TESTIMONY SUMMARIES FROM THE PTO HEARING

TESTIMONY SUMMARIES FROM THE PTO HEARING
ON THE STANDARD OF NONOBVIOUSNESS
July 20, 1994
Crystal City, VA

Greg Aharonian
Internet Patent News Service

Last Wednesday (7/20/94), the Patent and Trademark Office held a hearing
at their headquarters in Crystal City. The hearing was to solicit comments
on the standard of nonobviousness as defined in 35 USC 103 and interpreted
by the PTO and the Federal courts. Under 35 USC 103, a patent may not be
obtained ".....if the differences between the subject matter sought to be
patented and the prior art are such the subject matter as a whole would have
been obvious at the time the invention was made to a person having ordinary
skill in the art to which subject matter pertains."

What follows are my notes summarizing the testimony of each speaker. In
general, it was a very interesting hearing and a lot of good observations and
ideas were put forth. There were about 80 attendees and speakers at the
hearing, along with four PTO officials including Commissioner Lehman. The
hearing lasted all day, with 28 people testifying, including a former PTO
commissioner, and Gil Hyatt of microprocessor patent fame.

Interestingly, much of the idle chitchat during the day was about trying
to figure out who or what prompted the PTO to hold the hearings. Some thought
it might have been the software industry complaining about the many obvious
software patents being issued, but there were very few representatives of the
software industry there.

Some summary comments before I present individual testimony. In general,
most agreed that the standard of obviousness in 103 and as elaborated in
Court decisions should not be changed, that is it is a workable definition
that handles most patent applications with no problems. Testifiers asked that
both across examining groups at the PTO, and between the PTO and the Federal
courts, that the standard be applied and interpreted consistently, but that
103 itself should not be changed. Many argued that a stiffer definition would
hurt small companies and American competitiveness by making it harder to get
a patent.

At the same time, people thought that obviousness assessments could be
done better. In particular, many stated (which was music to my ears) that
patent examiners need better access to prior art to provide a better context
in which to assess obviousness and novelty, especially for biotech and
software. Also efforts should be made to allow examiners to interact with
industry more (attending conferences, etc) to help them obtain a feel for
what "skilled in the art" currently implies. Generally though, like at the
software patent hearings last winter, many called for providing the examiners
with better prior art sources and tools. [ Gee, a few more such hearings on
obviousness and software patents and maybe I will finally to raise sufficient
funding to make my large software prior art database generally available.
Any investors reading this feel free to call :-))))) ]

Printed copies of the transcript will be available from the PTO for $25
or so in a few weeks. Machine readable testimony and public comments should
be available at the PTO's Internet node in the near future.

Greg Aharonian
Internet Patent News Service
(for subscription info, send 'help' to [email protected])
(for prior art search services info, send 'prior' to [email protected])

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Pasquale Razzano
New York Intellectual Property Law Association
& Fitzpatrick, Cella, Harper & Scinto - NY

Current standard is appropriate and reasonable. New legislation only if
quality control at PTO can't be improved. Same standard for both prosecution
and litigation. Current standards have helped country be a sci/tech leader.
"Commercial success" doesn't imply non-obvious. Any problems correctable by
PTO examination procedure changes. Approach legislative change with caution.
Different standards should not be used for different fields, as hard to
define boundaries - will cause more lawsuits to established precedents. PTO
should improve prior art sources for biotech and computing.

Cecil Quillen
Putnam, Hayes & Bartlett - DC

"Person ordinarily skilled in the art" definition has been weakened to
that of an unimaginative, conventional thinking, lazy reference researcher.
Now seemingly anything is patentable if it doesn't read exactly identical to
anything existing. Lower standards have diminished US innovations and
foreign competitiveness. Inventors have to file more trivial patents to play
game of lower standards. More trivial patents increase costs of everyone,
detracting from innovation and commercialization. Lower standards cheapen
true innovative patents, become licenses for lawsuits. Suggestion: improve
definition of "skilled in the art" and knowledge of prior art trends. Also,
standards at the PTO and in the courts should be the same.

William Epstein
Biotechnology Industry Organization (BIO)
& Patent Counsel at Hoffmann La Roche - NJ

BIO believes standard should not be changed, but enforced. Compared to
other countries, US has highest standard for examination. Foreign patent
attorneys complain USPTO too rigorous in applying standard. There should be
no disparity between standard used by PTO and the courts. Obviousness should
be backed up evidence and/or scientific reasoning, not subjective belief.
PTO doesn't have good prior art sources, or testing laboratory facilities,
to help consider obviousness. Small biotech companies need tons of money for
development and testing, money raised by having patents. A tougher standard
would result in more appeals of Office actions, appeals smaller companies
could not afford to pay. Current examiner corp good, but need more guidance.

Harold Wegner
Intellectual Property Law Program
George Washington University - DC

Bad broad patents become a patent "tax". Problem is not obviousness
standard, but weak reexamination process. Need strong reliable patents for
investors. Problem is uncertainty of liability due to potential broad bad
patents. Don't need higher standard for patentability, will throw more
activities into the courts like during the 1960's under Black and Douglas.
Upgrade the Board of Appeals. In biotech, process is a mess, a cancer in
Group 1800. It is almost impossible to win a reversal of the Federal Circuit.
Serious problems in biotech. Examiners who force continuations seem to be
heroes, not pariahs.

Edward Tuttle
Tutle International Technology Marketing - FL

Standard should not be made more rigorous, as it will burden the process.
PTO should not meddle with new laws, but improve the examination process.
Canada has nice clear definitions for determining obviousness. Prior art
test of 103 is good enough, as long as examiners have access to good prior
art resources. PTO Disclosure Document should be encouraged and extended.
First-to-file bad because of rapid desemination of knowledge after discovery,
especially when good records are kept which could be leaked. More rigorous
obvious standards would hurt innovation and hinder US global competitiveness.

Keith Stephens
Corporate Counsel
Taligent - CA

Taligent wants refinement of 103, not overhaul. Current application by
PTO of 103 works, but problems arise dealing with what is not a "small change"
worthy of patenting. Secondary considerations are applicable (such as
commercial success) beyond main 103 criteria. PTO needs to apply 103 tests
consistently. Need more justification than "hindsight", such as modification
of the prior art, even for something as obvious as software. There should be
one standard for all technologies. More training for examiners is needed, as
well as paying them higher wages. Need better prior art search tools and
resources. Companies need quality patent they can take to investors, to
stimulate investments. PTO is summarily rejecting software based on combining
old ideas, from Taligent's experience.

Rene Tegtmeyer
Section of Intellectual Property Law
American Bar Association - IL

Present standard should be maintained. No need to raise standards, which
could hurt US competing in international markets. Standard is well developed
in the laws, changes taking years to resolve in the courts. Shouldn't
experiment with 103 - too important. Impact of change difficult to predict.
103 criteria workable when applied properly. No need to have different
examining groups using different standards, though there is some evidence that
some examiners are so doing. Current test of "combining features in the
prior art" sufficient. Problems due to poor prior art sources and search
tools, and examiner experience who need more legal training and time for
examination. Improve reexamination process to correct faulty issued patents.

Edward Pencoske
Kirkpatrick & Lockhart - PA

No need for more rigorous standard of obviousness. Rich body of case
law helpful. Same standard should hold for all examining groups, though
some empirical evidence of fluctuations in Group practices. Better prior
art consideration needed, and consistently of application. Secondary
considerations such as commercial success should be deemed relevant.
Hindsight combining of prior art not enough for obviousness. Misapplication
for software patents being issued: lack of prior art, examiner inexperience,
and claim drafting. Too often patents are drafted too broadly. Applicants
should be encouraged to provide reference numerals in claims to preferred
embodiments, as is done in European patent applications, especially since
more and more US companies are filing overseas through EPO and the PCT.

George Margolin
Newport Beach, CA

Obviousness is in the eye of the beholder. How do you objectively
determine? It seems examiners over apply obviousness tests, though patents
eventually issue somewhat modified. Were "Post-It-Notes", Velcro, obvious?
After the fact, yes. Before, well who decides? Don't change standard and
complicate the patenting system.

Raymond Loyer
Patent Counsel
Monsanto - MO

Patents essential to Monsanto. No need to change standard. Apply the
103 criteria uniformly. More rigorous standards would lead to confusion.
Standard is being applied differently across groups, but it should not be
applied differently. Secondary considerations should be considered during
obviousness determinations. Better prior art access and interpretation by
examiners. PTO and courts should use same standard. Stricter standards
would hurt US industry. Present standard could be applied more consistently
and completely.

Jenny Servo
President
United Inventors Association - NY

It seems big companies and foreign companies are complaining more than
others. Their criticism is not for better law, but their bottom line.
Japanese surround-strategy is not fought by higher standards. Small business
is important to US economy and their interests should be served. Small
business concerns are well addressed with current US standards of obviousness,
which should be maintained. This way, when they license to big companies,
they can be assured that their rights will be held up in courts. In general,
harmonization advocates are bargaining away patent constitutional rights for
concessions from foreign countries, rights important to small companies.

[NOTE: There are too many people claiming to champion the interests of small
company and individual inventors. It was nice to hear someone who practices
what she preaches.]

Georg Kirsch
Hoechst AG
& Connolly and Hutz - DE

Hoechst applies/receives 400 US patents a year. Current standards are
acceptable. EPO and USPTO standards should be harmonized. Secondary
considerations should be considered carefully - marketing gimmicks don't
mean innovation. PTO and courts should use same standards.

Roger Smith
President
Intellectual Property Owners - DC

IPO sees no need for more rigorous standards. Improvements needed in
administration, which will be sufficient. Stability is important. Different
examiners interpret differently. All fields should have same level of
interpretation for 103 standard. Secondary considerations should be allowed.
Examiners should go on field trips to remain current. Guidelines needed for
"prima facie" arguments. A different standard probably wouldn't help US
industrial competitiveness. Need better prior art for software, and better
qualified examiners. Biotech needs better examiners. A more rigorous 103
standard would hurt US companies.

Raymond Damadian
President
Fonar Corporation - NY

Interested in small inventor concerns. Ultimately interests of US public
are paramount. If his MRI patents had been enforced, $500 million medical
device trade imbalance with Japan and Germany would be much less. Don't
need more rigorous standards, but better enforcement. We need more public
awareness of importance of patents. It is harder/riskier to steal a chocolate
candy bar than to steal the patent rights on a chocolate candy bar.

Lloyd McAulay
McAulay Fisher Nissen Goldberg & Kiel - NY

Incentive to design around, which often leads to more innovation, is
compatible with current standards, not more rigorous ones. [NOTE: I found
his argument on side effects of patent standards quite interesting].
Sometimes even bad patents lead to commercial success (company with an
unpatentable idea still gets a patent and raises money and becomes a success),
but wouldn't if more rigorous standards were used. Don't want to proliferate
additional court cases and precedents and doctrine - big hassles. Examiners
need better prior art sources to guide claim scoping.

Maxim Waldbaum
Federation Internationale des Conseils en Propriete Industrielle
& Fried Frank Harris Shriver Johnson - NY

Patent system is not broken. Standards are fine, don't need more rigorous
standards, potential harm to small inventors and businesses, who can't afford
appellate procedure where more rigorous standards would be argued. Secondary
considerations are important to obviousness, and comes up in litigation often,
rarely during patent prosecution. Federal circuit has a good body of law
built up over the years with current standards. Rather, need examiners with
more knowledge of current activities and prior art, especially software.
Need better trained examiners, who believe in patent examination as a career
profession, not a three year stepping stone to being a patent lawyer.

Gilbert Hyatt
Las Vegas - NV

More rigorous standards would weaken US industry, and take years to resolve
all new conflicts and interpretations. Secondary considerations should be
applicable to obviousness determinations. Hindsight an easy trap to fall
into. Strong patent system essential to competitiveness of US companies.

Gary Newtson
President
American Intellectual Property Law Association - VA

Four decades of current standards useful. See no need for changing
standards. Want court and PTO to use standards the same way. More rigorous
standards will complicate efforts, and not sure if it will help US corporate
competitiveness. No evidence that current standards are having a negative
effect. Changes can't anticipate future technology trends. Examiners need
more legal training to enforce standard. Need more examiner contact with real
world activities, so they can better understand "skill in the art". Obvious
standard interpretation varies examiner to examiner, which it shouldn't.

Susan Perkins
Campbell & Flores - CA

I was a former patent examiner in biotech for four years, and want to talk
about an issue unique to biotech/chemistry: genus/species relationship. The
courts need to articulate a clearer standard. If prior art genus encompasses
species, PTO says obvious. I argue not, too strict. PTO not following
"in re Baird [sic?]". Instead of "per se" standard, have a standard that
looks at total environment. If genus is hugh, how obvious is one species
never before specifically highlighted.

Donald Banner
Banner, Birch, McKie & Beckett - DC

[Banner is a former commissioner of the PTO]. Applauded new PTO policy
of holding public hearings. More rigorous 103 standard is not needed.
President Carter's [for you President Carter fans] study of the patent system
led to the formation of Court of Appeals of the Federal Circuit, which most
agree has greatly help protecting patent rights. In a sense, US patents are
a form of trade barrier to foreign imports, which is why foreigners want to
weaken US patent rights (first-to-file, tougher obviousness standard, etc.)

Donald Costar
Director Media Relations
United Inventors Association

Speak for independent inventors. More rigorous standard not needed.
Hindsight too subjective, literal read on prior art much better and more
"rigorous". More obstacles will help foreign interests. Need better prior
art provided to examiners. US patents help US economy greatly - don't
jeopardize by experimenting with changes to Section 103.

Robert Stevenson
Intermatic Inc
& Willian, Brinks, Hofer, Gilson & Lione - IL

In many cases, PTO applies low level of standard of obviousness, varying
from examiner to examiner. Applicant should explain unobviousness more
indepth. Patent Office should more strictly adhere to court precedents and
103 criteria. [NOTE: His testimony was a great gambit, as his firm had
just filed an appeal with the PTO commissioner on behalf of Intermatic, and
Stevenson used part of his testimony time to unofficially argue his appeal
before the Commissioner. Lawyers in the audience chuckled, wondering whether
this would help or hurt the formal appeal. Something to remember and use
at future PTO hearings.]

John Tresansky
Kensington - MD

More rigorous standard not needed. Better implementation of 103 criteria
sufficient. Little guidance for examiners to interpret Congress's intention
about 103 criteria. Secondary questions should be part of obvious
determinations, as courts say so, so so should section 103. In what part of
the world should "skilled in the art" be assessed? Is it confined to the
US, or considered globally? Global obviousness determination or declaration
would require a really comprehensive global prior art database.

Frederick Hunter
Chemical Manufacturers Association (CMA)
& Patent Counsel for Lubrizol Corporation - OH

Agrees with most said today. No more rigorous standard needed. Better
consideration of prior art sufficient in light of those "skilled in the prior
art". Members of CMA happy with section 103 in general. Standards should
be administered better. It appears hindsight is being used improperly to
reject claims, forcing costly resubmissions. PTO should follow court
precedents. EPO standards are lower than in the US. PTO should set clear
interpretation policy for examiners, who need more legal training. Courts
and PTO should use same standards. Secondary considerations should be given
some weight in obvious determination.

Gregory Aharonian
Source Translation & Optimization - MA

This was my chance to testify. I addressed the issue of the growing
number of really obvious software patents being issued. I read the first
claims to about a dozen patents, including my candidate for the "MOST
OBVIOUS" software patent, number 5,261,037. I stated that for these patents,
there is tons of prior art in which context these patents are obvious
according to 103 (including reading literally on existing claims), and yet
they were issued. I mentioned that after posting these patents to the
Internet, that I received lots of email messages back providing even more
prior art, and that the consensus of those on the Internet "skilled in the
art", was that these patents were obvious at the time of their submission.
I pointed out that while the average ACM/IEEE software articles references
over two dozen bibliographical items, the average US software patent only
references two non-patent prior art items, and half of all US software patents
reference zero non-patent prior art items. I suggested that applicants be
required to submit some fixed number of non-patent prior art items in their
Disclosure Document. Also, to help the software community better analyze
issued software patents, I again suggested connecting APS to the Internet.

Karl Limbach
Seagate Corporation
and Limbach & Limbach - CA

US only country allowing form factor patents, hurting US industry. Form
factor patents refers to sizes of dimemsions of components in disk drives.
The only new features in such patent claims are new dimensions of an existing
structure claimed in prior patents. Even Courts refer to such claims
disparagingly as "window dressing". Allowance creates confusion with regards
to obviousness. Seagate wants such trivia not-allowable in claims, rejected
under Section 112, paragraph 2. Applicants should show why such claims
should be allowed. Examiners should more strictly enforce section 112.

Paul Kudirka
Boston Patent Law Association (BPLA)
& Cesari and McKenna - MA

BPLA thinks system is working well. Current standard is fine, hard to
define more rigorous standard. Problem is with application of 103 criteria.
Need better prior art searching capabilities. EPO does better searches,
though charge more. Split searching activities from examination. Allow
post-grant opposition. Commission survey papers to establish current levels
of "skilled in the art". Secondary considerations in some circumstances are
very helpful. Combining prior art references should be based on specific
items, not impressions.

Gerald Murphy
Birch, Stewart, Kolasch & Birch - VA

No need for more rigorous standard. Losers of big infringement cases
should not be motivation for changing 103 standard. Different examining
groups apply standards differently. Some chemical and biotech groups have
higher standards. Increasing standard would make it harder to get patent,
hurting US biotech industry. Public needs an effective means for challenging
obvious patents. Current reexamination insufficient, and hard to convince
juries that something is obvious. Have active third parties in reexamination,
handled by an examiner different from the original examiner, who usually is
less inclined to reverse his/her original decision.

Brian Kahin
General Counsel
Interactive Multimedia Association - MA

Standards are too low for patents pertaining to multimedia. Content-media
software publishers suddenly found out patents can hurt. Most multimedia
patents are too obvious, reading on the prior art. Multimedia examiners given
more weight, though industry practitioners more experienced. Hire examiners
knowledgable about multimedia now, not ten years from now (like what had
happened with general software patents). Have a dialog with industry.
Examiners with legal and technical experience should be paired. Open up the
reexamination process. Submitting prior art still risky until active third
party participation permitted (this as an explanation of why few people
submitted prior during the reexamination of the C______'s multimedia patent).
There should be an opposition period. The IMA strongly advocates having
pre-grant publication of patent applications.

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All in all, an informative day of testimony.