|
|
- <?xml version="1.0" encoding="UTF-8" ?>
-
- <html>
- <head>
- <title>FSFE - Analysis on balance - Standardisation and Patents - by Georg Greve</title>
- </head>
-
- <body>
-
- <p align="right">[ <a href="ps.en.pdf">PDF version (94k)</a> ]</p>
-
- <h1 align="center">Analysis on balance:<br />Standardisation and Patents</h1>
-
- <p class="indent"><em>This paper provides an analysis of the
- interaction of patents and standards and finishes with some
- concrete proposals to address the most pressing issues. It was
- written under the assumption of very little background knowledge,
- and therefore provides some of the background necessary to
- understand the issue. An expert in the field should be able to
- skip the Background section.
- </em></p>
-
- <p align="right"><em>
- -- <b><a href="/about/greve/">Georg C. F. Greve</a></b>
- <br />FSFE, President
- <br />2. December 2008
- </em></p>
-
- <h2>Introduction</h2>
-
- <p>Software patents have been a hugely controversial debate, with
- lines of battle drawn primarily between large corporations holding
- large patent portfolios and engaged in multiple cross-licensing
- deals, and the Have-Nots, entrepreneurs, small and medium
- enterprises, and software users from the student using GNU/Linux all
- the way to institutional users in governments.</p>
-
- <p>This debate got a lot quieter with the rejection of the software
- patent directive in 2005. Its place in the headlines was taken by
- other debates, such as standardisation. Open Standards have been a
- buzzword for years, but never has this term been discussed more
- intensively.</p>
-
- <p>On Wednesday, 19 November 2008, both debates met in Brussels at a
- workshop titled
- "<a href="http://ec.europa.eu/enterprise/newsroom/cf/itemshortdetail.cfm?item_id=3371">IPR
- in ICT standardisation</a>", although "Patents in ICT
- standardisation" would have been a more suitable name because the
- discussion was exlusively about the interaction of patents and
- ICT standardisation.</p>
-
- <p>Patents and standards are fundamentally at odds, so many people
- call for a balance between patents and standards. This article
- comments upon the workshop and explains why standards should prevail
- over patents at least in the area of software.</p>
-
- <h2>Background: Patents & Standards 101</h2>
-
- <p>The idea of patents is not new. Its roots lie in the royal
- "litterae patentes" that conferred exclusive rights to certain
- people. Democratic governments eventually took the position of the
- monarchs, and patent legislation has evolved over time, but the
- fundamental characteristics of what is a patent have not
- changed.</p>
-
- <p>Succinctly put, a patent is a monopoly granted for a limited time
- by the government on behalf of its citizens.</p>
-
- <p>The term monopoly has many negative connotations, and for good
- reason. A monopoly stifles innovation and increases price due to the
- absence of competition. On these grounds a monopoly is generally
- understood to be to the detriment of economy and society. It is not
- illegal to obtain a monopoly, but society has a legitimate interest
- in limiting abuse of the power that a monopoly confers, and seeks to
- achieve this through antitrust law.</p>
-
- <p>The monopoly right created by a patent brings with it all side
- effects of a monopoly. It is granted by the state because it is
- understood that the absence of patents might prevent publication of
- breakthroughs, which is understood to be more harmful than granting
- the patent monopoly.</p>
-
- <p>This initial patent deal is based upon disclosure, so that others
- can learn from and build upon a new idea. Lack of useful disclosure
- or advancement of public knowledge translates into the granting of a
- monopoly with no return for society.</p>
-
- <p>Like patents, standards are closely related to disclosure. The root
- of the word standard appears to go back to heraldry, where it refers
- to a symbol that is used to make a rallying point visible in
- battle.</p>
-
- <p>Modern use of the term keeps that meaning of publicly visible point
- of reference, although it has been transferred to other areas. So
- among other things it is understood as "<em>something established by
- authority, custom, or general consent as a model or example</em>" or also
- "<em>a structure built for or serving as a base or support.</em>"
- (from <a href="http://www.merriam-webster.com/dictionary/standard">Merriam-Webster
- On-line dictionary</a>).</p>
-
- <p>In Information and Communication Technologies, a standard has both
- the above meanings. According to
- the <a href="http://www.bsi-global.com/en/Standards-and-Publications/About-standards/What-is-a-standard/">British
- Standards Institution</a> (BSI), a standard is "<em>an agreed, repeatable
- way of doing something. It is a published document that contains a
- technical specification or other precise criteria designed to be
- used consistently as a rule, guideline, or definition. [...] Any
- standard is a collective work. Committees of manufacturers, users,
- research organizations, government departments and consumers work
- together to draw up standards that evolve to meet the demands of
- society and technology. [...]</em>"</p>
-
- <p>The underlying idea is that a standard establishes common ground,
- it provides the means for interoperability and competition. This is
- especially true for ICT due to their strong networking effects. If
- all participants in an ICT market adhere to the same standards and
- make an effort to guarantee interoperability, not only can customers
- choose freely between various products and services, they can also
- exchange information with one another without problems.</p>
-
- <p>In contrast, absence or failure of standardisation warps networking
- effects in a way that monopolisation becomes almost certain. Users
- of one product or service could only interoperate with users of the
- same product or service. Over time, one solution would attain such
- a large user base that other users are de-facto left with the choice
- to join this group, or be unable to communicate fully with the
- majority of users. This could for instance be achieved by bundling
- software with a predominant hardware platform.</p>
-
- <p>So standards are largely an instrument to enable competition for
- the public benefit. The purpose of standards is intrinsicly
- anti-monopolistic.</p>
-
- <p>It is also pro-innovative. Since derivation from a standard
- automatically breaks it, standardisation and innovation seem opposed
- goals, and to some extent they are. But where all changes are done
- in consensus between implementors, the result is an updated version
- of the standard available to all. The second path is innovation on
- top of the standard, using the standard as a base for innovation
- rather than innovating inside the standard.</p>
-
- <p>Due to its global, consensus-driven nature, the first process is
- comparatively slow. Another problem is the substantial barrier to
- entry into the standards process. As a result, large companies are
- overrepresented in comparison to small and medium enterprises (SME).</p>
-
- <p>The second path is open to everyone, private person, SME, or large
- industry. It is also limited only by the speed of development of the
- team making the innovation. If the innovation was made by just one
- party, there will be a temporary monopoly. But given a certain
- maturity, the innovation is then likely to be formalised into a
- standard again, forming the base for the next innovation to be built
- on top.</p>
-
- <p>While the first path allows primarily for slow, small improvements,
- the second path allows for full participation of the economic
- majority and is much better suited for groundbreaking ideas and
- arguably the more important to protect for society.</p>
-
- <h2>Conflict: Fundamentally opposed instruments</h2>
-
- <p>The fundamentally different goals for patents and standards
- surfaced multiple times during the debate, for instance in the
- speech of Mr Karsten Meinhold, chairman of the ETSI IPR Special
- Committee,
- <a href="http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=3635&userservice_id=1&request.id=0">
- who summarised it</a> as "<em>IPRs and Standards serve different
- purposes: IPRs are destined for private exclusive use, Standards are
- intended for public, collective use</em>".</p>
-
- <p>Both patents and standards derive their justification from the
- public benefit, yet upholding one deprives the other of its
- function. Standards seek to counteract monopolies, patents establish
- them. Or, as Tomoko Miyamoto, Senior Counsellor of the Patent Law
- Section in the World Intellectual Property Organization (WIPO) said
- in
- <a href="http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=3633&userservice_id=1&request.id=0">
- her presentation</a>:
- Patent thickets and patent hold-ups may arise from
- certain forms of legitimate exploitation of the exclusive rights
- conferred by patents.</p>
-
- <p>In other words: Conferring these exclusive rights is the intended
- function of the patent system, and legitimate usage of these rights
- brings about consequences of patent thickets and patent
- hold-ups. Allowing patents on standards consequently is an
- intentional act to grant monopolies on standards to certain parties
- that includes the right to block implementation by other
- parties.</p>
-
- <h2>Ex-Ante Disclosure</h2>
-
- <p>There are multiple attempts through which the standardisation
- community has tried to mitigate these effects over the years. One of
- these mechanisms is called "Ex-Ante Disclosure." The parties working
- on a standard use this mechanism to commit to licensing terms while
- the standard is still being drafted. If these terms are not
- acceptable to the other parties working on the standard, the
- technology that is covered by the patent is not included in the
- standard.</p>
-
- <p>What are acceptable terms is highly subjective. A large corporation
- with big patent portfolio and existing cross-licensing agreement
- with the holder of the relevant patents might consider adding one
- more patent to the agreement a minor inconvenience. The same
- situation looks substantially different from the perspective of a
- small or medium enterprise that typically has at most a small patent
- portfolio and has to expect extortionate licensing.</p>
-
- <p>Since SMEs are strongly underrepresented in standardisation, Ex-Ante
- Disclosure is likely to bring more satisfactory results to large
- corporations with large patent portfolios that compete in the same
- area. The economic majority generally has no say about the
- acceptability of the terms.</p>
-
- <p>Another issue of ex-ante disclosure is difficult enforcement, as
- Suzanne Michel, Assistant Director Office of Policy and Coordination
- of the U.S. Federal Trade Commission
- (FTC)
- <a href="http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=3631&userservice_id=1&request.id=0">
- pointed out in her presentation</a>.
- The FTC had found that <a href="http://en.wikipedia.org/w/index.php?title=Rambus&oldid=251605519">Rambus
- Incorporated</a> had joined and attended standardisation meetings of
- the <a href="http://en.wikipedia.org/wiki/JEDEC">Joint Electron
- Device Engineering Council (JEDEC)</a> in order to modify their
- patent applications to cover technology that was under discussion
- for inclusion in future standards. In the opinion of the FTC, this
- behaviour was deceptive, violated JEDEC's disclosure policy, and
- illegaly gave Rambus monopoly power.</p>
-
- <p>The <a href="http://en.wikipedia.org/wiki/United_States_Court_of_Appeals_for_the_District_of_Columbia_Circuit">D.C. Circuit
- Court</a> disagreed with the interpretation of the FTC in their
- April 2008 decision. According to Ms Michel, the court said that
- avoiding so-called
- "<a href="http://en.wikipedia.org/wiki/Reasonable_and_Non_Discriminatory_Licensing">Reasonable
- and Non-Discriminatory</a>" (RAND) licensing terms does not
- constitute abuse, and that there is no proof that JEDEC would have
- avoided technologies if it had known that Rambus was planning to
- use its patents to the fullest extent allowed by law. The court
- also expressed reluctance to make patents unenforceable based on
- vague disclosure policies.</p>
-
- <p>Both patents and standards derive their justification from the
- public benefit. There was no additional disclosure of new technology
- provided by the patents that Rambus filed on the standards that were
- about to be published. Giving Rambus monopoly power over standards
- developed by JEDEC is also detrimental to public interest. So it
- seems likely that a full public interest evaluation of this
- situation would give that indeed the public interest did not prevail
- in this case.</p>
-
- <p>So it would appear that the FTC was correct in its evaluation, and
- so was the court, because establishing time-limited monopolies is
- the very purpose and function of patent law. The role of courts does
- not extend to the undoing of laws and most legislators have not
- given the public interest conflict between patents and standards
- consideration.</p>
-
- <p>JEDEC has meanwhile updated its disclosure policy, which may help
- to avoid similar issues in the future. Considering the value that
- patent law has in relation to standardisation for many courts, only
- a future court case can demonstrate whether the issue has been
- resolved in a way that holds up to formal legal review.</p>
-
- <h2>(F)RAND</h2>
-
- <p>This is true for all standardisation bodies that require ex-ante
- disclosure, which most of them don't. Instead the majority of bodies
- appear to rely on purely voluntary disclosure and the assurance that
- patent holders involved in the process will agree to so-called RAND
- or FRAND
- ("<a href="http://en.wikipedia.org/wiki/Fair,_Reasonable_and_Non_Discriminatory_Licensing">Fair,
- Reasonable and Non Discriminatory</a>") terms.</p>
-
- <p>One common criticism of (F)RAND terms is the lack of a definition
- of what is reasonable and for whom. During the 2006 Internet
- Governance Forum (IGF) in Athens, Susy Struble of Sun Microsystems
- <a href="http://www.youtube.com/watch?v=CNUdqEqjbOQ">pointed out</a>
- that what is reasonable for one party may not be reasonable to
- another.</p>
-
- <p>Licensing practices do indeed vary, and are influenced by various
- factors, including, but not limited to, whether or
- not a company has a stake in the relevant market, and how
- aggressively it pursues its patent revenues.</p>
-
- <p>Additionally, patents can be sold or acquired as part of a business
- restructuring or acquisition. A future patent holder may consider
- different terms reasonable, so could a patent holder who did not
- participate in the standardisation process and never committed even
- to RAND terms.</p>
-
- <p>RAND terms generally amount to a vague assurance to license upon
- request. Such an assurance does not constitute a perpetual license
- on the patent and is not valid for the new holder of a patent. So a
- new holder can choose freely how to enforce the patent, including
- patent hold-ups on all existing implementations of the standard.</p>
-
- <p>As Ms Miyamoto from WIPO pointed out, a patent hold-up is a
- legitimate and intended use of the patent system. So even in a RAND
- regime, there is a substantial amount of uncertainty that invariably
- favors large companies, which not only have deeper pockets, they
- also have larger legal departments and patent portfolios.</p>
-
- <p>It is this uncertainty that has caused great frustration among SMEs,
- which Charles Schulz of Ars Aperta summarised as RAND referring to
- "RANDom licensing at the sight of competitors."
- In
- <a href="http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=3639&userservice_id=1&request.id=0">
- his presentation</a>,
- Mr Schulz also pointed out that (F)RAND terms are
- discriminating against Free Software. Even RAND terms linked to zero
- royalties, the so called RF-on-RAND ("Royalty Free on RAND"),
- RAND-RF ("RAND Royalty Free") or RAND-Z ("RAND with Zero royalties")
- terms often exhibit the same problems because they do not permit
- sublicensing.</p>
-
- <p>Free Software
- (<a href="/documents/freesoftware">a.k.a. Open
- Source, FOSS or FLOSS</a>) is based on the principle that every
- living person and every legal entity can be a user, developer,
- distributor, or any combination of the above. Only conditions which
- permit this to take place are acceptable to Free Software, which is
- <a href="http://www.flossimpact.eu/">estimated</a> to reach 32% of
- all IT services and 4% of European GDP by 2010.</p>
-
- <p>In
- <a href="http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=3641&userservice_id=1&request.id=0">
- her presentation</a>,
- Amy Marasco, General Manager Standards Strategy of
- Microsoft, emphasised that she does not consider Free Software a
- business model. That is true to the same extent that proprietary
- software itself is not a business model. Business models are what is
- built on top of both Free Software and/or proprietary software.</p>
-
- <p>Ms Marasco continued to point out that all these business models
- are legitimate. And while there are strong differences in opinion
- about which software model is the better and more sustainable choice
- for economy and society, from the perspective of a political
- analysis of standards, all business models based upon proprietary
- software, Free Software, or a mixture of the two need to be
- considered valid and legitimate.</p>
-
- <p>As mentioned before, the Free Software related parts of European
- GDP are estimated to reach 4% by 2010. All parties agree that all
- business models, including those incorporating Free Software, are
- legitimate. This raises the question whether it can be considered
- Fair, Reasonable and Non-Discriminatory to exclude this legitimate
- part of economy by choice of patent licensing terms.</p>
-
- <h2>Harm from exclusion?</h2>
-
- <p>The situation bears an odd semblance to the situation with
- <a href="http://en.wikipedia.org/wiki/Counterfeit_drugs">counterfeit
- pharmaceuticals</a>, where the argument for patent enforcement is
- generally accompanied by public health considerations. But only
- effective pharmaceuticals that are identical to the patented product
- would actually violate the patent. Health risks arise primarily
- where the patents are not being violated.</p>
-
- <p>In standards, the situation is somewhat similar. If patents are
- part of a standard, only an implementation that is covered by the
- patents provides an effective antidote to monopolisation. Having to
- circumvent patents will generally break standards compliance and harm the
- public benefit that is the driving force behind standardisation.</p>
-
- <p>So patents in standards have the potential to make full
- interoperability impossible for legitimate businesses in some
- markets. As the aforementioned
- BSI <a href="http://www.bsi-global.com/en/Standards-and-Publications/About-standards/What-is-a-standard/">points
- out</a>: "Standards are designed for voluntary use and do not impose
- any regulations. However, laws and regulations may refer to certain
- standards and make compliance with them compulsory."</p>
-
- <p>Once a technology has been standardised, certain choices are no
- longer made for technological quality. Even where a better solution
- exists that would have the additional value of not violating a
- potential patent on the standard, an implementor would choose to
- follow the technologically inferior standard in order to have full
- access to the market. Such a case reverts the initial idea of
- patenting: The technology is valuable because it is patented, not
- patented because it is valuable.</p>
-
- <p>There are also cases where certain standardisation organisations,
- e.g. the <a href="http://www.iso.org">International Organisation for
- Standardisation</a> (ISO) have a privileged position with
- governments for procurement decisions. Due to patents and
- insufficient (F)RAND conditions, not all standards priviledged in
- this way can be implemented by all legitimate market participants
- that should be able to compete in public tenders.</p>
-
- <p>So through the special priviledge for organisations like ISO which
- accept terms insufficient to guarantee competition, the monopoly
- right conferred by patents translates into an oligopoly or even a
- monopoly for public procurement. This exclusion of competition from
- tenders by means of patents on standards is detrimental to the
- public benefit because it leads to higher prices and consequently
- higher taxes.</p>
-
- <p>Remedies for this situation would have to address the way in which
- governments grant procurement preferences to standards, the way in
- which patents are handled in standards, the patent system itself, or
- a combination of all of the above.</p>
-
- <h2>Attempted remedies</h2>
-
- <p>Good patent research costs around 100.000 EUR per case according to
- Rigo Wenning, Legal Counsel & Patent Policy Team Contact of the
- W3C/ERCIM who spoke about
- "<a href="http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=3636&userservice_id=1&request.id=0">
- Standards, Patents and the Dynamics of Innovation on the Web</a>." The W3C is
- indeed the only Standards Setting Organisation (SSO) that has a
- sufficient patent policy for its standards in order to accomodate
- all legitimate business models.</p>
-
- <p>From the perspective of most SMEs, 100.000 EUR patent research costs
- are prohibitively expensive. But even large companies will find this
- cost considerable, which is only one of the cost generators. More
- damage can be caused by injunctions against a product, or claims for
- damages. In
- his
- <a href="http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=3646&userservice_id=1&request.id=0">
- presentation of IBM's "SoftIP"</a> concept, Roger Burt, Senior Counsel of IBM
- Europe introduces the issues with a quote from a BSA et al. Amicus
- brief in eBay v MercExchange. The quote summarises the problems of
- large industry rather well:</p>
-
- <quote class="indent"><em>"Technology products typically consist of hundreds or
- thousands of patented components. It therefore is impossible for
- technology companies to investigate all of the patents, and pending
- patent applications that may be relevant to a new invention (product),
- notwithstanding their best efforts to do so. When, as frequently
- occurs, the claim of infringement is not made until after the new
- product is released or the industry standard has been adopted,
- designing around the claim is no longer a realistic option. Because an
- injunction will issue automatically upon a finding of infringement –
- even if the claim relates to an insignificant part of the product –
- the target of the claim is forced to pay an extortionate settlement in
- order to preserve its business."</em></quote>
-
- <p>Another attempt to keep patents fees from becoming exorbitant even
- for the largest corporations was introduced by Tim Frain, Director
- IPR regulatory affairs, Nokia in his presentation about
-
- "<a href="http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=3649&userservice_id=1&request.id=0">
- FRAND Best Practice</a>."
- Mr Frain advocates a system based on "Aggregated
- Reasonable Terms" & "Proportionality" (ART+P).</p>
-
- <p>The underlying idea of this approach is that if every patent holder
- individually charges patent fees they consider Fair, Reasonable and
- Non-Discriminatory, the resulting fees may easily add up to 50% or
- more of the cost for the end product. So all patent holders should
- commit ex-ante that the aggregate licensing cost for all patents
- should be reasonable. As an example, Mr Frain cited that in Nokia's
- view, the patent licensing fees on the communication technology for
- mobile phones should be below 10% per handset.</p>
-
- <p>Both approaches are attempts to control the use of monopolies
- granted by patents and as such are trying to get voluntary buy-in
- from other parties to not exercise rights that the patent system has
- granted them.</p>
-
- <p>Unfortunately they both fall short of the criterion of
- non-discrimination against legitimate business models, and the ART+P
- approach also has the practical weakness that convergence joins more
- than one kind of technology per device, so the total patent
- royalties on a smart phone may still reach 50% even if the costs for
- GSM & Co are limited to 10%. But even these 10% can be
- considerable for laptops with included UMTS modems, or embedded
- devices, an area in which the profit margins are typically far below
- 10%.</p>
-
- <p>To put it in the form of a controversial question: Is it fair and
- reasonable that patent holders receive a higher monopoly rent than
- an innovative company stands to gain by bringing out a new product
- and bearing all the risk associated with it?</p>
-
- <h2>Cui bono?</h2>
-
- <p>So who benefits? As explained before, patents are designed as a trade-off. Their
- benefits are often explained with the lone inventor having a genius
- idea. Would it be fair if this inventor published the idea only to
- see a large company bring it to market faster than the inventor
- could, with no financial reward for the inventor? Most people would
- agree this is not fair.</p>
-
- <p>In the absence of patents, such an inventor could only choose
- between accepting fate, or keeping the innovation secret for as long
- as possible while trying to bring it to market. Patents grant a
- temporary monopoly for the inventor in return for publication, such
- that the inventor can find investors, set up a company, finish
- product development, bring it to market, and enjoy a head start
- before others can compete normally.</p>
-
- <p>This mechanism seems to have worked reasonably well for some time
- in the past. But some basic parameters have changed, while patents
- have been extended in an essentially unreflected way to more
- areas. This is particularly true for software, where patents play no
- meaningful role in disclosure, breaking the patent deal for society
- whereas the time of bringing new innovation to the market and the
- time between groundbreaking discoveries has been decreasing.</p>
-
- <p><a href="http://en.wikipedia.org/wiki/Ray_Kurzweil">Raymond
- Kurzweil</a> found an exponential pattern in innovation reaching back
- all the way to single-cell organisms. Concluding that this must be
- a universal principle, Mr Kurzweil has been
- making <a href="http://en.wikipedia.org/wiki/Predictions_made_by_Raymond_Kurzweil">predictions</a>
- for the future of which several have turned out to be largely
- accurate so far. When applying this principle to patents, from the
- constant duration of the monopoly guaranteed follows an
- exponential growth of the value of an individual patent.</p>
-
- <p>The price that society is paying for granting patents has been
- <a href="http://en.wikipedia.org/wiki/Exponential_growth">growing
- exponentially</a> since the time that the initial patent bargain was
- struck. This would explain why the price for the patent system seems
- increasingly exorbitant with growing calls for reform, which have
- led to the recent announcement of the
- "<a href="http://www.ftc.gov/opa/2008/11/ipmarketplace.shtm">First
- in Series of Hearings on Evolving Intellectual Property
- Marketplace</a>" by the U.S. Federal Trade Commission (FTC).</p>
-
- <p>Remedies to this problem could be to decrease the lifespan of
- patents, adapt them to the specific situation in the field, and
- exclude fields from patenting in which patents provide no meaningful
- disclosure.</p>
-
- <p>When it comes to standards, it was An Baisheng, Deputy Director of
- the Division of Technical Regulations Department for WTO Affairs of
- the Chinese Ministry of Commerce who raised the question of public
- vs private benefit in his presentation titled
- "<a href="http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=3632&userservice_id=1&request.id=0">
- Strike the Right Balance between Public and Private Interests in IPR in ICT
- Standardization</a>".</p>
-
- <p>Taking our "lone inventor" scenario above, the question that we'd
- have to ask for patents on standards is: Would it be fair if our
- inventor could prevent someone else from bringing to market an
- innovation of their own that somehow interacts with the initial
- invention? To make it less abstract: Should a patent on a typewriter
- extend to carbon copy paper that has the right size to be used in
- that typewriter? Most people would agree this goes too far.</p>
-
- <h2>Potential Remedies</h2>
-
- <h3>1. Interoperability trumps patent</h3>
-
- <p>During the software patent debate in the European Union there was
- consensus among SME, Free Software and big businesses
- representatives from companies such as IBM or Sun Microsystems that
- patents which limit or prevent interoperability should be unenforceable.</p>
-
- <p>In the European Union, this could be introduced into the ongoing
- Community Patent debate. On a global level, WIPO should consider
- this as part of its ongoing Development Agenda discussions.</p>
-
- <p>Once implemented, this would solve the most harmful side-effects
- for all legitimate business models and give interoperability and
- competition preference over monopoly rights. Considering the
- extraordinary networking effects that exist in this market, such a
- preference seems justified.</p>
-
- <h3>2. Update policy in SSOs</h3>
-
- <p>Secondly, Standard Setting Organisations (SSOs) could update their
- patent policies to ensure that their standards are usable in all
- business models. Many SSO representatives in the meeting maintained
- that it was not their place to mandate certain patent policies. At
- the same time,
- the <a href="http://www.itu.int/ITU-T/dbase/patent/patent-policy.html">Common
- Patent Policy</a> of ITU-T, ITU-R, ISO and IEC already states the
- principle that "<em>a patent embodied fully or partly in a
- Recommendation | Deliverable must be accessible to everybody without
- undue constraints.</em>" As this analysis demonstrates, current
- application of RAND falls short of that principle.</p>
-
- <p>There is additional precedence supplied by the common way in which
- SSOs protect standards against potential later claims from Copyright
- holders by requiring all participants to a standardisation process
- to assign their copyright to the SSO. Applying appropriate similar
- measures on patents for similar reasons seems justified.</p>
-
- <h3>3. Provide intermediate and migration possibilities</h3>
-
- <p>Many patent-encumbered standards already exist, and even if WIPO
- ends up agreeing on a general interoperability preference, it will
- take decades for this to become local law.</p>
-
- <p>As an intermediate solution, (F)RAND needs to be enforced in a way
- that the license terms do not discriminate against any valid business
- model, as is still common today. A potential solution could be to
- tie (F)RAND royalties to the downstream licensing revenue.</p>
-
- <p>Business models that are based on proprietary licensing based on
- copyright or patents for revenue would continue to operate as they
- do today. Business models that do not rely on such licensing revenue
- would be enabled to interoperate and compete.</p>
-
- <p>Taking this step would also realign ITU-T, ITU-R, ISO and IEC again
- with their declared Common Patent Policy.</p>
-
- <h3>4. Update governmental procurement guidelines</h3>
-
- <p>Governments and Inter-Governmental Organisations should update
- their procurement guidelines to procure only products based upon
- standards that do not discriminate against any legitimate business
- model. This means a review of blanket approval for certain standard
- setting organisations, and only a limited approval for organisations
- that have not updated their patent policies appropriately by the
- time of the review.</p>
-
- <hr />
-
- <p><em>DISCLAIMER: This paper was written from the
- perspective of an expert in the field of software. The conclusions
- may apply in their entirety, partially, or not at all to areas
- other than software.
- </em></p>
-
- </body>
-
- <timestamp>$Date$ $Author$</timestamp>
-
- </html>
- <!--
- Local Variables: ***
- mode: xml ***
- End: ***
- -->
|