Internet Society Panel on Business Method Patents
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Jay: I'd like to suggest something we can do in the spirit of that question. I think here's the challenge and even if we all disagree, I still think we would agree maybe on this. There is no question that we want the highest quality examination. There is no question we want prior art databases that are far more sophisticated than the ones today so we don't ask the courts to eventually tax us all with uncertainty in legal costs. There is no question that the office needs more people and more equipment. There is no question that Congress takes the funds we pay as inventors and siphons off a significant percentage of it to fund other general purpose programs that have nothing to do with the examination.

Instead of investing more of our society's money in higher quality results, they are literally skimming off the top some enormous 20 to 25 percent, I don't know the exact numbers. So, there is no doubt that if we want Todd to do his job and we want better quality and we want better examination and we want other improvements maybe we want to discuss how opposition can be put into the process. We're not going to argue that, but if we don't get on the phone and use the taffy pull to say, look Congress, if you don't at least give them their fees, if you don't at least invest in this area, if you don't at least build open databases that programmers and software people can post things to, if you don't allow examiners maybe to be able to post questions in public in some way that Todd feels is within the rules in the law, then it isn't ever going to get better. So, we've got to support the system for some incremental change quickly that's driven by money and then we've got to support a dialog which I think is perfectly - Larry's perfectly legitimate point - on what in the information age is the meaning of property. What in the information age is the meaning of examination?

Larry: Let's not ask that philosophical question. I mean, philosophy is not the issue. It's a pragmatic question and so I'm completely willing to agree with you. I sign on to doubling no more of these limitations and taking money away from his office - you know, billions of dollars taken away over how many years - complete support for massive increase in the patent office's infrastructure. But then here's the deal I want: We get an agreement that we have a serious analysis, call it a commission, that asks that pragmatic question: Is there good evidence that changing the law as it effectively has been done to expand into business methods and software patents will increase innovation? Is there good evidence?

Jay: We should ask that for jeans. We should ask that across the whole of technology. To single out one area ...

Larry: I agree.

Todd: It's being asked and I think - I thought everyone knew, maybe they don't. The National Science Foundation has commissioned a study which is being done right now on just that very question and I think they're - I think it's going to come out next year. The president of Yale and I think the senior vice president for research at Xerox are heading up the study.

Larry: Right. I wasn't really asking about the nature of the study, but the consequence from the result. I'm saying let's structure the answer in the following way: If it comes out and says there's no good evidence that this will increase innovation then why don't we remove the patent tax that the software industry feels that they have to go through this game of issuing patents when there's no good evidence it's going to do any good and why don't we remove the business-method patent tax that issues for people who want to have business methods in cyberspace when there's no evidence it's going to any good. The consequence of this study should be if it can't show it's going to do some then we should remove this layer of government-issued monopolies and go back to the open-source base that we had before.

Jay: You want a big study group filled with the experts and you want this big study group to decide whether people who are using the patent system are doing a better job at creating value in this society than the people who might be abusing the system and that this study group should sort of decide?

Larry: Patents don't create value, patents allocate value to a patent holder. The value is created independent of the patent and all we're talking about it whether this system will create increased innovation. That's the question and if it doesn't why do we keep it.

Vint: I have a - we're very close to running out of time and I have a lot of people here who want to jump in. You guys are going to get attacked when you get off the stage. One thing that I would like to kind of summarize before we close. Let me just observe that in other matters of intellectual property people have managed to choose whether they are going to protect or not the idea that they've had. Interestingly enough, we were lauded I think inappropriately, Bob and I made a policy decision at DARPA not to patent the technology. This wasn't a voluntary thing, we were paid to work there, but the purpose behind implementing the protocols was to get them out there so everybody could build them so the military would be able to buy any equipment in any networking system from any vendor and make it all work together so they wouldn't be held hostage to any one vendor, software and hardware. That was the principal technological motivation at least as I saw it.

In any case, it seems to me that there might be - you might argue - well you can choose to patent your business process or your software or not and the worry that I would think Larry might put on the table is that if you choose not to do so and someone else takes that same idea and is able to patent it then you may be prevented from using that without paying a license fee.

Todd: That would just be a mistake.

Vint: That would be a mistake. So, this would be a prior art kind of issue.

Todd: If you are not the venturer, you cannot by law govern.

Vint: So, one of the worries that the Internet Society - or the Internet Engineering Task Force guys have is that they worked together on a standard for a period of a year or two and as they come to closure on the standard what we call - have been calling a submarine patent arises which contains arguments and claims about a particular technique which wasn't revealed to the people who are developing the standard and, in fact, predates the development of the standard and so that has raised a number of concerns on the part of the standards makers.

Andrew: Several comments. First of all, I think that standards makers now, I think as they come together, require that all patents or other electrical property developers are a function of the standards we are setting in process are required I think to be dedicated to the public.

Todd: Well let me address the submarine question. Congress has changed the law in several meaningful ways over the last year or two to address that question. That's why we have 18-month publication. That's why we have prior-use exception for business methods. If you have been using a business method and someone later comes along and patents it, Congress carved out a specific exception for that last year in the bill. And, as I mentioned with 18-month publication, that issue of art or of patents that have been too long submerged in the office I think will become much less of a problem, maybe it will be eliminated as a problem. They also changed the law several years ago so that patents are granted - patents are valid for 20 years from the date they're filed, not for 17 years from the date they're issued no matter how many continuations or divisions or other extensions that you might get in the office so people are less incented to submarine patents now because they are cutting into their effective overall time. So there are a number of mechanisms that have come into place in the just the last year or two which deal with that question.

Tim: I'd like to bring up one further issue that relates. A little bit to Jay. You keep bringing up this question of my property, and "can Microsoft take my property?" and I guess I want to put the opposite question to you. A lot of Internet developers who have been of developing in the open-range model, so to speak, feel the way perhaps that, in the Old West, ranchers versus farmers felt. Because the fact is that what we feel is that you're taking away our property. Because once you fence off an area that has been open, we can no longer do some of things that we used to do in that space. And so I think that issues are complex in that there really are two cultures that are, in some sense, at war with each other.

There is a culture that says we're going to carve off an area that we're going to defend as our own. And that actually makes it more difficult for the people who are trying to innovate through sharing [to continue with what they were doing]. And the problem is that here we have a set of technologies that were originally developed through a mechanism of highly evolved sharing. When people come in from the other culture it makes it more difficult for us to do what we did. So we feel that you're threatening our property, which is the property of innovation through imitation and leap frogging. You're trying to impose a culture with legal arguments that basically says, "You can't do that anymore. You have to do it by our rules." And that's the cultural war at the heart of some of this. You know, the lawyers are, in effect, hacking the hackers' system. You know, we talk about hackers but [in this case] the lawyers are hacking the technical world.

Vint: I'm going to have to draw a close to what has been a very stimulating and thought-provoking discussion. I want to thank all of you for joining us tonight. I apologize to all of you whose questions didn't get asked. One is almost tempted to take these and put them on a Web site somewhere just to allow further debate and discussion because certainly they would raise a good deal of interesting questions. Let me thank the panel very, very much for engaging us tonight. And let me thank the Internet Society and Booz Allen and the other sponsors tonight for having allowed us to join you prior to the other debate that's about to take place.

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