Is The Patent Office Smothering Software Innovation?

Joe Clark got a scare when he opened a letter from Optical Data Corp. two years ago. The Warren (N.J.) company claimed that Clark's small Seattle-based multimedia publishing company, Video Discovery Inc., may be infringing on Optical Data's two new patents.

But instead of paying royalties to get Optical Data off his back, Clark filed suit last August challenging the patents' validity. His claim: The government should never have awarded Optical Data patents covering such obvious technology as enabling teachers to access pictures and lesson plans from video disks. "They had an enormous club and could literally shut me down," says Clark.

Although Optical Data President William Clark insists the patents were "universally heralded" as unique when they were granted, the company agreed to put one of its patents in the public domain and to submit the second for reexamination by the Commerce Dept.'s Patent & Trademark Office.

The tussle between the two rivals is hardly an anomaly. And mounting criticisms in high-tech industries, particularly multimedia, have not gone unnoticed. A sign that the government understands the high stakes came when the Patent & Trademark Office decided in December to review a controversial patent it granted last summer to Compton's NewMedia Inc., a subsidiary of Chicago-based Tribune Co. Compton claims its patent covers the very idea of multimedia presentation--a contention that, if true, could keep many rivals from flourishing. The Patent Office agreed to reconsider Compton's grant after industry officials complained that it protects linking text, graphics, sound, and data in ways too commonly utilized to be patentable.

In addition, the Administration began holding hearings in January on the scope of intellectual-property protections. "To get a patent, you should really have an invention and not just something that is simply different," says Patent & Trademark Commissioner Bruce Lehman.

"LAND MINES." At the hearings, software makers disagreed on whether more stringent patent examinations would work. Unlike copyright, which covers expression of an idea, a patent gives exclusive rights to the idea itself. Companies can steer clear of copyright violations by avoiding outright parroting of others' work. But patented algorithms--the building blocks of programs--are often hidden deep inside a program, making inadvertent patent infringement hard to avoid. "Patents surface like land mines after someone has developed software independently," says Douglas K. Brotz, principal scientist at Adobe Systems Inc., a leader in desktop-publishing software.

Software companies that own extensive patents argue otherwise. They say rivals that haven't bothered to get patents in the past decade are just sore. And they say U.S. software companies need patents to compete globally. A Japanese company could easily demand steep licensing fees for use of its patents if a U.S. company lacked patents as a bargaining chip.

With industry so divided, Congress is unlikely to bar software patents. Instead, the government will concentrate on avoiding overly broad protections for common technology. Commissioner Lehman wants to hire computer scientists and improve the examiners' library of prior software works. He also backs laws requiring earlier publication of patent applications so competitors don't unwittingly infringe on pending patents. But many companies can't wait for Lehman and the Washington bureaucracy to solve their problems. Like Joe Clark, they will most likely be duking it out on their own.

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