Patents: A Company Receives a Software Patent and Will Soon Be Seeking Royalties

URL: http://www.nytimes.com/2001/03/26/technology/26PATE.html

Date accessed: 26 March 2001

March 26, 2001
By SABRA CHARTRAND

A software-based system for monitoring telephone calling patterns to detect fraud has won a patent after nine years of scrutiny at the Patent and Trademark Office. During that time, similar systems have been employed in the telecommunications industry, and the company that just won the patent says it now expects anyone using the technology to now license it and pay royalties.

The patent, number 6,185,415, was awarded to John Boatwright, a former chief technology officer for the @Comm Corporation in Burlingame, Calif., which owns the patent. The application was filed in March 1992, and was held up in part because of a dispute with another inventor over who was the first to conceive the idea.

"Since it took so long, this will probably be a surprise," said William Welling, chief executive of @Comm. "Since it goes back so far, and companies have been using this technology for four or five years, and no one has made any claims, everyone probably felt secure."

Mr. Welling said the company's lawyers had sent letters seeking to license this technology to all the major carriers and to the third parties that provide fraud-detection services. He said the list included AT&T , Sprint, Verizon and Excel, and providers of billing software like Compaq and Amdocs .

By recent standards, Mr. Boatwright's patent spent an unusually long time in the pipeline. These days, it usually takes a year and a half to fulfill the patent process from submission of an initial application, requests for additional paperwork, examination by patent agency experts and final issuing of a patent number. And the Patent and Trademark Office says it is still trying to trim that schedule.

Historically, American inventors won a patent for 17 years from the date the patent was issued. But in 1995, the law was changed to award patents for 20 years from the date of the first filing. Now anyone filing a patent and deliberately dragging out the examination process would also see the patent's term eroded in the same period.

The long delay in granting Mr. Boatwright's patent was not deliberate, though, resulting from the administrative processes that arose when the Patent and Trademark Office required that he and another inventor resolve their dispute over who first invented the technology. The other inventor eventually withdrew, Mr. Welling said.

Because Mr. Boatwright's patent application was originally filed in 1992, it has a term of 17 years from its issuance last month. That still gives @Comm plenty of time to pursue royalties.

Mr. Welling said the patent was broad enough that the technology could be applied to any phone system. "It's a profiling scheme," he explained. "The profile is of an individual user or phone number, and you profile the pattern of calling."

He compared it to cubbyholes for mail, with several representing local, long-distance and international calls, and others for time of day and day of week.

"The system gathers information on calling patterns from users and phone numbers, and measures and keeps track on a moving-average basis," he continued. "Say a 14-day moving average. If, as the days progress, usage starts to exceed the average in one cubbyhole, an alarm will go out."

Once the system detects an irregularity, it can automatically restrict access. It might ask the caller to provide a password, or it might transfer him to an operator who asks more detailed identifying questions. It might also simply cut him off from making any more calls.

The system would also send a message to an office or headquarters that something out of the ordinary is going on with a particular user's calling authority. The whole system can be automated so that it does not require a person to analyze the calling pattern or impose any of the restrictions on the caller.

Mr. Welling said telecommunications companies already use similar profiling technologies to look for fraud in calling patterns with telephone credit cards, for example.

"They have in their computers your pattern of usage, and if there is a discrepancy, they flag that," he said. "What they're doing is what we are doing here with this patent."

Though @Comm has notified the major carriers that it intends to defend its patent, Mr. Welling said none of those companies had yet to respond. And he acknowledged that his company did not know how much to expect in royalties from what the telecommunications industry spends on efforts to eliminate fraud.

"All we know is what is reported by various consulting groups about a broad calling category labeled `tel- abuse,' " he said. "That's a catch-all for abuse and fraud, and long-distance fraud is considered to be around $3 or $4 billion. So there's an active effort to limit toll fraud."

Clearly, @Comm would like a piece of that effort, though Mr. Welling added, "We're not talking about hundreds of millions of dollars, but a much more modest number."


Copyright 2001 The New York Times Company

Categories: 2. Patent Law, 18. Value of Patents