Look's like the PTO is going to take a publicity beating over the Energizer Bunny patent. Add to the need for a software prior art database a survey of the software industry to come up with a set of definitions of what is novel and unobvious. The distinction the examiner made to allow the patent is kind of silly. Greg Aharonian Internet Patent News Service (for subscription info, send 'help' to patents@world.std.com) (for prior art search services info, send 'prior' to patents@world.std.com) ============================================================================== *********************************************************** Information Law Alert ||||||||| || |||| * a voorhees report * || || || || * * || || || || * 718-369-0906 * || || ||||||||| * voice * || || || || * 718-369-3250 * || || || || * fax * ||||||||| |||||||| || || markvoor@phantom.com* *********************************************************** 411 First Street, Brooklyn, NY 11215-2507 April 22, 1994 The Applicants That Couldn't Spell Straight Energizer Bunny patent: a bad joke that won't go away The latest patent to exercise the software industry is called the "Energizer Bunny" patent. It is called that because the patent owner wants to collect royalties on a software program that shows the Energizer Bunny flitting across a computer user's screen. The name describes just how silly some software patents have become. Software Advertising Corp., the patent holder, is asking PC Dynamics to pay 5 to 10 percent of sales on screen saver. The screen-saver program has been a smash hit for a specialty product, selling more than 100,000 copies. The street price is $15 to $20. The bunny war is just the opening salvo. Software Advertising hopes PC Dynamics will be the first of many victims to fall and pay royalties. If the world was a fair place, this episode would be the last chapter of a short book titled, "The Applicants That Couldn't Spell Straight: They Just Don't Get It." But the world is not often fair and patent owners too often grossly inflate their contributions to it. And so there is more to tell. Software Advertising says its patent covers any use of advertising within a computer program so long as the ad doesn't interfere with the program. It sort of is like getting a patent on putting a corporate logo on a coffe mug, an analogy Software Advertising's lawyers sharply dispute. Publicity about the patent, which was issued in 1992, surfaced just after the government initially rejected the controversial Compton's NewMedia patent during a re-exam last month. The publicity has only accelerated the swirl of events calling into question the wisdom of many software patents and the patent process. As ridiculous as the patent may seem, PC Dynamics is forced to take the request for royalties seriously. Otherwise, it could be found to be a willful infringer and subject to triple damages. President Peter Avritch received his first overture from Software Advertising in February. He hired James Shay of Morrison & Foerster, a high-profile patent lawyer, to steer him to harbor. Shay is now searching for other patents or printed publications that would invalidate the patent and in conversations with Software Advertising's lawyers. Others in the industry are publicly lobbying Patent Commissioner Bruce Lehman to re-examine this patent, as he did with the Compton's NewMedia patent, which sweeps many of the basic CD-ROM search and retrieval techniques into its path. Even more so than the Compton's NewMedia patent, this patent exposes the frailty of the system in handling software-related inventions, the system's dependence on thorough examinations, and the consequences of a questionable patent landing in the hands of owners who think they have struck gold. AMATEUR HOUR Let's go the videotape. Noorali Pirani and David Ekedal, the operatives behind Software Advertising, applied for the patent in 1989. They two had already developed a software product to estimate masonry jobs for which they registered a copyright. That product meshed both their interests. Pirani, a native of India and graduate of UCLA business school, is a software developer, while Ekedal, a contractor who lays foundations, fashions himself as an inventor. Ekedal holds patents on a tool for working with concrete and an illuminated skateboard. "You're going to laugh when I tell you this," he said about the skateboard invention. Pirani and Ekedal did not retain a lawyer to help prosecute the Energizer Bunny application. It shows. The first application contained nine typos and spelling mistakes, such as spelling "by Novell" as "byovell" and "magazine published" as "maazine puished." In 1991, examiner Jeffrey Brier rejected the claims, which broadly covered displaying ads on a computer screen, because he found that they described an invention that was previously disclosed. Initial rejections, of course, are common. And Pirani and Ekedal did not give up. They amended their application in April 1991. This time, Pirani and Ekedal asked the examiner's assistance if the new claims were not in proper order. But Brier again rejected their amendment, which cancelled the original claims and contained four new ones. As prior art, he cited a automobile game program that displayed pictures of Ferraris and Porsches and an AT&T patent on a form-entry program. This rejection was a final office action and could have ended Pirani and Ekedal's quest. But Brier allowed them to try to refine one of the four claims and whip it into shape. In August and September of 1991, Brier talked on the telephone with Ekedel and Pirani to discuss the rejection. In the second conversation, the two sides worked on a way to overcome Brier's reservations. According to Brier's notes from the conversation, he told them that the AT&T program and the game both required the ad to function properly. If Pirani and Ekedal came back with a claim in which the ad was independent of the function of the program, they might be home free, he suggested. In October, the two inventors returned with the fixes embodied in a single claim. The AT&T patent, they said in their amendment, does not allow more than one advertiser to be placed in a software. Likewise, the car software would not permit a refrigerator company to advertise in place of an auto manufacturer. "The methods advocated by us is [sic] not obvious. Yes, after looking at it, anyone can say that they could do it. But most of the software manufacturers will be delighted to use the methods because those methods will bring extra income to them. The methods which can bring much needed revenue to the software manufacturers can not remain dormant for 25 years if the methods are so obvious," the applicants wrote. The misunderstandings of patent law displayed in the amendment may be understandable for pro se applicants. Where is the novelty? Why wouldn't it be obvious to permit multiple ads in software, if the placement of one is already prior art? Even more basically, why does the claim cover a patentable process at all rather than an unpatentable and routine business method? But what was Brier up to? He was on solid footing when he rejected the claim twice. What he eventually approved hardly seems novel or non-obvious next to what he rejected. Nonetheless, in October, Brier allowed the claim, and in April 1992, the patent issued. Until this winter, however, the patent lay dormant. HERE COMES THE ENFORCER It would have been one thing if Pirani and Ekedel simply continued on their merry pro se way, knocking on doors, seeking royalties or joint ventures on their own. But after surviving on the inexpensive kindness of the patent office they decided to go hire a lawyerDDand not just any lawyer. They retained Louis Knobbe, name partner of Newport Beach, California's Knobbe, Martens, Olson & Bear, a well-regarded intellectual property firm. Knobbe and associate Edward Treska are knocking on doors of companies like PC Dyanmics, trying to get a cut of sales of products that might be construed as containing an ad. Treska declines to say which other companies they have approached. It's not clear why they have targeted screen savers, which don't contain advertising per se. PC Dynamics pays a royalty to Eveready Battery Co. This royalty-seeking effort would likely be happening behind closed doors, except for two things. First, PC Dynamics' president Avritch has been spinning the story every chance he can. He put out a news release complete with canned quotes from such pundits as Michael Miller, editor in chief of PC Magazine, and Bob Metcalfe, publisher of Infoworld. The release even listed a telephone number for Lehman, the patent commissioner. Second, the re-exam of the Compton's New Media patent raised the consciousness of the public and media regarding the problems that software patents can pose. For Lehman, that is a mixed blessing. By taking the rare step or ordering a re-exam, he appeased the Silicon Valley crowd that provided crucial political support to President Clinton during the campaign. But he also invited public lobbying of patents. Let's face it: Nobody wants to pay for something he or she didn't buy. And with many patents covering processes, an infringer has to pay whether he purchased a product from the patent holder or not. Keep in mind that all important patents are controversial and that not all controversial patents are bad. By bending to pressure on arguably bad, controversial patents, Lehman will have a harder time resisting entreaties from those who want to knock out valid, controversial patents. Ruth Ford, spokeswoman for the patent office, says Lehman must decide where to draw the line. "He won't be shy about" ordering re-exams of questionable patents, she says. "But he won't jump every time someone writes a letter." The official response is that the patent office is "looking into" the Energizer Bunny patent in response to letters from PC Dynamics and at least one other party. Lehman is trying to improve the patent system so bad patents don't issue in the first place. But by being willing to take the rare step of re-examing patents, he risks overshadowing the internal improvements. It is more important to issue good patents in the first place than to strangle bad ones in a highly politicized environment. WE'RE IN THIS TOGETHER The irony is that Pirani and Ekedel say they want to lower the cost of software through this patent. They see their patent as the funnel through which the multi-billion software and advertising industries work together. The advertiser would subsidize the purchase price on behalf of the user. There are several things wrong with this picture. Practically, it is a bad idea. Imagine buying Microsoft Word for $50 but then seeing a Pepto Bismal advertisement in the corner of the screen. At least in a movie theater, a viewer can go out and buy candy during the advertisements. There may be a few specialty software programs where users might actually benefit from ads for related products. Users of the patent owners' masonry estimation software might want to see ads from local vendors of masonry equipment or sand and gravel yards on their screen. But those instances will not be revenue gushers. The second flaw is that the two patent owners give themselves far too much credit for discovery. Prodigy was accepting on-line advertising long before Pirani and Ekedal entered the picture. Indeed, they cite Prodigy system as prior art in the application. It's not clear why Brier, the examiner, did not kill the application on the basis of Prodigy alone. In their application, the patent owners attempted to distinguish Prodigy by saying their software does not require a phone or modem. But that seems to be a distinction without a difference if the Prodigy system shows how to do the same thing with stand-alone software. Pirani and Ekedal also said in their application that "the purpose of Prodigy type integration is direct sales while the purpose of [our] integration is additional income to the software manufacturers." The distinction is strictly semantics. Prodigy generates additional income through the ads, and an advertiser on a Pirani /Ekedal system would obviously want to increase sales. What's more, the distinction is based on non-technical aspects of the invention that don't have anything to do with whether it deserves a patent. Treska, Pirani and Ekedal's lawyer, acknowledges that the Prodigy system would likely be an issue in any possible litigation. But he says he's not worried. "I have not seen a piece of prior art that invalidates the patent," he says. PLAYING POKER One of the difficulties in this case is that, short of litigation, it may be difficult to persuade the owners to forget their hopes to earn easy money. If a member of the public or the commissioner orders a re-exam, it is limited to printed prior art. Arguments about prior sale and unpatentable subject material don't matter in a re-exam. And this may be the patent that covers something so obvious nobody thought to write about it. And so what unfolds now, in the words of Shay, PC Dynamics' lawyer, is a game of poker. If PC Dynamics and others simply ignore the requests for royalties, they risk being sued and subject to triple damages based on willful infringement. But by stonewalling, they could also force the owners to spend real money on court costs. Remember, these are owners who saved money by filing the application on their own. Avritch, 35, president of PC Dynamics, an eight-employee company, is not hot on spending lots of money in court. Before the introduction of the Energizer Bunny screen saver, his company was on the brink. And he is still not flush with cash, he says. "Do I send my daughter to college or tell her I stood up for a principle?" he asks. "It's going to cost tens and tens of thousands of dollars if not hundreds of thousands of dollars to get to a judge." Avritch devotes most of his time these days telling his story to trade associations, members of the press, and the industry in hopes that the disinfectant of light will somehow eliminate this nasty patent. "I don't want to be one of those people on C-Span testifying before Congress about how I lost my business and how the system has to be changed," Avritch says. Tactically, the crush of publicity works both ways. It is standard operating procedure of patent owners to pick on a little guy, frighten him into a royalty agreement, and then waive the agreement around threateningly to the big boys. Avritch has cut off that option for Software Advertising. But Software Advertising may inadvertently benefit from the attention. "If this country-wide effort does not turn up any prior art to invalidate the patent, I will feel even better about it," says Treska, the patent lawyer. ----- CUT HERE ----- WHAT THE ENERGIZER BUNNY PATENT SAYS The Energizer Bunny patent consists of one claim, which is printed below in its entirety: A small to full screen commercial advertisement is to be integrated with different types of screens generated by a computer software; and such commercial advertisement is to be integrated by modifying and/or inserting in a data entry, user interface, menu, prompt, help, edit, report, maintenance, error, action, game, sign on and off, and/or other similar screens in such software, wherein said small to a full screen commercial advertisement is to be placed in the different parts of a computer software so that such commercial advertisement becomes an integral part of such software, and yet does not interfere with or alter the original function of such software and is not necessary for the computer software to function.