PRESENTATION BY RON REILING
DIGITAL EQUIPMENT CORPORATION
MR. REILING;:  Good morning, Mr. Commissioner and members of
the panel.  Greetings from a snow-filled and bitterly cold
Boston.  I'm representing Digital Equipment Corporation.  We
are, as you may know, one of the larger suppliers of network
computers and software in the world and we invest heavily in
research and development to come up with new products and we
rely heavily on the patent system to protect that investment.
We are vitally interested in software-related inventions
because we spend hundreds of millions of dollars a year in
this area.  Creativity and innovation drive technology and
industrial progress.  Thus, the importance of adequately
rewarding the world's best minds by safeguarding their
software-related inventions through patents I believe will
increase dramatically in the years ahead as technological
advances in this field accelerate.
In today's global highly competitive marketplace, some believe
that we are witnessing a fundamental shift in business
history.  They are, we say, progressing from managerial
capitalism to intellectual capitalism.  They believe that the
importance of intellectual capital will ultimately cause a
dramatic shift in the wealth of the world from material
resources to those who control ideas and information, that is
intellectual property.
A fundamental feature of the patent system is that it
establishes a basis for this intellectual effort to be
regarded as an asset and to be traded in the marketplace. 
Thus, an effective patent system which promotes creativity by
providing a beneficial and stimulating environment for
inventors is essential for the information age.
This environment will produce a constant stream of new
products and competitive processes forging the growth of a
vigorous American economy.
Turning now to the specific issues, Digital believes, one,
that software-related inventions should be treated the same as
any other invention; that no legislative changes are necessary
in order to properly protect software-related inventions; that
increased training, as well as expanded content and better
classification of the prior art available to the examiners
would improve the examination process.
We feel it's important that patents can be obtained on all
software-related inventions, those at the operating system
level, at the application system level, those pertaining to
storage or the transmission of information, such as memory
data structures, packet switch networks, magnetic and optical
media.
We also believe that the standards for patentability applied
by the PTO for software-related inventions should be the same
as those applied to any other technology.  It would be a
mistake to single out any technology and treat it in a
discriminatory manner.
The issues related to software-related inventions have been
evolving for almost 20 years.  It appears that we are finally
approaching a point in this evolutionary process where
predictability may be possible.  It would be misguided in our
view to attempt to redirect software-related patenting at this
time by altering the established standards of review.
However, the PTO appears to have recently changed its standard
of review in certain of the software-related inventions by
ignoring novel software-related steps or means in the claims,
thereby finding the claims anticipated by prior art that does
not disclose the ignored claimed features.
This is basically a reversal of the PTO's longstanding claim
as a whole analysis in novelty determinations.  What's
happening in our view in these cases is that the PTO has
imported 101 type considerations back into the 102 and 103
considerations.
The PTO has also asked whether the implementing of a known
process, technique or method on a computer should be
patentable if but for the use of the software the overall
process, technique or method is known.  I believe the correct
answer is yes and that's provided, of course, the software
recitations in the claim present a new and nonobvious
invention.  It should not be the PTO policy or procedure to
exclude software limitations from novelty determinations.
On another point the PTO should not impose any special duty on
the patent applicants for software-related inventions under
Rule 56.  Such applicants should not be required to conduct a
patentability search.  After all, Rule 56 already encourages
all applicants in all technologies to examine carefully the
closest prior art information.
With respect to the way a software-related invention is
described no special requirements should be proscribed or
required.  Typically block diagrams are a useful to
communicate the software steps and functionality of
relationships of components included in software inventions.
Blocks within the diagrams should be deemed adequate
illustrations to support elements of both method and apparatus
claims.  Program code listings should not be encouraged.  They
should be accepted provided the specification standing alone
provides a clear and understandable description of the
invention.
With respect to administrative matters, we believe it is vital
that the PTO invest in quality.  The PTO has recently shown
improvements in timeliness and quality of examinations, but
further improvements are essential.  Congress should approve
the hiring and training of more examiners and ongoing
qualification assurance programs, including continuing
education requirements should be adopted.
The examiner should improve on the quality of Office actions
by including better explanations of rejections.  Providing
only conclusory statements of prior art rejections does very
little in advancing the determination of patentability.
Needless to say comprehensive patentability searches are
essential and we see some improvement in the PTO in the last
few years.  However, too often patent offices in other nations
encounter references, including U.S. references, which should
have been located but were not during the search by the PTO. 
This has to change.
Another possibility is the creation of an electronic database
where one could include software-related documentation and
make this database accessible to the public, so that people
could add to the database over the Internet, for example.
The patenting process we all agree should include public
involvement and we think the mechanisms to accomplish this are
already in place, but perhaps are not adequately utilized. 
For example, we could encourage the public to cite prior art
in accordance with Section 301 or the reexamination process
might be redefined to provide an incentive for early
challenges to issued patents.
One concept might be to substantially reduce the fees in the
first three months over a patent's life to encourage people to
use reexamination.
In conclusion, software-related patents are of great
significance to American industry.  We have a vast and vital
interest in software-related patents, in valid
software-related patents, and the industry is more than
willing to work with the PTO in accomplishing this objective. 
Thank you.
COMMISSIONER LEHMAN;:  Thank you very much, Mr. Reiling.  I
appreciate your suggestions, the idea of sort of a development
of an open-ended electronic database that you could get public
input in is a very interesting idea.
That concludes our morning set of hearings.  We're going to
reconvene promptly at 2:00 this afternoon.  I hope since we
have heard several of this afternoon's witnesses, I hope that
anybody that is in the room this morning that is going to be
here this afternoon will realize that, you know, they may be
called maybe even more than 20 minutes -- I hope more than 20
minutes -- before their assigned time schedule so that we can
conclude our business this afternoon early.
Thank you very much.
(Whereupon, at 12:06 p.m., the above-entitled hearing was
adjourned, to reconvene at 2:00 p.m., this same date.)
AFTERNOON SESSION
(2:14 p.m.)
COMMISSIONER LEHMAN;:  We're about to begin our afternoon
session of our third day of hearings on patent and
software-related inventions.  Before we call our first
witness, I'd like to note the fact for those who are here that
we have a distinguished visitor with us and that is Roland
Deer, who is a Director in the European Patent Office.
Mr. Deer, welcome to the United States.  We're glad you have
an interest in our proceeding.
(Applause.)
COMMISSIONER LEHMAN;:  We made quite a bit of progress this
morning and apparently our first witness that we had scheduled
for this afternoon, Michael DeAngeli has not arrived and,
therefore, we are going to go on to Jason Mirabito, Board
Member of the Boston Patent Law Association.  So if you would
join us, please, Mr. Mirabito, maybe we could hear from you.

Forward to Richard Jordan