WILLIAM BENMAN BENMAN & COLLINS MR. BENMAN: And as someone that hasn't had breakfast, I assure you that my testimony will be brief! Commissioner LEHMAN, thank you for hearing me on the question of the patenting of software_related inventions. I commend you for taking testimony on this important topic. I'm a partner with the intellectual property firm of Benman, Col- lins and Sawyer, with offices in Palo Alto, Los Angeles and Tuc- son. We have prepared and prosecuted numerous applications on software_related inventions, and we offer this testimony in the hope that our experience in this regard maybe of some value in connection with your effort to sample public opinion on this to- pic. Since the early 1980s, we in the community of patent lawyers who are preparing and prosecuting patent applications on software_related inventions observed two thrusts, one in the direction of copyright protection as the primary if not sole form of legal protection for software, and the other in the direction of patents where patent protection was available. We notice that those companies that were patent_conscious were most likely to exploit the patent option. Many of the companies which did not utilize the patent option were often new or young software com- panies which were not patent_conscious per se. The plight of these companies was compounded by their reliance on nsel from lawyers that were typically not patent lawyers with experience in the field. These lawyers held themselves out as experts in com- puter law and high_tech law, but typically held a mistaken notion that software was not patentable, although patents had already been issued for software_related inventions. To this day, many uninformed attorneys either advise their clients that patent pro- tection is not available for software, or they criticize the pa- tent system as too costly and cumbersome for the protection of software. As a result these attorneys have either generally steered their clients away from patents as an appropriate form of protection or neglected to advise their clients to seek counsel from an attorney having experience in the patenting of software. Hence, for many years now, many software publishers have been lured by the ease and low cost of copyright protection without being properly advised of the shortcomings of same nor the avai- lability and advantages of patent protection. As ea$as ten years ago we began to suspect that the copyright holders would someday become aware of the limitations of copy- right protection when it became necessary to enforce the copy- rights. We expected that they would seek a more substantive form of protection such as that currently afforded by the patent sys- tem. This has now come to pass as the software industry has be- come aware of the shortcomings of copyright protection often as a result of painful and costly court battles. The lawyers guiding these firms away from patents have now essentially painted them- selves into a corner, having failed to stretch the scope of copy- right protection to cover substantially more than the form of the software and not the underlying inventive aspects thereof. These attorneys have now marshalled some software publishers behind their effort to escape from the situation by criticizing the current patent system as unwieldy for software, advocating in- stead some new form of protection for software that would protect the underly(concepts without a rigorous examination process. They are supported in their efforts by recent admissions by the Patent Office of a shortage of prior art in PTO files to facili- tate the examination of software_based applications. It would appear that many now desire the ease and low cost of the copy- right system with the substantive protection afforded by the pa- tent system. It would clearly be adverse to the public interest, in our view, to grant such monopolies without a substantive examination of the application. Yet, in our view, any system which involved a sub- stantive examination of such applications would be essentially equivalent to the present system. Hence we seek to speak for those attorneys who are registered to practice before the Patent and Trademark Office and experienced in the protection of software in expressing our view that the present system of exami- nation for software_related inventions and innovations is, though not perfect, adequate and appropriate for the protection of software.,irst we feel compelled to mention that many of the con- cerns in the industry would be adequately addressed by educating the industry about the patent process by those qualified to do so. We believe that it is unethical for any attorney to advise a client not to seek patent protection for inventions whether software_related or not, if the attorney giving the advice is not skilled in the field. The process by which attorneys are admitted to practice before the Office is intended to protect the public interest by ensuring that those that hold themselves out as qualified to practice be- fore the office are indeed so_qualified. Unfortunately the software industry has grown up on an unhealthy of poor counsel with respect to intellectual property issues pertaining to software. It is no wonder then that it now has a bit of indiges- tion and needs some relief. We feel that the present system of examination if properly administered can provide that relief, and allow me to briefly address some of the perceived proble0ith the present system. One of the perceived problems is that the Patent Office will is- sue patents on inventions already in the public domain. That's been touched on by some of the speakers earlier this morning. Another problem is that the patent process is costly and there- fore available only to big companies, and a third often_heard complaint is that the patent process is too slow. First, with respect to the concern that the Patent Office will issue patents on innovations that are known and used by others in the industry, let me say that to the extent that this is a real problem, it is no different for the software industry than for other areas of technology. There are at least three levels of safeguards by which this perceived problem may be addressed by the current system. First, the Patent Office is currently in the process, as I understand, of providing the examining corps with the capability to search beyond PTO files to the on_line computer_searchable databases, such as those accessed through th4alog system. This will facilitate a more thorough examination of the prior art including technical literature, new_product an- nouncements and et cetera, minimizing ab initio the probability of a patent issuing on an innovation which lacks novelty or is obvious in view of such art. To the extent that the innovation is known by others but is not published and therefore inaccessible to this approach, the next level of safeguard should be considered. However, it should be noted again that software_related applications do not differ from other applications in this regard. The second safeguard is af- forded by the current reexamination process. Those who are aware of prior art which might render a patent issued on a software_based application invalid may initiate a reexamination of the patent, and I commend you for your intent to improve that process. A third safeguard results from the practical realities of patent enforcement. The cost of patent litigation are suffi- ciently high that one holding a patent of8stionable validity on software would think twice before instituting a court battle when advised of prior art which would invalidate the patent. Hence there are clearly several current safeguards to address this first concern. The second concern, that the patent process is costly and there- fore only available to big companies must be considered in light of the fact that in other areas of technology, patent filings by small companies and individuals are quite high. In recognition of the value of innovations provided by small entities and individu- als, those that qualify are entitled to pay reduced filing fees. In addition, it will soon be appreciated that in the software in- dustry, as in other industries, the total cost of procuring a pa- tent, typically somewhere between five thousand fifteen thousand dollars depending upon what part of the country you're in, is small compared to the value of patents and certainly small com- pared to the cost of copyright litigation. While patents are more expensive to acquire than copyrights, the old axiom, "You get what you pay for," comes to mind. Finally with respect to the concern that the patent process is too slow, we have a suggestion. You might consider an expedited examination on the basis of a higher filing fee for those that would like to see their patents issued quickly or be prosecuted quickly. Our concerns as practitioners with the patent system relate to the manner by which the examiners are currently applying the PTO test, and the extent to which the current PTO test is out of con- formity with the position of the Court of Appeals for the Federal Circuit, and in that regard I'd simply like to complete my re- marks by saying that we're very much encouraged by the position taken by the Board with respect to the Veldhuis opinion, to the extent that that is in conformity with the Arrhythmia decision of the Court of Appeals for the Federal Circuit. So to conclude, it's our opinion that what is needed in the sys- tem is an adoption by the patent office of a test that'@nsistent with the case law, a cadre of examiners that understand how to apply this test, and in this regard I should note that I think Mr. Goldberg has done an excellent job of training the examiners, but __ they're coming along, but with a little more help from us practitioners on the outside I think they'll get it right at some point. But I would advise any company or individual with a software_related invention to consult with a qualified attorney, experienced in the preparation and prosecution of software_related patent applications with respect to the advan- tages and disadvantages of the various forms of protection. With these elements in place, all concerned will recognize the viability of the current system of examination with respect to software_related inventions and innovations. Thank you. COMMISSIONER LEHMAN: Basically it's your position that we don't have much of a problem, right now, as I understand it. MR. BENMAN: That's basically my position. I favor the current system. I think that D we get the bugs worked out, when you ac- cess the other sources of prior art, everybody will find that the system works pretty well. COMMISSIONER LEHMAN: Do any of my colleagues have any questions or concluding remarks for this morning? If not, we will recon- vene at 2:00 o'clock, at which time we will hear from Mr. Jerry Baker, Vice_President of the Oracle Corporation. (Noon recess)