MICHAEL LACHUCK

POMS, SMITH, LANDE & ROSE

MR. LACHUCK:  Pick four, right.

Good afternoon, Mr. Commissioner and distinguished panel.

I am a partner in the intellectual property law firm of Poms, Smith, Lande
and Rose.  And I will be speaking today solely on my own behalf based on my
own experience and those of some of my partners.

I would like to depart at least a little bit from some of the comments that
you've heard from so many other patent lawyers that have had an opportunity
to speak at these hearings. Virtually, every one of those attorneys has said
to you that they've been able to obtain patents for software_related
inventions, and frankly, my experience has been no different.

I would like to point out that what this means is that irrespective of what
the Patent Office decides to do, clever patent drafters will always a way to
disguise a mathematical algorithm or some other form of software_related
invention either as a piece of hardware, or as some form of methodology
having significant post solution activity necessary to get a patent.

The problem is one that simply isn't going to go away, it can to a certain
extent be curtailed.  What I would like to do is make some suggestions on
how the Patent Office might be able to change its practices to alleviate
this problem.

There are two issues I would like to address:  One, is specifically how the
Patent Office might change its practice, and the second is how the Patent
Office might propose legislation to effect remedies available in patent
litigation.

Speaking to the first issue of patent practices:  at the office, several
people have come up here and suggested that applications might be laid open
during the pendency of the application and before a patent issues.

I would like to argue against this practice for three specific reasons:  the
first reason is that this practice would shift the fundamental contract
between the patentee and the U.S. government concerning the grant of a
patent in the first place. Currently, the application is obliged, or rather
the patentee is obliged to provide a specification having an enabling
disclosure, one that teaches the public or those reasonably skilled in the
relevant arts how to make and use the invention.  In exchange for this, he's
awarded certain rights and remedies under the patent laws.  Now, if the
application is simply laid open, the same standard or obligation of teaching
merely avails the application of a possibility of obtaining a patent at some
later date based on the presence of prior art that they, themselves, may or
may not be aware of.

Secondly, I would like to most strenuously point out that if the practice of
laying open an application for public comment were to follow current
practices of re_examination procedure, it simply wouldn't work.  The problem
is that right now the public has only one bite at the apple.  They can
submit prior art of a certain form, prior patents and printed publications,
and they are allowed to comment exactly once on the relevancy of this art to
the application.

Thereafter, the process again becomes an ex parte process where the
applicant's advocate, some skilled patent attorney is able to argue with the
examiner over whether or not that art is in fact relevant or does make the
invention obvious. The ant_like persistence of patent attorneys is
legendary, as even the well known jurist Learned Hand once noted.  This
process of allowing the ex parte communication between the patent
applicant's advocate and the examiner, is a decidedly risky proposition.

What I would like to propose instead is that the re_examination process be
modified to allow representatives of the public or interested members of the
public to participate in that further communication that takes place between
the applicant's advocate and the Patent Office examiner, more or less in the
manner that litigation motions currently proceed; that is, the public would
be afforded an opportunity to submit prior art and comment on its
appropriateness or applicability to the application.  Thereafter, the
applicant's advocate would be afforded an opportunity to comment and then
the public or their representatives would be afforded an opportunity to
respond to the applicant's comments.

I am concerned that if this isn't done in some fashion or other, then the
suggestions that have been made concerning the submission of prior art to
the Patent Office, particularly in this area where there appears to be a
dearth of prior art, isn't going to change very much.

Under current circumstances, the district court judges typically afford
great weight to the decisions of the Patent Office examiner.  Unfortunately,
the public representatives are never provided an opportunity to debate or
address the subsequent arguments that are made by an applicant's
representative.  The result is that very few litigators suggest filing a
re_examination application.  The best prior art is lost, and the patent is
simply strengthened.

Turning to the subject of patent remedies.  I would like to suggest a
drastic reduction or elimination of injunctive relief in patent enforcement
litigation.  The threat or promise of injunctive relief drastically distorts
the economic value of a patent and the attendant costs of litigation.  It's
been my personal experience, and the experience of every patent attorney I
have ever talked to that the cost of litigation is directly related to the
potential liability exposure of the defendant.

Patent infringement litigation, because of the threat of injunctive relief
typically becomes a venture company_type lawsuit.  The client does insist on
a most vigorous defense proportional to the risk that they face.  If
potential liability exposure for patent infringement litigation were reduced
to a few thousand dollars, the cost of litigation would drop to some small
fraction of that value.

The basis for award of injunctive relief is based solely on tradition,
dating back to old English law, which now, in the hands of a patent owner
who frequently does not market any product, is ludicrous.  The effect of
patent infringement litigation with the threat of injunctive relief is to
waste a tremendous amount of American wealth and resources.  It is time to
bring this practice to heel.

(applause)

Thank you for the opportunity to speak to you today, and I thank you also
for your taking the time to personally come out here and hear from so many
representatives of the industry.

COMMISSIONER LEHMAN:  Thank you very much.  I should add that I've been
waiting for somebody to make the point that you did.  And I am somewhat
surprised that it has not been made before, and that is that there is a deal
in the patent system, and that is that one does not really give up their
trade secrecy rights until they are certain that they've got the patent. 
And certainly to go to a prepublication system would create a hiatus in
which that bargain in effect would be jeopardized.

But I do find it interesting that thus far, you're the only person who's
raised that.  That by and large the wave of testimony has been, I gather,
that it's worth taking that risk in order to improve the availability of the
prior art to the patent examiner.

Anyway, thank you very much.

MR. LACHUCK:  I would like to address that one comment. I suggest that if
the statutes were amended to provide that any patent infringement litigation
were automatically stayed pending re_examination, then the need to have post
issuance examination or comment by the public, the need to have the
application laid open would be alleviated.

The current reasoning I think that exists for people wanting to have an
application laid open during the pendency of the application is to avoid the
situation where the trial court judge decides to continue with the
litigation while the re_examination takes place.  And as things currently
stand, there's also the threat of preliminary injunctive relief, so if you
get rid of that threat, it would probably be a more practical alternative to
allow the same public comment through re_examination.

Thank you for your time.

COMMISSIONER LEHMAN:  Thank you.

Next, I'd like to call on Gregory Aharonian, from Source Translation and
Optimization.


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