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Statement by Rep. Howard Berman (D-CA).
Re: introduction of HR 5364, the Business Method Patent Improvement Act of 2000.
Date: October 3, 2000.

Editor's Notes:
  Rep. Berman read this statement almost verbatim at a press conference on October 3, 2000.
  Tech Law Journal scanned a paper copy and converted into HTML.
  Copyright Tech Law Journal. All rights reserved.
  See also, story by TLJ, statement by Rep. Boucher, and bill summary by Reps. Berman and Boucher.

Rep. Howard L. Berman
October 3, 2000

Thanks to all of you for coming this morning to hear about Internet and business method patents -- and how and why they're awarded.... an arcane issue that is, nonetheless, of great importance and considerable controversy.

First, I want to thank my colleague, Rick Boucher, who has worked on this legislation, the Business Method Patent Improvement Act, with his customary strong focus and diligence.

It may be hard to believe that a substantial number of individuals have very strong views about the granting of patents for Internet and business strategies and techniques. I guarantee you, however, that the U.S. Patent and Trademark Office has heard from many of them and so have I.

My primary concern in this issue is the protection of intellectual property, which I believe is critical both to innovation and to the economy -- and in that context, I want to make sure that the quality of U.S. patents is the highest possible.

Since the automobile was first offered for sale in a color other than black, car salesmen have methodically provided choices to potential buyers. Recently a method of allowing automobile purchasers to select options for cars ordered over the Internet was patented. Given that auto salesmen have never patented their approach on the salesroom floor, is there a published record of activity of auto salesmen? And was this record considered in the drafting or examining of the patent? Were automobile sales organizations queried on the obviousness of the invention?

These same points can be made about a number of other recently granted patents: One patent owner believes he has a broad patent on the selling of music and movies in electronic form over the Internet. How many Web sites use an "electronic shopping cart" in the manner that has been granted patent number 5,745,681?

I am not saying that any of these patents should be invalidated. However, patents are becoming a critical factor in valuing many New Economy businesses, and that means they are significant to the health of our economy. We must pay attention to those who raise concerns about whether business method patents are being issued for "obvious" inventions or for inventions determined to be novel based on inadequate information about prior inventions.

One issue used in examining business method inventions is whether anyone knew about, or was using the invention before the applicant. This is particularly difficult with Internet and hi-tech practices, since very little published information exists ... and most of what does exist is analogous to 'folk knowledge,' handed from person to person orally or in chat rooms or by e-mail. The PTO needs the proper legal authority to get this non-published prior art into the hands of the examiners. In each case, the question that should be asked is whether the patent owner merely adapted a well known business activity to the Internet in a straight forward manner. Also, we believe there should be a process other than costly, time consuming litigation to challenge a PTO patent grant.

To improve the quality of these types of business related and Internet patents, Mr. Boucher and I have introduced a bill we believe addresses these, among other issues.

  • The bill requires PTO to publish all business method patent applications after 18 months, not just those filed in foreign countries. This will provide the public the opportunity to present information about prior inventions before the invention is patented.
  • It establishes an administrative "Opposition" process where parties can challenge a granted patent in an expeditious, less costly alternative to litigation and finally,
  • The bill provides that where an invention is new only in that it uses a computer to implement the business practice -- the PTO will presume the invention to be obvious, and thus, not patentable. This is a presumption that an applicant can challenge.

There are some who believe that business methods shouldn't be patentable at all. Others argue that current law "ain't broke," so there is no need for Congress to fix it. The bottom line is this: there should be no question that the U.S. patent system produces high quality patents. Since questions have been raised about whether this is the case, the responsibility of Congress is to take a close look at the functioning of the patent system in this very new, and rapidly growing area of patenting.

In introducing this legislation I am not taking a position one way or another as to whether business methods should be patentable -- I tend to think they should be, but I could be persuaded otherwise. I am not wed to the exact provisions of this exact bill. My intent with this legislation is to stimulate the dialogue. We need to air these issues and ultimately (and hopefully quickly) find the proper solutions.


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