PRESENTATION BY R. DUFF THOMPSON
WORDPERFECT CORPORATION
MR. THOMPSON;:  Thank you, Mr. Secretary.  My name is Duff
Thompson.  I am speaking to you today on behalf of WordPerfect
Corporation, for which I serve as the Executive Vice President
and General Counsel.  WordPerfect appreciates the opportunity
to participate in this hearing regarding the patent process. 
We certainly applaud the efforts of the Commissioner and
others to bring these issues to light.
WordPerfect Corporation is a Utah company employing
approximately 5,000 people worldwide.  It is the leading
supplier of word processing software in the world and other
key business applications.  WordPerfect is a member of the
Business Software Alliance, as has been mentioned, and we
support the positions that Ms. Callan has just expressed.
On behalf of WordPerfect, however, I want to emphasize certain
points she has made and to add a couple of others.  First,
WordPerfect Corporation believes with the Business Software
Alliance that strong intellectual property protection is
essential to the U.S. software industry to continue to grow
and provide jobs and export revenues for this country.
Because of the ease of copying, software piracy is endemic,
not only in this country but around the world.  Software
companies need vigorous intellectual property protection to
secure the fruits of their labors.
Second, like the Business Software Alliance, WordPerfect
Corporation does not believe that a suigeneris form of
protection for software-related inventions is a viable
solution to the problems that exist with the current legal
regimes, including patents.
Recent experiences of two types highlight the reasons for
these concerns.  First, the 1976 amendments to the Copyright
Act, an existing statute I might add, took well over a decade
to become enacted.  Given the number and diversity of views on
technical, financial and legal matters relating to software
protection and software patents, it seems likely that a new
statute could easily be a decade in the making.
During that time we would still have to get along with the
system we now have.  And as we know, a decade in the software
industry is virtually an eternity.  Moreover, even if a
suigeneris act were enacted, it would necessarily introduce
enormous uncertainties into the subject until years of case
law development had clarified the many inevitable issues.
We have lots of uncertain areas now within the existing legal
framework, but those uncertainties would seem very small
indeed compared to the issues that a clean slate approach to
this subject would introduce.
WordPerfect in sum believes that the existing statute,
regulations and case law are capable of providing an adequate
framework for assessing the patentability of software-related
inventions.
WordPerfect also believes, however, that two major
deficiencies in the application process which have led to
enormous expenditures of nonproductive effort and money by
software companies need to be addressed.
Time and again software companies have had to respond to
patents that should not have been issued because they are, in
fact, obvious over very close but non-cited prior art, and to
patents that issued a decade or more after the initial
application was filed during which time entire related
industries have developed, unaware of what I have called
buried land mines.
These consequences must be avoided if the health, growth and
worldwide competitiveness of the United States software
industry is to continue.
First on the issue of the obviousness of some of the patents. 
Too many software-related patents have issued despite the
existence of very close prior art, art which was not found
during the examination process.  Mr. Secretary, you, yourself,
have highlighted what has become the most glaring example of
this type of patent in the Compton New Media patent issued in
August of '93.
You ordered a reexamination of this patent because it cased a
"great deal of angst in the industry."  The PTO to its credit
departed from normal procedure when it decided to consider
additional prior art from the public during the reexamination
of the Compton patent.
This action clearly demonstrates the PTO's recognition of the
underlying problem, that much of the prior art in the area of
software-related inventions is not embodied in patents while
existing searching techniques focus on patents.
Clearly, the archive of prior art in relevant areas needs to
be significantly improved.  And the PTO's ability to access
that prior art must be greatly enhanced.
In speaking for the BSA, Diane Callan mentioned the
possibility of industry assistance to the PTO in setting up
databases for prior art with respect to software-related
inventions, in providing necessary software tools to ensure
meaningful access to those databases and in assisting with
training of examiners in these areas.
I'm here today to tell you the WordPerfect Corporation is also
ready to participate in that enterprise.  We are ready to do
our part in helping the PTO improve the examination process. 
I encourage all similarly situated software vendors to
participate in a like manner.
In addition, WordPerfect believes that giving third parties
the right to file oppositions to allowed applications would
further benefit the PTO and the public.  Oppositions would in
essence deputize the concerned public.  They would enable
people with the best knowledge of the subject matter to submit
prior art which was not located by the examiner.
In this way the PTO would be assisted, often by experts in the
field, in identifying the most relevant prior art.  At the
same time the interested public has the opportunity to prevent
the issuance of an undeserved patent that would otherwise
become a scarecrow in the art.
Again, consistent with the BSA statement, WordPerfect's
support for the availability of an opposition proceeding is
based on the expectation that first the failure of a party to
file an opposition would not in any way affect the presumption
of validity of an issued patent, either as to that party or
generally; and second, any opposition that is filed would be
completed in a relatively short period, so as not to unduly
delay the issuance of the patent.
Second, on the land mines issue a very small proportion of
patents carry a substantially and unfairly disproportionate
weight upon being granted.  These are often patents that are
issued 10, 20 or even more years after the initial application
was filed.  Often such patents rest buried in prosecution or
the public, not knowing about them, develops whole industries
related to their subject matter.
Such patents often don't really issue so much as blow up in
the unsuspecting public's collective faces.  Enormous
royalties are often demanded by their owners who have been
watching the industry develop, and in many cases drafted
claims to read on the products and processes of those
industries, taking advantage of accidental disclosures in
their applications that can be stretched and tortured to
support claims they never considered making until others made
the inventions.
The patents then go into expensive and protracted litigation. 
Two examples make this point.  The first is, in 1990 Gilbert
Hyatt's patent for a computer on a chip issued.  The original
application had been filed in 1970 when most of today's
computer companies were not yet even contemplated.  Yet
industry analysts have estimated that Hyatt's patent portfolio
may be well worth over $100 million during its 17-year life.
A second example, Jerome Lemelson owns a number of these long
hidden patents.  For example, his Patent Number 753 covering
a bar code scanner issued on July 7, 1992 from a continuation
application filed in 1989.  However, the original application
was filed in December of 1954 and was followed by 11
continuation, division and continuation in part applications.
In 1992 alone Lemelson's attorney, who according to the
American Lawyer Magazine earned more that year than all the
combined partners of Krabath, Swain & Moore and Winston &
Strong combined -- I assume to the chagrin of the partners at
Krabath, Swain & Moore and Winston & Strong -- negotiated over
$400 million in settlements regarding Lemelson's patents.
A racketeering and anti-trust suit filed against Lemelson
cites Lemelson's attorney as having written that "Some of
Lemelson's pending patent applications were being refined to
encompass explicitly the processes that manufacturers were
already using in their factories."
Even Judge J. Plager, Circuit Judge of the U.S. Court of
Appeals for the Federal Circuit acknowledged this problem in
a recent interview by the Journal of Proprietary Rights.  As
you may know, Judge Plager did not have a patent law
background prior to taking the bench on the Federal Circuit. 
Even so, during the interview on May 12, 1993 Judge Plager
supported the idea of switching to a fixed patent term from
the date of filing, noting that even in the short time that he
had been on the court, which is approximately two plus years,
he had picked up "some of the things that go on, the delays
that are built into or allowed by the system, all of the
things that you can do to game the system."
Thus, WordPerfect wholeheartedly welcomes the PTO's inquiry
into legislation which would change the life of a patent to
one that expires after a fixed period of time from the
original filing date of an application or its earliest parent.
Similarly, WordPerfect urges the PTO to support the
publication of all pending applications a fixed time after
their filing dates.  In these ways, most of the buried land
mines would be disarmed or at least have their explosive power
lessened, enabling the public to travel a safer landscape of
software development.
Finally, WordPerfect requests that the PTO consider one
additional item not mentioned in the BSA presentation.  That
is the vast extension of patent claims by unreasonable
application of the doctrine of equivalence to cover
software-related inventions which are vastly different in
spirit and content from the invention disclosed in the patent.
WordPerfect recognizes that the doctrine of equivalence has a
place in patent law and that there are times when the choice
between implementing an invention in hardware or software is
determined by a variety of factors which do not alter the
basic nature of the apparatus or process in question.
However, in other cases the basic nature of the invention as
described in a "hardware" patent is qualitatively different
from a software implementation.  In those cases I suggest the
doctrine of equivalence has been applied beyond any reasonable
scope.
Thank you for the opportunity to present these remarks.
COMMISSIONER LEHMAN;:  Thank you very much, Mr. Thompson.  I'd
like to ask you a question or two if you don't mind.
First, a fairly short one, and I think you've obviously given
us the answer, but just to put it on the record, when we were
in San Jose, one of the witnesses presented a chart and it
showed all of the patent applications that had been filed by
various computer software companies.  As might be expected, it
showed that we had, you know, the largest number in companies
like IBM, General Electric, Digital Equipment and so on.
The point was made that some of the most rapidly growing and
innovative companies in the business in the last ten years
have filed very few applications.  You got down to Microsoft
and -- I don't know -- there were maybe 13, I think, or 15
applications and the Lotus Development Corporation had about
7; WordPerfect had none.  And this was used to indicate that
-- basically as a result, I think the message was that
certainly the microcomputer industry could do just fine
without any patent protection at all.
And yet I don't hear you saying that.  Is it your view that
the industry has matured to the point that, you know, patents
should be a part of the options available to you now, even
though you have not -- obviously, any applications that you
may have pending are confidential -- but you haven't had any
issued?
MR. THOMPSON;:  We actually have had three issued.  I am not
sure where that information came from.
COMMISSIONER LEHMAN;:  I guess the information we got then was
incorrect.
MR. THOMPSON;:  Yes.  We actually have had a number issued and
we have a number in process.
This is a difficult question, Mr. Secretary, because we're
asking really at the base root whether or not we believe
patents are a helpful aspect of this industry.  I think that
it's been the position of the owners and most of the employees
of WordPerfect Corporation for a number of years that patents
are not good news for the software industry.
However, I believe the time for making that argument passed
many years ago and we are now at a point where we simply have
to say, if they are part of the landscape how can we best
ensure that they become a workable part of our business plan.
I have to say that WordPerfect Corporation has been surprised. 
There is a certain lag effect in the patent process, isn't
there?  There's not a real hurry up and let's start getting
our patent portfolio in shape.  There's a certain lag effect
here and it takes a period of years for companies to develop
process and methodology to see that patents are made a part of
the everyday development process.
And certainly that's the case of WordPerfect Corporation. 
Three years ago WordPerfect Corporation essentially had one
patent application in process.  Today we have many.  We are
considering hiring in-house patent counsel.  We consider it an
unfortunate circumstance, but a necessary circumstance.
COMMISSIONER LEHMAN;:  I gather then that the reason that
you're filing patent applications is by in large from a
defensive point of view?
MR. THOMPSON;:  Absolutely right.
COMMISSIONER LEHMAN;:  Some of the other witnesses in San Jose
indicated the same thing.
The next question I wanted to ask concerns, you referred to
the Commissioner's order of reexamination in the Compton's
Multimedia case.  Again in San Jose we heard a number of
situations listed, a number of patents which had been issued,
which some of the witnesses there, at least one or two,
thought were similarly questionable.
Obviously, one of the things that we could conceivably do is
to make better use of that, of our own powers to order
reexamination and perhaps make a review of some of the patents
that are -- where there is some question about whether or not
we have gotten all the prior art.  What would you view about
that be?  Would you encourage or discourage us from using that
Commissioner ordered reexamination?
MR. THOMPSON;:  I think that's a healthy thing for the
industry and certainly the most efficient thing that can be
done at this point in time.  As you may know, WordPerfect and
other companies are being threatened, a number of claims of
infringement on patents that we believe simply should not have
been issued and the prior art searches that we have done, I
think, would be very useful for the PTO.
COMMISSIONER LEHMAN;:  But I gather that in those cases you
haven't chosen to use the reexamination procedure yourself.
MR. THOMPSON;:  Not yet, no.
COMMISSIONER LEHMAN;:  And I asked also about that in San Jose
and I'm -- just in the interest of time; I don't want to spend
an hour on cross examination here, so I'll lead the witness a
little bit -- the answer that we got as to why companies who
feel that they have prior art that clearly might invalidate
some of these patents, they don't want to bring that to our
attention by requesting reexamination themselves is because
they think that the present procedure basically is not their
best shot for utilizing that prior art and they don't want to
disclose it in that kind of a forum.  They'd rather save it
for the infringement law suit itself.
Do you find that figures into your strategy about whether or
not to use reexamine?
MR. THOMPSON;:  I think that's right.  I believe if we had a
better sense of the reexamination process and certainly had
the sense that it was an expedited process, one which could
bootstrap us ahead of where we would be through the private
negotiations in the litigation that would be something we'd be
very attracted to.
COMMISSIONER LEHMAN;:  Well, unless any of my colleagues have
any questions, thank you very much.
MR. THOMPSON;:  Thank you.
COMMISSIONER LEHMAN;:  As I indicated, we are running a little
bit ahead of time and it would be very helpful to us in
getting through our afternoon more quickly if we could fit in
at least one or two of the afternoon people.  So I've
indicated that Richard Jordan -- is Richard Jordan here?
MR. JORDAN;:  Yes, I am, sir.
COMMISSIONER LEHMAN;:  Great.  Would you mind coming forward? 
Presumably you'll be as prepared now as this afternoon.
Richard Jordan, Patent Counsel to Thinking Machines
Corporation.  I hope you'll notice this new level of customer
service that we have here.
MR. JORDAN;:  Thank you very much.  It's very much
appreciated.
COMMISSIONER LEHMAN;:  We're on the Internet.  We've got all
our hearings printed up.  We've got refreshments in the lobby. 
We haven't yet gotten them for free, but we're working on
that.
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