CONSIDERATIONS IN ASSESSING A STANDARDS DEVELOPING ORGANIZATION'S INTELLECTUAL PROPERTY RIGHTS POLICIES IN ADVANCE OF PARTICIPATION 

George T. Willingmyre, P.E.

June 14, 2002 

In a January, 1998 article INTELLECTUAL PROPERTY RIGHTS AS A FACTOR IN THE DEVELOPMENT OF STANDARDs  GTW Associates outlined four considerations about  intellectual property rights policies a  participant in a standards development process should assess before participating in  the standards process covered by the policy.   Since 1998 the IPR polices of many organizations have evolved, there has been significant new private sector litigation  and the FTC is  conducting related hearings and investigating  matters  similar to  the landmark FTC consent agreement with Dell Computer  In that case, FTC charged  that Dell restricted competition in the personal computer industry and undermined the standard-setting process by threatening to exercise undisclosed patent rights against computer companies.

The 1998  paper compared and contrasted the policies at that  time of the  American National Standards Institute (ANSI),  The International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC),  the International Telecommunications Union (ITU),  and the Internet Engineering Task Force (IETF).  The four considerations explored  were:

action expected to occur when a company claims that its  IPR is necessary to meet the standard, but the IPR will not be made available on a non-discriminatory basis

the requirement for and specificity of the statement that an IPR holder will agree to license its  IPR

time during the development of a standard at which an IPR holder should disclose its IPR and the time at which a statement of commitment to non-discriminatory fair and reasonable licensing must be made   and

the role of cautionary statements about IPR to be included in the introductory material for standards where IPR is a consideration.

This article builds and expands upon the four factors above  with 9 additional considerations a company may find prudent to contemplate about  the intellectual property rights  policies of a standards development process before participating in that process.  A separate document "Intellectual Property Rights Policies of selected   standards developers "   builds  on the 1998  paper with links to the  IPR policies of key standards developing organizations including the current policies of  The American National Standards Institute (ANSI),  The International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC),  the International Telecommunications Union (ITU),  the Internet Engineering Task Force (IETF), the IEEE; the World Wide Web Consortium (W3C); and  the European standards bodies CEN and CENELEC.

The 9  questions below do not  have single  correct or incorrect answers for all situations.  These are questions that any company should  contemplate given its own circumstances and competitive position before participating in a standards process. There may be "better" or "worse" answers depending on the specific situation. These matters are not amenable to a "one size fits all"  treatment.     When the IPR policies and organizations identified at "Intellectual Property Rights Policies of selected   standards developers "   are filtered through the questions below, it can be seen that the IPR policies and practices of standards developing organizations are one means by which they themselves compete for  participation and marketplace relevance.  

1) What is the exact text of the relevant policy and what is the exact text of any related guidelines, procedures, educational references?  Each word in the IPR  policies of organizations  was or should have been  carefully chosen.  These  words  have been  and will in the future continue to be the grist of private sector and perhaps government litigation. What is the process of establishing the policy? What is competence and experience of the participants in that process?   If there is an IPR committee consider joining it. Participation in such activities provides early warning of changes.  Is there an "appeal" process for actions and decisions contrary to your interests? Is the process being followed?  ...by the organization administering the policy ...by the committee leadership ...by the participants?

2) Is there an explicit or implicit "IP bias"   in the organization...  in   the policy?  Any standards policy on IPR balances the needs and interests of two distinct classes of parties. There are the needs and rights of participants in the process and of the eventual user of the standard to access and use the standard without undue hardship or unforeseen difficulties.  And there are the  the rights and interests of holders of intellectual property that may be essential or related to the standard to capitalize their inventions. Standards organizations have distinct cultures. These cultures can tip the balance one way or the other in a policy.  For example, are there words to discourage utilization of any intellectual property?  Or are the  words instructions  how IPR  is to be treated in the case IPR is involved? Is the policy "friendly" or "unfriendly" to holders of IPR?  What is in your interest as a participant in the process...are you likely to have IPR or are you likely to need access to IPR?  What are the risks and costs to you as an IPR holder or or as an IPR seeker of participating in the process?  

3) What is the track record if any of the organization with respect to its policy?  Have there been any IPR controversies in the past involving the organization? How were they handled?  Have there  been previous versions of the organization's policy?  What was the previous text?  Why and how did it change? See for example Evolution of the ANSI Patent Policy and  Evolution of the IETF Patent Policy  If there were previous versions, what are the implications of the current and previous policies for standards developed under the previous policy?   What does the organization say about IPR claims on any of its standards?  Does it take any position on such claims such as when W3Ccalled for outside legal review of an IPR claim in order to counsel its members the IPR was not essential?  Platform for Privacy Preferences (P3P) technology does not infringe a patent held by the Intermind Corporation.  

What if any statements about IPR claims does the organization publish on or in the applicable standard? Does the organization accept or deny liability or responsibility for any IPR claim?  ANSI's statement is "By publication of this standard, no position is taken with respect to the validity of this claim or of any patent rights in connection therewith. The patent holder has, however, filed a statement of willingness to grant a license under these rights on reasonable and nondiscriminatory terms and conditions to applicants desiring to obtain such a license. Details may be obtained from the standards developer"  ETSI's comparable statement is ,  "Pursuant to the ETSI IPR Policy, no investigation, including IPR searches, has been carried out by ETSI. No guarantee can be given as to the existence of other IPRs not referenced in ETSI SR 000 314 (or the updates on the ETSI Web server) which are, or may be, or may become, essential to the present document"  ETSI further explicitly elaborates in its questions and answers:

Question 4 Does ETSI made an evaluation of the patent declarations received?

Answer 4: The information that appears on the ETSI IPR database reflects the ETSI Members' declarations with regards to Intellectual Property Rights that they have considered essential for a particular ETSI STANDARD. Because these IPR declarations are made on Bona Fide Basis, ETSI is not in a position to assess the essential character of the patents declared.

Yet these seemingly clear disclaimers are subject of much current attention in Europe by a company contending that an IPR declaration made to an ETSI  standard as "essential" and listed in the ETSI database is not really an essential IPR needed to meet the standard in the opinion of the company.

What role does the organization play if there are disputes about the wording or implementation of the policy?  Does the organization facilitate or in any way involve itself in  licensing of essential IPR from an IPR holder?  Is the organization registered under the National Cooperative Research and Production Act to limit its Antitrust liability?

4) What  is the action expected to occur when a company claims that its IPR is necessary to meet the standard, but the IPR will not be made available on a non-discriminatory basis  (or on the basis that the policy describes as necessary)?. The treatment in this scenario is important to any company who for whatever reason prefers that a standard NOT refer to its technology. What are the practical market place implications of any such action? For example a common case is for  the policy to requires the standard be "withdrawn" in the case of  essential IPR for which acceptable licensing terms can not be acquired Another option is to return the document to the technical committee.  Another option is to allow for a general assembly decision to publish the standard with information about the patent claim.   Participants may use a "claim" of IPR and statement of unwillingness to licence the IPR as a means to block progress on the standard.  How is the case handled when such a claim may be debatable? In an August 2001 letter ISO Director M.A.  Smith and IEC Technical Director J-P Brotons-Dias touched this point, "let us comment first on the claim to hold patents where there are none.  As you no doubt know, the boiler pate text we include in ISO and IEC (and ISO/IEC) standards includes a number of disclaimers.  One of these is that ISO and IEC as relevant take no position with respect to the validity or scope of identified patents.  One consequence of this is that we consider that it is the responsibility of the end user to decide whether their implementation will require them to seek a license or not and we do not expect ISO or IEC committees to make a determination about the relevance of a particular patent. "

5) Are you swimming with Sharks or Dolphins?  What companies and individuals will participate in the standards process covered by the IPR policy?  What has been the track record of those companies and persons with regard to standards setting?  It has been argued that there exists a self policing process within the standards development community.  Some had said  that  companies and participants that have a record of abusing the standards process will be informally and unofficially "black-balled"

6) What is the requirement that  IPR holder will disclose Intellectual property related to the standard?   Some have stated that the ANSI policy itself does not "require" essential patents to be disclosed.  The ANSI text narrowly addresses the case when the "Institute receives a notice that a proposed American National Standard may require the use of a patented invention." A narrow interpretation could be if no one has given ANSI a notice that IPR is involved, the procedures do not apply. 

What are the  words describing the IPR covered by the policy?  Is it "IPR essential" to practice the standard or merely "IPR related" to the practice of the standard? Is there a definition of "essential?"  According to the  ETSI Rules of Procedure, Article 15.6), "ESSENTIAL" as applied to IPR means that it is not possible on technical (but not commercial) grounds, taking into account normal technical practice and the state of the art generally available at the time of standardization, to make, sell, lease, otherwise dispose of, repair, use or operate EQUIPMENT or METHODS which comply with a STANDARD without infringing that IPR. 

Are there any other terms than "essential" used to describe IPR that should be disclosed? On the title page of ETSI standards  the term "potentially essential" is used

IPRs essential or potentially essential to the present document may have been declared to ETSI. The information pertaining to these essential IPRs, if any, is publicly available for ETSI members and non-members, and can be found in ETSI SR 000 314: "Intellectual Property Rights (IPRs); Essential, or potentially Essential, IPRs notified to ETSI in respect of ETSI standards"

Is the term "IPR" used or is the term more specific to patents, copyrights, trademarks etc. Is there any particular time in the process when such IPR "must" be disclosed or some default action might jeopardize the IPR? In some cases,  (See ECMA example in "Intellectual Property Rights Policies of selected   standards developers ) membership itself in the organization creates a "default" licensing of an organization's IPR  unless the IPR holder states its position otherwise. Is there a duty to "search" for IPR?  Or is the duty to search a self imposed function created by the previously mentioned default license?  Exactly where does  the responsibility for disclosing IPR fall?  Upon the participant in the development process?  Upon the formal company representative to the organization?  What is the duty of  anyone to disclose IPR of some other organization or company?  Are there different expectations for "contributors" of technical content that might be covered by IPR, or participants in the  committee process, or members of the organization that may not be participating in the specific process but whose IPR may be implicated in a standard they are not involved with?  How is the case for IPR discovered AFTER the publication of the standard handled?  Some have argued that a global statement that a company will agree to license any IPR its representatives contribute to a committee on the conditions applicable  is an effective and satisfactory substitute to disclosing any specific  IPR. See for example this statement from Lucent  Such broad statements are made in lieu of specific  disclosure  during the process.  Would  this practice meet the explicit statement related to disclosure in the policy? 

6) What is the specificity and use of the  disclosure requirement for  Intellectual property related to the standard?  Are there requirements for disclosing specific patent numbers and applications? Is the situation of patent applications covered or not? For example a participant in an ANSI accredited domestic standards process will most likely encounter the ANSI policy in this regard which addresses "If the Institute receives a notice that a proposed American National Standard may require the use of a patented invention"  While the same participant in an ANSI accredited process for participation in an activity of the IEC or the ISO will  encounter the ISO/IEC expectations for disclosing published patent applications  " patent rights – defined as patents, utility models and other statutory rights based on inventions, including any published applications for any of the foregoing –"  In an August 2001 letter ISO Director M.A Smith and IEC Technical Director J-P Brotons-Dias wrote, "We know there have been difficulties in the past caused by slightly different IPR policies practised by some national bodies (for example, some do not require that pending patents be declared whereas ISO and IEC do)" Are there any standard forms or language to be used?  What is the organization's practice with regard to making public the IPR disclosures?  How may such disclosures be found? Several organizations have state of the art web databases.  Other  major standards developers are unable even to produce a list of the standards for which there are IPR claims. 

7) What does the policy say about the  time during the development of a standard at which an IPR holder should or must  disclose his IPR?   and the time at which some statement of commitment for licensing should or must be made? Several years ago the European Telecommunications Standards Institute (ETSI) proposed an IPR policy that would have required IPR holders to identify and agree to license IPRs that might be the subject of future ETSI standards. Thus just to secure the right to participate in ETSI standards committees required a commitment to license technology that might be adopted. US industry resisted this policy as going too far and ETSI abandoned the proposal. In ANSI's Guidelines for implementing its IPR policy, ANSI suggests procedures to encourage early disclosure and commitments to license, but does not define any time deadline other than that the licensing commitment statement must be obtained before the standard is accepted as an American National Standard. One of the procedures ANSI suggests is the addition of requests for disclosure and commitments to license during the several iterative ballots that are typical of a standards development process. IETF encourages, "all interested parties to bring to its attention, at the earliest possible time," such information. Each IETF standards document contains this invitation. Any contributor to an IETF standards activity represents that he has disclosed the existence of any IPR in the submission that may be reasonably known to him. Formerly, within IETF, an IPR holder had to agree to the non-discriminatory licensing agreement at the time a standards track document reached the "Proposed Standard" state of maturity. (See Evolution of the IETF Patent Policy) Now within IETF there is no fixed time period, however a standard may be held up where a deferral of the standard will help obtain the assurance of licensing. ANSI also suggests periodic notices to committee members and encouragement of any party (not just the IPR holder) to identify IPR relevant to a standard. 

8) What does the policy say about the  nature of license commitment expected from  IPR holder? In some cases a standard form of disclosure and licensing commitment applies. Are these the only acceptable forms of disclosure and commitment?  What exactly are the words used to describe the licensing statement?... Must the licensing terms and conditions be explicitly stated in order to meet the requirement of the policy? The IETF's former policy required a rights holder to publish his terms and conditions on the Internet. Such terms had to be judged reasonable, "considering the objective of the ISOC to assure that all members of the Internet community will be able to operate under the standards at a minimal cost." Every such license had to contain a clause automatically modifying the terms of the license to be as favorable as the terms of any other license under the Rights previously or later granted by the Rights Holder. Now, the IETF Executive Director is instructed to attempt to obtain a written assurance from the IPR holder that licenses will be granted on "openly specified, reasonable. Non-discriminatory terms." Claims of IPR; statements of assurances about licenses to be made available; and results of attempts made to secure such assurances are held by the IETF. See Evolution of the IETF Patent Policy. ANSI's current  policy requires of a patent holder a statement of willingness to license under  "Reasonable terms and conditions that are demonstrably free of any unfair discrimination "  A previous ANSI policy  required confidential submittal to ANSI of the terms and condition of any such licenses, the number of independent licensees that have accepted the terms and conditions and the patent holder's basis for believing such terms and conditions are free of any unfair discrimination.  See Evolution of the ANSI Patent Policy May granted licenses be differing to different licensees yet still be non discriminatory?  For example if some license is granted during the process of standards setting in order to gain support for including IPR in the standard, would a  different license term after the standard has been published with the essential IPR included be considered non-discriminatory?  In one case may a patent cross license be a fair term while a specific royalty apply in another case?  What are the nuances between various  descriptions  of the terms expected?  For example compare the text as used by ISO/IEC "negotiate worldwide licences under his rights with applicants throughout the world on reasonable and non-discriminatory terms and conditions" and the ANSI wording "  a license will be made available to applicants under reasonable terms and conditions that are demonstrably free of any unfair discrimination" Is a licence required at all?  May the conditions be "royalty free" yet still carry any other obligations such as reciprocity?  What is the situation when there are multiple IPR claims?  Is there and can  there be  "patent" pooling arrangement? May there exist other "conditions" in the license about use of any other IPR?  Does the standards organization take any position when a license seeker does not feel that the terms and conditions the IPR holder is offering meet the statement the IPR holder made about those terms during the process?  Who is to arbitrate in this case?

About the Author: George T. Willingmyre, P.E. is President of GTW Associates, a consulting firm specializing in international trade, standards policy and conformity assessment matters. Previously, Mr. Willingmyre was Vice President of Washington Operations for the American National Standards Institute. Willingmyre was involved in the public and private sector resolution of the early 1990s  IPR  ETSI IPR Undertaking controversy and advancing private sector views to the government negotiations of the WTO Agreement on Technical Barriers to Trade.  Willingmyre currently participates in the ANSI Patent Group, the ITU/T Directors ad hoc group on IPR; the IETF  poised policy discussion  list and served for 2 years on the W3C patent group.  GTW Associates clients include Microsoft Corporation; DaimlerChrysler; European Commission; OECD, the Japan METI and various law firms involved in patent/IPR litigation.