Remarks of Mark H. Webbink, Sr. Vice President and General Counsel, Red Hat, Inc., before the House Judiciary Committee on “Patent Reexamination and Small Business Innovation”, June 20, 2002.

Thank you Mr. Chairman, I am testifying today as a representative of both Red Hat, Inc. and the open source community. Red Hat is the world’s premier open source software and Linux operating system provider. Headquartered in Raleigh, North Carolina, Red Hat has a market cap of approximately $1 billion and employs over 640 individuals in offices around the world. From its initial public offering just three short years ago, Red Hat has built a successful business model around the development, aggregation, distribution, and support of open source software, especially the Red Hat Linux operating system, and we have done so without reliance on the patent system to protect our intellectual property. On the contrary, we have encouraged other parties to use our work to build better software and to deploy it.

For those of you not familiar with open source software, it is software that is developed utilizing the Internet and World Wide Web as a development platform. Contributors to open source own the copyright and any patentable inventions in their creations, but they make those creations available for use by others, often without cost or any significant restriction. The Open Source Initiative (“OSI”) defines Open Source as software providing the following rights and obligations:

§No royalty or other fee imposed upon redistribution

§Availability of the source code

§Right to create modifications and derivative works

§May require modified versions to be distributed as the original version plus patches

§No discrimination against persons or groups

§No discrimination against fields of endeavor

§All rights granted must flow through to/with redistributed versions

§The license applies to the program as a whole and each of its components

§The license must not restrict other software, thus permitting the distribution of open source and closed source software together

Some of the most widely used software in the world is open source, including the popular Apache web server software and Sendmail, the workhorse of internet-based e-mail traffic. In fact, many would argue that, without open source software, the Internet would never have occurred.

It may then seem curious that I should come before you today to address the issue of patent reform. The open source community largely disdains patent protection of software. The community does so, in part, because of a strong perception that, by extending patent protection to software, software developers are provided two bites at the intellectual property apple, one under copyright and a second under patent. The open source community also believes that patents on software have actually stifled innovation, rather than promoted it, because software development occurs at a much more rapid pace than one finds in the other patent arts. For example, time to market cycles for software are often measured in months and obsolescence in less than 10 years. By contrast, the time to market cycle alone for most pharmaceuticals is in excess of 10 years. It is understandable then that open source software developers question 20 years of protection on something that took less than three years to develop and which is largely obsolete in less than half the patent term. However, despite this proclivity toward disdaining software patents, neither Red Hat, specifically, nor the open source community, generally, can ignore our patent system and its progeny.

While Red Hat is a publicly traded open source company, the vast majority of open source software is developed by the collaborative efforts of individuals and small businesses. These individuals and businesses do not, for the most part, enjoy the same degree of capitalization or financial freedom to invest in patent protection as the large proprietary software behemoths. These small companies are at a distinct disadvantage under the law in protecting themselves from assertions of patent infringement.

As I have stated in previous testimony given before Board of Science, Technology and Economic Policy of the National Academies of Science in October 2001 and a joint hearing of the Federal Trade Commission and Department of Justice in March 2002, we have seen an exponential increase in software and business method patents in the last decade, many of which are held by just a few companies. There would be nothing per se wrong with this if software and business method patents were subject to the same degree of prior art review as patent applications in the other arts experience. However, it is well established that the body of prior art, and hence the adequacy of the initial examination process, for software and business method patents does not enjoy the same organization, codification, and exposure as with other areas of patent art. As a result, numerous software and business method patents have been granted which do not merit the grant.

Patent litigation is expensive. In fact, I have frequently heard the USPTO’s move toward granting business method patents as the PAFEA, the patent attorneys full employment act, not only because of the volume of applications generated but because of the litigation the resulting patents are certain to spawn. The expense of challenging a patent, or defending a claimed infringement of such patent, is a substantial burden, especially for the small to medium sized business. As a result, it is imperative that the patent system, including the system for seeking reexamination of patents, be as unburdened as possible for third parties seeking to challenge such patents. Such steps ensure a level playing field and protect the public interest. To that end, we endorse House Resolution 1886.

HR1886 seeks to remedy certain fundamental flaws in the reexamination process resulting from ill-advised amendments in prior legislation. Those amendments, while well intentioned, had the effect of rendering the reexamination process of little utility to third parties seeking to defend their work or to ensure an open platform for software development. HR1886 should correct those defects.

To those who would oppose HR1886 on the grounds that it exposes holders of hard won patents to further expense and uncertainty, let us not lose sight of the fact that a patent is a government sanctioned monopoly. Where, as at present, we know that patents have been issued that, were there greater opportunity for public input during the examination process, should not, and would not, have been issued, then it is necessary for the Congress to step in to protect the public interest. Assuring third parties of a fair, open and reasonably inexpensive forum for challenging such patents is not only justified, it is imperative. HR 1886 is a move in the right direction.