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Patent Challengers' Arsenal Boosted

By Anna Marie Stolley

Washington, Oct. 25 (Bloomberg) -- Internet bookselling titans Inc. and Barnes & Inc. probably will spend millions of dollars in lawyers' fees battling over a patent on single-click online purchasing.

There is a cheaper alternative, according to the U.S. Patent and Trademark Office: Barnes & could ask the agency to take a second look at the patent it awarded

The office wants businesses to embrace a revised reexamination process intended to be faster than litigation. There are plenty of skeptics. Many businesses doubt government examiners who already approved a patent will change their minds, experts say.

``Reexamination is tilted so heavily in favor of the patent holder that no reasonable attorney could recommend it to his client,'' said Tim O'Reilly, president of computer book publisher O'Reilly & Associates Inc.

The Patent Office in August adopted revised procedures for reexaminations designed to reassure challengers they have a realistic chance of succeeding on a level playing field. While the changes don't foreclose a lawsuit after reexamination is completed, officials say guarantees of fairer treatment will discourage litigation.

The stakes are high. Right now, a patent holder has exclusive rights to an invention for 20 years from the date the application is filed. Generally, anyone who wants to use it has to pay the holder a licensing fee.

Single-Click Fight

Case in point: The battle between, the world's largest Internet retailer, and Barnes & received a patent in September 1999 for its single- click technology, giving it exclusive rights to use previously stored billing information to permit online ordering with a single click of a computer mouse.

Within weeks, sued Barnes &, alleging its smaller rival's Express Lane feature infringed the single- click patent.

In December, a federal judge in Washington state barred use of Express Lane unless it's significantly modified. An appeals court now must decide whether to uphold the judge's injunction until a trial in May.

It could take years to resolve the court fight. A reexamination procedure takes about 18 months.

Unique Features

Reexamination can be triggered by patent holders seeking to strengthen claims to withstand legal challenges, third parties aiming to escape infringement suits or ensure the validity of patents before entering licensing agreements, or the patent office itself. The office can decline to review a patent, reaffirm it, invalidate it or narrow the scope.

The procedure -- which costs the applicant $2,520 -- has some unique features. Unlike a court case or administrative review, there are no sworn statements taken in advance, formal hearings, witnesses or cross-examination.

The Patent Office's reexamination rules made news last year when the government reconsidered a patent for fixing Y2K computer glitches. Bruce Dickens, an employee with Boeing Co.'s McDonnell Douglas Corp., invented a programming shortcut to fix the Y2K problem.

Dickens asked companies to pay him licensing fees to fix the problem using his invention. Several businesses complained to the patent office that this invention was widely known by programmers before Dickens developed the idea.

The Patent Office is still reviewing this case.

Little Headway

Until now, officials have made little headway in discouraging patent litigation. More than 2,000 patent-infringement suits were filed last year, said Washington attorney Brad Wright, compared with 385 patent reexamination requests.

Over a 20-year period ending June 30, 1999, the patent office threw out a patent in one of every 10 cases it reexamined.

The situation has attracted Congress's attention. It enacted the American Inventors Protection Act last year, enhancing the power of challengers by offering an alternative, optional reexamination process while limiting their ability to sue if they lose administratively.

The Patent Office regards the new law, a compromise between small inventors and corporations, as insufficient.

The agency, already under attack for giving businesses protection against competitors for what many regard as mundane or obvious innovations, is revamping the reexamination process as part of a broader overhaul.

``With the cost of patent litigation becoming very expensive, reexamination has a substantial potential to be a low-cost alternative,'' said Q. Todd Dickinson, the head of the office. The first task is to eliminate the ``appearance of bias'' before businesses will consider it.

Added Review

Since August, examiners no longer are allowed to reevaluate patents they issued. A different examiner gets the assignment. In addition, completed reexaminations are now reviewed by panels composed of the examiner who reevaluated the patent and at least two other officials.

``We do the best job we can, but nobody should expect perfection the first time,'' Dickinson said. The ``original examiner bias,'' he acknowledged, has ``undermined confidence in the system.''

Critics question whether the changes are too incremental.

Intellectual property attorney Hal Wegner, a partner at Foley & Lardner in Washington, said patent examiners may be reluctant to overrule their colleagues and proposed outside experts be picked to conduct the new studies.

The assignment should go to those ``outside the sphere of influence of the everyday examiners who grant patents for a living,'' he said.

-- David L (, October 25, 2000

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