"U.S. industry competitiveness depends on standardization": Open Standards and Patents discussed at WIPO:

By Rick Jelliffe
March 26, 2009

Some material of interest (from KEI) from the WIPO Standing Committee on the Law of Patents (SCP) meeting this week, which includes a session on Standards and Patents.

There has long been a strong need for better international regulatory clarity on the overlap between standards and patents (or copyright): in particular to provide the necessary legal and administrative superstructure for the emergence and favouring of Open Standards. Among other reasons, to stop FUD and rorting.

Some interesting material on national variations on patent law, concerning exclusions and variations. South America, France, India, China and Japan seem to have a lot of measures, which look pretty sensible. Even "in the United States of America, a third party who uses a patented invention in the performance of a Government contract in effect obtains immunity to liability for patent infringement of the patent", which I was not aware of (probably US readers are.)

I liked the paper by the UN International Centre for Trade and Sustainable Development Addressing the Interface between Patents and Technical Standards in International Trade Discussions too.

However, the ICTSD paper comments on unfair and difficult licensing perhaps may be balanced by the Statement by the United States on patents and standards at WIPO patent committee which says

Today, more than 16,455 standards are approved as International Standards (with about 1800 more in the pipeline) and 11,500 of these as American National Standards. Thousands more are adopted by industry associations, consortia, and other Standard Setting Organizations on a global basis.

Yet the number of disputes that result in litigation per year is typically in single digits, and the vast majority of these cases involve specific fact patterns. In other words, there is NOT a crisis, as claimed by some, in standard setting.

The general US position on Open Standards is stated as

Open standards can improve interoperability, facilitate interactions ranging from information exchange to international trade, and foster market competition.

Open standards systems offer a balance of private and public interests that can protect IP with fairness, disclosure policies, and reasonable and non-discriminatory licensing.

When developed by broadly accepted bodies or organizations, even voluntary standards can become widely adopted. Because of these benefits, use of open standards in the traditional sense is strongly encouraged whenever practical.

In our view, the standard setting process should be voluntary and market-driven. Unnecessary government intervention can impair innovation, standards development, industry competitiveness, and consumer choice.

That is nice. (Though what is "the traditional sense" of open standard? If it is not just filler phrase, I suppose it must be a kind of endorsement of the original academic definitions, such as Krechmer's, rather then the recent encrusted versions which demand FOSS reference implementations and such.)

The US also positions standards as part of fair markets, ("Our focus is on preventing harm to the competitive process,") which is I think a really important aspect. Globalization and climate change get roped in too...you can almost see the buzzword checkboxes being ticked!

To effectively respond to the challenges posed by globalization, the emergence of new economic powers, public concerns such as climate change, and the need to remain current with evolving technologies, standards development organizations and the standards development process itself must be flexible as well as capable of adapting the most innovative and best performing technologies available.

I suspect the flexible means something fairly specific: perhaps emphasizing pragmatics and dynamism over ideology? But the US and I depart after this, especially concerning technologies that reach market domination. The US position:

We believe that patent owners should be provided the incentive to have their proprietary technologies included in the standard under fair and reasonable terms.

Without getting into the pros and cons of non-free licensed (as in $$$) technology in "open standards" (I would have thought the one excludes the other), in the specific case of market-dominating technologies, but I think it is appropriate to have them standardized and RAND-z: a compulsory free license for market equalization reasons. The incentive for a patent owner should never be to get a market-crushing advantage, but at most to get first player advantage within an active market, it seems to me.

And then comes this rubbish:

Without the commercial return there is no incentive for investors to fund research and development into new technology. Therefore, the incentive to develop and use patented technologies in standards should not be undermined.

What could be dumber? Monopolies prevent market forces operating. All that will happen if patented technologies in open standards have compulsory free licenses will be a different pattern of investment and marketing that is not aimed at market domination. It is arguable that the non-free (as in $$$) licensing of media types such as MPEG has been an utter dampener on the ability of desktop Linux to penetrate the SOHO markets.

However, two lights in the tunnel. First (my bolding):

The U.S. government recognizes its responsibility to the broader public interest by providing financial and legislative support for, and by promoting the principles of, our standards setting system globally. U.S. industry competitiveness depends on standardization, particularly in sectors that are technology driven.

and then the interesting comment that the US in particular in any agreement covering

potentially anticompetitive agreements, such as horizontal practices among members of standard-setting organizations that collude on prices or exclude competitors, we suggest referring generally to "illegal collusive or exclusionary conduct" when discussing competition law aspects.

I think in the future we will also see more treatment on the issue of standards bodies where vendors exclude or sideline buyers as one of the few practical methods of assuring that an industry standards group does not in fact become a legitimating front for a cartel.

(If any reader can point me to any Australian position papers etc, I would be interested.)


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