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Paul R. Gupta has either landed the client of his career, or he’s going to be spending the next few years chasing a whole flock of wild geese. For the past month and a half, he has been representing a small, Virginia-based company to which the U.S. Patent and Trademark Office (PTO) is about to issue a potentially powerful business-method patent. The PTO has sent his client a “notice of allowances,” which means that imminent issuance is almost a sure thing. The patent will probably issue “before the first snow falls,” predicted Gupta, who is the director of the technology law group at Boston’s Sullivan & Worcester. His client, DE Technologies, of Union Hall, Va., is seeking a patent on a method of performing computer-to-computer international business transactions via the Internet. According to a company press release sent out when the notice of allowances was issued this summer, this broad-based invention is “the most advanced international electronic order entry system that present technology will allow.” MONEY MACHINE If the technology is licensed at even a fraction of a penny for each international Internet transaction, the inventors could reap billions of dollars over the life of the patent. Potential licensors, according to inventor Edward Pool, are “bankers, logistic operators such as steamship carriers and aggregators” — specifically, companies that perform the complex steps involved in international business transactions. Proponents claim that DE Technologies’ system could save companies huge hunks of these transactions’ cost. In a chart posted on the company Web site, at http://www.detechnologies.com/ example_1.htm, DE Technologies projects a savings of up to $9,306 for the export of one automobile with a factory price of $15,000. Pool “invented this system before the general public even knew there was an Internet,” said Gupta. After reviewing both the patent application and the technology itself, he was impressed with the way the invention facilitated international commerce, and he predicted that many companies will eagerly take licenses. But the patent could also become one of this decade’s major litigation targets, if companies doing Internet-based international business view it as a potential commercial chokepoint and race to the courthouse to challenge its validity. Gupta is generally keeping mum about his client’s potential licensing or infringement litigation plans. “Our preferred way of approaching this is to form some strategic alliances and enter into licensing deals,” he said. “I was hired because I am a litigator, but I still think a negotiated approach to this is a better one.” He did acknowledge that Sullivan & Worcester has taken an equity position in the company, but said that that is not, as was reported elsewhere, in lieu of legal fees. Patent specialist Kevin Rivette, head of Cupertino, Calif.’s Aurigin Systems Inc., suggested that the firm’s investment might make for a less than optimal situation. “I’m not saying it’s wrong” for attorneys to invest in their clients, Rivette said. “I know it works beautifully many times. But it sure looks different when there is and when there isn’t a pecuniary relationship.” CRITICAL COMMENTS Some have been quick to criticize DE’s business strategy. Professor Mark Lemley, who frequently lectures on business-method patents at the University of California at Berkeley School of Law (Boalt Hall), criticized DE for sending out press releases before the patent has actually issued. “It might be good marketing strategy, but it’s not very prudent from a patent-law perspective,” he said, pointing out that competitors or the patent commissioner “could still re-evaluate the allowance decision at this stage, especially if enough people complain.” Another skeptic is Jeffrey Brandt, who, when he was at Walker Digital, steered Priceline.com’s key business-method patents through the PTO. Now president of JLB Consulting Inc. of Ridgefield, Conn., he is advising many corporations on business-method patent strategy. He declined to name names, but said that some of his clients have already received letters from DE Technologies exploring potential licenses. Like Lemley, he questioned the wisdom of the pre-issuance announcement. “DE Technologies has taken the position of strongly touting a broad, unissued patent as basic and necessary to the industry. This is a position fraught with the potential for backlash,” he said. “Legally the Patent Office can pull for continued examination of any allowed patent until the actual day of issue. Following the issue date, the commissioner can order a re-examination. Taking a position as has apparently been adopted by DE almost begs for such an action.” Rivette speculated that a desire to attract other investors may have spurred the early announcement. “My hunch is that it’s a numbers game; it creates froth,” he said. WELL-THOUGHT-OUT MOVE But making the announcement, said Gupta, was a well-thought-out decision. In the case of other high-profile business-method patents, “people have said … potential infringers should have been warned. We wanted to deprive anyone of that argument.” And he does not worry about additional patent-office scrutiny of his client’s application. “We may become the poster boy for business-method patents, but they are already well-established legally,” he said. Gregory Aharonian has used his Internet Patent New Service to criticize many recent business-method patents, mainly on the basis of poor prior-art searches on the part of the patent office. But he said that he’s waiting to see DE Technologies’ patent actually issue before he weighs in: “Is the patent an outright ‘bad’ patent? Probably, in its combination of things, I would say no. But will it withstand a well-funded attack on its validity, assuming the patent-powers hold out for a lot of money? Maybe, maybe not.” Meanwhile, Gupta said that he remains confident the patent covers an excellent technology and will issue without a hitch. “I think [Patent] Commissioner [Q. Todd] Dickinson’s challenge is to make his process efficient as Ed Pool’s is going to make international trade.”

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