We approach patent reform from this context -- very rapidly expanding universe of relevant patents and the continuing explosion of patent applications -- and we believe that patent reform legislation should have two primary objectives: 1. To improve the quality of issued patents. 2. To minimize disruptions caused by litigation, specifically, cases brought by persons in search of a quick buck through settlement negotiations, rather than by a party legitimately asserting a right. DRUGS -AERO Sftwre TOTAL Patent Quality Poor quality patents, as detailed in recent studies by the National Academy of Sciences and the Federal Trade Commission, hamper competition and harm innovation. A questionable patent may lead competitors to forego research and development in a particular area, fearful of the risks that may be involved. Poor quality patents may also require innovators to unnecessarily license thousands of patents. To ensure patent quality, policymakers should focus on three key areas: Adequate Training and Funding. A key concern expressed by many users of the patent system is the lack of patent office resources. We share this concern. When patent offices are adequately staffed and funded, patents are more likely to be awarded promptly and the overall quality of awarded patents is likely to be high-though, to be clear, we believe that quality is far more important than speed. By contrast, when patent offices suffer from inadequate staffing or other resource constraints, patents are both more likely to be delayed or even denied to deserving inventions, and more likely to be granted to inventions that do not, in fact, qualify for protection. Questionable patents, in turn, create uncertainty for software companies and computer companies who must work around the possibility that the patent may be asserted. BSA encourages Congress to ensure that the U.S. Patent and Trademark Office has the resources it needs to conduct patent examinations that are efficient, expedient and of the highest quality. Enactment by the 108th Congress of legislation to provide modest and necessary increases in PTO fees has enabled the agency to begin to provide additional staff and training in certain software-related technology disciplines. These efforts would be greatly complemented by permanently ending the practice of diverting patent application fees to the general treasury. Allowing the Patent and Trademark Office to retain the fees that it generates would help ensure that the Office is able to provide highquality examinations and to fund further improvements. We also applaud the PTO's strategic plan, which will also lead to improvements. Post-Grant Opposition The primary way to challenge a patent under current law is through litigation, a costly and difficult approach. In order to avoid litigation in those cases where it is not truly necessary, Congress should create a meaningful and balanced post- grant opposition procedure enabling third parties to challenge issued patents. Establishing an administrative procedure for post-grant review and opposition would permit important challenges to patent validity, short of litigation. Under such a system, the person opposing the patent should be required to make a suitable threshold showing. An administrative patent judge should preside over the proceedings, permitting crossexamination and carefully circumscribed discovery, and have appropriate sanction authority. Limitations must be included to protect against abuses of this provision, such as undue delay and harassment. The timeframe for initiating an opposition is critical and should be sufficiently long to provide for meaningful assessment of the granted patent; we recommend two years from grant or one year from receiving notice of patent infringement, to enable a person considering filing an opposition to assess the impact and merit of the patent at issue. Furthermore, given the unique circumstance that hundreds or thousands of patents may apply to each of our products, having a second window to address patents of poor quality that may be asserted is necessary in order to make the post-grant review process meaningful. By way of example, our industry frequently adopts standards that have to pick between various different techniques to permit interoperability or exchange of information. At that point, a patent that previously was unimportant can become critical to an entire industry when a patentee tries to take advantage of the uncertainties on claim interpretation and interprets its patent for the first time to cover that standard. This could be years after such an obscure patent has issued. Thus, it is important that the period for oppositions in our industry last much longer than the 9 months many others have suggested. Prior Art Steps should be taken to enhance patent examiners' access to relevant prior art in the examination process. Under current law, a listing of references in the patent file history creates a presumption that the references were considered by the examiner, even in cases where it is apparent that such references were not fully considered. Furthermore, in existing law, an issued patent is presumed valid and any party challenging validity must overcome its burden by "clear and convincing evidence.” As a consequence, although current law does not bar a party from bringing prior art to the attention of the examiner, the presumption that referenced prior art was considered by the examiner, coupled with the high burden necessary to overcome the presumption, severely discourages parties from doing so. To address this imbalance, we recommend changes to the effect that information and references deemed to be considered during examination shall be only those where the Director explicitly indicates the scope and relevance to the examination of such information and references. Moreover, we believe that the evidentiary rule should be "preponderance of the evidence" for challenging the validity of a patent based in whole or in part on information or references not considered during examination. Submissions By Public Of Prior Art With Commentary Under current law, members of the public with relevant prior art information are not free to submit that information to the examiner. The result is that patents are often granted on the basis of incomplete prior art information. To address this issue, we believe Congress should establish a mechanism for the public to submit prior art and other information relevant to patentability. We believe this would increase the likelihood that examiners become aware of most relevant prior art. To prevent the PTO from being buried in a barrage of irrelevant prior art references, persons making such submissions should be required to (1) include an indication of the teaching and applicability of each reference submitted to the patent application at issue, and (2) include a sworn declaration attesting to the relevance and accuracy of the submissions. Patent Harmonization BSA member companies derive a substantial portion of their revenues overseas and hold numerous patents in all major jurisdictions. We support efforts to harmonize U.S. laws with those of other major countries. While we favor harmonization, we are concerned about dramatic changes suggested by some other organizations. First, the U.S. Government is involved in negotiations on patent harmonization and we believe that it would be ill advised for premature action to handcuff the government's negotiating flexibility. Second, the proposals that we have seen go far beyond harmonization and, instead, eliminate longstanding statutory bars, such as the on sale bar and public use bar in current section 102(b). Third, the proposed amendment would limit the public knowledge to a new test where the knowledge is "reasonably effectively accessible," while interjecting into prior art analysis the written description requirements. Given that much of the public knowledge in our industry is often demonstrated by reference to parts of software with millions of components, this would lead to a dramatic scaling back of the scope of prior art in the software and computing industries. Abuses of Continuation Practice Currently, a patent applicant may continue to amend its claims after publication of its patent application. Through these mechanisms, some applicants keep their applications pending for extended periods, while monitoring the developments in the relevant market, and then modifying their claims to cover competitors' products after those competitors have invested significant funds in their products, often in a good faith attempt to avoid infringement. To address this problem, patents should not be issued on any claim that is broader than the broadest claim previously published or issued. Disincentives to Domestic R&D In 1984, the Congress added Section 271 (f) to the patent law to prevent companies from manufacturing parts for an infringing product in the U.S, and exporting those parts for assembly abroad to avoid the claim of infringement. Today, that provision has been |