United States Patent and Trademark Office

Public Hearing on Use of the Patent System to 
Protect Software-Related Inventions
Transcript of Proceedings 

Thursday, February 10, 1994
9:00 a.m. to 5:00 p.m.

Friday, February 11, 1994
9:00 a.m. to 12:30 p.m.

Before
Bruce A. Lehman
Assistant Secretary of Commerce and
Commissioner of Patents and Trademarks

Location:
The Marriott Crystal Forum
1999 Jefferson Davis Highway
Arlington, Virginia
Table of Participants

      
Before:

Bruce A. Lehman
Assistant Secretary of Commerce and
Commissioner of Patents and Trademarks
United States Patent and Trademark Office

The Panel:
Lawrence Goffney
Assistant Commissioner for Patents-Designate
United States Patent and Trademark Office
      
Micheal K. Kirk
Assistant Commissioner for External Affairs
United States Patent and Trademark Office

Jeffrey P. Kushan
Attorney-Advisor
United States Patent and Trademark Office

Michael Fleming 
Supervisory Patent Examiner
United States Patent and Trademark Office

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Witnesses

February 10, 1994

PAUL ROBINSON
Tansin A. Darcos & Company

KEITH STEPHENS
Taligent, Inc.

MARK TRAPHAGEN
Software Publishers Association

ROB LIPPINCOTT
Interactive Multimedia Association

E. ROBERT YOCHES
JEFFREY A. BERKOWITZ
Finnegan, Henderson, Farabow, Garrett & Dunner

STEPHEN L. NOE
Caterpillar, Inc.
Intellectual Property Owners, Inc.

JOHN J. HORN
Allen-Bradley

RICHARD NYDEGGER
Workman, Nydegger & Jensen

ALLAN RATNER
Philadelphia Patent Law Association
Ratner & Prestia

DIANNE CALLAN
Lotus Development Corporation
Business Software Alliance

R. DUFF THOMPSON
WordPerfect Corporation

RON REILING
Digital Equipment Corporation

RICHARD JORDAN
Thinking Machines Corporation

A. JASON MIRABITO
Boston Patent Law Association

JONATHAN BAND
Morrison & Foerster

LEONARD CHARLES SUCHYTA
Bellcore, Bell Communications Research

VERN BLANCHARD
American Multisystems

EDDIE CURRY
IMAGESOFT, INC.

February 11, 1994

D.C. TOEDT
Arnold, White and Durkee

JOSEPH HOFSTADER
League for Programming Freedom

TIMOTHY SCANLON
JOHN J. HORN
Allen-Bradley

R. LEWIS GABLE
Welsh & Katz

JOHN E. DeWALD
The Prudential Insurance Company of America

DAVID L. CLARK
Aquilino & Welsh, P.C.

ALLEN M. LO
Finnegan, Henderson, Farabow, Garrett & Dunner

SAMUAL ODDI
Northern Illinois University
College of Law

BERNARD GALLER
University of Michigan
Software Patent Institute

GREGORY AHARONIAN
Source Translation and Optimization

PROCEEDINGS
MORNING SESSION
(9:11 a.m.)

COMMISSIONER LEHMAN;:  Good morning.  My name is Bruce Lehman
and I am the Assistant Secretary of Commerce, and Commissioner
of Patents and Trademarks.
Welcome to our second round of hearings on the use of the
patent system to protect software-related inventions.  Two
weeks ago we held two days of hearings in San Jose,
California, the capital of the Silicon Valley.  Those hearings
focused on the patent system and how it was being used in the
field of software.
This round of hearings will focus on the standards of
patentability and the examination process, as well as the
treatment of the visual aspects of software under our design
and utility patent systems.
The common goal for all of our hearings is to find out how the
patent system is working for this field of technology and to
get your suggestions for making it work better.
President Clinton has made the development of and
competitiveness of high tech industries in the United States
a cornerstone of his economic program.  Promoting these
industries will lead to high tech, high wage jobs for
Americans and will ensure continued American competitiveness
in the industries of the future.
Our Secretary of Commerce, Ron Brown, has assembled an
excellent team to work on initiatives toward that end and I am
pleased to be a part of that Commerce Department technology
team.  The software industry is already meeting the
President's goals for creating competitive high tech domestic
industry.  So we've got a good thing going already.
Statistics show that since 1987 employment in the software
industry has risen at an annual rate of over 6.5 percent and
now employs well over 400,000 people.  In 1992 revenue from
the sales of programming services, pre-packaged software and
computer integrated design was over $50 billion.  U.S.
software firms dominate the world's software markets, holding
over 75 percent of the market for pre-packaged software.
It is interesting that up until the middle of this century the
wealth and economic strength of the United States came
primarily from the exploitation of our natural resources and
we had a lot of them in those days.  In the 21st Century, our
economic strength will come from tapping our most treasured
resource, the wealth of the human mind, and we will be
concentrating on conserving our natural resources.
To do this, however, we must encourage innovation and provide
our innovators with the legal protections they need to
successfully exploit their innovations.  This is especially
true in the intensively competitive and fast-paced computer
and software industry.
Indeed, innovation is the life blood of this industry.  It is
what separates successful firms from unsuccessful ones. 
Innovation, however, is a fragile commodity.  Without
effective legal protection our software industry would not
enjoy the dominance it now does in the global market, nor
would consumers enjoy the high quality and extremely usable
software products that are available on the market today.
Our intellectual property systems were established over 200
years ago to promote and protect innovation in all fields of
technology.  If these systems are functioning properly, they
will provide an appropriate level of protection and encourage
innovation.
From what we have heard recently, this may not be the case for
our patent system in the field of software-related inventions. 
This is why we are seeking public input -- to identify the
problems that exist and to hear suggestions on how to address
them.
Two weeks ago we held the first round of hearings, as I
mentioned earlier, in San Jose, California.  No clear
consensus emerged from those hearings, but many suggestions
were made regarding how the patent system could be improved
for the software industry.
Some people testified that the patent system was not working
at all, that it neither encouraged nor assisted software
development.  Others suggested that companies only sought
patents for defensive purposes.  If true, this runs counter to
one of the primary reasons for the patent system, which is to
encourage innovation.
On the other hand, several people testified that the patent
system was essential for successful software development
efforts.  We heard large and small companies tell us that
without patents they would not be able to attract or
effectively protect investments in developing new
software-related technology.  I think we also were hearing
that the industry might be on the verge of a shift to more
patent dependency and more usefulness in the patent system.
However, even people who generally supported the patent system
commented on the need to improve the quality of issued
patents.  Some people expressed skepticism over the ability of
the PTO to accurately gauge software innovation.  Others
commented that the Patent and Trademark Office does not have
access to enough prior art or that adequate collections of
prior art simply do not exist.
We are committed to addressing these concerns and to taking
whatever measures are necessary to ensure the proper function
of the patent system.  I would like to say, just yesterday, I
know, the Chairman of our House Subcommittee, Chairman William
Hughes, discussed these hearings and he indicated his
willingness to work in partnership with us, to the extent that
legislation is required to assure the proper functioning of
that system.
My goal is to ensure that patents will be instruments that you
can take to the bank literally.  From what we heard in San
Jose this may not be the case for patents in the field of
software-related inventions.
We intend to address these concerns through three levels of
action.  First, we will improve our examining operation to
ensure high quality examination.  Second, we will pursue
appropriate legislative reform to ensure the efficient
functioning of the patent system.  And finally, we intend to
work with the Judiciary to improve the interpretation of
patent rights in the context of enforcement.
Many useful suggestions were made in San Jose two weeks ago
and I expect to hear many more in the next two days -- today
and tomorrow.  For example, many people stressed the need for
reform of the reexamination process.  We recognize the need
for making reexamination a more attractive option for those
having reasons to question the validity of any particular
patent and are presently studying a number of suggestions and
proposals in that area.
Many people pointed out in San Jose that the obviousness
standard, as interpreted by our examiners and by the court,
seems to be inconsistent with the realities of the industry.
We recognize that an effectively functioning patent system
requires a standard of nonobviousness that is rigorous and
reflective of industry norms.  However, we also recognize that
the courts are the primary source of guidance on the basic
question of obviousness.
As such, we intend to work with the courts to ensure that the
obviousness standard is applied rigorously, not only in the
context of examination, but also when patents are enforced. 
I mentioned that was part of our three-part program.
Several suggestions were made regarding the improvement of our
operations.  I would like to note that we are already
responding to some of these suggestions.  For example, many
people have called for the PTO to improve its ability to find
and retrieve prior art.
One step we've taken towards this goal is the creation of our
electronic information center in Group 2300.  This facility
will provide an easily accessible structure through which we
can improve our collections of and access to the prior art.
However, extensive work with industry and other groups is
beginning to pay off in the form of specific commitments to
providing information, like in-house textbooks, old software
user manuals and access to information on early programming
techniques.
We also heard that we need to attract and retain more
qualified examiners by providing more competitive salaries and
improving the stature of the examiner position.  Toward this
end, we have just changed our standards so that we will hire
for the first time computer scientists as examiners.
We are also in the process of expanding our examiner
enrichment program to provide our examiners with greater
exposure to other aspects of the Patent and Trademark Office
and technical programs in other government agencies.  That is
just the beginning.  We have a real quality of life
improvement program underway here for our patent examiners
that hopefully will translate into better quality of
examination.
Another specific area targeted by people testifying in San
Jose was the need to improve the administrative processing of
patent applications.  People stressed the importance not only
of insuring the timely consideration of patent applications
but the timely processing at every stage of the patent
application process.  This falls squarely within our new focus
on customer service.
One example of a program that we are studying now is the
pre-examination interview.  We are conducting a trial program
to evaluate whether this step can help reduce the delays and
assist pro se inventors.
Before we hear from our first witness, I would like to
introduce you to some of the members of our own panel, people
who are here from the Patent and Trademark Office.
First, I would like to introduce on my left Michael Kirk. 
Mike is our Assistant Commissioner for External Affairs. 
Presently he's in charge of our Office of Legislation in
International Affairs.  But President Clinton has nominated
him to become Deputy Commissioner.
Under our new reorganization that we are implementing in the
Patent and Trademark Office, he will be in charge of --
basically the policy czar for the Patent and Trademark Office
and will have reporting to him not only the Office of
Legislature and International Affairs, which he now runs in
the Office of Public Affairs, but also the Solicitor's Office,
the Board of Appeals and our quality review operations so that
we can bring all of these together into a single unified
policy entity that will help work on policy aspects of these
problems and provide better service to all the people who look
to us in the Patent and Trademark Office for leadership.
On my immediate right is Lawrence Goffney, our Assistant
Commissioner for Patents-Designate, who the President has
nominated to run our patent operation, by far the largest,
over half of the whole Patent and Trademark Office, with over
5,000 employees.  And, of course, Group 2300 and this
particular subject matter falls directly under Larry Goffney's
jurisdiction.
The other fellow sitting here at the table with us is Jeff
Kushan, an attorney in our Office of Legislation,
International Affairs, who many of you may have talked with. 
He's the point man for day-to-day contact on this particular
issue.  And anybody who has any questions or follow-up on this
can get ahold of him, and his number is 703-305-9300.
I also would like to introduce somebody who is not sitting at
the table, but who is absolutely a lynch pin to this whole
effort, and that is Jerry Goldberg --- Jerry wants to stand up
-- who is our Group Director for Group 2300.
Finally, even though he is not sitting there right now, I
would like to note that Mike Fleming was in Group 2300.  There
he is right there.  Mike is going to be, anybody that has any
scheduling issues or questions or whatever, whether a hearing
is going on -- if you might, stand up again, Mike, so they can
make certain they know where you are.  Are you going to sit
there or over there?  He's going to sit right over here in the
corner.  You should just approach Mike and he'll see that you
get taken care of.
People who will be testifying over the next two days should
have received a schedule indicating the approximate time they
have been assigned to give their remarks.  A final list is
available at the entrance to the room.  I expect most of you
have already picked it up.
I would encourage all the people scheduled to testify to be
here at least 20 minutes before your assigned time slot.  The
reason for that is because we've already had a couple of
people because of this weather who can't come.  So obviously
if we have a person who can't come, that's going to move us up
a little bit.  That's been our experience so far with these
hearings, these and other similar hearings.  So please be here
at least 20 minutes before your assigned time slot.
Each person will have eleven minutes to speak.  The computer
monitor right there in front of the podium will display a
green screen for nine minutes.  Then it will turn yellow.  And
when the screen turns red we would very much like you to have
concluded your comments by that time.  I encourage everybody
to do that because it's really only fair to all the other
witnesses.  And generally speaking, these hearings have been
pretty good at that.  I hate to have to gavel people to a
halt.  So if you'd really cooperate with that, I'd really
appreciate it.  I think eleven minutes is a pretty good amount
of time.
I want to emphasize that, you know, these eleven minutes
aren't your only chance to -- they may be your only chance in
the spotlight with an audience, but they are not your only
chance to communicate with us.  You know, this isn't the court
where this is your oral argument and that's it.  We certainly
welcome further written comments.  Certainly at the Patent and
Trademark Office we like to be accessible even on a day-to-day
oral basis.  I've just introduced a bunch of people to you --
Jerry Goldberg and Jeff Kushan.
I would also like to introduce Charlie Vanhorn who is sitting
over there.  Charlie is our Chief Patent Policy guru in the
Patent Corps.  I know many of you already know these people. 
I'm sure that over the next weeks and months they look forward
to having a dialogue, continued dialogue, on these issues.
If you check the Federal Register Notice of December 20, 1993,
you will find all the information about how to send us more
comments if you want.  That notice is not only available
printed in the Federal Register, but it's also been widely
circulated through the Internet and it can be retrieved from
our FTP site, which is COMMENTS.USPTO.GOV.
Transcripts for these hearings will be available after
February 21 and paper copies will be available from our office
for $30.00 and transcripts will also be available for free
through our FTP site on the Internet.
Once again, we welcome everybody to our hearings today.  I'm
really gratified at the turnout that we've been having.  We
had a very large audience in San Jose.  We get a normal 60
people who testified and I'd say that we had at any given time
at least 100 people in the room, and probably at the maximum
we had 300 or 400 and a lot of them stuck with us.  So there's
obviously interest in the industry in this.  We're gratified
about that.
We also understand that that imposes on us an obligation to
really make these hearings meaningful and to follow up in the
ways that we've already started, that I've outlined to you in
my own opening remarks.
So with that I'd like to call our first witness to come up and
share his thoughts with us, and that's Paul Robinson, who is
the Manager of Data Processing and Chief Programmer of Tansin
A. Darcos.
Back to the index of speakers for Arlington

Forward to Paul Robinson