Follow up: Tensions between IPR & Standards Conference in Brussels

This is a follow up to the conference about IPR & Standards that took place in Brussels last week and that was organized by the European Commission, Enteprise and Industry. The conference was held to address some specific issues that arise in the interplay of IPR & standards. The event is part of an open dialogue process that the Commission is undertaking with several key stakeholders and that was organized in cooperation with the EPO. Since all topics are closely related to our research we wanted to attend this event and meet up with relevant practitioners. Furthermore this event was linked to the presentation of the study on: “The Interplay of IPR and Standards” that was conducted amongst others from my Berlin based department.

It was a one day conference and discussed 5 panel questions as followed:

Who needs standards-related patent registers and how should they look like?

From my point of view this is a question that is easy to answer, since I already used almost all patent declaration registers for my first research papers and therefore hope to have contributed to increase transparency on developments of IPR and standards. However, for professionals such as implementers or co-developers of standards, this question raises further issues such as: Who owns what? Who should do what? And how could information about essential IPR help in the standardization process? And even may be: How much would certain IPR cost (ex ante RAND)? During the panel discussion Amy Marasco from Microsoft demonstrated several databases and concluded that the current ETSI database is the “Rollce Royce” of databases, since they provide very updated and detailed information. Still, one problem that remains among all databases is that it is hard to identify who is actually responsible to monitor these databases and assures correctness of declaration. Companies that are active in standardization are the ones that demand for more detailed information, but on the other side are in some cases not willing to give out all information. The discussion further revealed that a central system, maybe managed by the respective SDO, would only work when all SDO members oblige to contribute and reveal all and especially correct information about their relevant IPR. The question if certain patents are essential to a standard can, at the end of the day, only be decided in court. A working system thus strongly depends on its participating members. Another point came from the audience that addressed informal ict consortia: There should also be a system that keeps track of standards consortia IPR! This however, taking into account the high number of over 700 consortia, might only be possible when declaration systems are harmonized and information is pooled in one database. This discussion leaded to the next question:

Is there a need to improve standards-related patents quality and how could this be achieved?
This question is of course in first place addressed to patent offices and especially, since they were present, to the EPO. Michael Gloudelis from the EPO stressed that it is especially important to get better information from patent offices in certain countries that are not contributing with information yet and combine them to a central database (such as the EPOs Espacenet). There currently is a lack of information and some patent offices lost track of what they granted and are not able to identify all patents of their nation. Again the question of harmonization raised up: First a harmonization of patent offices and in a second step a connection to harmonized SDO database of essential IPR. A link of Espacenet and ETSIs essential IPR database was a first more concrete proposal . However in view of the very heterogenic standard arena, also taking into account informal standards consortia, this will be a great challenge.
Another issue was “confidentiality” in standard working groups. When companies are to disclose information of technological innovations in working groups, which are not public, they might face to have no protection against infringers and imitators. Indeed, there apparently have been cases where companies took confidential information of their peers in working groups and filed patents on these technologies. This issue might in fact also cause patent thickets when several companies exploit the same information to file different overlapping patents. The panel therefore called for more transparency to make relevant documents to be public and thus by prior art prevent these negative effects.
However it is not only important to know who owns what but furthermore how much do I have to pay for what? This leaded to the next issue:

Ex-ante commitments of licensing terms
Don Deutsch (Oracle) started this panel with giving a case study of the IT standards consortia VITA. He illustrated how to shape an IPR policy to make participating companies state ex ante on how their FRAND commitment would look like, meaning how many royalties will licensors have to pay. In contrast Gustav Brismarks (Ericsson) held a presentation of the technological development of the GMS standard. He gave evidence that in telecommunication industries ex ante declarations and licensing terms are impossible to apply since technology develops over a long lasting time interval. It therefore seems to be a question of industry and technology, since in some sectors it is just not possible to calculate future success of standards or value of essential IPR. Again a harmonization of IPR policies for standard bodies, seem thus very uncertain. At least some formal SDOs already started to harmonize certain paragraphs. Informal standards consortia on the other hand are yet often untransparent and strongly differ in their policies. However, the discussion of the panel debate somehow showed that it is the nature of informal standards consortia to apply to differing demands of their members and therefore stay very heterogeneous in their IPR policies.
Another issue was: It is difficult to estimate how many patents will be essential for a standard ex-ante. To assure that cumulative royalties should not exceed a certain percentage of the product’s costs, ex-ante licensing would also have a negative effect on consumers.
However, the whole discussion managed to overlook the question on how to define FRAND and especially tackle the question of what is a reasonable license and who is to decide that. Again a central and independent system was proposed as a be a solution, but seemed to be yet very vague.

In the end of the conference also the topic of availability for licensing, when third parties own essential IPR, and open source standardization were discussed.

Read More and See Presentations of Participants

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About timpohlmann

Tim Pohlmann is a post-doctoral researcher in economics at Mines ParisTech and Berlin Institute of Technology. He specializes in the economic analysis of markets for technology. He earned his doctoral degree with the highest distinctions in August 2012 from the Berlin Institute of Technology with a dissertation on patenting and coordination in ICT standardization. Tim’s research covers the empirical analysis of the trade of patents, patent trolls, standardization consortia and patent pools. He has presented his work at a large number of international conferences. Tim has been actively involved in preparing studies for the European Commission and the German Federal Government on the role of patents in technological standardization and business models in Open Source Software. Doctoral Thesis SSRN author page
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2 Responses to Follow up: Tensions between IPR & Standards Conference in Brussels

  1. justusb says:

    Thats a very comprehensive discussion of the debate. I just have one suggestion to add for those interested in the discussion on ex ante commitments. There is an ongoing debate on this topic in the context of the revision of the guidelines on application of EU Competition Law to Horizontal Cooperation Agreements (which include standardization). DG Competition held a public consultation on the revised rules, and the vast majority of respondents focused on the standardization chapter, thereby underlining the importance of this issue for the industry. My impression was that opinions widely diverged on ex ante commitments, with many commentators arguing for or against more explicit ex ante price commitment regimes. There are even prominent companies from telecommunications, such as RIM, arguing in favor of more guidance in that sense. This goes against the argument we heard in Brussels that ex ante commitments make no sense in this industry.

    The contributions to the public consultations are online. There is also a short reply written by Francois Lévêque and myself on behalf of Cerna. We argue in favor of a stronger endorsement of ex ante commitment regimes. Furthermore, we regret that no clarification on patent pools and non-discriminatory licensing has been attempted. Having studied both issues into detail, I think that there is a lot of potential for beneficial guidance.

    All contributions: http://ec.europa.eu/competition/consultations/2010_horizontals/index.html
    My own reply: http://ec.europa.eu/competition/consultations/2010_horizontals/cerna_en.pdf

  2. Pingback: EU Conference on ICT Standards and Patents | Innovation Tomorrow

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