DOUGLAS BROTZ ADOBE SYSTEMS, INC. MR. BROTZ: Good morning, Mr. Secretary and members of the Panel. My name is Douglas B.. . I'm Principal Scientist at Adobe Sys- tems, Incorporated, and I am representing the views of Adobe Sys- tems as well as my own. Adobe is a software company based in Mountain View, California. We are most well_known for our PostScript language and interpreter which provides foundation for desktop and electronic publishing. Although I am a computer scientist, I became involved in patents when Adobe was contacted by another company regarding Adobe's possible infringement of a patent. I'm currently Adobe's techni- cal advisor to our patent attorneys. Let me make my position on the patentability of software clear. I believe that software per se should not be allowed patent protec- tion. I take this position as the creator of software and as the beneficiary of the rewards that innovative software can bring in the marketplace. I do not take this position because I or my company are eager to steal the ideas of others in our industry. Adobe has built its business by creating new markets with new software. W$ke this position because it is the best policy for maintaining a healthy software industry, where innovation can prosper. The problems inherent in certain aspects of the patent process for software_related inventions are well_known, the difficulties of finding and citing prior art, the problems of obviousness, the difficulties of adequate specifications for software are a few of those problems. However, I argue that software should not be pa- tented, not because it is difficult to do so, but because it is wrong to do so. The software marketplace requires constant innovation regardless of whether the computer programs can be patented or not. Indeed, the fundamental computer programs and concepts on which the en- tire industry is based were conceived in an era when software was considered to be unpatentable. For example, when we at Adobe founded a company on the concept of software to revolutionize the world of printing, we believed that there was no possibility of patenting our work. That belief did n(top us from creating that software, nor did it deter the savvy venture capitalists who helped us with the early investment. We have done very well despite our having no patents on our original work. On the other hand, the emergence in recent years of patents on software has hurt Adobe and the industry. A "patent litigation tax" is one impediment to our financial health that our industry can ill_afford. Resources that could have been used to further innovation have been diverted to the patent problem. Engineers and scientists such as myself who could have been creating new software instead are working on analyzing patents, applying for patents and preparing defenses. Revenues are being sunk into le- gal costs instead of into research and development. It is clear to me that the Constitutional mandate to promote progress in the useful arts is not served by the issuance of patents on software. Let me illustrate this burden with some figures. The case Infor- mation International Incorporated v. Adobe, et al........,s filed five years ago. Last year the trial court ruled for Adobe, find- ing no infringement. In December the Appeals Court for the Federal Circuit unanimously affirmed that judgment. Yet, in that time, it has cost Adobe over four and a half million dollars in legal fees and expenses. I myself have spent over three thousand five hundred hours of my time __ that's equivalent to almost two years of working time __ and at least another thousand hours was spent by others at Adobe. The Chairman of the Board spent a month at the trial. This type of company behavior would not be high on anyone's list of ways to promote progress. This state of affairs might be acceptable if there were a corresponding benefit for patents in the software industry. How- ever, I see none. Companies that have trumpeted their fundamental software patents are not leaders in software innovation. Confer- ring monopoly positions in an industry that was already the most innovative of all will promote stagnation rather than increased innov0n. When companies turn from competing by offering the best products to earning money by the threat of patent litigation, we will see our best hope for job creation in this country disap- pear. An industry that still generates tremendous job growth through the start_ups of two guys in a garage will not continue to grow when a room for a third person, a patent attorney, needs to be made in that garage. There does exist a perfectly adequate vehicle to protect creator's rights in this industry, the Copyright Law. The nature of software is that it is a writing, an expression of mathemati- cal ideas. The copyright law protects this expression, and it does so without requiring costly and time_consuming proceedings. For people working in the fast_paced software industry, the way a copyright is created is idea. While feverishly working to meet deadlines, there is no need to explain what you've done to a government agency. The very act of writing the software confers the copyright on it. Furthermore, the cop....4ht law confers the correct level of pro- tection on computer software. Regardless of what current regula- tions may say, the fact is that all computer programs express mathematical algorithms. Every part of every computer program manipulates numbers with logic. Any software that performs any task does so through mathematics. It is inconsistent to hold that mathematic algorithms are unpatentable while granting pa- tents on systems composed of software. If the Patent Office were truly following the law it would recog- nize the inherent mathematical nature of software and it would not grant patents to software_based inventions. In the last de- cade the Patent Office has been granting patents on software and algorithms regardless of superficial attempts to cast claims as systems methods or processes. The Supreme Court did not say in Diamond v. Diehr that pure software inventions are patentable. By adopting this position in its recent practice, the Patent Of- fice has made a dangerous step that could decimate the ve8ndustry it wishes to protect. Whenever the Patent Office grants a software patent, it grants a right to the patent_holder to devastate innocent businesses. Due to the arcane nature of this technology, our courts find it very difficult to distinguish frivolous software patent lawsuits from legitimate ones. As a result, a frivolous plaintiff is in a very strong blackmailing position, where a defendant can look forward either to an extortionate settlement or enormous legal costs. An excellent remedy would be to change our law to allow a successful defendant to recoup legal costs in patent cases. Until that day arrives, at least our Patent Office can refrain from granting these dubious patents. We have heard today from proponents of software patents who will claim that these patents can protect the independent inventor. This belief is a delusion. The expensive patent process protects large, methodical corporations that can afford to apply for scores of patents much more than it protects the poorly_capitalized lone inventor, and when that inventor tries to produce his inven- tion he may well find that those large corporations can ruin his own business with their large software patent portfolios. In summary, these are my main points: The software industry thrived without patents, creating its fun- damental base in an era of no software patents; software patents harm the industry, with no corresponding benefit; software embo- dies mathematical algorithms; the law, starting with the Consti- tution, argues against patents for software_related inventions; and last, the proper form of protection for software is copy- right. As a postscript to the figures on the patent lawsuit that I dis- cussed before, the final figure is actually not in. Although Adobe has been successful twice already, the plaintiffs are ask- ing for reconsideration of the unanimous appeal judgment against them. These kinds of festering sores are what our country can ill_afford when we are trying to lead the world in creative in- dustry. Thank you. CO......@SIONER LEHMAN: Thank you very much, Dr. Brotz. You've indicated that you think that the copyright system works very well to protect software. An earlier witness, Mr. Kohn from Borland, indicated that he felt that there were serious problems with the existing copyright system, and in particular he felt that it shouldn't protect screen displays, for example. Other witnesses have indicated that they're very concerned about, I believe, the witness from Storage Technology indicated that he was very concerned about the decompilation issue. He very much believed that one should be able in effect to copy software in the decompilation process in order to produce interoperable works. I'm wondering, since you really believe that we should focus on copyright, if you have views on either of those two is- sues. MR. BROTZ: Yes. I certainly do. I agree with Mr. Kohn that we should not confuse strong enforcement of copyright rights with broadened scope of copyright rights. I agree that some plain- tiffs have tried Dtretch the scope of copyright beyond where it ought to go. I firmly support his position, in fact, that copy- right law should protect us against piracy and the kinds of threats that copyright law was intended to protect us against. In answer to your other question about decompilation and intero- perability considerations, I believe that the evidence always cited for the importance of interoperability is that companies that do not provide for interoperability fall of their own weight. I do not see that as an argument for insisting that com- panies therefore make themselves interoperable. If strong rights are granted to all aspects of the written computer software, then a company could choose what level of protection it wanted and how far to assert its rights and whether they wanted to open their interface or not. If they make a wise decision and offer enough interoperability, they'll do well; if they make an unwise deci- sion, they won't, and it's up to them to decide whether they want to succeed or not. COM.....HIONER LEHMAN: In other words, your view is that the licensing system deals with this problem, that if people don't adopt intelligent licensing processes, then they will suffer the economic consequences which will be negative and will encourage basically licensing that creates more open systems. MR. BROTZ: That's right. And I would oppose having a law that straitjackets the way in which these kinds of licenses or accesses must be made. COMMISSIONER LEHMAN: Thank you very much. Does anybody else have any questions? Thank you. Next I'd like to call Hans Troesch, partner in the law firm of Fish and Richardson.