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by George T. Willingmyre
This article is intended as background for persons impacted by the current discussions of patent policies in the standards-setting
arena: What are the issues? Why and how will these issues affect standards development organizations, their members, and users?
What may transpire over the next few years? Patent issues in standards setting are complex. Debates, discussions, and litigation are
often dominated by attorney experts in intellectual property and antitrust. This article necessarily includes legal references; however it
is primarily addressed to a non-legal audience. All members of the standards community have important stakes in these issues and
their resolution. How the global voluntary standards system addresses these issues in the near term will have lasting implications for
Patent policies represent the choice a standards-developing organization (SDO) makes to balance the rights of patent
holders and the need for implementers to be able to use proprietary technology that may be essential for compliance with a
standard while protecting and advancing the SDO’s own interests.
The patent policies of consensus-based SDOs, like all of their other processes, require balancing the points of view of
stakeholders with differing interests. However, the interests of the SDO are also an important consideration, because the patent policy
or procedures of an SDO are a facet of its competitive position in the global market of standards setting. In developing a patent policy
or procedure any SDO (and its members) essentially chooses what it believes is an optimum balance of competing interests: attracting
contributions of proprietary technology so that the resulting standards will be the best solutions compared to other SDOs, and not
discouraging implementers of the resulting standards from adopting them. This utilization of proprietary state-of-the-art technology to
meet a market need may involve what this paper calls “SEPs” or “Standards Essential Patents.”
The incorporation of an SEP in a standard has specific market value to the owner of that technology. These returns may come
from increased product sales, from revenues from licensing the SEPs, or both. Owners of SEPs evaluate whether it is in their interests
to strive to market their innovation on its merits alone or to contribute the technology to a standards process (and which one) in order
to obtain returns based on the incorporation of the SEP in a standard. Such evaluations rest on a cost/benefit evaluation of the “costs” a
particular SDO imposes on such contributions in terms of forgoing rights that a patent process has otherwise granted them. For
example, a tangible benefit of contributing an SEP to a standards process can be the ability to obtain reasonable royalties for licensing
the use of the SEP from large numbers of implementers of the standard. Even when commitments are made to license SEPs
compensation-free, economic benefits can accrue because of early knowledge, advantages of making products utilizing one’s own
technologies, and benefits that arise from cross-license commitments made in “reciprocity,” where licensees agree “not to sue” or to
provide for access to their own patents.
The conditions that many SDOs patent policies establish for a contribution of SEPs require or encourage “disclosure” so that any
SEP in the standard is not hidden or secret and that implementers will be able to utilize the SEP based upon negotiating a license under
some stated assurances by the owner.
The details of any specific patent policy represent an SDO-chosen balance between opposite interests. SDO patent policies that
preclude SEPs from being included in a standard or allow only compensation-free license assurances from owners of SEPs are
“advantageous” to implementers.
SDO patent policies that provide for the inclusion of SEPs if the owner makes an assurance that
licenses will be made available on reasonable and non-discriminatory terms (RAND terms)
give patent holders stronger incentives to
invest in research and development, to patent, and to contribute SEPs to an SDO. SDO participants’ points of view can change
between implementer and contributor of an SEP as the participants’ roles change standard by standard.
An important consideration is the ownership rights that an SDO patent policy may request an owner to forgo. A second is the role
of the legal system in regulating what is acceptable and unacceptable behavior. Recent presentations by officials from the US Federal
Trade Commission (FTC)
and staff of the US Department of Justice (DOJ)
provide helpful background. Such agencies enforce laws
prohibiting anticompetitive behavior and deceptive conduct. Another is the experience of the American National Standards Institute
(ANSI) that has employed various approaches in the evolution of its patent policy to address current problems.
This paper explores the issues and factors applicable in establishing such a balance and the implications for SDOs and their
members. Different SDOs will develop different patent policies based on their balancing of the factors. But just as the pile of rocks in
Figure 1 will fall if not carefully balanced, so will market forces reward or punish SDOs depending on the balance or lack thereof of
their patent policy.
Figure One Symbolic illustration of need for balance in a patent policy
Patents are such an essential aspect of stimulating innovation and competition that they are mentioned in the US Constitution. The
granting of a patent in the United States is authorized by Article One, Section Eight:
“The Congress shall have Power ... To promote the Progress of Science and useful Arts, by securing for limited times to
Authors and Inventors the exclusive Right to their respective Writings and Discoveries;”
Developed countries have similar authorizations and procedures for granting patents. Generally these provide for granting to
qualified applicants a limited term monopoly right to exclude others from making, using, selling, or offering for sale the patented item
within their territory. SDOs whose standards are used around the world must therefore approach development of a patent policy from
a global point of view. The global landscape of intellectual property and antitrust law is beyond the scope of this paper; it will be
sufficient to address US law given broad similarities in laws. In the United States such patent rights are valid for twenty years from the
earliest claimed filing date. This is the primary reward a patent grants in exchange for making information public about the patented
After this anyone might practice one or more of the rights to the invention previously granted exclusively to the patent holder.
The owner of a patent has various options. The holder might decide to develop and commercialize the technology itself (and
exclude others); commercialize the technology itself while also licensing the technology to others, possibly in exchange for some
compensation; forego development itself and license the technology to others; sell the patent rights to someone else; or not exploit its
patent in any way.
SDO patent policies generally seek a patent holder’s assurance that it will not pursue the first option in the case of an SEP. This
right to develop and commercialize a technology to the exclusion of all others is one of the most significant rights granted to patent
holders. Patent policies elaborate the nature of an assurance the patent holder must make to license others to use the SEP. These SDO
patent policies generally demand assurances from a patent holder that licenses to practice the SEP will be available on RAND terms or
perhaps free of monetary compensation (RANDz).
A variation of RANDz is an assurance that the patent owner will not take action
when the patent is being infringed. The requirement that license terms be “RAND” establishes an assumption that the owner of the
SEP and implementers will be able to agree on financial royalties and or non-financial terms (such as cross-licenses) under which the
SEP owner will grant use of the SEP to practice the standard.
There may be occasions when others appear to use one or more of the patent rights without permission. This might happen when
an SEP is used because someone is practicing the standard without regard to the SEP owner’s rights, or when the owner of an SEP and
an implementer fail to agree on the terms and conditions for (or even the need for) a license. In such cases the SEP owner may take
some action if it wishes to protect and enforce its patent rights. Disputes can lead to litigation and costs to determine whether the
patent should have been granted in the first place;
whether the alleged infringer does actually violate one or more of the patent rights;
and what damages the patent owner has suffered because of the infringement. In some cases a court may grant a temporary or
permanent ruling (an injunction) that the alleged infringer must cease the actions alleged to infringe the patent right. In the United
States, a patent owner may also call on the International Trade Commission (ITC) to ban (an exclusion order) infringing products from
being imported into the United States. The ITC may then launch a fact-finding investigation and make a determination. However the
President of the United States may overrule such an ITC exclusion order based on additional public interest factors. In July 2013 the
Office of the US Trade Representative did just that, disapproving an ITC decision to issue an exclusion order favorable to Samsung
that would have prohibited importation of certain products of Apple.
Concerns about SEPs in Standards Setting
The incorporation of an SEP in a standard leads to a variety of hypothetical and practical problems. Some argue that SDO patent
policies should derive primarily from data about actual problems and, more specifically, problems experienced by the SDO and its
members. Others argue that policies should anticipate and address potential problems whether experienced or not. Some types of real
or potential problems are described below.
can occur when the existence of an SEP is not known during the development and approval of a standard. The
concern is that after a standard has been developed and implementers have made products meeting the standard, an SEP owner might
“ambush” implementers with unexpected demands for licensees. Most SDOs have developed rules and guidance,
agencies have initiated cases
that encourage if not require participants in standards setting to disclose SEPs. The FTC contended in
these instances that ‘hiding’ an SEP while participating in standards setting and then seeking licenses for the SEP is deceptive
conduct. However such problems currently rarely occur and SDO patent policies do not apply to parties that do not participate in the
standards development process. Even the most rigorous procedures intended to address the possibility of patent ambush by
participants in standards setting do not apply to entities that have no duty to follow SDO rules and guidelines.
can occur when an SEP owner that has made an assurance to an SDO to license its SEP on RAND terms and an
implementer cannot agree on terms and conditions in a specific license to the SEP. The term is used when an implementer believes
that the SEP owner is seeking “unreasonable” royalties or other terms and conditions in a license inconsistent with the SEP owner’s
RAND assurance to the SDO. However the SEP owner may view the same situation as deriving from a recalcitrant implementer who
rejects offered terms and conditions that are “clearly” RAND. This latter view is called . Several courts have
interpreted the meaning of an SEP owner’s assurance of offering a license on RAND terms. These legal interpretations, while not
dispositive, set precedents which SEP owners and implementers will take into account in their negotiations. In 2013, the FTC also
took several enforcement actions intended to address concerns with alleged patent hold up situations involving standards
parties sought injunctions to prohibit using the SEP. Some, however, contend that the FTC goes too far.
Addressing the matter of
these FTC enforcement actions preceding his appointment, FTC Commissioner Wright stated:
These complaints and consent orders,
taken together, logically and necessarily depend upon the assumption that seeking injunctive relief, without more, is itself
anticompetitive. There is certainly no economic evidence available to support that policy view.
Royalty stacking or the closely rated issue of patent thickets may arise when there are many SEPs asserted to be essential to
practice a standard. A 2011 European study of intellectual property (IP) issues in standards setting found that the number of patent
assurances per standard varied widely from sector to sector. See Figure 2. In an often referenced paper
the authors state that a
modern laptop embodies or utilizes at least 251 interoperability standards, but the actual number could be even higher.
When the matter of multiple SEPs for a standard is combined with the situation that a single product may implement many
different standards, the possibility of excessive royalties to be paid to different SEP owners arises. The value of any single SEP to a
final product that utilizes many patents becomes controversial and subject to dispute. A license to use a single SEP may be RAND, but
the sum of many such licenses may become “unreasonable” from the point of view of the implementer. Accurate data about the
dimension of this issue is lacking.
Figure Two Patents per standard as in Technology class
Problems may also arise when NPEs (non-practicing entities, who do not build anything) seek unreasonable or unnecessary
royalty bearing licenses from implementers of a standard. Sometimes NPEs purchase and assemble numerous patents into a patent
portfolio and subsequently send “demand letters” threatening infringement litigation to many implementers (or even their customers!)
if the implementers do not accept a license on the proffered terms to all the patents in the portfolio. If the requested royalty is less than
the cost to an implementer to respond with counter litigation, it may be advantageous for an implementer to just pay the royalty. A
nuance to the disposition of NPE-associated patent problems in standards setting is that NPEs (in contrast to SEP owners that make
products using the standard) have nothing to lose in infringement counter-suits from implementers who also own SEPs for that
standard. If NPEs do not participate in standards setting, they may also not experience the motivation to act as “good citizens” as do
those SEP owners who value good reputations within the SDO community. Another complicating factor is that NPEs might be highly
respected academic institutions and/or may serve a helpful role for a small inventor in monetizing and commercializing its patent
when the small inventor does not have the critical mass to do so. In 2013, the US House of Representatives passed H.R. 3309, the
intended to address perceived problems in the market caused by NPEs. Relevant legislation
was introduced in
February of 2014 in the US Senate. Additionally, the FTC announced in 2013 that it would seek public comment on a survey and
study of NPEs.
It seems that, relatively speaking, only a small number of standards embedding SEPs drive the current attention to revision of
SDO patent policies. This is not to discount the importance of problems of SEPs and standards nor that such problems are unworthy of
attention and solution; but rather to place these problems in perspective within the global voluntary standards system. A European
study of IP issues in standards setting completed in 2011 stated that:
“The analysis of the essential IPR databases of eleven of the most important SSOs revealed that approximately 250 distinct
standards include technologies that are covered by one or more declared IPRs, and many of these standards are successful and
widely employed. Since there are several hundred thousands of standards available worldwide, this is a quite selective group”.
Others project the total number of worldwide standards could be three million.
A 2014 publication reported that the number of
standards embedding SEPs to be about 1500,
albeit more in some industry sectors, so the incidence of patent disputes may be
higher or lower in specific sectors. The main point is that a small minority of the total number of standards are involved with patent
disputes … between one in one thousand and one in ten thousand. Some further contend that the present legal system is satisfactorily
addressing those disputes that do occur and that it is reasonable to expect that some disputes will arise during negotiations between
the owner of an SEP and an implementer. However it is certainly true that the frequency of litigation involving all sorts of patents is
rising. According to a 2013
report by the General Accountability Office (GAO):
Stakeholders knowledgeable in patent litigation identified three key factors that likely contributed to many recent patent
infringement lawsuits. First, several stakeholders GAO interviewed said that many such lawsuits are related to the
prevalence of patents with unclear property rights; for example, several of these stakeholders noted that software-related
patents often had overly broad or unclear claims or both. Second, some stakeholders said that the potential for large
monetary awards from the courts, even for ideas that make only small contributions to a product, can be an incentive for
patent owners to file infringement lawsuits. Third, several stakeholders said that the recognition by companies that patents
are a more valuable asset than once assumed may have contributed to recent patent infringement lawsuits.
One possible explanation for the relative low rate of patent disputes involving standards is that existing patent policies have been
and continue to be effective. As ANSI stated in 2013 to the Global Standards Collaboration with respect to its own policy:
The Policy’s efficacy is, in ANSI’s view, evidenced by the fact that there has not been any adjudicated abuse of the process
relating to patents that has occurred in connection with any ANS.
ANSI further elaborates systemic disincentives for duplicitous conduct by participants:
With respect to the inclusion of patented technology in standards, there are incentives built into the system that cause it to be
effective in discouraging duplicitous conduct by participants. The risks are that (1) the approval of the standard is subject to
withdrawal, often rendering the company’s innovation relatively useless, (2) competitors can and usually do avail themselves of
their legal rights in court if they believe they are being unfairly disadvantaged, and various legal claims, such as equitable
estoppel, laches, patent misuse, fraud, and unfair competition may be available to prevent a patent holder from enforcing a patent
covering an industry standard due to the patent holder’s improper conduct in a standards-setting context, and (3) in the case of
deliberate misconduct, the FTC or DOJ can intervene. In addition, a company engaging in such conduct likely would lose some of
its stature in the standards development community.
Smartphone patent wars account for the majority of the attention today to SDO patent policies; sixteen percent of active US
patents are related to smart phones.
Widespread market adoption of smart phones illustrates the convergence of multiple
technologies. Smart phones comprise the technology of wireless and wired telephony, but also include many technologies arising from
the growth and global utilization of the Internet. Smart phones also include technology from the information technology sector and
often include cameras and consumer-oriented product features. Each of these sectors has a different history of standards and the role
of IP in such standards.
In the smartphone product sector patent litigation is rampant. Figure 3, published in early 2012, provides a snapshot of
smartphone litigation in process. Standards may play a factor in the litigation but standards and standards processes are not the
principal stimulus for the litigation. As stated in the PC magazine article where the charts appear:
There's a war on, and it could hit your smartphone. A slew of lawsuits are rocking the smartphone industry as nearly every major
manufacturer fights to get cash from the others for using its patents, to block its opponents' products from being imported into the
US, or just to bleed out their energy paying for lawyers rather than engineers.
Figure Three: Source PC Magazine January 2012 http://www.pcmag.com/article2/0,2817,2399098,00.asp attributed to Amy
Hammer Verizon (included with permission)
The factors identified in the report by GAO above likely have more impact on the rate of patent litigation both generally and with
respect to smart phones than do generic failures in SDO patent policies.
The American National Standards Institute patent policy has a long history, and has been evolving since 1932 to address the
intellectual property and standards issues of the day. Understanding how the policy has changed over time provides practical lessons
for the voluntary standards community. This includes not only the SDOs accredited by ANSI and whose procedures and operations
must comply with ANSI’s essential requirements, but also others
who will benefit from ANSI’s experience.
The earliest publicly available record from ANSI or its predecessors that addressed the matter of patents incorporated in
standards was in 1932; it noted that patented designs or methods should not be incorporated in standards, but may be appropriate in a
given standard. In 1959 the idea of licensing on reasonable terms to any interested party was added. In 1970 the policy added
defensive text whose objective was to shield the organization from litigation over existence, accuracy and completeness of statements
and about infringements of patents due to use of the standard. Between 1969 and 1997 requirements included patent holder submission
of specific terms and conditions and active evaluation by counsel or committee of such and recording a statement of the basis for
considering submitted terms and conditions free of any unfair discrimination In 1997 this requirement was deleted and the policy took
on the essential structure and major elements that survive today: the policy continues to be refined as new issues and solutions arise.
3.1 ANSI patent policy - I nclusion of Patents in American National Standards
There is no objection in principle to drafting an American National Standard (ANS) in terms that include the use of an essential
patent claim (one whose use would be required for compliance with that standard) if it is considered that technical reasons justify
If an ANSI-Accredited Standards Developer (ASD) receives a notice that a proposed ANS or an approved ANS may require the
use of such a patent claim, the procedures in this clause shall be followed.
3.1.1 Statement from patent holder
The ASD shall receive from the patent holder or a party authorized to make assurances on its behalf, in written or electronic
(a) assurance in the form of a general disclaimer to the effect that such party does not hold and does not currently intend holding
any essential patent claim(s); or
(b) assurance that a license to such essential patent claim(s) will be made available to applicants desiring to utilize the license for
the purpose of implementing the standard
(i) under reasonable terms and conditions that are demonstrably free of any unfair discrimination; or
(ii) without compensation and under reasonable terms and conditions that are demonstrably free of any unfair discrimination.
In 1991 ANSI issued the first edition of The Guidelines for Implementation of the ANSI Patent Policy; an Aid to More Efficient
and Effective Standards Development in Fields That May Involve Patented Technology. Guidelines are not typically “mandatory”
requirements and thus help an SDO retain flexibility. According to ANSI, the “…guidelines are intended to assist voluntary standards
developers and those that participate in the standards development process, in understanding and implementing the ANSI Patent
In the opinion of the author the evolution of the ANSI patent policy highlights instructive experience:
1) An SDO needs to protect itself from involvement in litigation about the accuracy and completeness of statements
and about infringements of patents due to use of the standard.
2) Between 1969 and 1995 ANSI patent policy included patent holder submission of specific terms and conditions and
evaluation by counsel or committee of such and recording a statement of the basis for considering submitted terms and
conditions free of any unfair discrimination, but these requirements were removed in 1997 ;
3) ANSI’s policy does not currently require disclosure but describes what is to happen if disclosure happens; however the
accompanying Guidelines to implementation of the policy acknowledge the value of early disclosure and suggest procedures
SDOs may implement to encourage disclosure;
4) The essence of the ANSI patent policy is a requirement that when an SDO receives a notice that a proposed or an approved
standard may require the use of a patent claim (i.e. an SEP), the SDO must obtain an assurance that: “A license will be made
available to applicants under reasonable terms and conditions that are demonstrably free of any unfair discrimination.”
5) The consequence of not fulfilling the requirements of the ANSI policy is that the standard cannot be an ANS. SDOs should
consider the “consequences” for not meeting the ANSI policy.
SDOs around the world are evaluating whether their patent policies address current problems and issues facing them and their
members. It is the nature of a patent policy to evolve to address current situations. The patent policies of various SDOs differ based on
their differing historical experiences and the needs of the SDO and its members. Ongoing evaluations and potential revisions to
existing patent policies will similarly differ based on the SDO’s perspective. However suggestions
made in four recent documents
provide helpful common points of departures for such evaluations.
“Encouragement for SSOs to further consider” excerpted from the Study on the Interplay between Standards and Intellectual
Property Rights (IPRs)
Excerpts from the presentation Six “Small” Proposals for SSOs Before Lunch
Recommendations excerpted from National Academy of Sciences Report, Patent Challenges for Standard-Setting in the
Global Economy: Lessons from Information and Communications Technology
Excerpts from EU commissioned study: Patents in standards: A modern framework for IPR-based standardization Ref.
Ares(2014)917720 - 25/03/2014
While these efforts were independent of one another and the phraseology differs in construction, there are some common themes.
SDOs may contemplate the merits and relevance of the suggestions in these recent publications. No doubt some of these suggestions
will appear in revisions to SDO patent policies in the coming years.
It is beyond the scope of this paper to predict the outcomes of ongoing patent policy evaluations in any given SDO. However the
issues involved in and possible approaches to a few of the shared themes extracted from these papers can be considered.
All of the documents described above recommend that SDO patent policies should require that assurances of license availability
made to SDOs by owners of SEPs should apply to subsequent owners if the SEP is transferred. A legal precedent in this regard is a
2008 FTC consent agreement with N-Data where the FTC contended that N-data refused to meet a commitment made by a former
owner of an SEP to license the patents covering the 'Ethernet' standard. N-Data agreed to an order prohibiting it from enforcing the
patents unless it has first offered a patent license based on the terms offered by the previous owner. The IEEE Standards Association
revised its patent policy in 2007 to address this very situation:
The Submitter and all Affiliates (other than those Affiliates excluded in a Letter of Assurance) shall not assign or otherwise
transfer any rights in any Essential Patent Claims that are the subject of such Letter of Assurance that they hold, control, or have
the ability to license with the intent of circumventing or negating any of the representations and commitments made in such Letter
The Submitter of a Letter of Assurance shall agree (a) to provide notice of a Letter of Assurance either through a Statement of
Encumbrance or by binding any assignee or transferee to the terms of such Letter of Assurance; and (b) to require its assignee or
transferee to (i) agree to similarly provide such notice and (ii) to bind its assignees or transferees to agree to provide such notice
as described in (a) and (b).
It is very likely that future SDO patent policies will include some clause addressing SEP ownership transfer. Once made, an
assurance ought to be able to be counted upon, although it will still be necessary to address the issue of the extent of liability the
maker of an assurance may have for the actions of subsequent owners or the special conditions that arise when an owner declares
There is broad consensus to encourage participants in standards setting to disclose the existence of an SEP.
disclosure, however, is more problematic. SDO patent policies currently vary widely with respect to disclosure obligations. For
example, while the ANSI Guidelines encourage disclosure, the ANSI patent policy does not require disclosure; it merely states what is
to happen when a disclosure occurs. In contrast, the patent policy of the IEEE explicitly includes mandatory disclosure:
In order for IEEE's patent policy to function efficiently, individuals participating in the standards development process: (a) shall
inform the IEEE (or cause the IEEE to be informed) of the holder of any potential Essential Patent Claims of which they are
personally aware and that are not already the subject of an existing Letter of Assurance, owned or controlled by the participant
or the entity the participant is from, employed by, or otherwise represents; and (b) should inform the IEEE (or cause the IEEE to
be informed) of any other holders of such potential Essential Patent Claims that are not already the subject of an existing Letter
Similarly the patent policy of VITA requires disclosure:
Each working group member (“WG Member”) shall disclose to the working group (“WG”) in writing the existence of all patents
and patent applications owned, controlled, or licensed by the VITA member company (“VITA Member Company”) …
Some suggest that when SDOs do not have a policy requiring licensing assurances from all participants, they should include a
disclosure element as part of their IPR policy.
For example, the patent policy of the IETF
rests on mandatory disclosure without a
mandatory license assurance. Nevertheless many IP submissions to IETF include such license assurances.
Beyond the issue of encouraging vs. requiring disclosure, the European Commission study referenced above suggests that SDOs
should check for essentiality and even establish royalty rates—two activities which would result in increased cost and exposure to
liability for US SDOs.
Disclosure requirements or incentives in SDO patent policies should derive from the actual experience of an SDO and its
members. For many standards and SDOs adding mandatory disclosure requirements would add little if any value. If disclosure is
mandatory, the requirements should include a definition of to whom the requirement applies (including whose knowledge about an
SEP triggers the requirement), distinctions between encouragements and requirements applicable to when disclosures are made, what
information a disclosure must contain, what the consequences are for non-disclosure, and whether the disclosure requires a patent
search of an organization’s patent portfolio.
Some current litigation derives from breakdowns in negotiation over license terms and conditions between the owner of an SEP
who has made an assurance that licenses to the SEP will be available on RAND terms and an implementer. The SEP owner may
believe its offered terms and conditions are consistent with its previous assurance but the implementer may contend that the offer is
not reasonable or does discriminate. At one time, ANSI’s patent policy included some review of terms and conditions for licensing of
an SEP that were to be submitted to the organization as a part of the approval process for an American National Standard (ANS). Also
the “basis” for a conclusion that license terms and conditions were acceptable was to be recorded. Both of these requirements were
deleted. One possible rationale for this deletion is that in creating such a record, the Institute could be drawn in as a party to or
defendant in the type of litigation over licensing disputes of SEPs which is occurring now. A second possibility is that not just one but
many different sets of terms and conditions might be “RAND”. Some contend that it is this flexibility about terms and conditions
consistent with a RAND assurance that is its strength,
It is true that SSO rules consistently fail to define “RAND” according to any precise formula. But because this is the consensus
result of the competitive evolution of SSO rules we have discussed earlier, it is appropriate to take as a first hypothesis that this
flexibility in the concept of RAND is strength, not a weakness. One size rarely fits all, and the use of RAND terms does not
obligate each patentee or SSO to ensure that every licensee receives identical terms.
also made by FTC Commissioner Joshua Wright. A third possible rationale is that the details of patent licenses are often
confidential and SEP owners resist sharing confidential information. The current situation at ANSI is described in the Guidelines:
While ANSI’s counsel will verify that the information required from the patent holder has been supplied, counsel will not
undertake to evaluate whether the terms and conditions satisfy the substantive test set forth in Section 3.1 (i.e. whether the terms
and conditions are “reasonable” and/or “free of any unfair discrimination”). Such a decision is the exclusive province of the
Board of Standards Review (or, on appeal, the ANSI Appeals Board) if the issue is raised during the approval process or in a
petition for withdrawal of approval. In making its decision, the BSR shall consider all information of record it finds relevant.
The VITA SDO requires participants to submit terms and conditions of license offers:
Each WG Member must declare the maximum royalty rate for all patent claims that the VITA Member Company he or she
represents (or its Affiliates) owns or controls and that may become essential to implement the Draft VSO Specification. WG
Members are encouraged to attach to the Declaration a draft licensing agreement for all patent claims essential to implement the
Draft VSO Specification.
A tentative approach by IEEE contemplating a revision of its patent policy is to propose the meaning of “reasonable rate”
Seeking an injunction through the courts or a comparable equivalent “exclusion order” at the ITC is a remedy available to patent
owners to address alleged infringements of a patent. However:
There is a diversity of opinion within the literature regarding whether and to what extent injunctive relief is or should be
available to address infringement of an SEP, as it is generally for infringement of other patents.
Some participants in SDOs state that the use of injunctive relief against willing licensees, or the threat of seeking such relief, is
fundamentally incompatible with the RAND promise.
The argument is that even the threat of infringement litigation increases an
SEP owner’s leverage to seek compensation greater than deserved. A joint policy statement
of the US Department of Justice and US
Patent and Trademark Office in this regard includes this observation:
A decision maker could conclude that the holder of a F/RAND-encumbered, standards-essential patent had attempted to use an
exclusion order to pressure an implementer of a standard to accept more onerous licensing terms than the patent holder would be
entitled to receive consistent with the F/RAND commitment—in essence concluding that the patent holder had sought to reclaim
some of its enhanced market power over firms that relied on the assurance that F/RAND-encumbered patents included in the
standard would be available on reasonable licensing terms under the SDO’s policy.
But then continues with text about the value of strong incentives for innovators:
Finally, determinations on the appropriate remedy in cases involving F/RAND- encumbered, standards-essential patents should
be made against the backdrop of promoting both appropriate compensation to patent holders and strong incentives for innovators
to participate in standards-setting activities.
Some SDOs are considering revisions to their patent policy to circumscribe the occasions when an owner of an SEP might seek an
injunction. Generally the objective is for SEP owners to be able to seek injunctions only in instances where an implementer fails to
abide by some outside decision that it take a license on specified terms. One matter of contention is that if SEP owners are to be
constrained so should implementers be constrained from taking legal actions against SEP owners. Some argue that “seeking” an
injunction is a different matter than “having” an injunction and the deliberative legal processes courts and agencies utilize should be
allowed to function.
There is general consensus that it is consistent with a RAND assurance for the owner of an SEP to include requirements in a
license that if the implementer has an SEP of its own to the standard, the implementer will “reciprocally” provide access to its SEP.
Some suggest that such an implementer with its own SEP should provide access to anyone to that SEP. There are some variations on
this theme. Some sort of permissive text in future patent policies that RAND assurance may include such “reciprocity” conditions is
likely to be added to SDO patent policies that do not have such today.
However whether a RAND assurance is consistent with an SEP owner including both SEPs and patents other than SEPs in a
specific license offer, or include reciprocal requirements for its access to licenses for the SEPs of implementers to some other standard
or to non-SEPs, remains under discussion. Voluntary “Cross-licensing” agreements between businesses characteristically provide for
broad access to multiple patents. At contention is whether an SEP owner who has made a RAND assurance should be able to require
access to non SEPs. There may be antitrust implications in some of the extreme cases. Another suggestion—likely to be equally
contentious—is that an implementer should be entitled to select a “cash only” license option when it has little to offer in a cross-
While “reciprocity” in general may be consistent with a RAND assurance and may appear in future patent policies of SDOs,
patent policy text explicitly defining what “reciprocity” terms and conditions are consistent with RAND or perhaps those that are not
will be contentious. In the meantime, many SDOs address the issue by following the guidelines of ISO, IEC, and ITU, which state:
The Organizations should not … interfere with licensing negotiations … this should be left - as in the past - to the parties concerned.
Private arbitration of disputes over license terms and conditions for SEPs is an option to litigation or seeking some action by
government. The arbitration process may resolve disputes in shorter time frames or at less cost than court litigation. Or it may not. A
shared theme in the recommendations above is that SDOs should encourage use of arbitration in resolution of licensing disputes.
Arbitration is a valid approach to resolution of many sorts of disputes. Arbitration is an option presently available to parties involved
in standards disputes conditioned on the agreement of the parties to use the process.
A few SDO patent policies currently require the use of an arbitration process. For example the procedures of VITA state:
Any VSO member who believes a WG Member or the VITA Member Company that the WG Member represents has not complied
with his/her or its obligations under this Patent Policy, including but not limited to obligations under Section 10.3 to grant
licenses on terms that are fair, reasonable and nondiscriminatory, may submit his/her claim in this respect to the applicable WG
Chairperson. If the claim is not thereupon resolved on an informal basis within fifteen (15) days of its submission, the WG
Chairperson will commence an Arbitration Procedure in accordance with the provisions set forth below.
(5) Any dispute between a Member and another Member over whether the Member is offering a license under its Essential
Patent(s) on fair, reasonable and non-discriminatory terms and conditions within the context of the provision of 16(4) shall be
decided by a single neutral arbitrator appointed under the International Rules of the American Arbitration Association (the
14.7 Each Member hereby agrees, on its behalf and on behalf of its affiliated companies, that, subject to clause 14.9 of this
Article 14, all disputes with any other Member of these statutes (MoU) regarding solely the terms and conditions of licenses
arising in connection with the undertaking in this Article 14 shall be finally settled under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with such Rules.
However there is no evidence to date that an arbitration process has actually addressed a standards related patent dispute. One SDO
is considering adding text to state that nothing in its patent policy prohibits parties from pursuing arbitration. Such an approach
encourages dispute resolution through alternatives to litigation but does not require it.
Adding requirements that SEP owners must use arbitration in resolving license disputes would significantly expand most current
SDO patent policies. Arbitration is difficult to setup and if incorrectly setup can be prejudicial. Also not all disputes are amenable to
No single “one size fits all” patent policy is best for the number and variety of different SDOs. The requirements in any SDO
patent policy are choices an SDO makes based on its interests and needs of its members. The market focus of the SDO, its
experiences, the concerns and interests of its members all contribute to the development of an appropriate patent policy for the SDO.
These evolve over time. The patent policy which was appropriate yesterday may not be the most appropriate today or tomorrow.
Some data suggest that SDO patent policies today (whatever they are) have been effective in limiting the ratio of standards
associated with patent disputes to the total number of standards to between one in one thousand and one in ten thousand This is not to
diminish the importance of the issues generating such disputes nor possible solutions, but to place the problems in perspective in the
overall health of the global voluntary standards system. Many aspects of the voluntary standards system discourage bad behavior by
participants. It is important to understand the primary causes for patent disputes in order to propose the best solutions if the goal is to
reduce the overall number of disputes.
While different SDOs will make different choices, all patent policies have the goal of attracting the best technology for their
standards while not discouraging implementers from adopting them. In this respect, a shared characteristic of an SDO patent policy is
the balancing of divergent points of view of stakeholders and the needs of the SDO itself.
An important consideration is the applicable legal environment of intellectual property and antitrust/competition for the SDO’s
stakeholders and the SDO. An SDO may become involved in litigation about infringements of patents in a standard if it does not
recognize and address its exposure.
There is no reason to “reinvent the wheel.” SDOs will benefit from the patent policy lessons learned from experiences of
organizations that have practical experience about what has worked and not worked. Its patent policy is one aspect of an SDO’s
competitive position in the global market for standard setting, and the consequences of right or wrong decisions are significant.
I would like to acknowledge the assistance of Dan Bart of Valley View Corporation, Earl Nied of Intel Corporation, Anne Layne-
Farrar of Charles River Associates, and David Ringle of IEEE-SA for their review and suggestions. Their comments were most
George Willingmyre is the President of GTW Associates, an international standards and trade consultancy. Willingmyre was
previously a vice president at ANSI. George is active in the ANSI Intellectual Rights Policy Committee and other IPR venues. He can
be reached at firstname.lastname@example.org.
The American National Standards Institute states that its patent policy strives for a balance among multiple interests: “It was written with the
objective of finding a balance among the rights of the patent holder, the interests of competing manufacturers seeking to implement the standard,
the consensus of the technical experts from different stakeholder groups on the desired content of the standard, the concerns and resources of the
SDO, the impact on consumer welfare, and the need to avoid unnecessary strictures that would discourage participation in the standards
development process.” from ANSI Contribution to Global Standards Collaboration 15 May 2013 GSC17-IPR WG-10
SDO patent policies define SEPs in various ways. The term SEP will be used in this paper to describe patent claims or claims in pending patent
applications that must be used in order to implement a standard. SDO patent policies sometimes encourage disclosures of proprietary technology
that “may” become an SEP. This paper will use the term SEP to include all such variety of definitions. See for example why it may be important
for SDOs to include proprietary technology in FTC case American Society of Sanitary Engineering, Dkt. C-3169, 106 F.T.C. 324 (1985). The US
Federal Trade Commission condemned the adoption by an SDO of rules that prohibited the inclusion of any technology that was patented by or
manufactured by only one company.
However, see note 3, supra referencing the ASSE case and FTC views of SDO rules excluding patented technology.
SDO patent policies use different texts to describe such license assurances. This paper uses the term “RAND” for the variety of such terms while
the specific text of the SDO in each situation is the one that is applicable in that situation.
Maureen K. Ohlhausen Commissioner, Federal Trade Commission elaborated FTC activities in A Pragmatist’s Approach to Navigating the
Intersection of IP and Antitrust December 4, 2013 (www.ftc.gov/sites/default/files/documents/public_statements/pragmatists-approach-navigating-
Renata Hesse, Deputy Assistant Attorney General for Criminal and Civil Operations at the Antitrust Division of the US Department of Justice, Art
of Persuasion: Competition Advocacy at the Intersection of Antitrust and Intellectual Property, November 8, 2013
Public information about a granted patent is widely available. See for example www.uspto.gov/patents/process/search/. Information that a patent
has been applied for also becomes public in the United States 18 months following the application.
An assurance that a license will be made available free of compensation is often termed “RANDz” The “z” stands for “zero” compensation while
there may be RAND non-financial terms and conditions.
Questions of validity might include whether all the criteria for granting a patent were met during the approval process, or whether the invention was
previously described (prior art).
USTR letter to ITC August 3, 2013 www.ustr.gov/sites/default/files/08032013%20Letter_1.PDF.
See, for example, from the 2012 Guidelines for Implementation of the ANSI Patent Policy Accordingly, during the development period, standards
developers may wish to adopt procedures whereby one or more requests are made to participants for the disclosure of patents that may be required for
use of standards in process. Such a request could be made, for example, by including it on letter ballots used in connection with the development of a
proposed standard. Alternatively, other means could be adopted so that requests are repeated throughout the course of the standards development
process—e.g., by a semi-annual notice mailed to each participant in the development process or appropriate working group(s)
A precedent setting case in this regard is FTC v Dell November 2, 1995 “This case involved the standard for VL-bus. During the standard-setting
process, VESA [Video Electronics Standard Association] asked its members to certify whether they had any patents, trademarks, or copyrights that
conflicted with the proposed VL-bus standard; Dell certified that it had no such intellectual property rights. After VESA adopted the standard—based,
in part, on Dell’s certification. Dell sought to enforce its patent against firms planning to follow the standard.” See
In the Matter of Rambus, FTC Administrative Complaint and decision on February 5, 2007. The SSO involved was JEDEC (Joint Electron Device
Engineering Council), which promulgates standards for the memory chip market www.gtwassociates.com/alerts/Rambus.htm and In the Matter of
UNOCAL, FTC Administrative Complaint and Decision on August 2, 2005. The SSO involved was the California Air Resources Board (CARB).
In a Bosch–SPX FTC Consent Order in 2013 in the context of a merger between companies that make automotive air conditioning recharging
products, FTC investigated one of the merging parties for seeking injunctive relief when it enforced SEPs subject to voluntary RAND licensing
commitment. The FTC entered into settlement in which the offender voluntarily agreed to license SEPs and non-SEPs royalty free and not to seek
injunctive relief for RAND-encumbered SEPs. See www.ftc.gov/os/caselist/1210081/121126boschanalysis.pdf.
In a Google/Motorola Consent Order in 2013, FTC alleged that Google efforts to enjoin the sale of products implementing standards for which
Google claimed to own SEPs was a violation of Section 5 of the FTC Act, which prohibits unfair methods of competition. FTC entered into
voluntary proposed settlement with Google, in which Google agreed to refrain from seeking injunctive relief under certain conditions. See
MPHJ Technology Investments initiated litigation on January 13, 2014 against the FTC asserting unlawful interference and threats by the FTC
Does the FTC Have a New IP Agenda? FTC Commissioner Joshua Wright at
How Many Standards in a Laptop? (and Other Empirical Questions) Brad Biddle, Andrew White and Sean Woods at
Figure 3-15 page 54 from Study on the Interplay between Standards and Intellectual Property Rights (IPRs) April 2011
H.R. 3309 House Passes Innovation Act to Make Reforms to Our Patent System December 5, 2013 http://goodlatte.house.gov/press_releases/476
S.2049 A bill to curb unfair and deceptive practices during assertion of patents, and for other purposes. http://thomas.loc.gov/cgi-
FTC Seeks to Examine Patent Assertion Entities and Their Impact on Innovation, Competition Commission Votes to Seek Public Comments on Proposed
Information Requests to Better Understand PAE Practices September 27, 2013 www.ftc.gov/news-events/press-releases/2013/09/ftc-seeks-
Study on the Interplay between Standards and Intellectual Property Rights (IPRs) April 2011
April 2, 2014 Communication to author from Steve Noth of IHS Product Design.
Trends In the Interplay of IPR and Standards, FRAND Commitments and SEP Litigation Knut Blind and Tim Pohlmann at www.lesi.org/les-
INTELLECTUAL PROPERTY Assessing Factors That Affect Patent Infringement Litigation Could Help Improve Patent Quality
ANSI Contribution to Global Standards Collaboration 15 May 2013 GSC17-IPR WG-10
PC Magazine Infographic: Smartphone Patent Wars Explained, 19, 2012 www.pcmag.com/article2/0,2817,2399098,00.asp.
See also Evolution of the ANSI Patent Policy at www.gtwassociates.com/answers/EvolutionANSIPolicy.html.
Many organizations that are not accredited by ANSI still use the ANSI patent policy principles as the basis to draft the organization’s patent policy.
For example, see, discussion of Advanced Television Systems Committee (ATSC) and its patent policy at http://tinyurl.com/GTW-Associates-
ATSC, and the Smart Grid Interoperability Panel’s (SGIP) patent policy, both based on the ANSI patent policy. http://sgip.org/wp-
Excerpted from ANSI Essential Requirements January 2014 at
A table excerpting the recommendations from these four studies is available at www.gtwassociates.com/answers/excerptsofrecommendations.htm.
Study on the Interplay between Standards and Intellectual Property Rights (IPRs) April 2011, http://ec.europa.eu/enterprise/policies/european-
Renata Hesse Deputy Assistant Attorney General, Antitrust Division, US Department of Justice, Six “Small” Proposals for SSOs Before Lunch
Remarks as Prepared for the ITU-T Patent Roundtable Geneva, Switzerland October 10, 2012 See www.justice.gov/atr/public/speeches/287855.pdf
October 15, 2013 www.nap.edu/catalog.php?record_id=18510
IEEE patent policy https://standards.ieee.org/develop/policies/bylaws/sect6-7.html#6.
“Experience has indicated that early disclosure of essential patents or essential patent claims is likely to enhance the efficiency of the process used
to finalize and approve standards. Early disclosure permits notice of such patent claims to the standards developer and ANSI in a timely manner,
provides participants the greatest opportunity to evaluate the propriety of standardizing the patented technology, and allows patent holders and
prospective licensees ample time to negotiate the terms and conditions of licenses outside the standards development process itself.” From 2012
Guidelines for Implementation of the ANSI Patent Policy at
IEEE patent policy https://standards.ieee.org/develop/policies/bylaws/sect6-7.html#6.
VITA patent policy www.vita.com/home/VSO/vso-pp-r2d6.pdf.
See recommendation 4:1 from Table 3 at www.gtwassociates.com/answers/excerptsofrecommendations.htm.
See Intellectual Property Rights in IETF Technology RFC 3979 www.ietf.org/rfc/rfc3979.txt.
The FTC, IP, and SSOs: Government Hold-Up Replacing Private Coordination August 5, 2011 Epstein, Kieff, & Spulber at
SSOs, FRAND, and Antitrust: Lessons from the Economics of Incomplete Contracts http://ftc.gov/speeches/wright/130912cpip.pdf.
2012 Guidelines for Implementation of the ANSI Patent Policy.
VITA patent policy www.vita.com/home/VSO/vso-pp-r2d6.pdf.
The Use and Threat of Injunctions in the RAND Context James Ratliff_ & Daniel L. Rubinfeld, January 2013 www.law.berkeley.edu/files/Ratiff-
“A party who made a FRAND commitment to license its cellular standards essential patents or otherwise acquired assets/rights from a party who
made the FRAND commitment must not seek injunctive relief on such patents. Seeking an injunction would be a violation of the party’s
commitment to FRAND licensing”. November 11, 2011 letter from Apple VP and Chief IP Counsel Bruce Watrous to ETSI Director-General Luis
Jorge Romero Saro www.scribd.com/doc/80899178/11-11-11-apple-letter-to-etsi-on-frand.
“Microsoft will always adhere to the promises it has made to standards organizations to make its standard essential patents available on fair,
reasonable and nondiscriminatory terms. …This means that Microsoft will not seek an injunction or exclusion order against any firm on the basis
of those essential patents” Microsoft’s Support for Industry Standards February 8, 2012 www.microsoft.com/en-
US Department of Justice and US Patent and Trademark Office on remedies for Standards Essential Patents Subject to Voluntary F/RAND
Commitments – January 2013 www.uspto.gov/about/offices/ogc/Final_DOJ-PTO_Policy_Statement_on_FRAND_SEPs_1-8-13.pdf
Guidelines for Implementation of the Common Patent Policy for ITU-T/ITU-R/ISO/IEC Revision 1, effective 23 April 2012
VITA patent policy www.vita.com/home/VSO/vso-pp-r2d6.pdf
Blu-Ray procedures www.blu-raydisc.com/Assets/Downloadablefile/BDA_Bylaws_%28v2.0%29-18618.pdf
Memorandum of Understanding of the DVB Project www.dvb.org/membership/mou/DVB-MoU.pdf
See IEEE proposal http://grouper.ieee.org/groups/pp-dialog/drafts_comments/index.html.
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