Statement made on 23 Feb 2009

Suggested issues by BSA (for the first call)

  • Interests of licensors and interests of licensees
  • SDO initiatives (cooperation with patent offices etc.)
  • OSS and RAND-based standards
  • Role of European Commission in voluntary, industry-led standardization
  • IPRs and European competitiveness -- Implications of IP free policies on European innovation and competitiveness
  • SDOs IPRs policies- reasons for differing approaches

Statement made on 27 Feb 2009

Issue 1: How can SDOs and public policy best balance the competing interests of licensors and licensees?

IPR policies promote interoperability by encouraging firms to contribute their best technologies to standard-setting efforts, while avoiding undue obstacles to the implementation of standards.

The vast majority of leading IT standards bodies allow the inclusion of innovative patented technology, so long as the patent holders agree to licence the essential intellectual property on fair, reasonable and non-discriminatory (FRAND) terms. In some cases, participants may choose to commit to royalty-free licensing.

This long-standing practice is based on the recognition that FRAND licensing is one way to appropriately balance the legitimate interests of IPR owners and users of the standard. Depending on the environment, more restrictive requirements (such as IPR policies that require members to licence on royalty free terms) may reduce business incentives that may be necessary to attract key innovative contributors. While rarer, policies that require members to licence on royalty free and otherwise reasonable and non-discriminatory terms may appropriately balance the legitimate interests of IPR owners and users in some business environments.

Issue 2: How do SDOs' IPR policies ensure competition?

SDO's IPR policies need to set a framework for pro-competitive cooperation, both ex ante (i.e. before the standard is adopted) and ex post (i.e. when the standard is implemented). The cooperation among competitors to develop standards and their commitment to license IPR necessary to implement the standard to competitors and other users in generally considered pro-competitive. However, since abuse of IPR is possible, standards setting organizations have evolved many best-known methods to understand when IPR may need extra consideration. One technique often used is a reasonable policy around the disclosure of potentially patented technology. More recently a voluntary disclosure of licensing terms during the ex ante phase is considered to be one possible way to get additional competitive information on the table for consideration.

In the words of Commissioner Kroes, … if we are to include proprietary technology in a standard, then ex ante disclosure may help those involved make a properly informed decision. Competition law should not stand in the way.

Issue 3: Should public policy continue to support voluntary, industry-led standardization?

Under EU policy, standards development and use is voluntary, and principally a matter for the market. ICT companies generally agree that this is the best way forward and stated that this also follows from the fact that ICT standardization takes place for the global market place.

As part of this process, SDOs are free to set their own IPR policies, within the remits of competition law.

Issue 4: Can products and services incorporating open source software implement RAND-based standards?

BSA member companies develop and implement a wide range of technology standards and routinely implement RAND-based standards, including as part of open source software, proprietary or mixed or hybrid solutions.

Increasingly, products and services are hybrid, running with a blend of proprietary and open source code.

Open source licenses are multiple and diverse. Since standards often address the interface, communication of interoperation between standards compliant devices, open source license can readily co-exist with RAND and RAND/RF based standards.

The marketplace has found a range of solutions tailored to the problems at hand that allow patents and OSS licensing to co-exist.

In today's environment where almost all relevant standards are RAND or RAND/RF based, open source software has been constantly growing including in products and services implementing a wide range of standards.

Issue 5: Why is it important to allow SDOs to have differing approaches on IPR policies?

Standards exist in unique business environments and the business relationship between any implementer and any other patent holder will also be unique. To be successful, standardization has to strike the right balance of interests. In response to market forces, different SDOs follow different rules for different situations.

A successful standard is one that solves the problem for which it is intended. Typically, the development of such standards is achieved through a natural and dynamic process that is voluntary and responsive to market demands.

Issue 6: What would be the implications of mandatory IP-free policies on European innovation and competitiveness?

Mandating IP-free policies would exclude most leading open standards, such as DVB, GSM and MP3 and would potentially ignore the most innovative, highly productive, efficient and long lasting technologies..

Some companies that contribute of state-of-the-art technologies will not be willing or able to agree to those terms. European policies requiring IP-free policies may drive innovative technologies away from Europe and

the EU could be affected in its ability to protect intellectual property in foreign markets, as trading partners could leverage Europe's precedent as an excuse to expropriate European IPRs. The business environment for each standard is unique and the decisions on what licensing model best addresses the business interests of all parties is best left in the hands of the standards setting organization.

Issue 7: What are SDOs doing to adapt to new market-demands?

Many SDOs regularly review their IPR policies and share their best known methods with other SDOs.. The Commission welcomed these initiatives, while reaffirming the market-led nature of standardization.

SDOs also increased cooperation with patent offices, in particular the EPO - these initiatives should be evaluated and if successful promoted.