Review of   24 comments addressing IP related aspects 

in standards setting  

on the Web site containing 93 public comments submitted in response    to the call for comments on Effectiveness of Federal Agency Participation in Standardization 

in Select Technology Sectors for the

National Science and Technology Council Technology Committee  Subcommittee on Standardization

GTW Associates  submitted  recommendations and substantive comments   in  March 7,  2011  Standardization feedback to the  Sub-Committee on Standards  Docket No. 0909100442–0563–02

 

24 of the comments on the site Web site containing 93 public comments submitted in response  referred to Intellectual property rights matters.  GTW Associates has excerpted text from these comments and pasted them below  and in the attachment. 

 

See   an   analysis of the comments 

 

 

1) ATIS page 6

Nor is it ATIS’ experience that any change in the current standardization approach is necessary because of intellectual property issues. ATIS’ IPR policy is modeled on the ANSI policy, and seeks the disclosure of IPR that may be essential to a standard, and for owners of essential IP to provide licensing undertakings stating their willingness to make licenses available. This policy has worked well for ATIS, which has experienced no instances where IPR has delayed or precluded the development of an ATIS standard or its implementation. This includes with respect to those standards developed for implementation by federal agencies or pursuant to agency direction.

 

2) American Bar Association ABA Section of Science & Technology Law  page 3 & 4 

Almost all SSOs today have a written IPR policy that governs the treatment of patents and other IPR relating to standards developed within the SSO. These IPR policies often differ in significant regards and our experience is that there is no ideal or one-size-fits-all IPR policy ... Stakeholders, including government stakeholders, have a legitimate interest in avoiding the unnecessary expenditure of resources to develop or adopt a standard that cannot be implemented because essential IPR is not available.  As an initial approach, government agency stakeholders could work with industry to create a high-level check list that would identify issues potentially blocking the implementation. For example, such a checklist could include questions regarding whether the SSO has a published IPR policy, whether the SSO makes patent disclosures or licensing commitments public, whether any patent owners claiming to own essential patent claims have disclosed to the standards body in question that they are not willing to license such claims on RAND or RAND-RF terms, and whether there are any known IPR lawsuits, threats of litigation, or settlements involving the standardized technology

 

3) AIPLA   page 1   

These comments reflect AIPLA’s general views that: 1) AIPLA favors standards-setting organizations (SSOs) having the flexibility to formulate their own policies and procedures; 2) AIPLA does not support legislative, regulatory, judicial, or administrative action that requires all SSOs to adopt a single prescribed IPR/licensing and disclosure policy; and 3) AIPLA favors the practice by SSOs of making clear and publicly available information relating to the SSOs’ standards development and their IPR / licensing and disclosure policies. 

 

 

 

4) ANSI  page 12 

The ANSI Patent Policy has proven over time to be a flexible and effective means of addressing the incorporation of patented technology into standards. Indeed, out of the approximately 10,000 current ANS, for only a relatively small number have questions ever been formally raised regarding the ANSI Patent Policy, including issues relating to improper “hold up.” ANSI generally seeks to address broader patent-related issues vis-à-vis its Patent Policy and Guidelines, while recognizing that bilateral disputes are often best resolved through legal proceedings as opposed to wholesale changes to the ANSI Policy. 

 

5)  Cable labs page 6

allowing  multiple  voluntary standards solutions also allows the market to offer a choice  of IP approaches

 

6) CISCO various

 

1) the federal government should revise the Circular to announce a federal preference for standards created under rules that permit, encourage or require participants in standards development to state their maximum licensing terms during the standards development process,   2)  OMB Circular A-119 should be revised to encourage adoption of standards created under intellectual property rights policies that may retain the use of RAND, but that define the “reasonable” element to focus on the contribution made by the particular patents to the value of the device in which it is implemented, rather than on the value of the entire device. 3)   Consistent with revising OMB Circular A-119 to give federal adopters greater assurance that essential patents will be available for license, changes to the Circular that encouraged federal adopters to select standards created using negative declarations would be a positive step.  4) announce a federal policy favoring adoption of standards created under IPR policies that require transferees of essential patents to be bound by licensing commitments given by their predecessors in interest.2  5)  favor federal adoption of standards created by SDOs clarifying that a RAND or RF licensing commitment prohibits participants from seeking to enjoin implementers of standards, at least until an objective third party such as a court or arbitrator has determined that the patentee has offered to license on reasonable terms

 

7) CCIA page 6 

ANSI’s United States Standards Strategy is less a strategy than a set of aspirational statements. It makes vigorous claims for the importance of standards and the need to communicate their importance, yet it offers no policy analysis. It simply defers to patents, as if there were no economic tension between patents and standards or vulnerability of investments in standards based products. It does not address the policy considerations around RAND and RF licensing, nor does it address royalty stacking and non-participant ambush.

 

8) CEA page 5

Consistent with ANSI Essential Requirements, CEA supports Intellectual Property Rights (PR) policies that require reasonable and non-discriminatory disclosure (RAND). CEA’s IPR policy requires patent holders to make commitments to offer licenses on essential, patented  technology on RAND terms and conditions, with or without compensation. CEA policies encourage the early disclosure of essential patents in the standards process.

 9) page 3 & 8 Davis  Wright  Tremaine, LLP  

 

 

10) Electronic Health Record Association page 13 15

In  general,  healthcare  standards  setting  organizations  (e.g.,  HL7,  ISO,  DICOM and  IHE)  have  policies  around  the  use  of  patents  and  other  intellectual property  that  are  the  most  appropriate  and  effective  for  handling   these issues.

Our  discussions  on  this  topic  do  not  address  hold up  or  buyers’  cartels.  In many  years  of  industry  participation  in  healthcare  standards,  we  have encountered  only  a  few  cases  where  patents  or  other  IP  issues  prevented or  held  up  standards  development  or  deployment  in  the  traditional  way  these problems  are  thought  of

 

 

11) Page  16 17 18  Gesmer Updegrove 

 

12) GTW Associates  page 32

Recommendation Eleven: The US government should stimulate and encourage sharing of experiences, practices and policies regarding patents in regulation and procurements  by agencies with such experience such as the FCC and procurement agencies such as GSA and DOD. 

 

Recommendation Twelve: The US government should  assist owners of  intellectual property resist and overturn  foreign government’s procurement or regulatory policies  relating to incorporation of patents  in standards  that unfairly compromise  the abilities of the US owners of patents  to obtain a  fair return on their investments.

 

Recommendation Thirteen : The US government should represent its interests in the setting of responsive patent policies by active participation in the activities of   the diverse population of  standards developing organizations.  The US government should  strongly resist policy decisions that would have the effect to  favor the patent policy of one standards developing organization compared to another excepting any  cases that may entail antitrust or competition irregularities.

 

 

 

13) IBM believes the following practices would be beneficial to the public-private efforts in standards involving the five identified fields.

China’s Standardization Administration of China (SAC) proposed regulations promoting compulsory licensing (for national standards) and licensing royalty free or at rates below normal commercial rates.   

page 14, 15 18 IBM  

 

14) IPO  pages 2 , 3 , 4

In recent years, IPO has observed and commented on proposals that, if adopted, could upset this balance by undervaluing the contribution of intellectual property owners in standards setting activities.  ... To balance the interests of implementers and innovators, most SSOs adopt disclosure and licensing rules to achieve a practical balance between producing a standard that can be implemented by all and one that encourages innovators to invest in innovative technologies and contribute such technologies for use in the standards. ... In sum, self-governing conditions and incentives already exist to prevent, or at least reduce, opportunities for anticompetitive conduct that may give rise to competition law concerns.

 

15) Microsoft  page 12, 13 

Government should take an inclusive view towards SSOs’ diverse IPR policies and not promote one approach over another. When evaluating whether there may be IPR issues associated with candidate standards for initiatives such as Smart Grid, government should consider whether there are valid, serious, and documented IPR concerns, or whether the standard has been accepted in the marketplace and is being widely implemented. Most SS0s have an IPR or patent policy that seeks to balance the rights and interests of their stakeholders by seeking commitments from participating patent holders that they will offer patent licenses for their necessary patent claims on reasonable and non discriminatory (“RAND”) terms and conditions. Currently there is significant diversity with regard to how these policies are articulated in detail at different SSOs. This diversity is healthy and should be encouraged, and any articulation by the government of one or more preferred approaches should be avoided. This view is widely supported by the ICT industry.  ... Accordingly. before including a standard in a standards framework, the U.S. Government (or its designee) may -   and  to complete a “health checklist” to verify that the relevant SSO has an IPR policy consistent with the umbrella requirements of 0MB Circular A-l 19

 

 

16) OGC   Page 2  

 

Fortunately, there are few patents that are in any way specifically related to the work of the OGC. There are no particular obstacles that either prevent intellectual property owners from obtaining reasonable returns or cause intellectual property owners to make IP available on terms resulting in unreasonable returns when their IP is included in the standard. Risks associated with hold-up or buyers' cartels have never been an issue in the OGC.

 

17) Don Purcell   ISO Focus

The Federal Circuit’s Qualcomm decision contains an extensive discussion of the legal standard set forth in Rambus that a standardization participant’s “duty to disclose [to the SSO] extended only to claims in patents or applications that reasonably might be necessary to practice the standard. In other words, this duty encompassed any patent or application with claims that a competitor or other [SSO] member reasonably would construe to cover the standardized technology.”  

The Court relied on the expectations of joint venture participants to establish a de facto rule of patent disclosure in a manner similar to Rambus. In addition, the Federal Circuit found the ITU/ISO/IEC Patent Policy specifically applied to Qualcomm, a participant in the joint venture standards project, and this policy set forth a specific duty to disclose patents, or pending patent applications, reasonably necessary to comply with a standard being  developed.

 

 

 

18) Open Secure Energy Control Systems  page 3  

One provision in the NIST definition of an open standard is the allowance of RAND conditions in the SDO policies on patents. For software intended for open source licensing, such as is being developed by OSECS, RAND conditions are clearly unreasonable and discriminatory. RAND conditions would allow charging of license fees for patents used in open source software. Any such fees violate the underlying principles of open source software licenses.  page 3 Open Secure Energy Control Systems

 

19) Qualcomm page 11, 12 

 

 

Joint Negotiations of License Terms

For years, the private, voluntary standard setting system has successfully co-existed with, and indeed has thrived under, generally recognized antitrust law principles. Recently, however, some have made proposals that would, in essence, allow otherwise potentially antitrust suspect conduct to address what are claimed to be flaws in the standards development process. The claimed standardization flaws involve the inclusion of patented technology in standards, and the potential need to obtain licenses for such patents. Thus, some contend that joint negotiation of licensing terms should be permitted ex ante - i.e., before a standard is finalized - so that potential licensing costs are minimized. Some have argued that such steps should particularly be made in connection with standards relating to public procurement or government programs.

Mandating such an approach, however, is neither necessary nor appropriate. First, for the reasons discussed above, even in the public procurement context the issue of potential licensing costs has not and should not deter effective standardization. Such costs indeed may be de minimis.

Second, and many  Qualcomm and many other patent owners, ex ante, commit to license their essential patent claims on reasonable and nondiscriminatory ("RAND") terms, announce maximum rates, and freely engage in bilateral negotiations with interested parties. The foregoing diminishes or eliminates theoretical concerns about "patent hold-up" without undue diminution of innovation incentives. By contrast, mandating or even encouraging ex ante joint negotiations would insulate from antitrust scrutiny coordinated action that would create and facilitate the exercise of monopsony or oligopsony power over licensing terms, and most specifically royalties that could be charged by a patent owner for the use of its standards-essential patent claims. 

Thus, any government policy that would require or encourage joint ex ante negotiation of licensing terms among standards implementers and individual patent owners would be imprudent. Such an approach would bear many indicia of buyer cartels that are highly problematic under current U.S. antitrust precedent. Creating a special exception to antitrust law so that standards implementers may aggregate their buyer power and dictate license terms to owners of patents, including patents incorporated or proposed for incorporation in a standard, is fundamentally inconsistent with President Obama’s call for policies that “enhance private sector investment incentives.” 

This would, contrary to the teachings of A Strategy for American Innovation, increase the “inherent risk and uncertainty of innovation;” reduce rather than “enhance private sector innovation incentives;” accelerate not reverse the decline in “corporate R&D” and “other R&D metrics, and” ultimately delay or deny to the economy and consumers many of the benefits that the patent system was designed to promote.

 

 

 20) SAP  pages 2, 3 

Intellectual Property Policy

Flexibility is important, and for this reason the federal government should not mandate a particular Intellectual Property (IP) policy in the SSO context. If, however, an IP policy is to be mandated for standards adopted by the federal government, licensing commitments that are based on reasonable and non-discriminatory (RAND) terms should be encouraged. When independent parties successfully negotiate an IP license, it can be presumed that concepts of commercial reasonableness specific to the circumstances ultimately will guide the process. They then negotiate what is acceptable to them in a free market system. That is, neither party is constrained nor coerced to offer or accept  terms that it finds unduly unreasonable. Maintaining flexibility in an IP policy including RAND terms is a key to successful licensing, and thus to the success of standards.

Ex ante licensing terms are not preferred and should not be endorsed by NIST. The basics of standards development suggest this position. Given the large number and wide range of participants involved in standards creation and resultant product commercialization reflecting a wide range of opinions and business needs, it is impractical and unreasonable for this many parties to agree to a single set of licensing terms before a standard is developed. Endorsement of any specific term including ex ante licensing terms would be impractical and deter some from participating in an SSO,which would hinder development of successful standards.  ... Allowing SSOs to adopt RAND policies permits flexibility at an appropriate level in the particular circumstances. An SSO can adopt RAND and any member who wishes to offer a unilateral license or covenant on a voluntary ex ante basis may do so within the bounds of a RAND commitment. Flexibility is thus given to the SSO to pass down to the members and implementers

 

 

21) SCTE  Page 4 

 

Respect Intellectual Property Rights. Many standards organizations rely on the sale of their standards for survival. The US Government has done an excellent job over the years of supporting those organizations by reminding users of regulations that copyright remains with the standards developer; that support should continue. Given the trends in government outside the United States, the US Government should also resist the temptation to join the chorus of governments who advocate the elimination of intellectual property in standards. The US standards system has thrived with the current RAND system, and will continue to do so.

 

22) TIA pages 16  17 

As described above, marketdriven open standards can help promote competition and innovation, and such standards are developed or ratified through a voluntary, open and consensusbased process. This process typically includes an IPR policy pursuant to which patent holders make commitments to offer licenses to essential patented technology on reasonable and nondiscriminatory (RAND) terms and conditions, with or without compensation.

Like many others, TIA encourages the early disclosure of essential patents, but does not mandate disclosure and does not require the making of a search for patents. To further such encouragement, TIA takes a three-part approach: 

  1. The chairs of formulating groups are required to insure that everyone in attendance is aware of TIA’s intellectual property rights policy and where it can be found.
  2. The second part of the approach is a notification on each ballot for a proposed standard encouraging the identification of essential patents or published patent applications.
  3. Finally, the Manual provides for an optional, voluntary disclosure statement on a submission cover sheet. For this purpose, TIA provides a suggested submission form, some provisions of which are mandatory when this form is used.

Recently, there have been attempts to redefine "Open Standards" that may disrupt this process and its related balance of interests. The concept of "open" has been equated with patented technology that is "free" (without payment) or "free to use freely" (without payment and without any restrictions). These proposed redefinitions are being used to advocate policy changes that would undermine the rights of those who have invested in the development of the standardized technology.

 

23) TCG  page 8

 

24) US Chamber Page  1 , 3 

In inquiring as to the appropriate role of government in standard setting, the interface standards can have with intellectual property (IP), competition matters, and finally the challenge of understanding standardization in a global trade and U.S. competitiveness context, the request for information accurately captures the current complexity of policy development with regard to standards. In short, the Chamber strongly believes that the current U.S. approach to standards, with its hallmarks of being private sector driven, voluntary in nature, and consensus-based, has served the interests (of regulators, businesses, and consumers alike).

The voluntary and consensus-based nature of the U.S. standard setting system is key on several levels as it relates to government involvement in standard setting. An increasing concern by some in government is the intersection among standards policy, intellectual property policy, and competition policy. These complicated issues are not only of interest to U.S. government officials, but also countries that represent our largest trading partners.

Typically in a SSO’s IPR policy, there is a requirement for good faith disclosure with regard to any underlying intellectual property rights that are essential to the use of a potential standard and a related licensing commitment statement. In addition, a number of standard setting bodies have policies that are “participation-based,” where all participants agree in advance that they will license IPR that is technically essential to practice the final standard that is adopted on RAND terms (with or without compensation). These approaches are working and there have been few problems.

The Chamber is aware of two narrow situations where government intervention may make sense. First, government clearly has a duty to enforce competition laws in to ensure no collusion occurs among SSO members that could undermine established SSO decision-making procedures. Such a clear competition violation is exceedingly rare as standards bodies and their participants are mindful of the fact that price coordination and other similar competition law violations are subject to aggressive enforcement. In addition, most standard-setting bodies have rules that (a) do not mandate that IP holders must disclose specific licensing terms and (b) prohibit group discussion of specific IP-related licensing terms in order to avoid any buyer cartel or group boycott issues.

Second, to the degree there is outright fraud in the standard-setting process by one of the IP holders, recourse may be sought through various means including but not limited to exercise of legal rights through litigation and/or action by an appropriate government agency. While the SSO may be an effective self-regulator, some standard organizations are not well equipped to deal with fraud.

 

 

 

 

 

 

 


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