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T.J. Rodgers believes the best way to handle patent enforcers is to be as prickly as possible. “Lawyers are like wolves looking for food,” said Rodgers, CEO of San Jose, Calif.’s Cypress Semiconductor Corp. “I’m like a porcupine. It may be easier to eat something else.” Cypress is one of a growing number of companies willing to go to court to fight off claims of infringement brought by companies that want money for a patent license. It successfully fought five patent infringement suits — three brought by Texas Instruments Inc. and two by EMI Group North America Inc. — and is currently battling the granddaddy of patent enforcement outfits, the Lemelson, Medical, Education and Research Foundation. Slammed by critics as little better than extortionists, patent enforcers are coming under increasing fire from government and the private sector as rank abusers of the patent system. Companies have banded together to fight off enforcers, and some want to change the law to make it more difficult to shut a company down for infringement and to make it easier to challenge a questionable patent held by an enforcement company. But government efforts to rein in potential abuse of the patent system have been hampered as Congress has siphoned money from the U.S. Patent & Trademark Office. The money, corporations and lawyers say, is critical if the PTO is to properly regulate the patent system. “Getting Congress to stop stealing PTO fees is a first step,” said Greg Aharonian, an outspoken critic of the patent system and Internet newsletter publisher, who was himself sued by the patent enforcer TechSearch LLC. “If the patent office had more money it could afford to have examiners spend more time” reviewing patent applications. Like Rodgers, however, some in the private sector aren’t waiting for government action. When The Lemelson Foundation recently filed suit against 135 national retail chains, a group of about 40 decided to join forces and fight. That’s a first when it comes to Lemelson — usually companies fend for themselves when confronted by the foundation. “Along the way if the plaintiffs believe it makes more sense to get rid of Goliath by settling, in a group they will bring more power to the party,” said Kenneth Chiate, a partner in Pillsbury Winthrop’s Los Angeles office. Chiate serves as lead counsel for the retail companies. Despite the expense of litigation, patent attorneys say companies have been taking a tougher stand in recent years. That’s particularly true of foreign companies, long a prime target of patent enforcers. “Five or six years ago people saw foreign companies as easy marks,” said Henry Bunsow, a partner at San Francisco-based Keker & Van Nest. “Five million to 10 million dollars was nothing to them, and they were reluctant to litigate in U.S. courts.” Now, he said, they are much more likely to resist infringement claims by going to court. With the growth in patent licensing, the number of patent suits has doubled in the past decade, from 1,171 in 1991 to 2,484 in 2000, according to data compiled by Paul Janicke, a professor at the University of Houston Law Center. “What impacts the number of patent cases is that more people are getting patents and enforcing them,” Janicke said. But as litigation has grown, the number of cases going to trial has stayed constant. In 1991, 86 patent suits went to trial, compared with 85 in 2000. The relatively flat numbers are “probably a result of licensing activity, alternative dispute resolution and the fear of going to trial as the stakes are higher,” Janicke said. Peter Detkin, assistant general counsel at Intel Corp., says the goal for most companies is still to stay out of court. They are particularly afraid of an injunction that will force them to stop manufacturing an infringing product. Intel is facing just such a situation in a pair of suits brought by patent enforcers who do not make semiconductor products. Detkin is pushing for federal legislation that would prohibit companies from winning an injunction unless they are actively pursuing the patented technology or could fill a void if the defendant’s product were pulled off the market. To date, he has had informal discussions with members of Congress, but legislation has not been introduced. The lack of action is not particularly surprising. Since enacting the Patent Act of 1952, which established today’s patent system, Congress has adopted only two major patent bills. The first measure revised the term that a patent is in force from 17 years from the date of issuance to 20 years from the date a patent application is filed. That eliminated so-called submarine patents made famous by the inventor behind the Lemelson Foundation, Jerome Lemelson. Lemelson waited nearly 30 years before pursuing a patent on his machine vision and bar code technology. Though the technology was being widely used by the time he got the patent, Lemelson was able to extract more than $1 billion in patent licensing fees from dozens of companies. Two years ago, Congress made its second revision — allowing third parties to participate when the PTO re-examines a patent. That’s important for patent enforcement foes because it allows them to weigh in when they believe a patent is overly broad or invalid. This year, Rep. Howard Berman, D-Los Angeles, is going after one of the key moneymakers for patent enforcers — applying computer technology to pre-existing inventions and then patenting the result. Walker Digital Corp. has made a business out of this practice, obtaining more than 70 patents on ways of doing business with Internet technology. “I would like to see a patent system that subjects these patents to more rigorous review, and thus provide greater assurance that they are valid when issued,” Berman said in introducing legislation. Berman’s bill is still in its infancy, but even if passed, it’s likely the PTO will have problems implementing it. That’s because the agency is already feeling a financial pinch. For 10 years, Congress and the White House have been diverting revenue generated by the agency to other programs. For 2002, the Bush Administration calls for withholding $207 million of the agency’s revenue. IP groups and dozens of corporations say this is undermining the agency’s ability to weed out poor patents and re-examine ones that may be overly broad or invalid. Re-examining patent quality is crucial, they say. “I haven’t heard anyone criticize [someone for enforcing] a valid pioneer, breakthrough patent,” said Michael Kirk, executive director of the American Intellectual Property Law Association. “The concern is mostly that there are on occasion patents that are improvidently granted.” That problem, he said, can be addressed by having “a more robust re-examination proceeding.”

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