JIM WARREN AUTODESK, INC. MR. WARREN: Mr. Chairman and other distinguished representatives of the Department of Commerce: My name is Jim Warren. First, I am a Member of the Board of Directors of Autodesk, a multi_national software company specializing in computer_aided design. As a 4OO million dollar company, we have been recently identified as the sixth largest PC software publisher in the world. I am presenting its recommendations. Secondly, I have been a computer professional since 1968, have founded multi_million dollar companies in Silicon Valley, and have held numerous leadership roles in personal computing essen- tially since its inception in the 197Os, in the mid 197Os. I was founding President of the Microcomputer Industry Trade As- sociation, received the Electronic Frontier Foundation's first Pioneer Award, hold graduate Degrees in Computer Engineering, Medical Information Science, Mathematics and Statistics. I was founding Editor of microcomputing's first$tware periodical, was founder of the first, first free newspaper and the first sub- scription newspaper, InfoWorld, and founding host of television's oldest Computer Weekly, as well as founding the world's largest public microcomputer conventions and chairing them in the first decade of the industry. My remarks are excerpted from three parts of my prepared state- ment; namely, principles, pragmatics and some specific recommen- dations. I am not speaking as an intellectual_property attorney. I am speaking as a technological innovator with proven experience and as a long_time observer of this industry. I've written ap- proximately 6O to 7O articles about the future of this industry that have received wide circulation, in excess of 22O,OOO copies per issue. We all know that software is somehow different from all tradi- tional inventions. The difference __ but how does it differ from the devices that are surely what the framers of the Constitution envisioned when they mandated patent protection? The difference is(t all traditional inventions enhance our physical capabili- ties, whereas software mimics the mind and enhances our intellec- tual capabilities. This is what makes software different from all patentable devices and this is what justifies sui generis. Let me define what software is for the purpose of our discussion, based on its functionality, its utility, the useful character of its art: software is what occurs between stimulus and response, with no physical incarnation other than as representations of binary logic. The fundamental question is: Do we want to permit the monopoly possession of everything that works like logical intellectual processes? I hope not. The mind has always been sacrosanct. The claim that intellectual processes of logical procedures that do not primarily manipulate devices, as in Diamond vs. Diehr, can be possessed and monopol- ized, simply extends greed and avarice much too far. What frightens and infuriates so many of us about software pa- tents is that they seek to monopolize o,ntellectual processes when their representation and performance is aided by machine. I respectfully object to the title of these hearings, "Software_Related Inventions". The title illustrates an inap- propriate and seriously_misleading bias. In fact, in more than a quarter century as a computer professional and observer and writ- er in this industry, I don't recall ever hearing or reading such a phrase __ except in the context of legalistic claims for mono- poly where the claimants were trying to twist the tradition of patented devices in order to monopolize the execution of intel- lectual processes. To pragmatics. There is absolutely no evidence whatsoever, not a single iota, that software patents have promoted or will promote progress. And I provide examples in my paper. Of the thousands of programmers I have known in the last quarter century, I have never heard a single one say they didn't develop a program because they could not monopolize its functionality. Of the thousands of programs I have known a0 as a multi_decade industry observer, I don't know of a single one that was innova- tive enough to promote progress, much less perhaps qualify for a patent as a useful art, that couldn't find funding. The system was not broken when there were no software patents. Now, however, there is growing evidence that software patents have begun to harm and deter progress. And I provide a number of examples, including the company for which I am speaking, Auto- desk, holds some number of software patents and has applied for others, which, of course, remain secret under current US law. However, all are defensive and an infuriating waste of our techn- ical talent and financial resources made necessary only by the lawyers' invention of software patents. Autodesk has faced at least 17 baseless patent claims made against it in recent years and has spent over a million dollars defending itself, with millions more certain to pour down the bottomless patent pit. Fortunately, we have the financial and technical resources to r4f such claims. We rebutted all but one of the claims even before the patent holders could file frivolous lawsuits and will litigate the remaining claim to conclusion. Your Office has issued at least 16 patents that we have success- fully rebutted and we never paid a penny in these attempted ex- tortions that your Office assisted, but it is an enormous waste of resources that could better be invested in useful innovation. COMMISSIONER LEHMAN: Could I ask a question about that? MR. WARREN: Out of your time or my time? COMMISSIONER LEHMAN: It can be out of your time __ out of my time. MR. WARREN: That's what I was __ oh, okay, thank you. COMMISSIONER LEHMAN: We have a procedure for re_examination of patents. It sounds to me like what happened here __ MR. WARREN: I was about to recommend that. COMMISSIONER LEHMAN: Well, we have that now, you know. In other words, were those 16 __ It sounds to me like what happened here is that people basically threatened you with lawsuits and, you know, you got 8 lawyers all geared up and basically scared them away before you went to court, but left it there. Whereas, one of the things that you could have done, under our existing procedures, is that you could have come into the Patent and Trademark Office and petitioned for re_examination of those patents and have them held invalid. Did you consider doing that, and, if you didn't, why? MR. WARREN: I am certain that we did the least expensive thing that we could do. And I have no specifics. You'll have to talk to our legal eagles on that, or have to ask our legal folks on that. But this is an enormous __ Incidentally we not only invested our financial resources, we in- vested our technical talent. Instead of them creating something, they had to go research prior art to fight off these frivolous claims. That ain't right. Back to my prepared remarks. That does not reward innovation nor promote progress. Further- more, software patents can probably deter progress, and I provide a number of examples. Finally, there is an intense danger that software patents pose to our industry's global competitiveness, and I detail how. To specific recommendations. Okay, this is the goodies. Let us agree that those who hold software patents probably prefer patent protection __ IBM, I think, is the largest holder and Mi- croSoft is the second largest __ and those who spend their time and resources creating technical innovation and national progress rather than creating patent applications and litigation probably prefer unfettered freedom to innovate. Let us also agree that the Constitutional intent __ very impor- tant __ is to "promote progress". So let us disregard who wants what for self_benefit and act on principle. We propose as a principle that those processes that are exclusively intellectual and exclusively algorithmic, even when mimicked by machine, must not be monopolized. We offer two recommendations, the second having 12 parts, so to speak, the 12 Apostles of redress of the current problems. The first recommendation@ssue a finding that software, as I have defined it, implements intellectual processes that have no sub- stantive physical incarnation, processes that are exclusively analytical, intellectual, logical and algorithmic in nature; plus the clearly stated Constitutional intent to declare that __ and use those findings to declare that the Patent Office acted in er- ror when it granted software patents; declare that software pa- tents monopolize intellectual and algorithmic processes and also fail to fulfill the Constitutional mandate to promote progress; declare that software as a mimic of the mind cannot be patented. Second, until and only until software patents are definitively prohibited, reject or freeze all such applications pending con- clusive action on the following 12 points: (1) Redress serious errors of previous administrations. Issue a finding that there have been extensive and serious errors of judgment in a large percentage of software patents granted in the past and immediately recall all software patD for re_review and possible revocation. Encourage industry assistance. And I offer some comments about how and some legislation that's needed. Make the information available via the Internet and solicit max- imum public input. (2) Mandate disclosure upon filing. Issue a finding that it unconstitutionally suppresses progress to hide software threats in secret filings for one to five years. Note that most of the other high_tech nations with which we com- pete require disclosure upon filing or very soon thereafter. Require disclosure upon filing or at least within, say, 9O days of filing. This will give software developers essential early warning of possible danger. It will also allow them to provide badly needed prior art, perhaps years before the patent might be granted and become a threat. Let it be the responsibility of those seeking lengthy monopolies to defend the truly novel and truly non_obvious character of their innovations in a public patent_application review process. Do not continue to fH that responsibility onto all other practi- tioners after the fact. (3) Recommendation 3. Require disclosure of complete source code and documentation upon filing. That will slow this stuff down. Reiterate that the __ (Laughter). That was not in my prepared remarks. Reiterate that the major function of the patent system is to as- sure complete public disclosure of innovation in order that all may benefit and progress be promoted. Issue a finding that software patents require full disclosure of complete original source code and complete internal documenta- tion. Then require its disclosure, preferably upon filing or perhaps 9O days later, but at least upon the granting of the software patent. Note that this implements the "best mode" re- quirement. Software patent disclosures in the past have often failed to ful- fill this minimum requirement; therefore, require such disclo- sures from all present software patent holders. Those who de- cline to so disclose in a timely manner must have their patents invalidatLs being improperly granted. (4) Prohibit filings after any public exposure. Issue a finding that most of the nation's high_tech competitors prohibit patent filings after any public exposure of their pro- posed innovation. Further, find that patentable innovation in software is unclear, vaporware is rampant, early disclosure is common, sharing of dis- closed innovation is almost universal, and possibly infringing development using such disclosures is almost inescapable. Use that finding to prohibit any filing after the date of any public exposure. Recommendation (5) Reduce requirements for challenging software patents. Find that the evaluation of what constitutes new, novel and un_obvious innovation in software is highly subjective and essen- tially impossible for the Patent Office to judge, since the Of- fice does not have the 5O years of prior art that exists. Change the standard for invalidating software patents from a re- quirement for "clear and convincing evidence" to no presumption of validity at allPwhich is usually the case if the experience of well_funded defendants who can do the adequate research, such as Autodesk, is any measure. (6) Reduce the protection period. Issue a finding that 17_year software protection patents are clearly unreasonable where, in an industry where significant in- novation can often be created in months, most innovation has minimal costs relative to traditional inventions, manufacturing and distribution is trivial, products can be shipped within weeks of being finalized, great profits can be attained in less than a year, the life of a product typically is only a few years, and all of the growth of the industry, from inception to Diamond vs. Diehr in 1981, was barely three times the 17_year monopoly period. Shorten the one_time protection period to no more than, say, two years. Sui generis is justified. (7) Replace __ wow, I'm still in the green __ or no I'm not __ or have I run out of time? COMMISSIONER LEHMAN: I was giving you your maximum. MR. WARREN: Oh, sorry Tt that. May I finish the other remarks very quickly? (7) Replace first_to_invent with first_to_ file. Issue a finding that this nation is almost alone in granting monopolies on the basis of first_to_invent. If the patent system is justified and public disclosure has merit, then encourage it by awarding monopolies only on the basis of first_to_file_and_disclose, but, of course, retain the principle that prior art always invalidates a patent. (8) Declare that useful intellectual communications cannot be monopolized. This is the look and feel issue. We don't want to protect it under patent any more than we want to protect it under copyright, when they are not primarily aesthetic and not primarily artistic and not primarily for controlling equipment. And I address that more properly. (9) To promote continuing progress, mandate cross licensing. If you are going to grant monopolies over our algorithmic processes, then at least mandate that we can use them under license from the monopolists. And I sXst how. In particular, we suggest mandatory licensing rates not exceed- ing, say, 5 percent of a licensee's profits prorated across all cross licensers for a given product. (1O) Provide a nationally accessible prior_art collection. I'm sure you heard that from 5O other people. If you don't have the resources to do it __ and make it available across the Inter- net __ if you don't have the resources to do it, then inform Congress that you are unable to perform your assigned functions without endangering national progress. (11) Exercise much greater due diligence with regard to software patents. You must stop leaving it up to endless threats, defenses, court battles among those who can afford them to ascertain which few patents might be valid, which is too often determined only by the relative wealth of the combatants. (12) And finally, create a large public advisory body, a commis- sion of volunteers who are technologists, those who produce the nation's progress in this area, not just intellectual_propettorneys. Seek them from a broad spectrum of software publishers, great and small producers, including individuals. These recommendations require Congressional action, and this in- dustry has been politically asleep, but continuing software pa- tent debacles are beginning to awaken it, most especially its in- novators, and we certainly have the financial resources, the com- munication tools and the tenacity to seek effective redress as we finally organize and choose to act. However, the needed Congressional action can be greatly facili- tated by supportive recommendations from your Office. Please draft them soon. But not cloistered inside the Washington Belt- way, rather with extensive Internet circulation of all drafts and discussion. Let us stand on each others' shoulders rather than on each oth- ers' toes. Thank you. COMMISSIONER LEHMAN: Thanks very much, Mr. Warren. We gave you a few extra minutes there __ MR. WARREN: I appreciate that. COMMISSIONER LEHMAN: __ because of my intervention. I want to tha`ou for coming out here. I think we'll look at your recommendations very carefully and I think with regard to this idea of, first of all, I hope you will appreciate the fact that we're not inside the Beltway right now __ MR. WARREN: Every two days outside we appreciate. COMMISSIONER LEHMAN: __ we have a little capacity to innovate, even Washington lawyers can come up with a few good ideas every once in awhile. And secondly, I think that we do need to have closer, a better means for communicating directly with the innovative community and not just for patent lawyers, and so we need to do a little innovative work to figure out the mechanisms for doing that our- selves and I really appreciate your comments. Thanks. MR. WARREN: Ask us for help __ I mean all of the industry __ and we will help. Thank you. COMMISSIONER LEHMAN: Next I'd like to ask Mr. Michael Glenn, from the Intellectual Property Section of the State Bar of Cali- fornia, to step forward. Maybe he can defend the lawyers.