Infringement Fears Haunt IBM, Others in Patent Project
Initial testing for an online peer review of up to 250 patent applications is
set for next week even as the program's director deflects fears that participants
could be liable later for willful patent infringement.
IBM Corp., Microsoft Corp. and other technology innovators have funded and
agreed to public review of some software patent applications filed with the
U.S. Patent and Trademark Office. Yet some engineers, attorneys and others worry
whether comments on a rival's application could make them vulnerable later to
willful or deliberate infringement charges.
The potential for triple damages when willful infringement is proven creates
"a lot of fear," says Marc Williams, an official in IBM's governmental
Beth Noveck, the program's director, insists deliberate infringement laws apply
to patents, not applications. She's a professor and director of New York Law
School's Institute for Information Law & Policy, which is running the project.
General Electric Co., Hewlett-Packard Co., Oracle Corp. and Red Hat Inc., which
helped fund the project, are also participating in the program aimed at improving
patent reviews. The goal is to provide government examiners with the most current
and informed opinions of professional, academic and everyday experts, Noveck
said earlier this week at a forum to discuss the project.
The pilot is designed for the scientific community to compile a "top 10
list" of commentary and relevant information on an application for patent
examiners, Noveck said. She hopes to launch the pilot by June 1.
Applicants currently wait up to four years for a first response on many software
applications, but to promote the project the Patent Office has offered to move
applications of program participants to the front of the line.
The project is also intended to drive legislative reform, including changing
the "willful infringement" standard, Noveck said.
Even when willful infringement isn't proven, the stakes are high for companies
that get caught infringing patents.
A federal judge last week instated a permanent injunction against Internet
phone carrier Vonage Holdings Corp. for illegal use of three Verizon Communications
Inc. patents. The decision came after a jury awarded Verizon $58 million plus
5.5 percent of any Vonage revenue garnered from continued infringement of the
patents. In an unrelated case, a federal jury last month ruled that Microsoft
must pay $1.52 billion in damages to France-based Alcatel-Lucent SA for infringing
on two MP3 player patents. Vonage and Microsoft are appealing the rulings.
IBM, which has been the leading U.S. patent recipient every year for more than
a decade, endorses legislation that would require a patent holder to first notify
a company or individual of a willful infringement allegation before filing a
lawsuit. The hope is to reduce lengthy, expensive trials that in many cases
could be handled out of court.
The Patent Office, struggling with a backlog of about 700,000 applications,
also is pushing for legislative help on its fast-track review program, which
has raised separate legal concerns.
Earlier this month, the government issued the first patent under the fast-track
process, which guarantees a decision within one year if a more detailed-than-usual
application is filed that includes necessary relevant information.
Applicants in that program also get to cut to the front of the line versus
a typical wait of between one and six years for an initial response.
At least part of the delay is that competition drives companies to start with
broad patent claims and then refine them to a specific innovation after repeated
denials from patent examiners.
Critics of the program though are concerned about the potential of "inequitable
conduct" court findings that can invalidate patents when companies fail
to submit all relevant information needed to assess whether an application is
Patent Office Director Jon Dudas has said he is addressing the liability concerns
of both programs with lawmakers. Various patent reform bills were introduced
but failed to garner widespread support last year, although congressional aides
from both houses at Monday's forum signals continued interest and the House
Small Business Committee has a patent reform hearing scheduled for Thursday.