[10319] in Commercialization & Privatization of the Internet
InfoLawAlert
daemon@ATHENA.MIT.EDU (Mark Voorhees)
Fri Feb 18 18:01:17 1994
To: com-priv@psi.com
From: markvoor@phantom.com (Mark Voorhees)
Date: Tue, 15 Feb 94 10:18:42 EST
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(c) 1993 Mark Voorhees
IN THIS ISSUE
MATTHEW BENDER TAKES ON WEST PUBLISHING'S COPYRIGHT
Publishers battle over whether page numbers
of law reporters are protected
SCULLEY'S STATUS AS VICTIM RINGS FALSE
PATENT OFFICE MAY ASK CONGRESS FOR PERMISSION
TO PUBLISH PATENTS IN ADVANCE
CRYPTOGRAPHIC CURVE BALL WITH DIGITAL SIGNATURES AND PKP
Compton's multimedia patent:
PATENT OFFICE OPENS PANDORA'S BOX
Notes from the frontier
SOFTWARE PATENTS ARE HERE TO STAY
Several suggestions for improvements emerge from California
hearings
ENCRYPTION A HO-HUM AFFAIR SO FAR FOR CONSUMERS
WARMING UP TO THE OPPOSITION
POOR MAN'S INFORMATION HIGHWAY
VIDEO DIALTONE BACKLOG
Range of Video Dial Tones: Status of Trials and Services
BOX SCORE: A WHO'S WHO OF LAWYERS IN KEY CASES
----------Cut here----------
MATTHEW BENDER TAKES ON WEST PUBLISHING'S COPYRIGHT
Publishers battle over whether page numbers
of law reporters are protected
It seems so silly_almost a joke_the notion that a company can
hold monopoly control over such items as page numbers. But don't
ever tell that to West Publishing Co. West takes very seriously,
even religiously, its copyright on its federal reporters,
including the page numbers. The Eighth Circuit only fueled West's
ardency in the infamous 1986 decision, West Publishing Co. v.
Mead Data Central, holding that pagination was indeed an element
of West's copyright.
West's bedrock faith in the inviolability of its copyright,
however, is now under attack.
Matthew Bender, a competing legal publisher, has filed suit in
federal court in Manhattan seeking to weaken the West copyright.
It wants a declaration that West does not hold a copyright on its
page numbers or that use of the page numbers is protected by
"fair use" doctrine of copyright law.
Matthew Bender wants to publish a CD-ROM collection cases from
the Second Circuit. It also wants to add West's volume and page
numbers since many courts, in the words of its suit, require
"citation to the volume and page number of the West federal
reporter."
A West spokeswoman says the suit is "totally unfounded."
But life in the law of copyright is very different from the
time of the Eighth Circuit ruling. That was BF, and this is AF.
The F stands for Feist, as in Feist Publications, Inc. v. Rural
Telephone Service Co., the 1991 case that said the names,
addresses, and phone numbers of the white pages are not protected
by copyright.
Last year, the 11th Circuit said that copying the facts from
the yellow pages does not violate a compilation copyright.
The Supreme Court last month declined to hear the
11th Circuit case, despite West's plea, as a friend of the court,
that it take the case.
The Feist case rejected a line of cases that supported "sweat
of the brow" copyrights. If you work long and hard enough at a
task, the theory went, your efforts deserve to be protected by
the monopoly grant of a copyright.
Writing for a unanimous court, Justice Sandra Day O'Connor
instead fell back on more traditional copyright jurisprudence,
which rewards only creative expression, not hard work. Viewed
from that angle, the creation of page numbers seems about as
expressive as a door knob.
O'Connor's decision repeatedly cited a law review article,
written by professors Craig Joyce and L.R. Patterson, that
harshly criticized the 8th Circuit West decision. It has always
been a source of speculation whether O'Connor was subtlety
refuting the 8th Circuit finding.
In congressional testimony, Joyce has said that the West
decision was "a classic case of consequentialist reasoning: in
substance, the court concluded not that West was harmed because
it had copyright protection but that it had copyright protections
because it was harmed."
James Dabney, a Pennie & Edmonds lawyer who represented Mead,
says that pre-Feist law should have been enough for the Eighth
Circuit to reach a different decision. He says West will argue
that Feist does not apply in the Bender case, because the Supreme
Court did not overturn the cases upon West relies.
West argues that pagination "metaphysically expressed the
arrangement" of cases in a law reporter, Dabney said. "It's a lie.
Pagination has nothing to do with the arrangement, coordination,
or selection of cases."
West and Mead eventually settled their suit. The settlement is
secret, but Mead can now use the page numbers. It isn't known how
much Mead pays for that right.
The growing popularity of CD-ROM as a method for data storage
casts a dark cloud on West's horizon, if it cannot protect its
page numbers. One CD-ROM disc holds the equivalent of 150,000
pages of text. It is also easy to conduct key-word searches on
CD-ROMs. Unlike such on-line services as WESTLAW or LEXIS, users
don't incur access and printing charges.
If competitors, like Matthew Bender, are able to cite West's
page numbers, they can offer a space-saving alternative to the
vast racks of law reporters.
In its complaint, Matthew Bender says it has collected slip
opinions from the government and then converted them into digital
form through scanning and retyping. Bender next wants to insert
the West page numbers. It would not add the case synopses,
headnotes or "any copyrightable material," the complaint says.
Nonetheless, "West has threatened to initiate suit" if Bender
includes the page numbers. Last year, West sued a Florida
company, alleging that it converted its reporters into CD-ROM
format for sale.
Ironically, the first U.S. Supreme Court copyright case,
Wheaton v. Peters, involved Supreme Court law reporters. The 1834
case found that those reporters were not covered by a copyright.
----------Cut here----------
SCULLEY'S STATUS AS VICTIM RINGS FALSE
John Sculley wants everyone to believe he is a victim of foul
play, but it ain't necessarily so. Sculley acted foolishly and
hastily in becoming chief executive of Spectrum Information
Technologies.
He's doing it again by filing a $10 million suit against Peter
Caserta, the Spectrum executive who recruited him. It's time for
the former chief of Apple Computer to look forward and forget the
folly of the past.
Sculley sued Caserta in the southern District of New York on
February 7, the same day he quit Spectrum, leaving behind the
stack of stock options, now under water, that drew him to the
small wireless communications company. Spectrum's patents on
wireless data transmission were the other stack of drawing cards.
Sculley claims Caserta duped him by not disclosing during
employment negotiations a plank of bad news about the company.
Sculley accepted Caserta's assurances that everything was okay
and joined the company October 18, 1993.
Caserta may have been dishonest, but Sculley should have known
better. Let's go to the videotape:
One of Sculley's main complaints was Caserta's failure to
inform him of accounting practices that recognized licensing
revenues before it was received. If Sculley had done his
homework, he would have at least suspected that Spectrum was
pushing the envelope. Here's why:
Sculley began negotiating with Caserta in October. Two months
earlier, Spectrum disclosed its accounting practices to the
Securities and Exchange Commission.
The company told the SEC that its fiscal first quarter
earnings of $447,000 included "the accrual of the non-refundable
licensing fees of $3,200,000 to be paid by AT&T, Megahertz, and
Apex Data for the use of the Company's patented technology."
(Emphasis added)
In plain English, that means Spectrum was recording future
revenue as income. The accrual of future revenues in itself is
not so unusual. But here's the killer: Spectrum also disclosed
that it was recording $2,750,000 in liabilities to reflect
marketing payments Spectrum would make to its licensees. The
payments would help the licensees publicize Spectrum's
technology.
So while Spectrum was recording as today's income tomorrow's
future payments, it was shoving tomorrow's linked obligations
onto the balance sheet, where they would not interfere with
today's earnings. Accounting symmetry suggests that linked events
should be treated similarly.
The company engaged in the same practice in the second
quarter, which ended September 30, and was reported to the SEC
November 15, after Sculley's arrival.
Sculley says he was unaware of the accounting until a
Bloomberg news report in early December. But the Bloomberg report
was based solely on the two SEC reports.
On the advice of new auditors, the company has restated
earnings for those two quarters to show a $5.3 million loss
rather than a $1.1 million gain.
A spokesman for Sculley says he devoted most of his due
diligence on the validity of Spectrum's patents. "He relied on
Caserta's word" for much of the rest of his pre-employment
investigation.
----------Cut here----------
PATENT OFFICE MAY ASK CONGRESS FOR PERMISSION
TO PUBLISH PATENTS IN ADVANCE
The U.S. Patent and Trademark Office is considering
recommending to Congress that patents be published prior to their
issuance. That seismic change would allow the public to point out
weaknesses in patents before issuance rather than afterward in
lengthy court battles.
Ruth Ford, a patent office spokeswoman, confirms that the
recommendation is under consideration by Commissioner Bruce
Lehman. Lehman is considering several changes to bring the patent
office in touch with the modern world, but none would be so
radical as pre-publication.
In the United States, unlike many other foreign countries,
patents are secret until issued. After issuance, they are hard to
overturn in court because they carry a presumption of validity.
Pre-publication may allow fewer bad patents to emerge. It also
could bog down an already overburdened office in a procedural
overload. It is commonly assumed that pre-publication would take
place 18 months after submission.
Lehman is also considering changes to the re-examination
procedure, in which patent owners, third parties, or the office
itself can submit prior art to buttress or tear down an existing
patent.
The re-exam process currently favors patent owners and is
rarely used. But changes in the process could obviate the need
for pre-publication.
----------Cut here----------
CRYPTOGRAPHIC CURVE BALL WITH DIGITAL SIGNATURES AND PKP
The Administration threw Public Key Partners a curve ball
earlier this month when it announced that a proposed digital
signature standard would be royalty free.
PKP has been working with the National Institute of Standards
and Technology on a standard that would provide a royalty to PKP.
PKP holds most of the important cryptographic patents in the
country and is in the business of collecting royalties and
licensing fees on them. The proposed government standard is based
on two patents owned by PKP.
Digital signatures would allow parties to sign documents
electronically with the same surety now reserved for print
documents.
In a proposal already published in the Federal Register, PKP
would receive about $1 a year from users of the proposed Digital
Signature Standard. Now that the government wants that standard
to be free for end users, PKP and the government are back at the
negotiating table. One solution is for the government to pay a
fee to PKP. Industry prefers a digital signature standard known
as the RSA algorithm, which is in wide use, over the government's
proposal. PKP also owns the patent on the RSA algorithm.
----------Cut here----------
Compton's multimedia patent:
PATENT OFFICE OPENS PANDORA'S BOX
Beware the law of unintended consequences:
Patent commissioner Bruce Lehman may be doing the right thing
by ordering a re-examination of a controversial multimedia
patent. But he has also opened a trap door into which all sorts
of proper patents_and the patenting process itself_may fall.
The patent in question, of course, is the so-called Compton's
NewMedia patent. An announcement of its existence at the fall
Comdex computer show in Las Vegas created such a fuss that Lehman
re-opened the case.
Re-examinations are rare birds. There have only been 80 such
inquiries ordered by a commissioner since 1982 out of a million
or so patents issued, and most of those were caused by a wayward
examiner used a supervisor's stamp to approve patents without
authority.
Despite the odds, Lehman may be correct. His staff has
unearthed several examples of prior art, including a best-selling
computer book, that could kill the Compton's NewMedia patent
before it hatches any eggs for its owners. The Tribune Co., one
of the owners, had been squawking that it deserved royalties from
competitors on such multimedia products as CD-ROM encyclopedias.
Royalties would range from 1 to 3 percent and could apply to
companies like Microsoft, which are actively entering the CD-ROM
business.
The patent covers techniques to search through databases
holding text, pictures, animation, and audio clips. It is almost
like a road map through the interactive media and multimedia
kingdom that everyone would have to buy before entrance.
No company wants to pay an entrance fee to a competitor,
putting itself immediately at a cost disadvantage. But critics
say that the patent is old hat and that the subject matter was
covered thoroughly in Danny Goodman's book, "The Complete
Hypercard Handbook," published in 1987, two years before
Compton's New Media.
The handbook, which has sold 400,000 copies, teaches Macintosh
users how to work with the Hypercard programming and development
language.
If the patent was issued improperly, Lehman may have saved all
parties_ including Tribune Co. and Encyclopedia Britannica, the
other owner_the time, expense, and aggravation of expensive
litigation.
But, in the process, Lehman has exposed himself to perception
that he can be bought off by public pressure. He may have
undermined his other efforts to explore the relevancy the
two-century-old patent system.
Ruth Ford, a patent office spokesman, says Compton's is an
exception. "Will we respond every time they hold a war council in
Los Vegas? No."
The re-exam is simply one of several efforts by Lehman to
expose the office to the disinfectant of public scrutiny and
access. In the old days, Ford says, patent commissioners met
privately with the captains from large business. "It was a
star-chamber affair," she says.
The U.S. Patent and Trademark Office is not a semi-autonomous
unit of government, like the Federal Reserve system, but it has
often acted that way. The office, located in suburban Virginia,
has not been prone to the same sort of political jawboning
exercised by the alligator-shoe and cellular-phone crowd across
the Potomac in D.C. However ineptly and awkwardly, the office has
tried to fulfill its constitutional mandate to promote the
"progress of science and the useful arts."
If the focus of the office switches from prior art to public
response, the consequences are easy to imagine. "Every important
patent will now be subject to political pressure," says one
patent lawyer. "And all important patents are controversial."
Ford responds that Lehman initiated the Compton's re-exam on
his own initiative. For all the criticism of the patent, nobody
submitted prior art or requested a re-exam, she says.
The Compton's NewMedia patent certainly falls within Lehman's
zone of interest. He recognizes and has responded to criticisms
that software patents are diluting the creative juices of
developers. Lehman, for example, has held hearings on software
patents and chairs a governmental working group exploring
intellectual property along the electronic highway.
Lehman also recognizes the link between intellectual property
and economic development, which is so clearly revealed through
the Compton's New Media patent. If Compton's, a unit of the
Tribune Co., is able to demand tolls from every user of
multimedia applications, it could dampen that growing market. It
is hardly surprising then that this patent came to Lehman's
attention or that it has come to symbolize all that is supposedly
wrong with software patents generally. "There was a harmonic
convergence of events," Ford says.
The U.S. Supreme Court did not even recognize software patents
until 1981. In the thirteen following years, several murky areas
have arisen.
Algorithms are not patentable, for example. Yet there is no
bright line separating the underlying math, which doesn't qualify
for protection, from the useful process, which does. A clever
drafter might easily make the former look like the latter.
Likewise, most software is incremental and derivative, and
yet some of the recent controversial patents purport to cover
"core" processes. "Let's not patent a device that captures
rodents," says Goodman, whose best-selling Hypercard book will
play a key role in the Compton's New Media re-examination.
On a practical level, software development is often not well
documented. There is not a rich heritage of technical journals
and bulletins, as in the manufacturing world. Indeed, many
advances are preserved as trade secrets.
Finally, there are often many ways to achieve the same result.
In many cases, there are both hardware and software solutions.
With so many ways to skin the same cat, searches for prior art
extremely tedious.
For all the difficulties in defining, describing and limiting
software patents, the industry has hardly missed a beat since the
1981 Supreme Court ruling. It is among the fastest growing
sectors of the U.S. economy, generating $36.7 billion in annual
sales. U.S. firms also dominate the international markets, where
patents are even harder to protect.
IN THE BEGINNING . . .
For better or worse, the Compton's New Media patent will be
re-examined in the context of this uncertainty, debate, and
turmoil. It is the worst of times, from an owner's perspective,
for a patent to go through a dissection.
The starting point for any patent is the invention, which in
this case was Compton's Multimedia Encyclopedia published in 1989
by Compton's New Media, then a unit of Encyclopedia Britannica.
The company says the product was the "first electronic
encyclopedia to integrate pictures, sound, motion, and multiple
entry paths."
On October 26, 1989, Encyclopedia Britannica filed a patent
application on behalf of its multimedia subsidiary to cover the
underlying technology of the encyclopedia. The invention went far
beyond what was then available in the CD-ROM world, the
application stated. There was no other product that could search
so easily and flexibly for graphics, text, and video clips in so
many different ways.
The inventors took pains to note that the anticipated patent
was not limited to encyclopedias but could cover "any information
that can be stored in a database." They were bucking for a piece
of the action on virtually any multimedia storage and retrieval
device.
Almost four years later, on August 13, 1993, the inventors
received manna from heaven when a patent was issued. Although the
language was completely re-written in places, the general scope
of the patent was intact. Within a month, the Tribune Co. bought
Compton's Multimedia Publishing Group, a CD-ROM publisher
focusing its catalog on reference, educational, and entertainment
works.
Not sufficiently prescient to recognize the impending
controversy, Encyclopedia Britannica retained a half interest in
the patent.
Compton's NewMedia executives waited several months until the
Comdex computer show in November to spring their invention on the
masses. Expecting to be greeted as visionaries, they were instead
ridiculed as highway robbers, trying to extract tolls at gun
point from CD-ROM sales. It is difficult to pick up a computer
magazine today without reading at least one jeremiad directed at
Tribune Co. for its arrogance.
By mid-December, the uproar was so deafening that Lehman
ordered the re-examination. Gerry Goldberg, the head of the unit
that approved the patent, has assigned Archie Williams, a
respected, senior examiner, to oversee the second look.
----------Cut here----------
CONTINUATION OF COMPTON'S MULTIMEDIA STORY
HEAVY HITTER
Tribune Co. has brought in its own heavy to help out with the
re-examination: D.C. Toedt, one of the nation's leading software
patent lawyers, and a partner at Houston's Arnold, White &
Durkee. Britannica continues to use Dickstein, Shapiro, the firm
that prosecuted the application, for the re-examination, which
will likely take several months.
A re-examination is similar procedurally to a patent
application. Tribune Co. and Encyclopedia Britannica have until
mid-February to submit material in support of the patent, if they
choose. Unlike in a court case, the claims of the patent don't
carry a presumption of validity.
Afterward, examiner Williams will issue an "office action,"
which the patent owners can challenge. Williams will then issue a
second office action, which generally is final. If he rules that
all of some of the claims are invalid, Tribune Co. and
Encyclopedia Britannica can challenge the action, first to an
appeals board and then the Federal Circuit.
This re-exam, however, is like few others. Normally, outside
parties cannot submit prior art unless they themselves had
requested the re-exam, which requires a $2,250 filing fee.
Lehman, however, has decided to accept outside any submissions
that come over the transom.
It is in keeping with the history of the Compton's NewMedia
patent that things not go according to plan. This patent is proof
the saying that nothing succeeds as planned.
Any patent is defined by its claims_in this case 41 separate
statements that comprise an infringement checklist. The broadest
claim of the bunch is the first one and also the one that has
been the focus of the most scrutiny.
The claim covers a computer search system that is able to
retrieve both text and graphics from "a plurality of entry path
means." In other words, a user can search for text by, for
example, clicking on a picture, or search for pictures by
scrolling through text.
The remainder of the claims embellishes and refines the broad
brush of the first one. There are claims covering spell checking,
a thesaurus, different search methods, and different entry
methods. A user can enter through an atlas path, a history
timeline path, or a picture caption path. You get the picture.
If the invention and claims are the bookends in the life of a
patent application, the file history is its biography. The
history comprises the original applications and all amendments,
rejections_and even summaries of interviews. Two things are
striking about the three-inch-thick file history of the Compton's
NewMedia patent.
First, this patent did not slip through the cracks. It was
rejected three times, two times more than normal, before even a
single claim was approved. Second, far from revealing the patent
office at its worst, the history shows the diligence of the
reviewing examiners.
They discovered more relevant prior art than did the
Dickstein, Shapiro & Morin lawyers for Encyclopedia Britannica,
even though some of it was late in the game. And they dutifully
worked with the Dickstein, Shapiro lawyers to amend claims and
improve the description of the invention. If the examiners made a
mistake, it was not for lack of effort but because of structural
defects in procedure.
Patent examiners compare applications to other patents, not
they real world. And their tools for comparison are out of date.
Moreover, the Goodman book, which may turn out to be the killing
knife, is not the sort of publication that examiners are
instructed to search. "It's very easy for me to imagine why the
book was not cited," says a lawyer familiar with the patent.
TRY AGAIN
Encyclopedia Britannica originally filed 79 claims, and they
all were rejected in April 1991, 1 1/2 years after filing. An
initial rejection is not uncommon.
Maria Napiorkowski, the examiner, pointed out examples of
vague or indefinite claims, which is normal, and an patent that
anticipated this particular invention. The earlier patent covered
retrieval from a videotex databases.
Dickstein, Shapiro responded by canceling 30 of the claims.
amending most of the rest, and arguing strenuously why the
earlier so-called Calo patent did not apply. Calo does not teach
how to retrieve information from a "plurality of information to
be retrieved in a plurality of databases," wrote Jon Grossman of
Dickstein, Shapiro.
The application was rejected a second time at the start of
1992, although a new examiner, Maria Von Buhr, noted she would
accept most of the claims if they were re-written.
Her response should have been the beginning of the end for
Compton's NewMedia in its quest for a patent. A quick clean-up
job was all that stood in the way. Instead it was the end of the
beginning.
When Dickstein, Shapiro resubmitted the application for a
third time in February, it was bounced again. This time, Von Buhr
discovered another patent she said made the Compton's NewMedia
invention seem obvious. The so-called Bodick patent was filed in
1988, well before Compton's Multimedia Encyclopedia was on sale.
Grossman sat down with Von Buhr in July of 1992, and the two
worked out a few, simple word changes that would overcome the
examiner's concerns. Two weeks later, Grossman submitted his
third amendment. It would not be his last. In November, Von Buhr
announced that she had uncovered another patent, the Swinehart
patent, filed two years before the Compton's NewMedia patent.
This invention sounded perilously similar to the Compton's
NewMedia claims. The patent covered a search system that allowed
the user to search interactively for several types of information
As Von Buhr wrote, the newly discovered patent "discloses the
presence of textual, video, audio and graphical types of
information and its accessibility." She, did, however, allow one
claim
It is tempting, in light of Von Buhr's second discovery, to
wonder who is minding the store. Is it too much to ask that,
after three years, the patent office has discovered all relevant
prior discoveries? The criticism applies with equal force to
Encyclopedia Britannica, which has a duty to disclose relevant
art that they know of.
The Swinehart patent, however, turned out not to be the
barrier that it looked to be on its face. The Swinehart patent
simply forced the Dickstein, Shapiro to narrow the initial claim.
While Swinehart disclosed techniques to search several types of
information, the patent "fails to teach or suggest any means by
which to search graphical information in order to retrieve
related textual information," Grossman wrote. Previously,
Dickstein, Shapiro had tried to keep the searching claims as
broad as possible. But in light of Swinehart, Dickstein Shapiro
just closed the blinds halfway. Specifically, for example, the
general phrase_a "means for storing a plurality of types of
information in a plurality of databases"_was replaced with the
specific phrase, "means for storing interrelated textual
information and graphical information."
While these changes may have limited the breadth of the
patent, they satisfied Von Buhr. She approved the claims on April
19, 1993, subject to submission of formal drawings needed for
publication of the patent. The rest, of course, is history. The
history lesson is not yet over. Time in the patent world may soon
be marked as BC or AC_before or after Compton's. "It's a litmus
test," Ford says.
----------Cut here----------
Notes from the frontier
SOFTWARE PATENTS ARE HERE TO STAY
Several suggestions for improvements emerge from California
hearings
Editor's note: The following is excerpted from an article
published in the Internet Patent News Service. The author
attended and testified at the U.S. Patent and Trademark Office's
hearings on software patents in California in late January. Here
are his impressions of the testimony of 50 speakers; his
predictions for likely patent office action; and thumbnail
sketches of the remarks of some of the speakers.
BY GREGORY AHARONIAN
Most lawyers and executives from large corporations were in
favor of allowing patents for software, while many programmers
and small companies were against awarding software patents. There
were a few exceptions, such as Oracle Corp., which testified
against software patents. A few speakers argued that the growing
overlap of hardware and software design tools made it
increasingly difficult to distinguish hardware and software in
assessing claims.
Everyone agreed that patent examiners and the patenting
community need a comprehensive software prior art database to
prevent the award of patents for non-novel and obvious ideas.
Opinion was split on pre-publication_ publishing applications
at a fixed interval, say 18 months, after submission. In this
way, the public could offer evidence of prior art before a patent
was issued. This is standard practice in foreign countries.
Most participants suggested that an open re-examination would
be beneficial. Many speakers suggested that parties that request
a re-examination should be able to participate in the
proceedings. Now, third parties can request a re-exam and submit
prior art but not anything else, like questioning the patent
owner. Many lawyers recommend clients not request re-exams
because a court will likely defer to the two reviews by the
patent office.
Most observed that patent examiners need more training and
that the software engineering community should help out. There
were suggestions that the software and hardware examiners should
move to the Silicon Valley, where they could work more closely
with applicants.
Many observed that current regulations on the patentability of
software and algorithms have little effect, due to inconsistent
application of the guidelines by patent examiners. Some speakers
suggested that the guidelines be dropped completely and that the
office allow any combination of hardware and software to be
patented.
There were also calls for the Patent Office to make better
use of the Internet for distributing patent information and
communicating with the public.
PREDICTIONS
As much as the League for Programming Freedom hopes, there is
no way patents for software will be banned. Too many large
software vendors desire software patents, including Microsoft.
Beyond politics, it will be impossible to define software
precisely.
Shortening the life span of patents (down to as little as
three years) will also not occur, again because of politics and
the difficulties with definitions.
Pre-publication will also not come to be. Especially in the
field of software, the Patent Office would not be able to deal
with the deluge of material submitted by opponents, short of
getting more money from Congress or raising fees. Higher fees in
turn would hurt open reexaminations.
Some rules will be changed to improve practices. The
re-examination system will probably be opened up, with more
public participation. This may cause document overload (until a
prior art database is built) and massive copyright problems.
There will be efforts to start a software database. Few of
the speakers, however, seemed to understand the enormity and
complexity of the task. It will be that much more difficult to
construct if the hardware-software equivalence argument takes
hold or is used in a court case.
While there are problems with the patenting process of
software, things aren't too bad yet and there is time to make
changes. A few years from now, without changes, there will be a
mess.
QUICK TAKES
JOE CLARK, CHAIRMAN OF VIDEO DISCOVERY is frustrated by the
secrecy of the patent system the potential liability due to
infringement. He wants less secrecy during prosecutions and more
public participation during re-examinations.
RICHARD LEFAIVRE, VICE PRESIDENT OF APPLE Computer and
representative of the Computer Business Equipment Manufacturers
Association, says there is no need to treat software patents
differently but a crying need for better knowledge of prior art.
Restrictions on software patents would hurt US companies'
protection overseas.
TOM LOPEZ, PRESIDENT OF THE INTERACTIVE MULTIMEDIA
Association, says the patent system is casting a cloud over his
industry. Broad system-level patents are especially troubling. He
does not oppose software patents but is worried about the
difficulty in overturning patents in court.
DOUGLAS BROTZ, PRINCIPAL SCIENTIST OF ADOBE, says software
should not be protected by patents. Software patent suits have
cost Adobe at least $4.5 million over the past five years.
Industry leaders like Microsoft didn't rely on patents for their
success. Copyright laws adequately protect software. It is
foolish to think that patents protect small entrepreneurs.
ROBERT SABATH OF THE WORLD INTELLECTUAL Property and Trade
Forum says the West Coast deserves its own public search facility
similar to that at the patent office in Virginia. There should be
more such facilities throughout the country in schools and
libraries. While relaxing rules for software patenting and
algorithms results in more software patent, it also increases the
volume of prior art and limits the number of future patents.
JERRY BAKER, VICE PRESIDENT OF ORACLE CORP., says copyright
and trademark protection is sufficient for software. Software is
fundamentally different from other technologies. The product
cycles are shorter than patent processing times. The software
industry rarely has quantum breakthroughs that are worthy of
patent protection. If there must be software patents, a prior art
database must be developed and the patent life should be reduced
to three years. Patent review should be more competitive.
Software patent examiners must be trained and paid well.
DENNIS FERNANDEZ OF FENWICK AND WEST says the two to three
year backlog of patent applications hurts owners. Overall,
however, software patents do no significantly impact business.
Companies can design around other patents or obtain reasonable
licensing fees.
STEVEN HENRY OF WOLF GREENFIELD & SACKS says the re-
examination process now favors the examiner's position at the
expense of challengers. He is now involved with company that
couldn't get funding without having filed for a patent. Investors
ask him about patent protection often in regards to investments.
ROBERT MAY OF ICONIC INTERACTIVE supports both software and
interface patents. Clients want indemnification for prior art
infringement, but searches are expensive.
NEIL BROWN, A SOFTWARE CONTRACTOR, is against software
algorithm patents. Software patents will hurt innovation. Access
to prior art is difficult, and prior art determination could be
intractable. Software patents are a blight. Copyright and trade
secrets are sufficient.
GORDON IRLAM OF THE LEAGUE FOR PROGRAMMING Freedom prefers
traditional "literal aspects" copyright doctrine. He opposes
"look & feel"copyrights and patents. Large successful companies
don't rely on software patents to grow in the software industry,
like Microsoft. Software patenting needs economic analysis.
E. ROBERT YOCHES OF FINNEGAN HENDERSON Farabow Garrett &
Dunner says investors prefer patents over trade secrets, which
they feel can easily become public. Software is easy to design
around, so it does promote innovation without restraining trade.
JIM SHAY OF MORRISON AND FOERSTER says the software industry
benefits from patents. Patent examiners don't have best access to
prior art. The patent office should work closely with industry
groups. Pre-publication and open reexamination would help.
JIM WARREN, DIRECTOR OF AUTODESK, says software mimics the
mind. Extending patents to software allows monopolies of
intellectual processes. There is no evidence that patents promote
software progress. Autodesk wastes money filing defensive
software patents and spends millions of dollars fending off
frivolous lawsuits.
PAUL LIPPE, GENERAL COUNSEL OF SYNOPSYS, says the first
company to market has an advantage equal to patent monopoly
protection. There are not any good technologists at the Patent
Office, which will increasingly become a problem as the worlds of
hardware and software converge.
RONALD LAURIE OF WEIL GOTSHAL & MANGES says the notion that
"Software patents are bad" is legally unsound. It should be
irrelevant whether a process is based on mathematical or logical
operations. There is no distinction between hardware and software
solutions. Novelty and non-obviousness standards must be applied
rigorously.
LEE PATCH, GENERAL COUNSEL OF SUN Microsystems, says the
system is broken, creating too much uncertainty, affecting large
financial decisions. Poor patents are being issued because the
prior art and non-obvious threshold is too low.
WILLIAM NEUKOM, VICE PRESIDENT OF MICROSOFT, supports
improving the reexamination process. A better software prior art
database and prompt processing of applications are also needed.
Microsoft did not have any patent lawyers two years ago but will
have six by the end of the year.
RICHARD STALLMAN OF THE LEAGUE FOR PROGRAMMING Freedom says
software development is evolutionary. There are few quantum jumps
and little novelty. The country has had plenty of progress
without software patents.
VICTOR SIBER, SENIOR COUNSEL OF IBM CORP., says patents help
gain access to foreign markets. The patent office should do a
better job of checking for novelty. Standards should not be
altered for software patents. Hardware and software too
interrelated.
MICHAEL LACHUCK OF POMS SMITH LANDE & ROSE says clever patent
drafters will always get around any set of rules. He opposes
pre-publication. Reexamination procedures should be improved.
Aharonian is president of Source Translation & Optimization of
Belmont, Massachusetts. He maintains a database with information
on 15,000 government, university, and corporate computer
programs, 5,000 software patents, and 100,000 technical reports
and articles. He can be reached at 617 489 3727 or at
srctran@world.std.com.
----------Cut here----------
ENCRYPTION A HO-HUM AFFAIR SO FAR FOR CONSUMERS
The Administration's decision to go forward with the
controversial Clipper Chip technology has once again fanned the
encryption flames.
Nearly everyone, civil libertarians, computer makers,
exporters, is up in arms_everyone, that is, except Joe Consumer,
who so far thinks encryption is a big yawn.
The first industrial-strength commercial encryption product is
off to a modest start. ViaCrypt PGP has been publicly available
since late last year, but its owner, Lemcom Systems, Inc., of
Phoenix, Arizona, has only sold a few hundred copies, according
to Leonard Mikus, president of the ViaCrypt division. "It's not
taking off like Lotus 1-2-3," he says.
ViaCrypt PGP sells for $100. Because Lemcom does not plan to
export the product, it contains stronger, more secure coding
techniques than other commercial products.
ViaCrypt PGP is a commercial version of the underground PGP
encryption product now the subject of a government investigation.
The U.S. Attorney's Office is looking into how the so-called
freeware software product made its way overseas in violation of
U.S. export laws.
Government officials are worried that PGP, which stands for
Pretty Good Privacy, is too good and can't be broken.
The Clipper Chip technology is based on secret algorithms
developed by the super-secret National Security Agency. The
government will use it internally to scramble voice and data
signals and hopes private industry will also embrace the
technology.
Privacy advocates criticize the Clipper because there is no
independent way to assess it security and because government
agencies will be able to obtain court orders to decode the secret
messages.
The Computer Professionals for Social Responsibility is
considering litigation that would force disclosure of documents
related to development of the Clipper proposal.
Corporations worry that consumers, especially those overseas,
won't trust a U.S. government-developed encryption product.
----------Cut here----------
WARMING UP TO THE OPPOSITION
Bruce Forrest, the Justice Department lawyer who handled the
appeal of Bell Atlantic Corp.'s video programming victory, was
supposed to receive a present after press time.
John Thorne, an inhouse Bell Atlantic lawyer, sent Forrest a
light olive-brown warm-up suit, with a brief note: "It's a
gag_not a warmup suit."
During oral arguments on February 7, Forrest argued that the
ban against telephone company entry into the cable business was
so tailored that it qualified as a "warm up suit, if not a body
stocking."
When Bell Atlantic counsel Laurence Tribe stood up, he
responded, the ban was "neither a warm-up suit or a body stocking
but a gag," as in a prior restraint.
----------Cut here----------
POOR MAN'S INFORMATION HIGHWAY
Forget about interactive multimedia, video-on-demand, and
other fancy whiz-bang devices. Most consumer's journey on the
information highway will begin with a telephone call.
Newspapers especially are rushing to offer the ability to
provide information and advertising over the telephone. Users
would pay 50 cents to call a simple three-digit number, such as
711, and receive information ranging from sports scores and
restaurant reviews to school lunch menus. It's not sexy, but it's
surprisingly popular.
In Atlanta, where newspaper publisher and cable heavy Cox
Communications has a temporary 511 number, about 4,000 users call
each day. That works out to about $720,000 in revenues a year for
a start-up service.
The corporate parents of the Washington Post and Baltimore
Sun are vying for trials in Maryland. The Post is also pushing
hard in Virginia and the District of Columbia, which is taking a
go-slow approach.
As expected, opposition is building. Bell Atlantic, so
forceful in its rights to enter invade other businesses, doesn't
want outsiders users its network to make money on information
services_at least not yet.
Bell Atlantic does not want individual service providers to
monopolize individual N11 numbers. Rather, it wants users to
pre-subscribe to services so that when they call, say, 611, they
are automatically routed to their selected provider, whether it
is the Washington Post, Baltimore Sun or any of potentially
hundreds other providers. The Bell Atlantic approach would even
allow users to be routed to a menu of providers.
The advanced intelligent network features that would make this
all possible, however, are not yet commercial available.
American Telephone and Telegraph Co. has also expressed
reservations when the Federal Communications Commission was
reviewing N11 services two years ago. Both AT&T and MCI are
watching Maryland closely. They would prefer a nationwide number
such as 411 is universally associated with directory assistance.
The FCC, however, seems in no hurry to act_a fact that N11
supporters interpret as open season for states to make
assignments.
The staggering aspects of N11 are its ease and potential.
Nearly everyone can dial three digits, while few people can
program their VCR and fewer still own a modem.
More than 16 million users now call the Washington Post's free
seven-digit telephone number. If they were converted to 50 cent
N11 calls, the Post would generate $8 million in revenues.
----------Cut here----------
VIDEO DIALTONE BACKLOG
A traffic jam is developing in the Federal Communications
Commission, caused by the surge of video dial tone applicants.
At press time, twelve telephone companies await action on
their requests to act as common carriers of video signals.
Of the twelve, two are more important than the rest. Those
two applications, submitted by New Jersey Telephone, a Bell
Atlantic subsidiary, were the first to request full-blown
service, rather than a trial run. They will likey be guideposts
for other applicants requesting full service, setting the path
that those who came later must follow. Eight other full-service
offerings have been submitted since the New Jersey Telephone
applications.
The FCC has been sitting on the New Jersey Bell applications
since October. They have been held up by the press of other
business, staff changes, including the arrivial of Chairman Reed
Hundt, and difficult policy choices.
For example, New Jersey Bell proposes to allow one customer
to use up to one- half of each system's channel capacity. Its
original applications, which were returned this summer by the
commission, allocated 60 of 64 channels of initial capacity to a
single customer. Still, the commission must wrestle with when
capacity obligations diminish the idea of common carriage.
New Jersey Bell has also presented cost information that,
critics argue, proves that ratepayers are vulnerable to
subsidizing the video dial tone service. That concern was
reinforced recently when Pacific Bell assigned only about 13
percent of total network upgrade costs to video dialtone. If
video is such a small part of the picture, critics ask, why does
an adequate network need such a massive overhaul?
These issues are doubly tough because the FCC also has more
than 20 requests to reconsider the video dial tone policy. It is
difficult to rule on the permanent applications without
considering the policy judgments questioned in the
reconsideration petitions. Applications for trial runs, on the
other hand, have moved through the FCC much more smoothly.
Asked when action is expected, one official responded, "That is
the $64,000 question." Another said he expected the New Jersey
Bell applications will be acted on within "weeks, not months."
----------Cut here----------
Range of Video Dial Tones: Status of Trials and Services
APPLICANT: AMERITECH
LOCATIONS: Chicago, Cleveland, Columbus, Indianapolis,
Milwaukee
SCOPE: Fully tariffed service passing 1.2 million homes
ACTION: Filed 2/1
APPLICANT: CHESAPEAKE & POTOMAC TELEPHONE
LOCATIONS: Maryland, Virginia, part of D.C.
SCOPE: Fully tariffed service passing 300,000 homes
ACTION: Notice period ended 2/11
APPLICANT: CHESAPEAKE & POTOMAC TELEPHONE
LOCATION: Arlington
SCOPE: Technical trial underway; market trial of 2,000
homes is proposed
ACTION: Notice period ended 12/27
APPLICANT: NEW YORK TELEPHONE
LOCATION: Manhattan
SCOPE: Technical trial underway in three apartment
buildings with 2,500 homes
ACTION: Authorization granted 6/29/93; New York City has
requested reconsideration
APPLICANT: NEW JERSEY BELL
LOCATION: Dover
SCOPE: Fully tariffed service to 12,000 homes
ACTION: Application revised; pleading closed
APPLICANT: NEW JERSEY BELL
LOCATION: Florham Park
SCOPE: Fully tariffed service to 38,000 homes
ACTION: Application revised; pleading closed
APPLICANT: PACIFIC BELL
LOCATION: Los Angeles
SCOPE: Fully tariffed service to 360,000 homes
ACTION: Notice period ended 2/11
APPLICANT: PACIFIC BELL
LOCATION: Orange County
SCOPE: Fully tariffed service to 210,000 homes
ACTION: Notice period ended 2/11
APPLICANT: PACIFIC BELL
LOCATION: San Diego
SCOPE: Fully tariffed service to 250,000 homes
ACTION: Notice period ended 2/11
APPLICANT: PACIFIC BELL
LOCATION: South San Francisco Bay
SCOPE: Fully tariffed service to 490,000 homes
ACTION: Notice period ended 2/11
APPLICANT: ROCHESTER TELEPHONE
LOCATION: Rochester
SCOPE: Technical and marketing trial to rental complex
with 500 homes
ACTION: Scheduled to start service 3/16
APPLICANT: SOUTHERN NEW ENGLAND TELEPHONE
LOCATION: West Hartford
SCOPE: Unopossed technical and marketing trial to 1,600
homes
ACTION: Authorization granted 11/12; notice period to
expand trial ended 1/21
APPLICANT U S WEST
LOCATION: Boise
SCOPE: Not filed as of press time
ACTION:
APPLICANT U S WEST
LOCATION: Denver
SCOPE: Fully tariffed service to 330,000 homes
ACTION: Filed 1/10
APPLICANT U S WEST
LOCATION: Minneapolis
SCOPE: Fully tariffed service to 292,000 homes
ACTION: Filed 1/18
APPLICANT U S WEST
LOCATION: Omaha
SCOPE: Free technical trial to 2,500 homes; tariffed
market trial to 60,000 homes
ACTION: Authorization granted 12/22
APPLICANT U S WEST
LOCATION: Portland
SCOPE: Fully tariffed service to 132,000 homes
ACTION: Filed 1/18
----------Cut here----------
BOX SCORE: A WHO'S WHO OF LAWYERS IN KEY CASES
BELL ATLANTIC'S REQUEST FOR WAIVER TO FACILITATE MERGER WITH
TELE-COMMUNICATIONS
BELL ATLANTIC
Inhouse Michael Glover, John Thorne, John
Walker, James Young
Kirkland & Ellis Steven Bradbury, Paul Cappuccio
Skadden, Arps, Slate, Jay Birnbaum,
Meagher & Flom C. Benjamin Crisman, Jr.
VIDEO DIALTONE APPLICATIONS
AMERITECH
Inhouse Pamela Andrews, Michael Pabian
PACIFIC TELESIS
Inhouse Alan Ciamporcero, James Wurtz
JOHN SCULLEY V. PETER T. CASERTA and
SPECTRUM INFORMATION TECHNOLOGIES V. JOHN SCULLEY
JOHN SCULLEY
Proskauer Rose Goetz & Arnold Burns
Mendelsohn
PETER CASERTA
LeBoeuf, Lamb, Leiby &
MacRae
SPECTRUM
Kelley, Drye & Warren
MATTHEW BENDER V. WEST PUBLISHING CO.
MATTHEW BENDER
Deutsch, Klagsbrun & David Blasband
Blasband
Irell & Manella Elliot Brown, Morgan Chu, David Nimmer
WEST PUBLISHING CO.
Heins Schatz & Paguin
WEST PUBLISHING V. MITCHELL GROSS AND LEXSCAN DATA CORP.
WEST PUBLISHING
Heins Schatz & Paguin Joseph Musilek
Vaughan & Murphy Charles Murphy, Ellen Scholssberg
MITCHELL GROSS
Brant, Moore, Satt, S. Greer Wells
McDonald & Wells
----------End here----------
| Mark Voorhees | voorhees reports
| | 411 first street
| 636-8931 MCI Mail | brooklyn, ny 11215-2507
| | 1-718-369-0906 (voice)
| markvoor@phantom.com | 1-718-369-3250 (fax)
