PATENTS
January 4, 1999
New Technology Revives Old Debate
By TERESA RIORDAN
The technologies may be new, but the debate that promises to dominate the patent industry this year dates from at least the days of Thomas Edison and Alexander Graham Bell.
The debate now centers around whether methods of doing business over the Internet, known as electronic commerce, should be patentable.
"A hundred years ago, the Supreme Court struggled with the same issues that we struggle with today -- how to make our laws responsive to new technologies," said Rick Nydegger, a patent attorney who represents Microsoft Corp. and other companies and teaches intellectual property law at Brigham Young University.
"The question that is being raised with e-commerce was raised with the telegraph and telephone," Nydegger said. "At the time, no one had envisioned using electricity as a way to communicate."
The Supreme Court is expected to decide in the coming weeks
whether to review a July ruling by the U.S. Court of Appeals for the Federal Circuit that, according to some patent experts, represents a potential windfall for those who were among the first to file electronic commerce patent applications. Although no statistics are available, many experts speculate that the case, State Street Bank vs. Signature Financial, has set off a stampede of new electronic commerce applications to the Patent Office.
The ruling affirmed and broadened earlier court decisions as well as Patent Office guidelines on software patents, including electronic commerce patents.
"In the mid-1980s, when I used to lecture on software patents, I would get laughed out of the room," said Robert Greene Sterne, a patent attorney in Washington. "I'd get booed. I'd be called a capitalist pig by software entrepreneurs who thought it
should be owned by the masses."
Now, Sterne notes, filings from companies like Microsoft, which initially rejected the idea of software patents, are tumbling in.
Gregory Aharonian, a patent-search consultant, has long been
critical of the quality of the nation's software patents, and he is no more sanguine about electronic commerce patents. "The e-commerce
patents are about as valid as software patents in general, which
aren't very valid to begin with," he said.
Aharonian contends that the Patent Office does not have the
proper resources to research what is known as "prior art" -- previous inventions that are similar to a new technology. For example, he says, a score of software patents have been issued recently covering solutions to the Year 2000 problem, but none of them mention a paper on the subject produced by IBM in 1986. Such oversights make a patent more vulnerable to legal challenges.
"It's extremely relevant," he said. "But none of the issued Y2K patents have cited it. That's just gross failure."
Q. Todd Dickinson, acting commissioner of the Patent and
Trademark Office, says his agency is doing an admirable job and adds that 20 new patent examiners have been hired recently for the division responsible for reviewing most electronic commerce patents.
How successful have patent-wielding companies been in licensing their electronic commerce technologies so far? It's hard to say: Patent licenses are not publicly recorded.
Sterne, who represents several dozen software companies, says patents are important for small enterprises mostly because they help attract investment capital and provide momentum for initial stock offerings.
"Patents are having a major impact on financing," he said. "The investment banking community, the venture capital community and the angel investing community are becoming very interested in intellectual property."
But Aharonian remains skeptical about the value of electronic commerce patents. "Until they end up in court, nobody's going to know whether they're valid," he said.
Copyright 1999 The New York Times Company |
