MR. YOCHES:  Thank you,  Commissioner  LEHMAN,  it  is  indeed  a
pleasure  not  to  be  in  Washington,  D.C. today because of the
weather, and also a pleasure  to  be  before  this  distinguished
Panel. For the record my name is Bob Yoches and I am a partner of
Finnegan, Henderson, Farabow, Garrett & Dunner, although I  speak
today  not as a representative of that firm, not as a representa-
tive of my partners, and  not  as  a  representative  of  any  of
thients  of  the  firm.   Instead I offer my own views based upon
having practiced in the area of intellectual property for patents
for fourteen years, and in that capacity I've been before the Pa-
tent  Office  in  prosecution,  I've  litigated  patents  in  the
software and computer area, I've licensed patents in those areas,
licensed in and out technology, I've been involved  in  copyright
registrations,  copyright licensing and litigation, and I've been
involved in trade secret litigation.  I've represented both large
companies  that  have  been well_established, small companies and
start_up companies.  I've also represented domestic companies and
foreign  companies, and I've represented those that had intellec-
tual copyrights and those that were concerned with other parties'
intellectual property rights.  And based upon that experience I'd
like to offer some observations about the  applicability  of  the
patents  and  the  patent law to the software_related inventions.
I'm going to  restrict  my  remarks  to  perhaps  unique  aspects
oftware  that  make  patents appropriate or inappropriate, as op-
posed to addressing any of the general attacks on the patent sys-
tem  itself.   I'm  not  under  the  impression  that there's any
large_scale movement to rid ourselves of the  patent  system,  so
let me address myself to the specific aspects of software and the
specific aspects of how the patent system impacts software.

I note that in the discussions  today  and  the  testimony  given
there  are three characteristics of software that I think are im-
portant, especially from the aspect of how best to implement  the
Constitutional  directive.  One  is that software is pervasive in
our technology.  It pervades our lives, it pervades our jobs,  it
pervades  all  other  types of technology that hithertofore we've
considered different.  We've heard somebody  from  the  petroleum
industry  talk.   We've heard about a case involving software and
the medical industry.  There is software in the  banks,  software
in  stock  exchanges,  there's software in your automobiles.  Not
only does sof e now pervade our lives, it will do so more in  the

A second observation is, you cannot extricate  the  software  and
treat  it  separately,  in other words, I question whether we can
talk intelligently about software_related inventions,  software's
such an integral part of our lives. And lastly, the last observa-
tion generally on software is that  although  software  has  some
unique aspects, so does every other type of technology; certainly
biotechnology has unique aspects. Certainly chemistry and pharma-
ceuticals  have unique aspects, but I think there are some things
about software that it has in common with other  innovations  and
with  other  technologies  that are particularly important to how
patents will affect that.

One of those characteristics is software is extremely useful;  it
is,  as  I indicated before, pervasive, but it has the potential,
and has already actualized much of that  potential  for  dramatic
impacts on our life.

Second, the more we know about software, and  I  think  there  is
some  testimon$  this  point  also,  the more that is known about
software, the greater will be the development in order  to  avoid
ploughing ground that's been ploughed, and the faster will be the
rate of that improvement.

Given those observations then, what role do patents play and  can
they  play?   And  I  think patents have already played, and will
continue to play, a role in three major aspects. The one general-
ly  starting from what I just talked about is in publication.  We
heard a speaker this morning testify that indeed one  large  com-
pany  allowed publication of ideas because they were protected by
way of patents.  In addition to that, however, and I think a much
stronger  point, is the fact that the patents themselves are pub-
lications of the ideas, and publications in a very important  way
that really hasn't existed.  They are publications of information
in a structured format by way of the Patent Office's own classif-
ication system.  As the Commissioner spoke this morning, the fact
of the matter is that  because  we  have  reli(o  long  on  trade
secrets there is perhaps a lack of this structured database.  The
way to solve that is not to avoid the patent system,  but  rather
to  embrace  it,  and  to  look  at and perhaps adopt many of the
recommendations that have been made here on how  to  improve  the
accessibility to prior art.

The second issue, and this has been a key issue here, is that  of
investment,  and rather than repeat what's been said, it has been
my experience that not only do investors, and by investors I  not
only  include  venture  capitalists, but also large concerns that
are interested in some sort of partnering  agreement,  but  these
type  of  investors  care  more  about patents than they do about
trade secrets, if in all honesty copyrights are kind of  a  wash.
They're there anyhow, it doesn't make much difference.

But given that, there's often a choice between  whether  to  keep
processes  secret or obtain a patent on it, I find investors like
patents much better, for two reasons. One  is,  they  don't  like
dealing with trade secrets b,se they have to sign a confidential-
ity agreement and a lot of investors won't do that.   The  second
reason  is,  and I think even more compelling, is that the inves-
tors are afraid that the trade secrets will have  a  short  life-
time.   They  can easily be lost.  They can be lost in an instant
by an inadvertent publication.  They much prefer patents.

The third area that I think that patents play in software is that
of  innovation. There's been I guess some dispute here on whether
software is fast_developing or slow_developing, but I think there
is  one observation we can make, and that is, it's generally easy
to change software.  It's more flexible to change  software  than
hardware,  indeed  that's  why  so  many of our developments have
software in it.  Well, of course one of the options that the  pa-
tent  system  offers,  and one of the opportunities it offers, is
that if there's a patent out there, and you don't feel like  pay-
ing  the  license fee for it, you are encouraged to design around
the patent, and indeed the Federal 0uit has indicated that a  key
aspect of the patent laws is the designing_around.

Software, by its nature, by the ease and quickness by  which  you
can modify your procedures and modify your algorithms, is partic-
ularly adapted to designing around other patents, and particular-
ly adapted to then promoting new developments. It has been my ex-
perience, in summary, that the patents have served  the  software
type of developments very well, and I believe in general that the
Patent Office, especially in Group 2300 with which I've  had  the
most  experience,  has also done a good job of serving the system
well, but I notice, I think, two problems currently, with the Pa-
tent  and  Trademark  Office  in the area of patent protection of
software_related inventions.  The one is, I believe in  the  Sec-
tion  101  area  as  I think other witnesses have indicated, that
there is a reluctance, and almost stubborness by the  Patent  Of-
fice to taking the most contrary position that they can on wheth-
er subject matter is patentable, and indeed in  4form  paragraphs
which the patent and trademark office uses as a bases for its re-
jections, it had been able to pick  and  choose  among  different
cases,  especially  cases  from the 1970s, to support their posi-

I think that's contrary to the trend of the  law.  I  think  it's
contrary  to two major Supreme Court cases, the most recent cases
in this area.  Because in the Jacobardi case, as the Notice indi-
cates,  the  patent laws are supposed to extend to anything under
the sun made by man, and in the Diehr case, there was a direction
that  we're  supposed  to  look  at  the claim as a whole and not
dissect it into its old elements, meaning its mathematical  algo-
rithms,  and  its  new  elements.  And I do not believe currently
that the Patent and Trademark Office is  following  that,  and  I
think  that  the  result has been, at least in my experience, two
things.  One is frustration by some applicants because they  have
abandoned their application rather than pursue this to the Board,
and for those people that have pursued to the8rd, at least in our
firm,  they've  been very successful, and all it's resulted in is
an additional expense to those applicants.

The other issue, and I think the Patent Office I  understand  the
last  week  made  I  think a major change, is the Patent Office I
understand now allows or will allow Group 2300 to  hire  computer
scientists as examiners. I think that's a very good step.  Howev-
er, it's my understanding though that if you're a computer scien-
tist  out  practicing  in the world you may not currently sit for
the Patent Bar.  The belief is that  you  don't  have  sufficient
technical training.  I think that should change, and certainly if
you're qualified enough to examine patents, you ought to be qual-
ified enough to prosecute those patents in front of the Office.

Thank you very much.

COMMISSIONER LEHMAN:  Thank you very much, Mr. Yoches, for coming
all this way to share those thoughts with us.

Next I'd like to call our final witness  of  the  afternoon,  Jim
Shay of the firm of Morrison and Foerster.

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