Patent reform: Who's on first?

But Gould waited to seek a patent on his discovery, believing incorrectlythat a working prototype was necessary. Eventually, two otherresearchers were awarded the basic patents instead.

Related story
The patent for PB&J

It's easy to find bizarre
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have been granted.

After a decades-long legal tussle, Gould finally reveled in victorywhen a federal court ruled that the patent application it had approveddid not anticipate the common uses of lasers. The U.S. Patent andTrademark Office then granted Gould lucrative rights to the invention,in part because as a graduate student he had his original researchnotebooks date-stamped and notarized.

The legal standard that was applied awards patents to the person whoinvented a concept first, and it has long been a unique feature of theU.S. patent system. This year, however, Congress is about to consider acontroversial proposal from Rep. Lamar Smith, a Texas Republican, thatwould grant a patent to the first person tosubmit the paperwork
--a standard that's common outside theUnited States.

The legislation suddenly has become a flash point about everythingthat's right with the U.S. patent system--and everything that's wrongwith it. Technology companies fighting expensive patent cases are hopingthe bill will reduce litigation, while open-source advocates say it willdo nothing to hinder the rising tide of software patents being issued.Many people feel that the measure will make only modest improvements, ifany, to the quality of patents being awarded.

Smith's bill, called the Patent ReformAct of 2005, also has drawn the ire of independentinventors, who have said it will unfairly hurt anyone without abattalion of patent lawyers who can race to the Patent and TrademarkOffice in Alexandria, Va. The rule probably would have kept Gould frombeing awarded the laser patents he eventually got.

Smith declined, through a representative, to comment on the billbefore a hearing set for Thursday.

The issue has taken on additional urgency because of Smith'sambitious plan to navigate his bill quickly through the House by year'send. Next week's hearing will take place shortly after politicians havereturned from their summer break. Meanwhile, a similar measure is beingreadied in the Senate by Utah Republican Orrin Hatch. Some melding ofthe two proposals is expected.

The compressed calendar has prompted lobbyists on both sides toscramble. Leading the way are litigation-weary companies, includingMicrosoft, Apple Computer, Intel and Hewlett-Packard, which quietlyworked on the details this spring with Smith's aides and have beenpressing other members of Congress to sign on ever since.

Microsoft's patent woes
Microsoft has been especially critical of a legal framework that causesit to spend $100 million a yeardefending itself against 35 to 40 lawsuits at any one time. But whatspurred the company to team up withSmith was a jury that awarded one-man software company Eolas Technologies$565 million in damages--a decision that has been partially reversed--in a patent dispute overMicrosoft's Internet Explorer.

"We really feel that there's a litigation lottery," said DavidKaefer, Microsoft's director of intellectual-property licensing. "Peopleroll the die and hope that their number comes up big."

Large technology companies love the language in the bill that willmake it more difficult to seek court injunctions against allegedinfringement, while creating a way to challenge patents after they aregranted and recalculating the way damages are decided--in a way thatwould make large jury awards more difficult to win.

"We feel it would give us significant relief," said Adam Kovacevich,a spokesman for the InformationTechnology Industry Council, which represents dozens ofhigh-tech companies, including Dell, Apple and IBM. "There are issueswhere we intend to make the provisions even stronger, but on balance, Ithink we consider the Smith bill a very good bill for the techindustry."

Individual inventors are as critical of the Smith bill as the techlobby is effusive. By making it more difficult to seek an injunctionagainst an alleged infringer, they claim, the measure will encouragelawbreaking by rewarding intellectual piracy.

"The patent system is a crucial part of what made America great,"said Ronald Riley, president of the Professional InventorsAlliance. "The companies who are complaining about thesystem are bad players, crooks who took great liberties with others'inventions. What they are really complaining about is being heldaccountable for their disreputable conduct."

Open-source status quo
Altering legal standards for injunctions and permitting post-grantreview may grab the attention of corporations and inventors, butadvocates of free and open-source software believe that those changesare far too modest.

What's needed, they said, is a radical, bottom-to-top rethinking ofthe way patents are reviewed and approved, especially those applicationsseeking patents on programming techniques that should have been obviousto any undergrad in computer science.

"Way too many obvious junk patents have been issued for things thatare obvious to any engineer, and those are being used to suppress competition," said EricRaymond, a free-software advocate. "I don't see this billfixing that."

Unearthing seemingly bizarre software patents has been made intosomething of a competitive sport by free-software aficionados. They'vespent years laughing at Microsoft's often-successful attempts to patentideas such as highlighting numbers, adding white space to a document andcreating custom "emoticon" smiley faces.

But a serious worry underlies the amusement: What if a companylaunches a patent attack against open-source programmers? One studyreleased last year estimates that Linuxinfringes 283 patents, including 27 held by Microsoft.

In a stark warning that patent litigation could open another front inthe Linux-Microsoft wars, Mitch Kapor, chairman of the MozillaFoundation, predicts that the software colossus will wield its fast-growing stockpile ofpatents against Linux. (Insurance for Linux users isalready available.)

Michael Tiemann, president of the Open Source Initiative, said thatopen-source programmers--especially hobbyists or people withoutresources to search patent databases--are vulnerable to writing codethat accidentally infringes on a patent.

"Any line of code I write could in fact trip across a patent I nevereven knew existed, and that's a problem for innovation, and it's aproblem for open source," Tiemann said.

Acknowledging those arguments, European politicians voted in July toreject software patents. But thatmove is viewed in the United States as radical, and no one in Congresshas suggested following suit.

"If Representative Smith is going to help make the patent office moreefficient and more accountable, that's wonderful," Tiemann said. "But aslong as the real question is whether or not software patents reallybelong in the patent system or should exist at all, I don't think that'sa question that Smith's bill entertains."

Attorney BruceSunstein, who heads the patent practice group at Boston'sBromberg and Sunstein law firm and supports the Smith bill, said hebelieves the fears of open-source advocates are unfounded.

"Patents, software and free software have coexisted" since the 1980s,Sunstein said, and will continue to do so.

Hatch's unplayed hand
One possibility for broader changes to patent law lies in theSenate.

Hatch, who heads a newsubcommittee devoted to writing intellectual-property law,may be open to more far-reaching changes to the patent system. Althoughhe has yet to disclose any details, Hatch has promised that a bill is inthe works.

In a speech last month to patent attorneys in Salt Lake City, Hatchacknowledged that "many of the current complaints about the patentsystem that I have heard deal with the number of suspect and over-broadpatents that are issued."

He indicated that he might consider two other legislative options.The first one would be to permit third parties to submit "prior art,"the legal term for evidence that an alleged invention was alreadypublic, after the patent application has been published but before ithas been granted. A second option would be to repair the Patent andTrademark Office's existing re-examination process, which is virtuallyunused.

"It is vitally important that PTO examiners have access to anyinformation which may be in the hands of the public," IBM spokesman ToddMartin said. "Parties should have the right to submit prior art at anypoint during the examination process."

Those reforms would go beyond what's anticipated in the final Houseversion. Blair Jones, a spokesman for Smith, acknowledged that the billis mostly complete but added that "further changes are possible--thosetalks are ongoing."

One reason that companies like Microsoft are backing Smith's proposalto curb injunctions against patent misuse is the possibility ofdisrupting product shipments during litigation. In October 2003, forinstance, Eolas Technologies asked for aninjunction barring Microsoft from shipping InternetExplorer.

From Microsoft's perspective, injunction reform makes good businesssense: Software patents are proliferating, and it's often difficult forcompanies to know whether a judge might be persuaded to grant a courtorder before a full trial can take place.

But the biotech industry, which relies on fewer patents and arelatively more predictable legal environment, prefers to preserve thecurrent method of granting injunctions. This sets the stage for morepolitical jockeying before Congress this fall--and Hatch seemssympathetic to the argument.

Pharmaceutical and biotech companies "rely on the absoluteexclusivity of their patent rights, often enforced by injunctions, toensure that they are able to commercialize their inventions and enjoythe fruits of their innovation," Hatch said in his speech last month."Similarly, small inventors rely on injunctive relief to equalize theplaying field when competing against larger, better-fundedenterprises."

Political-risk calculus
It seems likely that Congress eventually will approve some type ofpatent reform.

Yet what remains unclear is whether politicians will merely approvesome uncontroversial changes or take the political risk of offendinglarge software makers or the biotech industry through more substantialalterations.

Complicating matters further is that the software industry is farfrom unified on the subject. Morgan Reed, a vice president at theAssociation for Competitive Technology, said that "we can't support thebill as it was introduced" because it does away with automaticinjunctions. Reed's group counts more than 2,000 smaller softwaredevelopers as members.

In the past, IT companies have been politically successful only when united oncontroversial topics, such as the R&D taxcredit, more H-1B visas,restrictions on Internet accesstaxes, free trade withChina and curbs on lawsuits arisingfrom the Year 2000 computer bug .

That might doom the chances for final approval this year. DanRavicher, legal director of the Software Freedom Law Center, whichprovides legal aid to nonprofit developers of free software, predictsthat distractions over Supreme Courtvacancies won't help: The same Senate committee that presides overconfirmation hearings also oversees patent law.

"The heart attack that's happening with the patent system is poorpatent quality. The patent office is issuing too many patents that don'tdeserve to be issued," Ravicher said. "The (Smith) bill does a littlebut not too much, so it's kind of like putting a Band-Aid on the fingerof someone who's dying of a heart attack."

CNET News.com's Anne Broache contributed to this report.