ROBERT MAY IKONIC INTERACTIVE MR. MAY: I want to thank you very much for coming out to Silicon Valley and also for slipping me in unannounced. I'd expected to be out of town today and at the last moment my travel plans changed. I want to give a quick perspective on the lay of the land from Ikonic Interactive. We're a soft` developer located in San Fran- cisco. We're a multimedia developer with about nine years of ex- perience in this business. Current clients include Time Warner for whom we're designing the user interface and software for the full_service network in Orlando, Florida; Dow Jones for whom we just recently completed the redesign of the Wall Street Journal for PDAs; a variety of other projects. So we're intimately ac- quainted with some of these issues and I'd like to just give you a snapshot of some of our perspective. I spent my morning on the phone with one of our clients negotiat- ing contracts, and I should say, number one, I am not an attor- ney, and it's only through the tutelage of Kate Spellman up at Steinhart and Falconer, our IP attorney, and David Hayes down here at Fenwick and West that I know just enough to be dangerous, but notwithstanding that, I often rush in where angels fear to tread, and I wanted to discuss two key issues that we face every day, and just to give you some data with which to make sodecisions. I should also say in the spirit of full disclosure, we do have a software patent application under way, another one that we're considering, and I come here as a supporter of the notion of software patents, and more specifically, interface patents. Not- withstanding that, a single biggest problem I'd say from a busi- ness exposure standpoint is that we are often asked by our clients to indemnify them, that we have not incorporated prior art or other patents in our work. Given the way that the prior art search has to be conducted at this point it's very very dif- ficult for us to indemnify our clients to that, and I would respectfully suggest two possible solutions to that. And the first would be that in my midnight reading of patents and patent law, which I've been doing the last year or so, I've learned that things like the Compton's patent have many many many claims attached to them, and it's very very difficult to under- stand, let alone plan for the implications of those claims. Ori- ginally as I uhstand it, patent law was designed to address in- ventions that were reduced to practice, and it seems to me that it might be a useful distinction to separate claims very specifi- cally to those that are actually reduced to practice and are shown to be reduced to practice and those that are speculative and looking for future technologies. And as a nonattorney I've got a very difficult time when I'm faced with trying to judge that and then promise in a contract that I will in fact not __ not infringe on those claims. Number two, recently the FCC decided to free up 10(k)s and other public filing information and make that available on the Inter- net; previously it was available on Meade and I believe maybe Lexis and Nexis. Currently I'm not aware of a way to research pa- tent information by public, without signing onto Lexis, undergo- ing quite an expensive search process, and insofar as it is pub- lic information I'd like to urge you to make that information available on the Internet and make it available publicly. lond issue that we're confronted with very frequently, and this wraps around both patent issues and copyrights and others __ COMMISSIONER LEHMAN: Can I ask you a question. What kind of in- formation for somebody like you would be useful? You know, there's everything from the full text of prior_issue patents and all of the company technical drawings to, you know, abstracts of the patent. What kind of __ when you're talking about making things available on the Internet, what kind of information of that type would be useful to you? MR. MAY: Yes, sir. Given the example that I just gave, from a business person's perspective, I'd like to see the whole thing, because I'm being asked to indemnify my client against all claims. A helpful start would be the abstract, but lamentably, I've got to be familiar with the art to the extent that I can be. It would help me very much if there were to be drawings, et al. Does that answer your question? COMMISSIONER LEHMAN: Yes. Yes, it does. MR. MAY: Okay. The secoprea that we experience in day_to_day is again as I said, broadly a problem across both patent law, copy- right law, and I'd like to just raise it in the context of patent law here today, and that is the difficulty between what current practice is and what we'd like to see practice moved to, and that is the concept of work made for hire wherein typically a small company like ours is doing work for a larger client, who attempts to get us to engage in that work under work made for hire, which means that, as you know, they own all patent rights and copy- rights and trade drafts, et cetera. Very difficult to conduct business in this way and to grow a business in this way. So we've been successful ourselves and I urge other folks out there in our business to move to a license strategy where in fact we retain the rights to underlying key concepts and intellectual property that we develop and license that in perpetuity on a royalty_free basis to our client. One of the key problems with that approach is the ambigutin copy- right law between what's called look and what's called feel, and I would urge you and the folks you work with to turn your atten- tion to that ambiguity and try to address that, and the specific case in point is that when we're faced with producing a project for say Time News On Demand for Time Warner, it's one thing to grant them the rights to look at that program and morally and ethically and by all other business means, I'm absolutely commit- ted not to producing work for another client that copies and looks the same as the work that I do for my initial client. At the same time, in the pursuit of my business, we often enjoy the discovery of elements that help us do the job better for the next person, and the current ambiguity in copyright law makes it very difficult to parse out, to separate out what is look from what is feel, and feel, as you know, in the Apple Microsoft Case has been pulled out to mean basically menu command structures, things like that. So that's the underlying structure that wxed to have in what we call our multimedia toolbox in order to ply our trade, and to the extent that we are forced by circumstance or by the size of our business in the marketplace to give up those rights in a work_made_for_hire scenario, it's very difficult for us to ply our trade in the future. Like the carpenter being told that they can't use a particular jig that makes them drill holes faster, it cuts down on our efficiency and our ability to carry on our busi- ness. So I wanted to bring these two points to mind just to give you a snapshot of what it's like out here on the frontier of the Infor- mation Superhighway, but these are key issues for us and I'd wel- come your attention to those. COMMISSIONER LEHMAN: Part of that problem that you have, and I don't mean in any sense to suggest there isn't merit to your sub- stantive ideas about scope of copyright protection, but is part of the problem there that in your situation when you mentioned Time Warner, they're a client, you're a small company, a small entr|neur, that you just don't have the marketing power basically to avoid being, you know, strong_armed into signing work_made_for_hire agreements that would mean that you have to give away more than you'd like to give away. I mean is that one of the reasons this becomes really acute? You just __ Ideally, you know, you don't have to __ you work under conditions that you want to work under and you can say, Well, I'm sorry, I'm not go- ing to give away some of my techniques that I would otherwise give away, but you just can't do that because you don't have the market clout. Is that a problem? MR. MAY: Well, I think it's tempting to paint the big company as the bad guy and the little company as the Don Quixote. I would suggest from personal experience that large companies in point of fact, once this distinction, this difficulty is raised, they're willing to look at solutions that work for both sides. There is a reflexive tendency to turn to work made for hire as something that quote has been done in the past, it's always been good enough. Happily we've been able to negotiate positions with our clients that enables us to move forward, but yes, I think in some instances you're correct, if you're a smaller company, if you haven't been able to build your multimedia tool kit and you come in with just a hammer and saw sometimes it's easy to be bulldozed, to mix my metaphors. COMMISSIONER LEHMAN: Thank you very much. MR. MAY: Thank you. Appreciate it. COMMISSIONER LEHMAN: Next I'd like to, back on our regular schedule here, and I'd like to ask Mr. Steven Henry from Wolf, Greenfield & Sacks, came all the way from Boston.