Standards bodies reveal IPR policy considerations
Representatives at IEEE, ETSI and W3C tell Patent Strategy why they have chosen their patent policies, why they work for them and how their approaches might change in the future
Standards development organisations and their IPR policies have been something of a controversial topic for a while now, both from the perspective of what rules they set out and how those provisions are then applied or interpreted.
University of Richmond School of Law professor Kristen Osenga said in September, for example, that the Institute of Electrical and Electronics Engineers’ (IEEE) 2015 policy update has been shown to be wholly favourable to implementers over the past four years.
And last year, a Nokia amicus brief case arguing that SDO IPR policies, including that of the European Telecommunications Standards Institute (ETSI), do not require standard essential patent owners to license cellular rights at the component level failed to persuade Judge Koh from ruling against Qualcomm in May 2019.
In an effort to clear up some of the confusion, Patent Strategy has spoken to representatives at IEEE, ETSI and Tim Berners-Lee’s World Wide Web Consortium (W3C) about their IPR policies and why they have chosen particular routes over other options.
Some of these entities reject the idea that their policy is favourable to a particular group and argue that they have helped remove uncertainty in this space by defining fair, reasonable and non-discriminatory (FRAND). Others say it is important to maintain an unbiased approach to the patentee-licensee ecosystem, or that the best way to encourage contributions is to remove royalties from the equation.
“It is important to protect the rights of each of our members,” says Luis Romero, director general at ETSI. “Their standards contributions need to be made available to everyone under fair and reasonable conditions, and hence we try to be flexible enough to allow everyone to join.”
IEEE past president Don Wright adds that it is vital for an organisation’s policy to evolve over time based on the recommendations of participants in its standardisation activities and environment.
“We listen to what various participants have to say and try to understand issues and clarify our policy so it works better for participants,” he says. “Every SDO must keep their policy workable for their participants; and it is on that basis that we make updates and changes.”
FRAND or foe?
IEEE amended its policy in 2015, and its new provisions were criticised by some in the ‘pro-patent community’ for effectively weakening the patent rights of contributors.
One of the more criticised amendments was that “the value that the functionality of the claimed invention or inventive feature within the essential patent claim contributes to the value of the relevant functionality of the smallest saleable compliant implementation”.
When asked about the controversy that emerged over IEEE’s last IPR policy amendment, Wright at IEEE – who helped draft it – says it is important to emphasise that the policy sets out recommended considerations in the licence negotiation process.
This is the case not just for the amendments surrounding the value contributed by the smallest saleable unit, but those that consider the totality of the patents applicable to said unit and what existing licences offer as well.
“We do not require that licence terms be based on the smallest saleable unit,” he says. “We deliberately used the word ‘should’ – which means recommended – rather than ‘shall’ – which means require – because these are recommended considerations.”
Phil Wennblom, chair of the IEEE standards association corporate advisor group and director of standards at Intel, adds that the previous iteration of the organisation’s IPR policy did not explicitly define what a reasonable rate could be.
A definition and three corresponding guidance points were included in the 2015 amendment because the organisation found that different participants were looking at the previous provisions around reasonable rates and coming to very different conclusions on what they meant.
“We sought to provide a little more clarity in the update to help different participants arrive at a more consistent interpretation,” says Wennblom. “That is, appropriate compensation that excludes the value that comes from inclusion of the patent claim in the standard – in other words, the value generated by the standards-setting activity itself.”
Wright adds that the biggest difference IEEE has made is to start to lift the haze surrounding FRAND terminology.
“The aim was to provide guidance to the patent holder and implementer and help narrow the breadth of their discussions so they were no longer 1,000 lengths apart in what they expected.”
IEEE has started to allow patent holders to use the previous letter of assurance when making licensing commitments for contributions made before the 2015 update to help with the transition to the new policy.
Wright and Wennblom say there are currently no plans to change the policy further. “We are working to make sure our policies surrounding pre- and post-2015 contributions are clear,” says Wennblom. “But we are not anticipating an update to the patent policy in the near future.”
ETSI has taken a very different approach to that of IEEE by refusing to define the terms of FRAND. Romero at ETSI says it is outside of the organisation’s scope to recommend or require any considerations surrounding commercial negotiations.
“Anything that concerns commercialisation will be something for our members to debate and discuss in a different environment. We cannot get into those details because once you start to get involved it will be difficult to draw a line at where to stop.”
He adds that by weighing in on commercial matters, an SDO will end up intentionally or unintentionally favouring one part of its membership over the other. Favouring one side or the other is not ETSI’s goal, he says, because everyone involved needs to have a fair playground to determine the best deal for the two parties.
“As such, we have purposely chosen not to define FRAND because we could quickly fall into commercial matters. At the end of the day, negotiations that come to an impasse will be decided by a judge, who will interpret what FRAND means.”
He adds that ETSI does not have any plans to fundamentally change its IPR policy in the near future. ETSI is, however, making a huge investment in 5G standards, partly through its work with 3GPP, a standards partnership project. The organisation is also looking to become more digital friendly to ensure that standards and declarations are more easily accessible and searchable in the future.
W3C similarly has chosen not to define FRAND – although that is because the organisation does not need to. All participants to web standards set up by the SDO commit to submitting royalty-free contributions – commonly referred to as ‘open standards’ – although they retain their IP for defensive purposes.
Wendy Seltzer, counsel and strategy lead for W3C, says this policy has emerged because of worldwide web creator Tim Berners-Lee’s vision for how his invention should evolve.
“We built the consortium and developed its IPR policy with the idea that the web should be available to everyone and that anyone could contribute and build on top of it.”
She adds that when the organisation formalised its IPR policy, even larger and traditionally pro-patent contributors such as IBM favoured the open standards approach.
“The broad infrastructure development that the policy allows, in the spirit of making the web the best common platform, enables a huge amount of business based on a wide range of business models,” she explains.
But W3C stakeholders are in discussions at the moment to adapt the IPR policy to the ‘evergreen model’ of specification development. As the web evolves at a faster pace, she explains, some groups are looking for ways for specifications to evolve more quickly as well.
These so-called ‘evergreen recommendations’ would aim to track the continuous development and maintenance of features, get review and patent commitments, and report on implementation status – all on a more granular, feature-by-feature level rather than only at the entire-specification set.
Seltzer says: “We are having active discussions on this continuous development model, including around whether we would change core processes and policies.”
SDO IPR policies can be a vexing matter for implementers and patentees alike. But this doesn’t appear to be an issue where a middle ground can be achieved – at least when it comes to royalty-focused contributions.
Rightly or wrongly, SDOs are sticking to their guns. It will probably take a serious overhaul of FRAND-related rules by courts or legislative bodies to make them budge.