PRESENTATION BY ROB LIPPINCOTT
INTERACTIVE MULTIMEDIA ASSOCIATION
MR. LIPPINCOTT;:  Good morning, Mr. Commissioner, members of
the panel, ladies and gentlemen.  My name is Rob Lippincott. 
I'm Vice President for Content at Ziff/Davis Interactive,
which is an on-line information services provider and
multimedia publisher.  I also serve as Executive Vice
President of the Interactive Multimedia Association.
The Association's General Counsel, Brian Kahen, who also
directs our intellectual property project is here with me
today to answer any questions you may have.
As a traditional magazine and newsletter publisher, Ziff/Davis
has built a business on the value added by the work of editors
and writers doing research, selecting, highlighting, linking
information, by aggregating rights, by creating original
material, and by expressing the opinions which they believe
will influence the market, change the flow of business or
touch human souls.
As multimedia information publishers we have come to view
interactivity as perhaps the fundamental principle of the new
media.  It is how editors and developers use computers to
speak to people.  It's how people use computers to get the
information they need, and it's how people speak to other
people through computers.
It's how communities grow and how markets are formed, perhaps
most importantly.  Interactivity, per se, cannot be considered
a patentable process.  It's how we communicate.  It's this
perspective that I find shared by the majority of my fellow
IMA members and from which I offer the following testimony on
their behalf.
The IMA, the Interactive Multimedia Association, is a U.S.
based trade association with more than 280 member companies
and organizations, representing all of the areas of the
multimedia industry.  Its mission is to promote the
development of interactive multimedia applications and to
reduce existing barriers to the widespread use of multimedia
technology.
Multimedia draws on traditional content industries -- movies,
television and music, as well as traditional publishing --
which have been and which promise to be powerful export
industries for the United States.  These are creative
industries which function very effectively and comfortably to
date, largely dependent on the copyright law for intellectual
property protection.
And as my colleague Tom Lopez testified in San Jose, a number
of the creative people in our emerging industry feel rather
threatened by abstract process patents which they believe give
patentees leverage over content developers and publishers.
Our concern is not software patents in general, but patents
which constrain and control human expression and the flow of
information.  Under the European patent convention, patents
are not granted for "schemes, rules and methods for performing
mental acts, playing games or doing business, programs for
computers or presentations of information."
While we have similar judicially created exceptions in our
law, in certain instances they have been eroded if not
eliminated.  The result is that we have a patent system that
has in certain instances stretched the system beyond its
resources and capabilities some might argue, to in fact
regulate those abstract functions.
From the perspective of a number of our members, our
multimedia developers and producers, the patent system is a
one-size-fits-all system for creating property rights that is
indifferent to its impact on the industries it seeks to
regulate, directly or indirectly.  Software is treated in much
the same way as chemical compounds, but it has persistent
problems in the examination process.
Broad patents, especially patents that preempt functions that
cannot be designed around, should not be granted without an
extraordinary level of quality control, preferably in the form
of peer review, much as has been spoken of earlier today.
Whatever the practical limitations on the knowledge and
expertise of examiners, they ought to be able to identify such
broad claims and route the applications accordingly.  Broad
patents are inherently regulatory in nature.  It is imperative
that the claims be precise and that the examination be
thorough.  Such patents must be widely acknowledged and
respected within the field and the industries that they
affect.
Pre-grant publication for both broad and narrow patents is an
absolute necessity in the software area because the patent
database is so limited.  In Europe and Japan and virtually
everywhere else in the world patent applications are published
before the patent is granted.  Many of the patents that
trouble the multimedia industry because of their breadth would
never stand up to pre-grant publication.
In 1966 the President's Commission on the Patent System
recommended against granting patents for computer programs for
practical reasons.  "The Patent Office now cannot examine
applications for programs because of the lack of a
classification scheme and the requisite search files.  Even if
these are available, reliable searches would not be feasible
or economic because of the tremendous volume of prior art
being generated."
Twenty-eight years later, and a significant twenty-eight years
in our industry, the situation remains largely the same
because the search files have never been completely developed
and the volume of prior art has naturally grown exponentially.
However, the U.S. PTO began to grant patents on software
processes liberally without addressing the practical problems. 
Pre-grant publication is an alternative, which could in due
course elicit sufficient prior art to make such a database
feasible.
Furthermore, we have the beginnings of an information
infrastructure that can make pre-grant publication inexpensive
and effective.  The patent system should be an integral part
of this infrastructure.
The problems with subject matter and those of examination tend
to go hand-in-hand.  While we applaud the fact that last month
the PTO finally began hiring examiners with degrees in
computer science, this didn't happen until 12 years after the
PTO liberalized its policy on software.
With the PTO granting patents on multimedia designs, business
methods and educational methods by rights it should admit MBAs
and Masters in instruction design as patent examiners.  Given
past experience, we would not expect this to happen any time
soon.  But the notion suggested in question two that an
examiner trained in electrical engineering can deduce the
level of ordinary skill in these arts from reading a few
journals and patents is clearly insupportable.
The relevant art or arts should be identified by the
applicant.  The examiner should be identified with a cited art
and their final signature should, in fact, affirm that they
are skilled in those arts.
There are a number of other considerations we don't have time
to note here, but will do so in writing.  We will do so with
the understanding that other industries may feel differently
about the operation of the patent system.  Other industries
may feel the opportunity to maintain trade secret protection
outweighs the need for a better examination process.  We
respect their views because we feel that the system should be
tailored to promote innovation, not simply to validate
preconceived rights through the threat of exorbitantly
expensive lawsuits.
As the Commissioner has suggested in San Jose, there is a
dearth of economic analysis of the patent system, but there
are costs that are real, and for multimedia designers,
frightening.
Stanford Professor John Barton estimates the average cost of
patent litigation at $500,000 per claim per side.  The cost of
insurance against an inadvertent patent infringement is a
minimum of $50,000 per multimedia product with a $50,000
deductible.  That's a marketplace measure of the tax that the
patent system places on our industry.
This figure is likely to be five or ten times the cost of
conventional errors and omissions insurance which covers most
other liabilities.  This figure functions as one benchmark
that multimedia developers will look to to gauge the Patent
and Trademark Office and the administration and their efforts
to protect the expression in the multimedia age.
We look forward to working with the Patent and Trademark
Office to perfect the process that we must support as an
industry.  Thank you, Mr. Commissioner and members of the
panel, for this opportunity to express the concerns of
multimedia developers and publishers.
COMMISSIONER LEHMAN;:  Thank you very much, Mr. Lippincott. 
We appreciate your comments.  They were so thorough that I
don't have any questions.  You answered all of them.
MR. LIPPINCOTT;:  All right.
COMMISSIONER LEHMAN;:  Next, I'd like to ask Mr. Robert Yoches
from Finnegan, Henderson, Farabow, Garrett & Dunner to come
forward.

Forward to E. Robert Yoches