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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 programs office.

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-worthy.

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.

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