will do nothing to hinder the rising tide of software patents being issued. Many people feel that the measure will make only modest improvements, if any, to the quality of patents being awarded.

Smith's bill, called the Patent Reform Act of 2005, also has drawn the ire of independent inventors, who have said it will unfairly hurt anyone without a battalion of patent lawyers who can race to the Patent and Trademark Office in Alexandria, Va. The rule probably would have kept Gould from being awarded the laser patents he eventually got.

"We really feel that there's a litigation lottery. People roll the die and hope that their number comes up big."
--David Kaefer
director of intellectual-property licensing, Microsoft

Smith declined, through a representative, to comment on the bill before a hearing set for Thursday.

The issue has taken on additional urgency because of Smith's ambitious plan to navigate his bill quickly through the House by year's end. Next week's hearing will take place shortly after politicians have returned from their summer break. Meanwhile, a similar measure is being readied in the Senate by Utah Republican Orrin Hatch. Some melding of the two proposals is expected.

The compressed calendar has prompted lobbyists on both sides to scramble. Leading the way are litigation-weary companies, including Microsoft, Apple Computer, Intel and Hewlett-Packard, which quietly worked on the details this spring with Smith's aides and have been pressing other members of Congress to sign on ever since.

Microsoft's patent woes
Microsoft has been especially critical of a legal framework that causes it to spend $100 million a year defending itself against 35 to 40 lawsuits at any one time. But what spurred the company to team up with Smith was a jury that awarded one-man software company Eolas Technologies $565 million in damages--a decision that has been partially reversed--in a patent dispute over Microsoft's Internet Explorer.

"We really feel that there's a litigation lottery," said David Kaefer, Microsoft's director of intellectual-property licensing. "People roll the die and hope that their number comes up big."

Large technology companies love the language in the bill that will make it more difficult to seek court injunctions against alleged infringement, while creating a way to challenge patents after they are granted and recalculating the way damages are decided--in a way that would make large jury awards more difficult to win.

"The companies who are complaining about the system are bad players, crooks who took great liberties with others' inventions."
--Ronald Riley
president, Professional Inventors Alliance

"We feel it would give us significant relief," said Adam Kovacevich, speaking for the Information Technology Industry Council, where he was communications director until recently. The council represents dozens of high-tech companies, including Dell, Apple and IBM. "There are issues where we intend to make the provisions even stronger, but on balance, I think we consider the Smith bill a very good bill for the tech industry," Kovacevich said.

Individual inventors are as critical of the Smith bill as the tech lobby is effusive. By making it more difficult to seek an injunction against an alleged infringer, they claim, the measure will encourage lawbreaking by rewarding intellectual piracy.

"The patent system is a crucial part of what made America great," said Ronald Riley, president of the Professional Inventors Alliance. "The companies who are complaining about the system are bad players, crooks who took great liberties with others' inventions. What they are really complaining about is being held accountable for their disreputable conduct."

Open-source status quo
Altering legal standards for injunctions and permitting post-grant review may grab the attention of corporations and inventors, but advocates of free and open-source software believe that those changes are far too modest.

What's needed, they said, is a radical, bottom-to-top rethinking of the way patents are reviewed and approved, especially those applications seeking patents on programming techniques that should have been obvious to any undergrad in computer science.

"Way too many obvious junk patents have been issued for things that are obvious to any engineer, and those are being used to suppress competition," said Eric Raymond, a free-software advocate. "I don't see this bill fixing that."

Unearthing seemingly bizarre software patents has been made into something of a competitive sport by free-software aficionados. They've spent years laughing at Microsoft's often-successful attempts to patent ideas such as highlighting numbers, adding white space to a document and creating custom "emoticon" smiley faces.

But a serious worry underlies the amusement: What if a company launches a patent attack against open-source programmers? One

Continued ...


(continued from previous page)

study released last year estimates that Linux infringes 283 patents, including 27 held by Microsoft.

In a stark warning that patent litigation could open another front in the Linux-Microsoft wars, Mitch Kapor, chairman of the Mozilla Foundation, predicts that the software colossus will wield its fast-growing stockpile of patents against Linux. (Insurance for Linux users is already available.)

"Way too many obvious junk patents have been issued for things that are obvious to any engineer, and those are being used to suppress competition."
--Eric Raymond
free-software evangelist

Michael Tiemann, president of the Open Source Initiative, said that open-source programmers--especially hobbyists or people without resources to search patent databases--are vulnerable to writing code that accidentally infringes on a patent.

"Any line of code I write could in fact trip across a patent I never even knew existed, and that's a problem for innovation, and it's a problem for open source," Tiemann said.

Acknowledging those arguments, European politicians voted in July to reject software patents. But that move is viewed in the United States as radical, and no one in Congress has suggested following suit.

"If Representative Smith is going to help make the patent office more efficient and more accountable, that's wonderful," Tiemann said. "But as long as the real question is whether or not software patents really belong in the patent system or should exist at all, I don't think that's a question that Smith's bill entertains."

Attorney Bruce Sunstein, who heads the patent practice group at Boston's Bromberg and Sunstein law firm and supports the Smith bill, said he believes the fears of open-source advocates are unfounded.

"Patents, software and free software have coexisted" since the 1980s, Sunstein said, and will continue to do so.

Hatch's unplayed hand
One possibility for broader changes to patent law lies in the Senate.

Hatch, who heads a new subcommittee devoted to writing intellectual-property law, may be open to more far-reaching changes to the patent system. Although he has yet to disclose any details, Hatch has promised that a bill is in the works.

In a speech last month to patent attorneys in Salt Lake City, Hatch acknowledged that "many of the current complaints about the patent system that I have heard deal with the number of suspect and over-broad patents that are issued."

He indicated that he might consider two other legislative options. The first one would be to permit third parties to submit "prior art," the legal term for evidence that an alleged invention was already public, after the patent application has been published but before it has been granted. A second option would be to repair the Patent and Trademark Office's existing re-examination process, which is virtually unused.

"It is vitally important that PTO examiners have access to any information which may be in the hands of the public," IBM spokesman Todd Martin said. "Parties should have the right to submit prior art at any point during the examination process."

Those reforms would go beyond what's anticipated in the final House version. Blair Jones, a spokesman for Smith, acknowledged that the bill is mostly complete but added that "further changes are possible--those talks are ongoing."

One reason that companies like Microsoft are backing Smith's proposal to curb injunctions against patent misuse is the possibility of disrupting product shipments during litigation. In October 2003, for instance, Eolas Technologies asked for an injunction barring Microsoft from shipping Internet Explorer.

From Microsoft's perspective, injunction reform makes good business sense: Software patents are proliferating, and it's often difficult for companies to know whether a judge might be persuaded to grant a court order before a full trial can take place.

But the biotech industry, which relies on fewer patents and a relatively more predictable legal environment, prefers to preserve the current method of granting injunctions. This sets the stage for more political jockeying before Congress this fall--and Hatch seems sympathetic to the argument.

Pharmaceutical and biotech companies "rely on the absolute exclusivity of their patent rights, often enforced by injunctions, to ensure that they are able to commercialize their inventions and enjoy the fruits of their innovation," Hatch said in his speech last month. "Similarly, small inventors rely on injunctive relief to equalize the playing field when competing against larger, better-funded enterprises."

Political-risk calculus
It seems likely that Congress eventually will approve some type of patent reform.

Yet what remains unclear is whether politicians will merely approve some uncontroversial changes or take the political risk of offending large software makers or the biotech industry through more substantial alterations.

"Any line of code I write could in fact trip across a patent I never even knew existed, and that's a problem for innovation and it's a problem for open source."
--Michael Tiemann
president, Open Source Initiative

Complicating matters further is that the software industry is far from unified on the subject. Morgan Reed, a vice president at the Association for Competitive Technology, said that "we can't support the bill as it was introduced" because it does away with automatic injunctions. Reed's group counts more than 2,000 smaller software developers as members.

In the past, IT companies have been politically successful only when united on controversial topics, such as the R&D tax credit, more H-1B visas, restrictions on Internet access taxes, free trade with China and curbs on lawsuits arising from the Year 2000 computer bug .

That might doom the chances for final approval this year. Dan Ravicher, legal director of the Software Freedom Law Center, which provides legal aid to nonprofit developers of free software, predicts that distractions over Supreme Court vacancies won't help: The same Senate committee that presides over confirmation hearings also oversees patent law.

"The heart attack that's happening with the patent system is poor patent quality. The patent office is issuing too many patents that don't deserve to be issued," Ravicher said. "The (Smith) bill does a little but not too much, so it's kind of like putting a Band-Aid on the finger of someone who's dying of a heart attack."End box

CNET News.com's Anne Broache contributed to this report.


Patent bill would make sweeping changes

By Declan McCullagh
Staff Writer, CNET News.com
September 13, 2005 4:00 AM PT

When Gordon Gould was a graduate student at Columbia University in 1957, he sketched out the concept of a concentrated beam of light amplified in a gas-filled chamber and coined the term "laser" to describe it.

But Gould waited to seek a patent on his discovery, believing incorrectly that a working prototype was necessary. Eventually, two other researchers were awarded the basic patents instead.

After a decades-long legal tussle, Gould finally reveled in victory when a federal court ruled that the patent application it had approved did not anticipate the common uses of lasers. The U.S. Patent and Trademark Office then granted Gould lucrative rights to the invention, in part because as a graduate student he had his original research notebooks date-stamped and notarized.

The legal standard that was applied awards patents to the person who invented a concept first, and it has long been a unique feature of the U.S. patent system. This year, however, Congress is about to consider a controversial proposal from Rep. Lamar Smith, a Texas Republican, that would grant a patent to the first person to submit the paperwork
--a standard that's common outside the United States.

The legislation suddenly has become a flash point about everything that's right with the U.S. patent system--and everything that's wrong with it. Technology companies fighting expensive patent cases are hoping the bill will reduce litigation, while open-source advocates say it will do nothing to hinder the rising tide of software patents being issued. Many people feel that the measure will make only modest improvements, if any, to the quality of patents being awarded.

Smith's bill, called the Patent Reform Act of 2005, also has drawn the ire of independent inventors, who have said it will unfairly hurt anyone without a battalion of patent lawyers who can race to the Patent and Trademark Office in Alexandria, Va. The rule probably would have kept Gould from being awarded the laser patents he eventually got.

"We really feel that there's a litigation lottery. People roll the die and hope that their number comes up big."
--David Kaefer
director of intellectual-property licensing, Microsoft

Smith declined, through a representative, to comment on the bill before a hearing set for Thursday.

The issue has taken on additional urgency because of Smith's ambitious plan to navigate his bill quickly through the House by year's end. Next week's hearing will take place shortly after politicians have returned from their summer break. Meanwhile, a similar measure is being readied in the Senate by Utah Republican Orrin Hatch. Some melding of the two proposals is expected.

The compressed calendar has prompted lobbyists on both sides to scramble. Leading the way are litigation-weary companies, including Microsoft, Apple Computer, Intel and Hewlett-Packard, which quietly worked on the details this spring with Smith's aides and have been pressing other members of Congress to sign on ever since.

Microsoft's patent woes
Microsoft has been especially critical of a legal framework that causes it to spend $100 million a year defending itself against 35 to 40 lawsuits at any one time. But what spurred the company to team up with Smith was a jury that awarded one-man software company Eolas Technologies $565 million in damages--a decision that has been partially reversed--in a patent dispute over Microsoft's Internet Explorer.

"We really feel that there's a litigation lottery," said David Kaefer, Microsoft's director of intellectual-property licensing. "People roll the die and hope that their number comes up big."

Large technology companies love the language in the bill that will make it more difficult to seek court injunctions against alleged infringement, while creating a way to challenge patents after they are granted and recalculating the way damages are decided--in a way that would make large jury awards more difficult to win.

"The companies who are complaining about the system are bad players, crooks who took great liberties with others' inventions."
--Ronald Riley
president, Professional Inventors Alliance

"We feel it would give us significant relief," said Adam Kovacevich, speaking for the Information Technology Industry Council, where he was communications director until recently. The council represents dozens of high-tech companies, including Dell, Apple and IBM. "There are issues where we intend to make the provisions even stronger, but on balance, I think we consider the Smith bill a very good bill for the tech industry," Kovacevich said.

Individual inventors are as critical of the Smith bill as the tech lobby is effusive. By making it more difficult to seek an injunction against an alleged infringer, they claim, the measure will encourage lawbreaking by rewarding intellectual piracy.

"The patent system is a crucial part of what made America great," said Ronald Riley, president of the Professional Inventors Alliance. "The companies who are complaining about the system are bad players, crooks who took great liberties with others' inventions. What they are really complaining about is being held accountable for their disreputable conduct."

Open-source status quo
Altering legal standards for injunctions and permitting post-grant review may grab the attention of corporations and inventors, but advocates of free and open-source software believe that those changes are far too modest.

What's needed, they said, is a radical, bottom-to-top rethinking of the way patents are reviewed and approved, especially those applications seeking patents on programming techniques that should have been obvious to any undergrad in computer science.

"Way too many obvious junk patents have been issued for things that are obvious to any engineer, and those are being used to suppress competition," said Eric Raymond, a free-software advocate. "I don't see this bill fixing that."

Unearthing seemingly bizarre software patents has been made into something of a competitive sport by free-software aficionados. They've spent years laughing at Microsoft's often-successful attempts to patent ideas such as highlighting numbers, adding white space to a document and creating custom "emoticon" smiley faces.

But a serious worry underlies the amusement: What if a company launches a patent attack against open-source programmers? One

Continued ...


(continued from previous page)

study released last year estimates that Linux infringes 283 patents, including 27 held by Microsoft.

In a stark warning that patent litigation could open another front in the Linux-Microsoft wars, Mitch Kapor, chairman of the Mozilla Foundation, predicts that the software colossus will wield its fast-growing stockpile of patents against Linux. (Insurance for Linux users is already available.)

"Way too many obvious junk patents have been issued for things that are obvious to any engineer, and those are being used to suppress competition."
--Eric Raymond
free-software evangelist

Michael Tiemann, president of the Open Source Initiative, said that open-source programmers--especially hobbyists or people without resources to search patent databases--are vulnerable to writing code that accidentally infringes on a patent.

"Any line of code I write could in fact trip across a patent I never even knew existed, and that's a problem for innovation, and it's a problem for open source," Tiemann said.

Acknowledging those arguments, European politicians voted in July to reject software patents. But that move is viewed in the United States as radical, and no one in Congress has suggested following suit.

"If Representative Smith is going to help make the patent office more efficient and more accountable, that's wonderful," Tiemann said. "But as long as the real question is whether or not software patents really belong in the patent system or should exist at all, I don't think that's a question that Smith's bill entertains."

Attorney Bruce Sunstein, who heads the patent practice group at Boston's Bromberg and Sunstein law firm and supports the Smith bill, said he believes the fears of open-source advocates are unfounded.

"Patents, software and free software have coexisted" since the 1980s, Sunstein said, and will continue to do so.

Hatch's unplayed hand
One possibility for broader changes to patent law lies in the Senate.

Hatch, who heads a new subcommittee devoted to writing intellectual-property law, may be open to more far-reaching changes to the patent system. Although he has yet to disclose any details, Hatch has promised that a bill is in the works.

In a speech last month to patent attorneys in Salt Lake City, Hatch acknowledged that "many of the current complaints about the patent system that I have heard deal with the number of suspect and over-broad patents that are issued."

He indicated that he might consider two other legislative options. The first one would be to permit third parties to submit "prior art," the legal term for evidence that an alleged invention was already public, after the patent application has been published but before it has been granted. A second option would be to repair the Patent and Trademark Office's existing re-examination process, which is virtually unused.

"It is vitally important that PTO examiners have access to any information which may be in the hands of the public," IBM spokesman Todd Martin said. "Parties should have the right to submit prior art at any point during the examination process."

Those reforms would go beyond what's anticipated in the final House version. Blair Jones, a spokesman for Smith, acknowledged that the bill is mostly complete but added that "further changes are possible--those talks are ongoing."

One reason that companies like Microsoft are backing Smith's proposal to curb injunctions against patent misuse is the possibility of disrupting product shipments during litigation. In October 2003, for instance, Eolas Technologies asked for an injunction barring Microsoft from shipping Internet Explorer.

From Microsoft's perspective, injunction reform makes good business sense: Software patents are proliferating, and it's often difficult for companies to know whether a judge might be persuaded to grant a court order before a full trial can take place.

But the biotech industry, which relies on fewer patents and a relatively more predictable legal environment, prefers to preserve the current method of granting injunctions. This sets the stage for more political jockeying before Congress this fall--and Hatch seems sympathetic to the argument.

Pharmaceutical and biotech companies "rely on the absolute exclusivity of their patent rights, often enforced by injunctions, to ensure that they are able to commercialize their inventions and enjoy the fruits of their innovation," Hatch said in his speech last month. "Similarly, small inventors rely on injunctive relief to equalize the playing field when competing against larger, better-funded enterprises."

Political-risk calculus
It seems likely that Congress eventually will approve some type of patent reform.

Yet what remains unclear is whether politicians will merely approve some uncontroversial changes or take the political risk of offending large software makers or the biotech industry through more substantial alterations.

"Any line of code I write could in fact trip across a patent I never even knew existed, and that's a problem for innovation and it's a problem for open source."
--Michael Tiemann
president, Open Source Initiative

Complicating matters further is that the software industry is far from unified on the subject. Morgan Reed, a vice president at the Association for Competitive Technology, said that "we can't support the bill as it was introduced" because it does away with automatic injunctions. Reed's group counts more than 2,000 smaller software developers as members.

In the past, IT companies have been politically successful only when united on controversial topics, such as the R&D tax credit, more H-1B visas, restrictions on Internet access taxes, free trade with China and curbs on lawsuits arising from the Year 2000 computer bug .

That might doom the chances for final approval this year. Dan Ravicher, legal director of the Software Freedom Law Center, which provides legal aid to nonprofit developers of free software, predicts that distractions over Supreme Court vacancies won't help: The same Senate committee that presides over confirmation hearings also oversees patent law.

"The heart attack that's happening with the patent system is poor patent quality. The patent office is issuing too many patents that don't deserve to be issued," Ravicher said. "The (Smith) bill does a little but not too much, so it's kind of like putting a Band-Aid on the finger of someone who's dying of a heart attack."End box

CNET News.com's Anne Broache contributed to this report.