View from the U.S.

1. View from the U.S. The Swing of the Pendulum in the Antitrust Focus to IPR Licensing in the SDO Context Lauren S. Albert AXINN, VELTROP & HARKRIDER LLP

2. Where we came from Patent Ambush or Hold-Up • 1995: FTC finds Dell Computer engaged in deceptive conduct by falsely certifying no knowledge of patent covered by SDO. • 2006: FTC finds Rambus engaged in deceptive conduct that allowed it to hold up SDO through patents covering the patented technology AXINN, VELTROP & HARKRIDER LLP

3. Meanwhile the Courts Grapple with the Relationship between IPR and Antitrust Issues • 1997: Ninth Circuit in Image Technical Services, Inc. v. Eastman Kodak Co. affirms Sherman Act liability relating to a unilateral refusal to license intellectual property. • 2001: Federal Circuit in CSU v. Xerox holds patent owners, except in limited circumstances, have an unfettered right to refuse to license its patents • 2006: Supreme Court holds in Illinois Tool Works that ownership of a patent does not create a presumption of market power AXINN, VELTROP & HARKRIDER LLP

4. Where we are today Like Europe, SDOs, to avoid a Rambus situation, are requiring ex ante licensing October 2006: VITA Letter: Approval of policy: (1) requiring disclosure of patents and patent applications; (2) requiring disclosure of irrevocable maximum terms applicable only to the standard; (3) prohibiting horizontal negotiations; (4) providing for arbitration relating to disputes on compliance. AXINN, VELTROP & HARKRIDER LLP

5. Where we are today continued • April 2007: IEEE Letter: Approval of a policy that provides patent holder 5 options if it has a patent essential to the standard: • Provide no assurance • State that it does not hold essential patents • Commit not to assert its patents against implementers of the standard • Commit to license on RAND terms • Commit to maximum price terms or most restrictive terms No remedy for failure to comply AXINN, VELTROP & HARKRIDER LLP

6. Where we are today continued • April 2007: IP2 Report: • Reaffirms holding in CSU v. Xerox that unilateral refusal to license patents generally will not impose antitrust liability • Ex ante consideration of licensing terms are likely to be pro-competitive and will be analyzed under the Rule of Reason AXINN, VELTROP & HARKRIDER LLP

7. Approval of Ex Ante Licensing Does Not Mean the Policy is Lawful • Agencies recognize that they must balance pro-competitive effects from a plan to prevent ambush by requiring ex ante licensing against its anticompetitive effects • Joint negotiations may facilitate horizontal price fixing among the buyers • Joint negotiations also may create monopsonization or buyer market power against patent licensor • Buyer cartel behavior has the potential to damage incentives to innovate, which has long term anticompetitive consequences AXINN, VELTROP & HARKRIDER LLP

8. Ex Ante licensing is not the only way to go • Agencies emphasize that just because they have approved the ex ante licensing procedures in the VITA and IEEE letters, it does not mean that an SDO has to have such a policy for its conduct to be lawful under the antitrust laws • Other ways to prevent hold-up than ex ante licensing: • Patent owners want to protect reputation because they have repeat business • Patent owners are interested in the success of the standard AXINN, VELTROP & HARKRIDER LLP

9. Conclusion Is there any more clarity or just more to worry about?