General IPR Policy Issues Considerations for Developing or Revising PSO IPR Policies

1. Global Standards Collaboration (GSC) 14 General IPR Policy IssuesConsiderations for Developing or Revising PSO IPR Policies Kent Baker TIA DEL

2. Issues Overview • On-going debate around “ex ante” • On-going debate around “Open Standards” • Current robustness of the standards system • Greater government oversight needed or desired? • Does a licensing commitment made to an SSO transfer to a new owner of the patent in question if the patent is transferred?  • Should participants undertake a “voluntary patent search” and share the results with the technical committee? • Need for clarity and precision in IPR policies, does the “practice” follow the “policy”? 

3. “Ex Ante Issues” • Term can be applied to different things • Disclosure that a company has patents that may contain essential claims • Disclosure of commitment to negotiate a license • Disclosure of licensing terms • Group discussion of proposed licensing terms • Timing

4. “Ex Ante” • Most SSOs support ex ante disclosure of: • Patents likely to have essential claims • Commitment to offer a license to essential claims • Voluntary disclosure of licensing terms • Almost no SSOs mandate disclosure of licensing terms or permit group discussion of terms • Legal concerns • Practical concerns • Perceived limited value because • most implementers do not want a license only for essential claims • Most implementers negotiate cross-license agreements customized for their requirements

5. “Open Standards” • Traditional definitions such as the GSC’s and ITU-T’s • Some propose a new definition that would mandate that essential patents are “free to use freely” • Some governments are taking this approach in connection with eGovernment interoperability frameworks • Few (if any) standards would meet the newproposed definition • Potential adverse effectsof proposed definition • On well-respected SSOs who have F/RAND-based IPR policies • On patent holder participation in SSOs • On incentives to innovate in technology areas subject to standardization

6. “Open Standards” • There is no evidence that F/RAND-based standards create a barrier to implementation or inhibit interoperability • Study commissioned by the Danish Parliament • IDC asked to compare 10 SSOs (CEN, Ecma, ETSI, IETF, ISO, ITU, NIST, OASIS, OMG, and W3C) as to how “Open” each of them is • See http://www.itst.dk/arkitektur-og-standarder/Standardisering/Aabnestandarder/baggrundsrapporter/Evaluation%20of%20Ten%20Standard%20Setting%20Organizations.pdf

7. Danish Study Conclusions • Rating SSOs as to how “Open” they are is not either possible or meaningful • “As a result, while the concept of ‘openness’ is central in the development of standards, this concept has been implemented in different ways in different standard setting organizations which renders comparisons difficult.” • “In conclusion there are both similarities and differences between standard setting organizations. They all have high scores in the questions about consensus and open change and they all have focus on ‘openness’ in their strategies. However, there are differences between standard setting organizations in terms of ‘openness’ and certainly in terms of how ‘openness’ is implemented. It can be difficult to make a distinction of which form of ‘openness’ is the most appropriate.”

8. Robustness of the Standards System • Certain interests are advocating that, if the current standards system is not producing truly “Open Standards” that meet the newer proposed definition, then the system “must be broken” • They argue that greater government oversight is needed to force changes they want • The US Government and ANSI have voiced support for the current system • Seewww.ansi.org/news_publications/news_story.aspx?menuid=7&articleid=2166

9. US Government Statement • “In [the U.S. government’s] view, the standard setting process should be voluntary and market-driven. Unnecessary government intervention can impair innovation, standards development, industry competitiveness, and consumer choice …. The U.S. government recognizes its responsibility to the broader public interest by providing financial support for, and promoting the principles of, our standards setting system globally.” (Emphasis added.) • The statement also outlined the benefits of open standards: • The USPTO (representing the US Government) stated the “United States supports and strongly encourages the use of open standards, as traditionally defined, that is, those developed through an open, collaborative process, whether or not intellectual property is involved.”

10. Transfer of the Patent • FTC v. N-Data complaint • Raised issue as to whether a licensing commitment made by the original patent holder is binding on later owners of the patent – does it transfer with the patent itself? • Signed licenses may explicitly address patent transfer • May depend on specific legal jurisdiction

11. Different SSOs Are Reviewing the Issue • Widespread support for the desire for licensing commitments to bind subsequent owners of the patent • Challenge is how to make that happen • Should SSOs require patent holders to take a specific action? • Notify subsequent owner of the commitment? • Bind subsequent owner to the commitment? • Require subsequent owner to bind future owners?

12. Transfer of the Patent • Challenges with policy approaches • To the extent that patent holders are tracking what commitments they make vis-à-vis specific patents, it can be viewed as reasonable to require them to at least provide notice to subsequent holders • General versus specific notice • Additional challenges when a company says “I will license anything I have that ends up being essential on RANDZ (royalty-free) terms” • Not likely that the company will spend money to conduct patent searches to track what it is offering to license for free • SSOs typically do not want to discourage RANDZ commitments

13. Transfer of the Patent • Some SSOs have linked any encouragement or requirement to provide notice to commitments that apply to specific patents • Some SSOs speak to the need to use reasonable efforts to provide at least a general notice to subsequent transferees (e.g., “these patents may be subject to licensing commitments made to SSOs”) • SSOs do not typically require patent holders to undertake an obligation to bind subsequent transferees • Patent holders concerned about being pulled into disputes over F/RAND terms between implementers and subsequent owners of the patent

14. Voluntary Patent Search Issue • Can a group of participants undertake a patent search or patent scan at their own expense vis-à-vis a standard under development? • Yes • Issue is to what degree (a) can they share that information with the technical committee and (b) what the technical committee can do with it? • May be helpful in ascertaining who holds possibly essential patents, especially if they are non-participants and not under the IPR policy

15. Voluntary Patent Search Issue • May be problematic in that: • Might result in too much information, especially about patents that are not likely to be essential • Can lead to the SSO having to send out many inquiries to many patent holders, adding burdens on both sides with possibly limited value • Potential for error and liability • Technical body may not fully understand applicability of the patent searches and how to use them in writing the standard • May lead to debates primarily based upon interpreting applicability of IPR and not making decisions primarily based upon choosing the best appropriate technical requirements

16. Absolute Need for Clarity • Regardless of how an SSO decides it wants to handle any of these issues or other IPR-related issues, it is important that the policy and related guidelines set clear parameters • Benefits SSO because it can minimize disputes • Benefits participants because they then know what they have to do in order to comply with the rules • Benefits courts and government regulators so that they can hold companies accountable in a fair way • Vague policies that do not define requirements and key words clearly can lead courts to rely on the “expectations of the participants.” • Courts may look at BOTH ‘Policy’ and actual ‘Practice’

17. Thank you! andQuestions/Discussion?