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InterDigital Testimony Highlights Alternate Views on Congressional Patent Reform Bill

LES Award Winning Company Helps Frame Discussion; LES President Comments on Importance of Patent Reform

WASHINGTON, DC, June 7, 2007 - The debate now raging in Congress over patent reform is proving to be a highly multilayered process, with different viewpoints emerging from companies even within the same industry sector. In the high technology field, for example, large technology companies are lining up to push for passage of U.S. Senate Bill S.1145, which would implement sweeping changes to U.S. patent laws, making it easier to challenge invalid patents and limiting damage awards in many infringement cases. However, not all technology companies agree that S.1145 should pass in its current form.

In testimony delivered June 6 before the Senate Judiciary Committee, Bruce Bernstein, chief intellectual property and licensing for InterDigital Communications Corporation, argued that many provisions of the bill would "significantly undermine the enforceability, predictability and value of all patent rights and, in the process, encourage litigation and abuse." InterDigital is a relatively small but highly successful company, known for inventing and developing advanced wireless technologies and products that drive voice and data communications. Technology developed by InterDigital is present in nearly all cell phones, for example.

InterDigital holds over 3,000 U.S. and foreign issued patents combined and has nearly 9,000 patent applications in process. The company has also built a worldwide patent licensing program that has generated more than $1 billion in patent royalty and technology licensing revenues from manufacturers of some of the world's most popular brands, such as Nokia, Samsung, Sony, Ericsson, LG, NEC, Panasonic, Sharp and Research In Motion.

In recognition of its successful licensing program, InterDigital received the prestigious Licensing Achievement Award from the Licensing Executives Society in 2006.

In his testimony, Bernstein challenged the notion that the "error rate" at the U.S. Patent and Trademark Office (USPTO) "has spiraled out of control." "I do not agree," he said. "In fact, in 2006, the USPTO achieved its lowest error rate in 20 years - 3.5 percent, as well as a record low patent allowance rate of 54 percent."

Bernstein went on to say, "Critics of our patent system are now advocating legislative measures that would create additional and more expansive opportunities to invalidate an issued patent without giving the patent holder a fair means of appropriately adjusting the patent's scope and fundamentally change our system of remedies to significantly reduce the cost of patent infringement. The premise of these so-called reforms is that the patent system is broken; the market is flooded with poor quality patents that were erroneously granted; and that patent plaintiffs are predominantly speculators who abuse the system to extract inflated settlements and judgments from large, established manufacturers.

"In InterDigital's view, claims of this type are grossly exaggerated and dangerous in their potential impact on our patent system. "With so much at stake, InterDigital urges the committee to proceed with great care and deliberation before approving measures that could fundamentally devalue American patents and weaken our global competitiveness." Interdigital also took issue with other aspects of the proposed legislation, but added that "much of the Senate bill is commendable, particularly those measures that are carefully tailored to improve patent quality and mitigate the subjective and costly aspects of patent litigation." Allen Baum, president of the Licensing Executives Society, said that InterDigital's testimony is a perfect example of why the patent reform debate is so important.

"Right now we have Congress, the Supreme Court, and the Patent Office all making changes to patent law," he said. "The problem is there is no real coordination of efforts. With all of this change occurring simultaneously, we run the risk that the pendulum will swing too far and that instead of 'tweaking' the system, we will destroy the incentive for innovation. "To ensure a positive outcome for our nation, we urge Congress to take a thoughtful approach to this and think through all the ramifications of patent reform. Our nation is known for innovation and inventions that help drive the global economy, and we must protect this valuable asset."

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Editors: Interviews with Allen Baum are available. Please contact Al Rickard at 703-402-9713 or arickard@associationvision.com.

The Licensing Executives Society (U.S.A. and Canada), Inc. (LES) is a professional society comprised of over 6,000 members engaged in the transfer, use, development, manufacture and marketing of intellectual property. The LES membership includes a wide range of professionals, including business executives, lawyers, licensing consultants, engineers, academicians, scientists and government officials. Many large corporations, professional firms, and universities are represented within the Society's membership. LES (U.S.A. and Canada), Inc. is a member society of the Licensing Executives Society International, which has a worldwide membership of over 13,000 members. LES serves as an independent, professional organization that facilitates global intellectual property commerce through education, networking, standards development and certification.