RONALD S. LAURIE, ESQ. WEIL, GOTSHAL & MANGES MR. LAURIE: Thank you, Mr. Secretary. I'd like to address the issue of patent protection for software_rped inventions generally rather than the specific ques- tions raised in the Notice. The views expressed are personal, they're my own, and they don't necessarily represent the position of either my law firm or any particular client. By way of introduction, I worked in Silicon Valley for 33 years, initially as a programmer and software designer and later as a patent lawyer focusing on computer technology. I currently teach a course at Stanford Law School entitled "Intellectual Property Protection for Information Technologies". I have previously served on advisory panels to the National Research Council and the National Academy of Science in connec- tion with software protection, and I was the only patent lawyer on the Advisory Panel to the Office of Technology Assessment in its recent study "Intellectual Property Protection for Software". When one listens carefully to the impassioned arguments against quote "patenting software" unquote, it becomes apparent that the arguments and the basic intellectual propetpolicy positions which underlie them can classified into three categories: First position: patents are bad. Second position: software pa- tents are bad. Third position: bad software patents are bad. The first position is most often heard in the halls of academia and raises fundamental social and economic issues which go far beyond the scope of the present inquiry. The second position is often advanced by some, though not by any measure all, of the software companies that emerged and flour- ished during the early and mid '8Os as a direct result of the commercial introduction of the microprocessor at a time when the industry generally and incorrectly believed that software_based inventions were unpatentable as a class. The third position is the one most widely held today and for ob- vious reasons the easiest to defend. In the heat of the debate over software patents, the boundaries between the second and third positions tend to blur, but I submit it is critically important to address them separately. I xectfully submit that the second position is legally unsound and that the third while correct does not represent an insoluble problem. In support of my thesis, I offer the following: Premise one: U.S. patent law does not protect software. Rather, it protects processes and machines that are quote "within the technological arts" unquote. In one of the first cases to con- sider the question of whether inventions involving computer pro- grams constituted patentable subject matter, Judge Giles Rich, who was one of the principal architects of the current patent statute, introduced the phrase, "technological arts" as the modern equivalent of the constitutional term "useful arts," and is therefore defining the outer boundaries of patentable subject matter, both under the Constitution and under Section 101 of the Patent Act. That case was, In re Musgrave, decided in 1970. Over the more that two decades since Musgrave, Judge Rich's for- mulation has remained unchallenged by any subsequent decision, although unfor|tely it has been ignored by many. Thus any process that is not sufficiently applied the physical environment in which it operates to qualify as being quote "within the techno- logical arts" unquote, constitutes unpatentable subject matter. The critical distinction then is between applied technology and abstract ideas. Examples of the latter include; laws of nature, scientific principles, methods of doing business, printed matter and unapplied mathematical relationships. Premise two: Computer implemented solutions to technological problems in the form of processes and/or machines typically exist along a design spectrum, ranging from pure hardware, that is ran- dom logic, to pure software, that is an externally_loaded comput- er program running on a general purpose digital computer. Intermediate points along the spectrum involve designs which may be described as special purpose computers and which combine ele- ments of hardware and software in varying proportions, using ran- dom logic, array logic, such as PLAs PALs, microcode and firmware, firmware being fixed programs stored in internal read_only memory. The particular point along the design spectrum that represents the optimum solution to a given problem is determined by a variety of factors, such as cost, speed, size, flexibility and so on. Moreover, the optimum design point moves over time as com- peting implementation technologies evolve at different rates. For example, in the mid '70s, complex video game functionality was implemented entirely in random logic. After the arrival of the microprocessor, the very same functionality was realized using firmware. Finally, technologies such as logic synthesis are becoming avail- able, by which a software solution can be quote "translated," un- quote into an equivalent hardware solution, and vice versa. It should be self evident that as a matter of legal policy, the law should not promote artificial distinctions that the technology does not recognize. And I should point out that Mr. Lippe's company is in the businef making a product which in effect translates software into hardware. Another example which I think illustrates the point is the technology of neural nets, which was originally created as a pure hardware solution and has evolved now into a software tech- nology. Premise three: The fact that a particular solution can be ex- pressed mathematically or is a series of logical operations should be irrelevant to the patentability of the solution. In 1972, based on what many commentators believe to be an errone- ous interpretation of its prior decisions involving laws of na- ture and scientific principles, the U.S. Supreme Court announced, in Benson v. Gottschalk that a patent claim describing a process which, quote, wholly preempts a mathematical algorithm is nonsta- tutory; that is, does not define patentable subject matter under Section 101 of the Patent Act. The result of this formulation has been over two decades of con- fusion and inconsistency in the case law involving the patenta- bility of software_implemented prses. The fact is that mathemat- ics is a language, albeit a very precise one, and like other languages can be used to describe concepts and relationships that are technologically applied as well as those of a more abstract nature that are not so applied. As noted by Professor Chisholm in an article called The Patenta- bility of Algorithms, the real issue is probably not one of sub- ject matter under Section 101, but rather one of indefinite claiming of the invention under Section 112. Under the constitu- tional standard within the technological arts, it is the subject matter of the invention and not the language chosen to describe it that should determine the presence or absence of patentable subject matter. Premise Four: Even if a particular software equipment and solu- tion represents patentable subject matter, in order to justify the exclusionary benefits conferred by a patent, it must also pass the test of novelty and nonobviousness over the prior arts. And Commissioner, you have pointed this out to severf the speak- ers, that there is significant difference between the patentabil- ity of software as a class and the patentability of any particu- lar software invention. This is the key factor that interrelates the second and third po- sitions, i.e., software patents are bad versus bad software pa- tents are bad; that is, even if a software implemented solution is sufficiently technologically applied to pass muster under the statutory subject matter test, in order to quality for patent protection, the solution must also be novel and nonobvious to a person of ordinary skill in the art. It is submitted that given the objective to be accomplished and accepted principles of software design, the great majority of the software written today would not pass the nonobviousness test. Thus, the effectiveness of a patent system in a particular area of technology is directly related to the degree to which the exa- mining authority __ in this case the Patent & Trademark Office __ has access to the most relevant prior art. To theent that there are or can be created mechanisms through which the Patent & Trademark Office can access the widest body of software_related prior art, the system will work. A number of such mechanisms have been discussed during these hearings, and they include PTO access to the growing number of commercial and public databases of software technology, private sector assistance in supplementing the PTO internal database, early publication of patent applications coupled with third party submission of prior art. The important point is that the problem of bad software patents is mechanical and not inherent. That is, over time it can be en- gineered away or at least reduced to a commercially tolerable er- ror rate. Finally, Premise Five: A very heavy burden of persuasion should be placed on anyone who advocates that a particular kind of tech- nology should be exempted from the normal operation of the patent system. In 1980, in the Chakrabarty case, the U.S. Supreme Court inter- preted the patent copyright clause of the U.S. Constitution to require that the scope of patentable subject matter should be as broad as possible __ anything under the sun that is made by man. Those who maintain that software based invention should be ex- cluded as a class from patent protection argue that software is different. It's different, they argue, in terms of its essential character __ it's logical. It's different in terms of the creative process by which it comes into being __ it's authored rather than engineered. Or it's different in terms of the under- lying economic model governing its production, distribution and life cycle. These differences have been discussed and debated at gatherings of distinguished software developers, computer scientists, economists and legal scholars and practitioners under the spon- sorship of a number of governmental agencies, including the Na- tional Research Council, the National Academy of Science, the Of- fice of Technology Assessment, the U.S. Congress and the U.S. Pa- tent & Trademark Office. Despite thet that the positions on both sides have been eloquent- ly expressed, the results are inconclusive. The primary reason is that there is no hard data available to support the anti_software patent position, and the evidence is anecdotal at best. Clearly, software is different, but is it different enough from all other technologies to justify a special exemption from the normal operation of the patent laws. Given the unavailability for reliable data on the societal costs and benefits of patenting software_implemented technology, we are presented with a situation where important policy decisions must be based on fundamental legal principles. In such a setting, we must conclude that those who would withhold patent protection from technologically_applied processes and machines, that happen to be implemented partially or wholly in software, have failed to satisfy the burden that the Constitution, the Supreme Court, and sound legal policy have placed upon it. Thank you. COMMISSIONER LEHMAN: Thank you very much an excellent statement, Mr. Laurie. There was something I was going to ask, and I may have to follow up now on it because it slipped my mind. But I think that was a good description of __ you parsed out the problem very well. MR. LAURIE: If I could address a point that came up yesterday, relating to the role of competition in intellectual property law, and where the competition is more appropriately addressed under the anti_trust laws or under the intellectual property laws, I'd like to say that I think that there is, there are many places in intellectual property law where competition plays a role, and the patent law of misuse is an example, and as shown by the Seiko v. (Accolade) case in the Ninth Circuit, in the copyright law under fair use, competition plays a very important role. Thank you. COMMISSIONER LEHMAN: Thank you. Next I'd like to ask Lee Patch, the Deputy General Counsel of Sun Microsystems to come forward.