| The Federal Trade Commission held a workshop IP
Rights in standards setting June 21 in Washington DC
In a May
13 Federal Register
FTC
posed such issues as,
"When standards incorporate technologies that are protected by patent rights, there is a possibility for “hold-up” by a patent owner – a demand for higher royalties or other more costly or burdensome licensing terms after the standard is implemented than could have been obtained before the standard was chosen … and … questions such as "What has been the experience of those SSOs that require or allow ex ante disclosure of licensing terms? How frequently do ex ante disclosures of licensing terms occur? Why are ex ante disclosures of licensing terms not required or made? 49 organizations contributed answers and recommendations to FTC. GTW Associates commented to the FTC There is a new question how frequent are ex ante disclosures in practice. Recommendations addressing and perhaps making more rigorous patent policies within standards setting organizations have little impact on third party owners of essential patents since they are not part of the standard organization in the first place. There will be several negative outcomes within the voluntary standards community of perceived pressure on standards organizations to adopt mandatory ex ante disclosure of terms and conditions for maximum royalties for essential patents. Rarely is a single essential patent subject of a license between a patent owner and licensee … or is a particular term in a license such as "royalty" more important than some other term such as reciprocity or cross licensing. The reasonable and non discriminatory assurance (RAND) promise the holder of an essential patent makes to comply with the requirement of the patent policy of many standards developers is ambiguous and intentionally so. It is that flexibility that is its strength .Ex ante auction models attempting to assign fair values to the contributions of intellectual property compared to values attributable to the standard itself do not produce the right outcomes from a social welfare point of view.
FTC activities about hold up in standards setting in the US will have trade implications by influencing the thinking of competition, trade, standards, commerce and procurement officials in many foreign economies competitive to US producers. FTC should Anticipate Foreign Use of FTC reports and decisions from this Project No. P11-1204 to the global competitive advantage of foreign countries and should mitigate against this risk through close interagency coordination with trade agencies.
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