GTW Associates Excerpted parts of the summary of  responses to the December 8 RFI on Federal Agency Participation in Standardization Activities in Select Technology Areas  addressing patents and copyright

(see also GTW Analysis  of 24 IP comments)   and  (text of the 24 IP comments)

Excerpts with respect to IP  pages 24 – 28     state:

Part 2: Copyright 13 and intellectual property rights14

Patents in standards

Respondents noted that a range of approaches help address the complex interplay between patents and standards, and that having this flexibility enables industry to provide solutions that are timely meet the needs of the specific technology sector and the participants in that sector. Eight respondents indicated that the approaches which balance the rights of IP holders to recover their investments in developing IP with those of parties interested in licensing the IP provide adequate incentives to IP holders to put forward their IP for consideration in standardization.

According to respondents, with a few exceptions the current system in the United States has worked well with few instances of patent hold-up among thousands of standards that have been developed. One respondent noted the importance of distinguishing between true patent hold-up and the lack of agreement over licensing terms which would be considered a commercial dispute rather than patent abuse. Other respondents recommended that SSO IPR policies should do more to mitigate the risk of opportunistic licensing behavior by patent holders participating in standards-setting activities. A number of respondents noted that the flexibility afforded by the current system has enabled the United States to assume and maintain a leadership position in the global economy in the information and communication technologies related sectors.

Four respondents (all SSOs) noted that their rules either do not permit or discourage the inclusion of patented or business confidential technologies in the standards their organizations develop. A respondent suggested that due to the "patent thicket" it may not be possible to exclude all patented technology – e.g., certain standards may require the implementation of hundreds of patents.

Some major themes

A number of respondents stressed the importance of transparency and clearly defined IP policies. Respondents also noted that the federal government should not mandate a single IPR approach for standards (in general, or for standards it is considering for its use), and that a mandatory IPR policy, even for standards that the government is considering for its use would have a stifling effect on innovation, and potentially adversely impact the willingness of IPR holders to participate in standardization.

Several respondents also noted that given SSOs are often best positioned to help articulate IPR policies for standards that they develop to strike an appropriate balance between the interests of its members, its standards users, IPR holders and licensees, SSOs have an inherent interest in getting this right.

With respect to mechanisms that enable inclusion of IPR in standards, 12 respondents discussed mechanisms for disclosure of essential patent claims and disclosure of licensing terms. A number of respondents voiced support for voluntary disclosure of licensing terms, with two noting that disclosure of maximum licensing terms can bring greater predictability and certainty to implementation costs. However, five respondents disagreed with any mandatory ex-ante declarations of maximum licensing terms, expressing concerns that such ex-ante mandatory disclosure requirements could potentially disadvantage the IPR holder if other parties engage in buyers’ cartel-like behavior to extract the lowest possible licensing terms from the IPR holder. Eleven respondents also noted the role of licensing commitments whether on RAND, FRAND or royalty free terms.

Multiple respondents observed that IPR licensing considers a set of complex questions and licensing engagements are not simple one-to-one negotiations. IPR holders license IPR for defensive and/or revenue producing reasons; RAND terms provide IPR holders the flexibility needed to accommodate these various objectives. One respondent disagreed, noting even when IPR holders commit to license their IPR on RAND terms, the negotiation process lacks transparency to those who are not party to the negotiation, and this permits patent holders to negotiate with potential licensees one-on-one from a position of strength. This commenter noted that this factor can be particularly disadvantageous to a newcomer that does not have their own portfolio to trade. Noting instances of disputes and lawsuits

between implementers and companies claiming to own essential patents regarding whether particular licensing terms do or do not comply with RAND and the potential costs to the federal government, another respondent noted that RAND terms provide federal agencies with little visibility into future licensing costs that the government could incur, either directly or indirectly in the prices they pay when they purchase products that implement standards.

One respondent noted the challenges associated with the use of standards from multiple sources with different licensing terms when implementing standards in complex technologies. Others felt that this is not a significant issue. 15 . One respondent noted that the uncertainty of disclosure in the standards  setting context has created opportunities for strategic behavior, such as “the ambush of standards by nonparticipating third parties”, an issue that is outside the direct control of SSOs.

Suggestions from respondents relating to IPR in standards

Respondents made various recommendations to the federal government relating to aspects of IPR in standards, including recommendations specific to SSOs own IPR disclosure, negotiations and licensing rules. The recommendations implicating government participation are summarized here, and this summary does not reflect any federal government position on their merits. These recommendations include (in no particular order of importance, and representing the various perspectives):

· The federal government should not mandate a single IPR policy for standards it may wish to use, or consider for use, for its purposes. It should take an inclusive view of the spectrum of IPR policies, and not promote one approach over another.

Revise OMB Circular A-119 to potentially:

o 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

o encourage federal adopters to select standards created using negative declarations, i.e. requiring participating patent holders to identify patents essential to the standards that they are unwilling to license
o favor 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
o clarify 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

Clarify ambiguities and consider current SSO practices, which may not conform with the literal terms of OMB Circular A-119

Relating to OMB Circular A-119, the federal government should clarify that reference to RAND in the Circular should be the minimum that federal agencies should require before they choose to adopt a standard, and that federal agencies are encouraged to include IP-based considerations in their selection of particular standards for federal adoption, including whether the standard were created using IPR policies that provide agencies, and vendors from which they purchase products that implement standards, with predictable IPR licensing terms.

While considering standards for inclusion in standards frameworks that the federal government may be developing for its purposes (e.g., addressing national priorities or for procurement activities), the federal government could consider creating a check list to determine whether SSOs developing the standards in question have an IPR policy consistent with the requirements of OMB Circular A-119. A high-level check list developed in conjunction with the stakeholders,  including SSOs could identify issues potentially blocking the implementation of specific standards being considered by the federal government, e.g.:

o any declarations of unwillingness to license essential patent claims on RAND or RF terms
o any known IPR lawsuits, threats of litigation, or settlements involving the standardized technology
o set time frames for early opt-out of participants who may not be willing to license essential claims on a RAND basis
o policies relating to continuity of licensing commitment, if made, even after the participant withdrawal
o any requirements that bind the employers of individuals participating on an individual basis in standards setting
o policies relating to transfer of patents that include essential claims, and including patents transferred in bankruptcy
o whether royalty rates and the determination of the “reasonable” element in RAND licensing would be based upon the contribution of the particular patent to the value of the device in which it is implements, or the value of the entire device

 · The federal government should take into consideration whether the SSOs developing standards that it is interested in have IPR policies, and whether these policies are easily and publicly accessible. The federal government should also encourage SSOs to make easily accessible associated additional documentation such as patent self-declarations, essential claims, patent licensing commitments, letters of assurance, any notices of objection, exclusion, or exceptions to licensing commitment under the SSO’s IPR policy, etc.

The federal government should provide clear and uniform guidance by which developers (e.g., entities operating government laboratories or facilities, entities funded under research or development contracts, etc.) can take ownership of government-funded inventions (under Bayh-Dole or similar provisions), if the developer is subject to a RAND commitment to license necessary patent claims.

To provide certainty to government-funded developers who may seek royalties for inventions they develop related to technologies of interest to the federal government, the federal government could provide guidance on when royalty-free license rights apply.

The federal government should license patent claims made by government employees (or otherwise owned by the government) that are necessary to implement a government-supported standard, under royalty-free or RAND licensing terms.

Copyright and sale of standards

Responses relating to copyright and sales of standards addressed three major issues, including:

Business models based upon revenue generated from sales of standards

Seven respondents addressed how sales of standards support various business models of SSOs. Responses indicated that sales of standards often are a significant revenue source for standards setting organizations, and enable low these organizations to keep the fees for membership/participation low, thereby reducing the barriers to participation in standards setting.

Observing and protecting rights of copyright holders

Six respondents discussed aspects of observing and protecting the rights of copyright holders, including observing the appropriate provisions in OMB Circular A-119. Three called upon federal agencies that use standards developed in the private sector to respect the IP of the standards setting organizations developing these standards. One of these responses noted that agencies should provide proper attribution when using these standards. Three respondents noted provisions within OMB Circular A-119 requiring that "…if a voluntary standard is used and published in an agency document, your agency must observe and protect the rights of the copyright holder and any other similar obligations…"

Access to standards

Different aspects of access to standards and availability of standards for review and/or use were also discussed within the responses – reflecting the current debate about enabling access to standards to all parties, particularly if the standards in question may be used in support of rule-making or may otherwise be adopted by state or local governments. Some of the responses have noted the high cost of standards as a barrier to access of standards. One response (state government regulatory authority) notes this to be a particularly significant issue, as they are charged with adopting standards by statutory authority, and observe that the high cost of the standard is a barrier to their ability to review the standard in question. Three respondents (all standards setting organizations) noted how they enable free or minimal barrier access to their standards to interested parties, using different mechanisms. These methods of access including access to the complete standard for free, or access to the standard in order to review the standard.

Three respondents also discussed various issues relating to free access to standards. Three respondents suggested that in case of standards with significant public use, the federal government could support SDOs through grants that could in turn enable free or very low cost access to the standards. One response noted that in cases where federal agencies have significantly supported the development of standards, including through federal grants/contracts/funds, etc., and significant agency staff time (e.g., in agency staff leadership and participation of standards activities) then the resulting standards should be made available to the public for free.

Ownership of copyright

Two responses touch upon copyright ownership of standards that are developed with either significant federal agency staff participation or by federal contractors. One response recommends guidance and clarification for situations where a standard has been developed in a private sector organization, with significant resources of the federal government and the help of federal government contractors. A second response notes that: ". . . copyright ownership in standards can be further complicated by the Government's participation in standards development. Any work ‘prepared by an officer or employee of the U.S. Government as part that person's official duties’ are not subject to copyright per sections 101 and 105 of the Copyright Act - Accordingly, while the Government's participation in standards development activities may be valuable, SDOs may wish to limit Government's role in standards development to minimize the risk that the Government could be considered a co-author of a standard unless there are changes to the Copyright Act that would allow standards co-authored by the Government to retain copyright protection."



13 The sixteen respondents who touched upon copyright and sales of standards related issues include 11 organizations with standards setting activities, 3 companies, and 2 respondents with an interest in the issue.

14 Of the responses that provided perspectives on aspects related to patents in standards, 13 respondents are involved in standards setting activities, 8 are trade associations or professional societies, 9 respondents are companies, while 4 respondents may be considered to be organizations/individuals with an interest in the issue.  

15 A recent study that identified 251 technical interoperability standards implemented in a modern laptop from multiple SSOs was cited in this context. Evaluating the IPR policies of 197 of these 251 standards, the authors noted that 75% of the standards were developed under RAND terms (including RANDz), 22% under royalty-free (RF) terms, and 3% were licensed through patent pools.


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