By Declan McCullagh
Staff Writer, CNET News.com
September 13, 2005 4:00 AM PT

But Gould waited to seek a patent on his discovery, believing incorrectly that a working prototype was necessary. Eventually, two other researchers were awarded the basic patents instead.

After a decades-long legal tussle, Gould finally reveled in victory when a federal court ruled that the patent application it had approved did not anticipate the common uses of lasers. The U.S. Patent and Trademark Office then granted Gould lucrative rights to the invention, in part because as a graduate student he had his original research notebooks date-stamped and notarized.

The legal standard that was applied awards patents to the person who invented a concept first, and it has long been a unique feature of the U.S. patent system. This year, however, Congress is about to consider a controversial proposal from Rep. Lamar Smith, a Texas Republican, that would grant a patent to the first person to submit the paperwork
--a standard that's common outside the United States.

The legislation suddenly has become a flash point about everything that's right with the U.S. patent system--and everything that's wrong with it. Technology companies fighting expensive patent cases are hoping the bill will reduce litigation, while open-source advocates say it will do nothing to hinder the rising tide of software patents being issued. Many people feel that the measure will make only modest improvements, if any, to the quality of patents being awarded.

Smith's bill, called the Patent Reform Act of 2005, also has drawn the ire of independent inventors, who have said it will unfairly hurt anyone without a battalion of patent lawyers who can race to the Patent and Trademark Office in Alexandria, Va. The rule probably would have kept Gould from being awarded the laser patents he eventually got.

Smith declined, through a representative, to comment on the bill before a hearing set for Thursday.

The issue has taken on additional urgency because of Smith's ambitious plan to navigate his bill quickly through the House by year's end. Next week's hearing will take place shortly after politicians have returned from their summer break. Meanwhile, a similar measure is being readied in the Senate by Utah Republican Orrin Hatch. Some melding of the two proposals is expected.

The compressed calendar has prompted lobbyists on both sides to scramble. Leading the way are litigation-weary companies, including Microsoft, Apple Computer, Intel and Hewlett-Packard, which quietly worked on the details this spring with Smith's aides and have been pressing other members of Congress to sign on ever since.

Microsoft's patent woes
Microsoft has been especially critical of a legal framework that causes it to spend $100 million a year defending itself against 35 to 40 lawsuits at any one time. But what spurred the company to team up with Smith was a jury that awarded one-man software company Eolas Technologies $565 million in damages--a decision that has been partially reversed--in a patent dispute over Microsoft's Internet Explorer.

"We really feel that there's a litigation lottery," said David Kaefer, Microsoft's director of intellectual-property licensing. "People roll the die and hope that their number comes up big."

Large technology companies love the language in the bill that will make it more difficult to seek court injunctions against alleged infringement, while creating a way to challenge patents after they are granted and recalculating the way damages are decided--in a way that would make large jury awards more difficult to win.

"We feel it would give us significant relief," said Adam Kovacevich, speaking for the Information Technology Industry Council, where he was communications director until recently. The council represents dozens of high-tech companies, including Dell, Apple and IBM. "There are issues where we intend to make the provisions even stronger, but on balance, I think we consider the Smith bill a very good bill for the tech industry," Kovacevich said.

Individual inventors are as critical of the Smith bill as the tech lobby is effusive. By making it more difficult to seek an injunction against an alleged infringer, they claim, the measure will encourage lawbreaking by rewarding intellectual piracy.

"The patent system is a crucial part of what made America great," said Ronald Riley, president of the Professional Inventors Alliance. "The companies who are complaining about the system are bad players, crooks who took great liberties with others' inventions. What they are really complaining about is being held accountable for their disreputable conduct."

Open-source status quo
Altering legal standards for injunctions and permitting post-grant review may grab the attention of corporations and inventors, but advocates of free and open-source software believe that those changes are far too modest.

What's needed, they said, is a radical, bottom-to-top rethinking of the way patents are reviewed and approved, especially those applications seeking patents on programming techniques that should have been obvious to any undergrad in computer science.

"Way too many obvious junk patents have been issued for things that are obvious to any engineer, and those are being used to suppress competition," said Eric Raymond, a free-software advocate. "I don't see this bill fixing that."

Unearthing seemingly bizarre software patents has been made into something of a competitive sport by free-software aficionados. They've spent years laughing at Microsoft's often-successful attempts to patent ideas such as highlighting numbers, adding white space to a document and creating custom "emoticon" smiley faces.

But a serious worry underlies the amusement: What if a company launches a patent attack against open-source programmers? One

Continued ...