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months of issuance (a timeframe supported by the Administration) under
section 323. The counterpart U.K. opposition law provides for an
opposition proceeding within two years after the date of grant, but the
European Patent Convention opposition period is only 9 months. We
respectfully suggest the creation of a reasonably moderate time frame of 12
months by changing the language of section 323 in H.R. 2795 from "9
months" to "12 months."

Further, we recommend allowing anyone who is threatened with a
patent infringement action to file a request for an opposition proceeding
within six months after receiving notice of the patent infringement action.
Without the six-month window for initiation of an opposition proceeding
upon a threat of patent infringement, the opposition proceeding would be
seldom used. Organizations would not likely expend the resources
necessary to monitor the patents of their competitors or the resources
necessary to invalidate a patent in an opposition proceeding without any
tangible economic return. However, an infringement action provides a
sufficient economic incentive to use an opposition proceeding to avoid
paying infringement damages for a questionable patent or a patent of suspect
validity. Moreover, the 6-month window for launching an opposition would
foster a more detailed scrutiny of patents than ordinarily occurs during the
typical 25 hours or less of examination at the PTO.10 We are pleased the

H.R. 2795 contains this second 6-month window.

H.R. 2795 currently requires the new opposition proceeding to be stayed if the owner of the patent files an infringement action during the 9

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month or 6-month windows for filing an opposition. This stay provision should be removed because it encourages costly litigation and allows the patent owner to control the opposition.

Conclusion

Both Visa U.S.A. and The Financial Services Roundtable are strong believers in the U.S. patent process as fundamental to a healthy U.S. economy and robust free enterprise system, and strong believers in the process you have started. With increases in pending patent applications and claims of infringement, there is a need for Congressional debate and frank discussion with members of the financial services industry and the patent community at large. Given the importance of the patent process, the USPTO should be fully funded without fee diversion and given adequate resources to perform its duties. At the same time, it is not enough for the USPTO to turn out patents in greater quantity if those patents are not of the highest quality. I know that Director Dudas shares this view and we appreciate his dedication to patent quality issues. Moreover, because of increases in

frivolous claims of patent infringement, we encourage you to continue your focus on appropriate defenses and other tools for litigation risk management, especially efforts to curb the use of injunctive relief.

We look forward to participating further as you develop and move legislation to improve the patent laws.

Biography

Jonathan Band received a B.A., magna cum laude, Phi Beta Kappa, in 1982 from Harvard College, and a J.D. from Yale Law School in 1985. From

1985 to 2005, Mr. Band worked at the Washington, D.C., office of Morrison & Foerster LLP, including thirteen years as a partner. Mr. Band established

his own law firm in May 2005. Mr. Band helps shape the laws governing intellectual property and the Internet through a combination of legislative and appellate advocacy. He has represented clients with respect to the drafting of the Digital Millennium Copyright Act (DMCA); database protection legislation; the Uniform Computer Information Transactions Act; and other statutes relating to copyrights, privacy, spam, cybersecurity, and indecency. He complements this legislative advocacy by filing amicus briefs in significant cases related to these provisions.

TESTIMONY OF CHUCK FISH

VICE PRESIDENT & CHIEF PATENT COUNSEL

TIME WARNER INC.

BEFORE THE

UNITED STATES SENATE

COMMITTEE ON THE JUDICIARY

SUBCOMMITTEE ON INTELLECTUAL PROPERTY

RECOMMENDED PATENT IMPROVEMENTS

June 14, 2005

Chairman Hatch, Senator Leahy, and Members of the Committee, it is an honor to have the opportunity to appear before you today to discuss recommended improvements to our nation's patent laws. My name is Chuck Fish, and I am Vice President and Chief Patent Counsel of Time Warner Inc.

The patent system as it exists today touches Time Warner's diverse businesses in many ways and works well in a variety of contexts. There are several areas, however, where improvements are sorely needed. The patent remedies environment, which is the subject of today's hearing, is one of the most important. As a large and diverse media company, Time Warner has an enormous and unique interest in the maintenance of strong intellectual property protections in all contexts. We believe that creators and innovators must have the fruits of their intellectual endeavors protected lest this country lose its edge in exporting valuable products like our entertainment and technology products and services.

That strong commitment to intellectual property protection and, in particular today, a strong and enforceable patent system in this country is wholly compatible with repairing a remedy system that has begun to reward not innovation, but hiring tenacious lawyers. Indeed, it

Judiciary Testimony Hearing

June 14, 2005

is critical that the remedial aspects of the patent law and their judicial application strike the right

balance in today's complicated marketplace.

To illustrate problems in the current remedy system, imagine a company (either a large or small company) that brings an exciting new information service to market. The company has invested tens of millions of dollars in research, equipment, marketing, etc. and may have negotiated license arrangements on a variety of patents needed for the service. Then, without warning, the company is hit with a patent infringement suit by another patent owner the company was previously unaware of who owns a patent that relates to a small part of the overall service. The patent owner demands as damages a portion of the monthly fee charged to subscribers for the overall service, including the new information service. In addition, the patent owner asks for an injunction, which would prevent the company from providing the service at all merely as a way to gain leverage and increase the likelihood of a favorable license fee. Thus, the new service can be essentially paralyzed until the patent dispute is resolved.

Certainly, if the patent is valid, and the company truly infringes the patent, a broad range of remedies including the issuance of an injunction may well be justified. However, as is increasingly the case, if the patent is invalid, or the company does not infringe the patent, the array of remedies brought into play through such a lawsuit cannot be justified. The company faces the threat of multi-million dollar damages far higher than the value of the patented component, as well as the threat of having to withdraw the service. The results and the relief in such cases are often unpredictable. Even winning these nuisance lawsuits can cause major damage to a large company, and can bankrupt a small company. In the end, most companies settle with the patent owner rather than run the risk of litigating. Consumers are the real losers,

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