DENNIS FERNANDEZ FENWICK AND WEST MR. FERNANDEZ: Good afternoon, ladies and gentlemen, my name is Dennis Fernandez. I am a registered patent attorney at the Sili- con Valley_based technology law firm of Fenwick and West. I am speaking today on my behalf. Before practicing law I was an electrical engineer and a techni- cal manager for several years at various comps in the computer and electronics industry including NCR, AT&T, Digital Equipment Corporation, Raytheon, RayCal Limited, where I did semiconductor chip design and processing as well as managed marketing and dis- tribution of semiconductor chip products. Currently I specialize in patent prosecution and litigation in the semiconductor chip industry. As you know, in this highly competitive electronics industry, in- tellectual property protection has become a very important part of doing business. This afternoon, I wish respectfully to share with you a few brief comments based on my practical experience in the semiconductor industry. As an electronics engineer and also as a legal counsel I believe I can provide many comments on how software patents have already or might in the future impact the business interests of semiconductor and software companies in the Valley, and because of the limited time which has been allotted for speaking I direct my comments only to a few points which are relevant to chip design ware. I believe these comments may reflect the interest of companies who do business in the area known as electronic design automa- tion, or, EDA. EDA products refer generally to sophisticated software written for automating the highly complex process for designing and testing semiconductor chips and related system boards. In this EDA context, I offer comments on the following three areas, number one, special technical need for software patent protection; number two, practical timing problems in U.S. pa- tents, and number three, apparent effect of software patents on innovation. First point, which is special technical need for software patent protection. Because of the highly functional nature of technical innovations that are developed for EDA software products, patent- ing seems to be an appropriate way for legal protection. For ex- ample, EDA software typically includes software programs for syn- thesizing logic circuits, generating test program vectors or simulating digital and analog system components$hese software functions involve fairly abstract ideas, which would not be pro- tectable ordinarily under copyright law, but would be protectable under patent method or apparatus claims if sufficiently inven- tive. Thus, due to the largely functional nature of innovations in EDA software, I believe that patent protection is appropriate. Second point. There are practical timing problems in U.S. pa- tents. There appear to be two practical problems which may apply to EDA companies with respect to timing related to U.S. patent applications. First, the seventeen_year patent duration may be too long. In the context of the EDA industry, where software products typically have product lives that are less than half this duration, it might be more appropriate to provide a shorter period of exclusivity. Second, the current two_ to three_year backlog in the United States Patent and Trademark Office, espe- cially in the electronic and software arts, may pose some prob- lems to companies in the EDA industry, both for those (anies who wish to enforce their patents during the market window available for their software products, and also for those companies who wish to learn about the existence of relevant patents and thereby avoid them. Third and last point, the apparent effect of software patents on innovation. In the highly competitive EDA business, particularly in the Silicon Valley, it has been my experience in a number of recent cases that the presence of relevant software patents do not necessarily serve to impede or deter competitive product development. Typically, clients in this business tend to be fairly sophisticated in our understanding of patent enforcement matters. Furthermore, these individuals are aggressive en- trepreneurs who are doing pioneering technical work in product development and are typically backed financially by venture capi- talist institutions. These individuals often find ways to design around even what appear initially to be fairly broad patent claims. Also, it has been my experience that such, clients are often able to obtain reasonable licensing terms or raise reason- able arguments for invalidity based on relevant prior art, there- by providing themselves with opportunities to make, sell or use their EDA products, possibly without legal liability. It does not seem to me, therefore, that software patents have necessarily stifled competition, at least in the electronic design automation industry at this time. This concludes my prepared comments. I thank you very much for your consideration. COMMISSIONER LEHMAN: Thank you very much, Mr. Fernandez. So ba- sically the bottom line is that you really don't think we need fundamental changes in the system, but you think we might want to deal with certain issues regarding the EDA industry like the ap- propriateness of length of terms. MR. FERNANDEZ: Term limits. Yes. COMMISSIONER LEHMAN: Yes. Thank you very much. Next I believe that Pete Antoniak has arrived now from Solar Sys- tems Software, so we can put him back on the agenda. Come for- ward, ple0