STEVEN HENRY WOLF, GREENFIELD & SACKS, P.C. MR. HENRY: Thank you, Mr. Commissioner and distinguished panel members. I'd like to begin my comments just by stating who I am. I'm a patent attorney in a large intellectual property firm, ap- proximately forty_five professionals, about half of whom deal with the computer industry, hardware and software. We have con- siderable experience ur client's experiences on all sides of these matters. To back into my remarks, I am a strong advocate of the patent system and I have seen it work time and again in the software in- dustry as well as other industries. I have seen no fundamental differences in the software industry other than tentativeness in applying the existing rules, and the problems that other speakers have addressed with respect to the ability of examiners to get at the prior art, which is indeed a serious problem. I don't be- lieve the software industry operates under substantially dif- ferent economic principals than any other industry, or that the people in that industry are driven by a different human nature. Professor Hollaar addressed many of the points, made many of the recommendations that I would like to make to this body, and I certainly endorse what he said. I'd like to, before proceeding, go one step further and address a topic or two that he did not address, and specifically the issue of reexamination as a cure for defve examination in the first place. If one looks at the statistical studies that have been done of reexamination, and one takes into account the kind of anecdotal experiences that we have had, reexamination is tilted in favor of supporting the conclu- sions originally reached by the Patent and Trademark Office, not through any intentional bias, but that's what the statistics in- dicate; and number two, it is severely limited and was intention- ally limited when it was fashioned, limited to consideration of patents and printed publications. The problems of examiners not understanding what they're looking at not addressed, the oppor- tunities for testimony are not provided. If one has an initially_weak examination and it is then reinforced by a faulted reexamination system, we've compounded the problem; we haven't addressed the problem. Though it takes money principally to free up manpower to hold hearings and to broaden proceedings, I be- lieve that there is no cure for the problem other than the money, the time ahe increased training. In written remarks we will address the overall legal and theoret- ical issues raised in your Notice. I'd like to take a few minutes to talk about some practical, anecdotal experience. COMMISSIONER LEHMAN: Can I ask a question? You know, you're talking about the money that would be involved and the change of procedure that would permit us and maybe encourage us to take oral testimony and to get at nonwritten prior art, but to some degree __ life is not, you know, totally fair, but to some de- gree, and I assume that would partly be on the motion of the par- ties seeking reexamination if you wanted to have reexamination just on the basis if you couldn't afford, for example, to support coming to Washington, getting witnesses there and so on and so forth, you could still go forward with the written record. I mean it's not automatically implying a greater burden, financial bur- den for everybody. MR. HENRY: Certainly the requester could go on a written record if the requester so desired.may well be that the Commissioner should consider some way of developing a fund wherein if the exa- mining group thought it would be appropriate to have a hearing of some sort, and the requester is not able to bear that expense, that there may be other resources brought to bear to be able to fly appropriate witnesses in. Because I think faith in the sys- tem is something that's extremely important and right now that's what's lacking. It's lacking in part because of media attention on a few glaring mishaps in the system, they're not the rule, they are the exception, but it so happens that the exception gets the attention. To turn to some of the times we've seen the system work, I'll try to give a synopsis of a few experiences, hopefully without iden- tifying the companies. In our first case I have a client that's a small software company on the West Coasts, initially financed through the founder's own resources. This is a utility type of software, improving hardware performance and reliability. They filedatent application; a hardware company that they were working with decided to flex its muscles a bit and threatened to design their own product, notwithstanding the patent application. How- ever, once we had an indication of reasonable allowable claims we were able to negotiate them back into the fold. A few months later, despite the success of the product, as we all know, it's extremely expensive to get software into the market- place and marketing expenses were just eating up the company's cash. The company went to look for investors. Every single investor re- fused to get actively involved until knowing that there would be strong patent protection, because the one thing that makes software unique is how easy it is to copy. And I'm not using copy necessarily in the copyright sense, but analyzing it and taking what's there. This was a situation where fortunately the system and some public servants in the patent and trademark office, very sensitive to issues such as this, responded and dealt expeditiouslth the response we had filed to an outstanding action, and indeed al- lowed very broad claims, and our client is at this point closing the financing which was the difference between life and death for the company. We represent university clients also. Universities will generally not be able to license their technology unless they have chances of protecting it. They are not known to be litigious; it is out of respect for the patent system and access to future technology generally that a licensee signs up. We've seen a number of in- stances where software developed at universities was licensed by the very developers who knew the potential, went out, formed their own companies, and that was a revenue stream that was formed back to universities; and that revenue stream is very im- portant. We have investors come to us, any number of times, thinking of investing in software_related companies, and their question again is, "Is this protectable? If I'm going to put in my millions and millions of dollars and all ofeffort, will someone else be able to come along and walk off with it?" In those situations where our own investigations of prior art or the Patent Office investigations of prior art make it question- able that strong protection is available, generally an investment is not made. Where, however, it appears that protection is avail- able, an investment often is made. We don't want investors to start getting gun_shy about investing because subsequently we find out that the examination __ search process in particular __ is defective. The best thing we can do at this point is every- thing reasonably possible to beef up that process. That will have carryover effect, as Professor Hollaar mentioned, with respect to the copyright system. The copyright system is drawing a great deal of fire because of the look and feel and its progeny and uncertainty. Investors and business people look for certainty, and it's our job to move the system in the direction where they feel a lot more comfortable with it. Thank you. CO SIONER LEHMAN: Thank you very much. Basically it's been your testimony, and it's very strong, that in your experience representing clients you've seen a number of very specific examples where investment in innovation would not have occurred had it not been for the patent incentive. MR. HENRY: Absolutely. COMMISSIONER LEHMAN: Thank you very much. Next I'd like to call Sal Cassamassima, General Counsel of the Exxon Production Research Company.