Sun - Software Patent Testimony

Public Hearing on Use of the Patent System to Protect Software Related Inventions
Transcript of Proceedings Wednesday, January 26, 1994 San Jose Convention Center

Lee Patch, Chief Intellectual Property Counsel, Sun Microsystems

Mr. Patch: Mr. Commissioner and colleagues, my name is Lee Patch. I speak today on behalf of Sun Microsystems, a 12-year-old $4 billion Silicon Valley-based manufacturer of computer workstations and related software products.

Sun invests approximately one-half of its substantial R&D budget in software development, particularly UNIX-based operating systems, development tools and application programs.

I serve as Deputy General Counsel and Chief Intellectual Property Counsel at Sun. I have the responsibility there for the patent activities.

You've heard and will no doubt continue to hear today widely diverging opinions concerning the virtues, or on the other hand, great evils of software patents, and you will note no lack of emotion and commitment to the speakers on either side of the issue. It's quite remarkable, I believe, that the normally quiet, calm environment of the patent practice and of the software development community has been so disrupted in recent years by loud and impassioned philosophical debate on subject matter that historically and traditionally had been only of interest to esoteric patent practitioners.

We've seen luminaries such as Mr. Warren take time out of his busy schedule to speak to you very passionately about evils of software. What I'd like you to take with you from these hearings, if nothing else, is that from the perspective of a company like Sun Microsystems, the system is indeed broken and needs addressing. The current operation of the system is creating an unacceptable amount of uncertainty within the software and computer industries, and as I'm sure you will appreciate, business executives who routinely or daily make million dollar, multimillion dollar gambles on issues of technology or on issues of the marketplace, hate the need to take gambles and to make bets upon the outcome of a legal system.

In the face of this problem with the system, you have heard radically different proposals for solution, ranging from abolition of software patents outright to rather modest suggestions of improvement in the searching capabilities that exist within the Patent & Trademark Office.

I would like to summarize if I could what I believe to be the three fundamental problems that have been the subject of much testimony before you this week. The first problem that I believe has been identified and addressed significantly relates to the quality problem within the Patent & Trademark Office. The second problem that I would like to address, which has been discussed previously, relates to the surprise problem, that is of considerable concern to the software industry. And finally, I'd like to address briefly the subject of the tied-hands problem, which is another aspect of the frustration you may be hearing this week.

To the subject of the quality problem, I would say in my experience that it is indeed the case that low quality software patents are routinely being issued -- I should also mention that none of those are being issued to my company -- but they are indeed being issued. Largely it appears, due to the fact that prior art is not available or being overlooked or being misunderstood, and secondly, because it's a widely-held view that the nonobviousness standard that is being applied is simply too low a threshold.

Commissioner Lehman: I hate to interrupt your train of thought, but what is the -- I should probably ask some other people this, but -- what is the relationship of the Court of Appeals or the Federal Circuit to that? Do you think they're not giving us the right kind of guidance that they should give us on the obviousness standard here? Or is this our problem more?

Mr. Patch: I believe it's a merged problem. I believe that the Court of Appeals for the Federal Circuit has lowered that standard, and unduly so, and I also believe that the standard is by no means uniformly being applied within the Patent & Trademark Office.

In my role as corporate patent counsel, in-house counsel, I spend considerable time defending against infringement charges, and I have had personal opportunity to confront most of the famous bad software patents that you will and have here heard about, including such as the exclusive or patent, and the Soderblom patents and AT&T Pike patents, and other like the Mark Williams byte order patent. There's a list of them which have been widely disseminated as problem patents. I have personal experience in having rebutted and defended against charges of infringement with relation to many of those. From that experience, I would like to offer a few observations for your benefit:

First, there is indeed a quality problem that exists, and it is costing the industry a great deal in terms of lost cycle time, a lot of expensive effort being undertaken that would ideally not be necessary.

That having been said, I'd also like comment that no, it is not the case that in the software industry the sky is falling. We have not reached a stage where these types of problems are bringing to a screeching halt progress in the industry. Our confrontations with this group of questionable patents were fortunately all resolved prior to litigation, and where there was some payment, they were relatively inconsequential amounts.

A third observation I'd like to mention is that to address these kinds of infringement charges, which are perceived to have little merit, it's often quite necessary in my position to do some mining in the memories of a series of old and experienced practitioners of this art, who I happen to have at my disposal inside the corporate environment.

There is not a great deal of public documentation, patent or otherwise, that serves as a ready vehicle or mechanism for solving these problems when they arise. A lot of dusty basements have to be explored and old computers that haven't been powered up for many years have to be discovered and reactivated in order to deal with these problems as they exist today.

The last observation I wanted to make is that the quality problem that I believe to exist is not unique to the software industry. In my business questionable patents are being enforced not just with respect to software inventions but in the hardware arena and the semiconductor arena, there is a considerable amount of that going on, driven not so much by the nature of the technology but by the nature of the economic interests and an opportunity being presented to people to realize some very significant money to the bottom line.

The second issue I wanted to mention briefly was, as I said, the surprise problem. And that's a very real source of frustration as you've heard at length this week. The industry feels as though it's being kept in the dark for long periods of time, and then surprised by some unanticipated patent jeopardies. This is clearly the result of delayed publication on the one hand, coupled with the ability in the Patent Office for an applicant to prolong the prosecution for an inordinate period of time, with no penalty, without loss of legal rights. This creates an environment where surprises become the rule rather than the exception to the industry.

Finally, the third issue of the tied-hands problem has also been mentioned, and I'd like to simply summarize my experience as an in-house counsel as it relates to that. When a low-quality patent is perceived to have issued in the software industry, most feel powerless to do anything about it. There exists today no quick, cost-effective mechanism to remedy this situation. The court system is typically unavailable unless you've already been accused and would be able to initiate a declaratory judgment action. And even if it was available, it's viewed as slow, expensive and lacking expertise.

The current Patent Office re-examination procedure, which has been discussed, is frankly considered in the industry as a trap to the unwary, and it is consciously avoided in most cases of the type that I mentioned. It's viewed as biased in favor of the patent applicant, and it's also viewed as dangerous, as a spoiler of otherwise powerful prior art. Frankly, the best prior art that you know about you would never offer up into the current patent re-examination procedure. You hold that back quite consciously.

Commissioner Lehman: Why is that? Because you don't want to disclose it because it's trade --

Mr. Patch: No. If you have a good reference, your very best reference, you don't wish to throw it over the fence to the Patent & Trademark Office and --

Commissioner Lehman: You want to save that for litigation.

Mr. Patch: You wish to have an opportunity to advocate aggressively the significance of that reference, and the Patent & Trademark Office re-examination proceeding simply does not provide that, and as a result of that lacking, good references are spoiled and no longer of significant use to you later in litigation.

Commissioner Lehman: And is that why a lot of people just choose to forego the re-examination process and go into litigation then directly?

Mr. Patch: Absolutely, absolutely.

A couple suggestions as to how you might address some of these problems: The quality problem unfortunately is the most difficult of the three. It's not one that can be solved overnight, it's not one that can be solved with the wave of the legislative wand. It requires, like in operating a business, daily, consistent execution. And that is your challenge, Mr. Commissioner, in implementing a solution to the quality problem that exists today.

The notice problem is one which I think creates a great deal of the emotion that you're seeing displayed today, and one which can be directly addressed and resolved. Since it's fundamentally due to the delay in the publication, plus the process in the Patent & Trademark Office which allows one to prolong extensively the prosecution history, the solution should be quite clear. Publish patent applications early and secondly, discourage prolonged prosecution by measuring the life of the patent from its filing date. If somebody wishes to prolong their prosecution for eight or ten years after that, it's at their own jeopardy.

This may sound in some regards like a call for harmonization, but I don't wish it to be misunderstood as such, because I'm a strong advocate of harmonization only when there's a specific identifiable problem being resolved by such harmonization.

I'd also suggest that the software industry would probably be a supporter of the idea of implementing a very short time period prior for publications after filing, perhaps shorter than even the current European and Japanese model of 18 months.

Concerning the tied-hands problem, the proposal or suggestion that I have is really in two parts -- a minimal approach and then a more comprehensive approach. The minimal approach would involved converting the existing re-examination procedure into an inter partes procedure, where opportunity for equal advocacy and appeal would be available. I would also strongly recommend that you permit a much broader range of prior art to be introduced into the proceeding. Even when a challenged company would like to take advantage of the re-examination procedure in our industry, it's very commonly the case that the form of the prior art that we have available to us is not acceptable in the re-examination procedure, and I would recommend you open it up much more widely, allow oral testimony, allow physical demonstration and make it a true inter partes procedure. Address all issues relating to validity and reference to prior art.

Finally, I would remove any appearance of a bias in favor of the patent applicant. I would do so by changing the trier of fact in the re-examination procedure, and I would strongly recommend you upgrade it and so the credibility of the Patent & Trademark Office is enhanced and prolonged.

The more aggressive approach that I would recommend would be a full-fledged opposition approach. Time for challenge to a patent should be set for a reasonable period after its issuance. I would recommend a speak-now-or-forever-hold-your-peace approach to that opposition procedure. Companies can come forward during the time allotted, challenge with their best shot, and thereafter the issue has been resolved before the Patent & Trademark Office, no longer subject to repetitive review by every court that might have the patent presented before it. This will have the benefit of unburdening the courts from dealing with frankly issues they are not well-positioned to deal with, and it would streamline subsequent court proceedings to deal with issues relating principally to infringement.

Commissioner Lehman: I think we're running a little over, so maybe we can wrap up.

Mr. Patch: I only have one more comment, and I will excuse myself. Sorry.

The term of the patent in an opposition such as I've recommended should be extended for the period in which the opposition goes forward to avoid abuses of well-funded challengers keeping an opposition going for a long period of time.

Thank you.