CHRISTOPHER BYRNE

STORAGETEK __ ACIS

MR. BYRNE:  Good morning.  I'm Chris Byrne, Senior Intellectual Property
Counsel for Storage Technology Corporation, or StorageTek.  I am testifying
today on behalf of the American Committee for Interoperable Systems, or
ACIS, to which StorageTek belongs.  ACIS sincerely appreciates this
opportunity to provide testimony.

By way of introduction, I am an electrical engineer and a lawyer, and a
registered patent attorney before joining StorageTek as patent counsel in
1991.  I spent six years on the Intellectual Property Staff of the
Hewlett_Packard Company.

I will address Topic A, Questions 4(a) and 5:  Does the present framework of
patent, copyright and trade secret law effectively promote innovation in the
field of software?  Do you believe a new form of protection for computer
programs is needed?

Because these questions are two sides of the same coin, I will respond to
them together.  ACIS members include numerous innovative high technology
companies such as Sun Microsystems, NCR and Broderbund Software.  My own
company, StorageTek, is headquartered in Louisville, Colorado, which is
about five miles east of Boulder.  We employ thousands of people worldwide,
and we had 1993 revenues of approximately $1.4 billion.  StorageTek designs
and manufactures high performance data storage and retrieval systems for
mainframe, mid_range and networked desktop computer systems.

Our customers include many Fortune 200 communication, transportation and
financial companies.  In fact, if you recently made a phone call, bought an
airline ticket or bought or sold securities, chances are that records of
your activity is stored on one of our products, awaiting ready access and
retrieval when necessary.  Our competitors include IBM, Hitachi and Fujitsu.

Like other ACIS members, we rely heavily on our nation's intellectual
property system to protect our most valuable assets: the innovations of our
engineers, particularly our software engineers.  Without adequate
intellectual property protection, we could not protect and recover our
substantial investment in research and development.  For instance, at
StorageTek last year, we invested approximately 10% of our revenues in R&D
__ that's over 140 million dollars.  Without that R&D investment, we simply
cannot stay competitive and in business.  Indeed, last November Vice
President Gore himself toured our substantial R&D facilities and personally
previewed key technology which we believe will facilitate his grand vision
of the information superhighway.

While all ACIS companies believe in strong intellectual property protection,
we also believe in balance.  We believe that overprotection is as
threatening to innovation as underprotection.  The need for this
sophisticated balance is particularly important with respect to software,
which is so pervasive in our economy and critical to its growth in our
national leadership and high technology.

ACIS believes that it would be a dangerous act of underprotection to deny
patent protection to software subject matter per se.  But it is an equally
dangerous example of overprotection to fail to expeditiously implement
needed corrections in the way we currently do software patents, if not all
our patents.  Those needed corrections are well known, and ACIS has gone on
record in support of them.  They include:

Improving the software prior art database so that it is accurate, timely and
includes both patent and nonpatent prior art.  The quality of the software
patent database will be directly related to the quality of the software
patentability examination by the PTO.

Working to raise the skill level of PTO examiners who are charged with the
vital and difficult task of examining software patent applications.  One way
to accomplish this is with site visits by examiners.  For instance, last
year two groups of examiners, one from Art Unit 2308 led by Michael Fleming
and another group from Art Unit 2507 led by Bruce Arnold, visited
StorageTek.  They spent valuable time with our engineers and our patent
committee learning how we do R&D and how we make our decisions about which
inventions to seek to patent.  We were very favorably impressed with the
legal and technical expertise of the examiners, who too often are merely
names at the end of an office action.

To our mutual benefit, the examiners learned about the challenges we face in
innovative R&D and we received a much better understanding of the difficult
nature of the examiners' work.  Educational visits by examiners is one way
to raise those skills.

Implementing key procedural reforms to prevent applicants from secretly and
indefinitely submerging their applications in the PTO until they are ready
to ambush the public __ and I think your 20_year limit is going to go a long
way toward solving that problem.  Otherwise we need to speed the examination
process and include accompanying public notice of possible patents.  Many
such procedural reforms are considered as a function of possible
harmonization of patent law, but such reform in this country should proceed
with or without harmonization.

And just a footnote here:  I think one of the very positive fallouts of this
meeting has been the offline interaction among participants.  And just as an
example, yesterday I spent some time brainstorming with my counterpart at
Silicon Graphics, Tim Casey, and Rob Stern, an attorney in private practice
from DC, and just over lunch we were talking about the problems that we have
with the Patent Office and we were brainstorming possible solutions, and a
number of those were things like regionalizing the Patent Office,
industry_sponsored technical colleges for examiners, expedited application
procedures, possibly limiting patents to one independent claim, and the
automation requirements of the modern patent system.  And one of the
conclusions that we came to was that we definitely believe that the water
glass at the PTO is half full as opposed to half empty, and we think that
hearings like this are going to be an important first step towards filling
the glass.

But all the good work that we undertake to improve software patents will be
simply undermined if we do not address another balancing issue, and that is
the proper balance between patent versus copyright protection of software. 
This is because copyright, if misapplied, can achieve patent_like protection
for software functionality.  This misapplication is particularly dangerous
when we consider that there is no examination for copyright as there is for
patents; a copyright registration does not specify the boundary line of
protected expression in a work, whereas a patent is explicitly bounded by
the terms of its claims; and copyright protection outlasts patent protection
by at least a factor of four.

This de facto patent protection under copyright is particularly pernicious
with respect to interface specifications. Unlike novels and plays, which
stand alone and do not need to interact with other works, computer programs
never stand by themselves; they function only by interacting with a computer
environment.  If the developer of an environment can use copyright to
prevent other developers from conforming to the system of rules governing
interaction within the environment __ to its interface specifications __ the
first developer can gain a patentlike monopoly without ever subjecting his
system of rules to a patent examination.  In the absence of competition, the
first developer would have little incentive to develop more innovative and
less costly products.  Moreover, this result is particularly dangerous to a
company such as mine.

StorageTek designs and manufactures data storage peripherals which interface
with the computers made by the dominant American, European and Japanese
computer vendors.  With de facto patentlike copyright control of their
operating systems, these vendors have the potential to therefore control
functional access to that interface and therefore exert market control over
subject matter, i.e., the peripheral device, which is completely beyond the
scope of the copyright itself.  This is dangerous overprotection of software
via copyright.

StorageTek joined ACIS because of our concern that the courts and the U.S.
government were losing sight of the importance of maintaining a balance
between incentives and competition in the area of intellectual property
protection of software, particularly copyright protection.

From the outset, it was our believe that the proper application of
traditional copyright principles such as the idea/expression dichotomy,
merger, scenes a faire, and the fair use doctrine would yield the
appropriate scope of protection for software.  Recent court decisions have
validated this.

The Second, Ninth and Federal Circuits have all found that copyright does
not protect functional interface specifications.  Further, the Ninth and
Federal Circuits have found the reverse engineering technique known as
disassembly to be a fair use and proper means to achieve functional
interoperability.  In our view, the Altai, Sega, and Atari decisions are not
radical departures from traditional principles; rather, they return
copyright to its proper course.  We expect that the First Circuit will soon
be consistent and overturn Judge Keeton's decision in Lotus.

Despite this positive trend in the case law, however, we fear that the U.S.
government has allowed its laudable goal to improve the balance of trade to
inadvertently divert its attention from the ultimate goal of our patent and
copyright system: promoting the progress of science and the useful arts, as
explicitly provided for in Article I, Section 8, Clause 8, of the U.S.
Constitution.

We applaud the manner and spirit of these hearings, therefore, as solid
indication that the U.S. government clearly appreciates that more protection
is not necessarily better.  We are also encouraged that Assistant Attorney
General Bingaman has established a task force to review and reformulate the
Antitrust Division's policies on intellectual property and antitrust.  We
applaud her observation that the scope of copyright protection for computer
software has important competitive implications.

In summary, we see no need for a sui generis software protection law.  Until
recently, courts applied copyright in a manner that overprotected software,
but the Altai, Atari, and Sega decisions corrected that aberration.  Bad
software patents also dangerously risk overprotecting software, but let's
not throw out the baby with the bath water; let's move quickly to implement
needed improvements in the way we do our software patents.

Thank you for this opportunity to present this testimony for your kind
attention.  I would be glad to answer any questions.

COMMISSIONER LEHMAN:  Thank you very much.  Appreciate your sharing that
with us today.

Next I'd like to ask Gideon Gimlan from Fliesler, Dubb, Meyer & Lovejoy.



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