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Standards process faces IP debate

Posted: 18 Jun 2007 ?? ?Print Version ?Bookmark and Share

Keywords:standards battle? IP rights? embedded systems?

If the process by which technology standards are forged and implemented isn't broken, it is surely straining under the weight of globalization, relentless technological change, patent-infringement and antitrust lawsuits as well as increasingly noisy standards battles among competing industry consortia.

In response, standards bodies are reviewing their procedures for dealing with intellectual property (IP) rights. Many are focusing on patent and licensing disclosure. The IEEE, for instance, is awaiting a government opinion on a plan to use voluntary patent disclosure in its standards proceedings. Groups like VMEbus International Trade Association (VITA), the Digital Video Broadcasting Project and Jedec are either conducting similar reviews or contemplating new disclosure requirements.

A key question for many standards groups is the extent to which participants must disclose patents or licensing terms, known as ex ante ("beforehand," in Latin) disclosure. At least one small standards groupVITA, which develops specs for embedded systems used in mission-critical applications like aircraft and satelliteshas decided to require disclosure by its members.

Larger umbrella groups such as the American National Standards Institute (ANSI), which is technically not a standards body but promotes U.S. business interests around the world, have a big stake in the outcome of the evolving IP disclosure policy.

Last October, the U.S. Justice Department issued antitrust guidelines for ex ante disclosures in response to a request by VITA. The guidelines, known as a "business review letter," are currently being scrutinized by groups like ANSI.

Antitrust enforcers said in the letter that they would "not oppose a proposal by VITA to implement a policy on the disclosure and licensing of patents."

Laying all cards
That means "you're getting everything on the table," said Ray Alderman, VITA's executive director. The goal, he said, is to make the "standards process fair, open and transparent to all parties."

But a U.S. Federal Trade Commission (FTC) attorney cautioned that it would be a mistake to interpret the U.S. Justice Department letter too broadly. Suzanne Michel, assistant director for policy and coordination, said a pro-competitive ruling for one group on ex ante disclosures doesn't mean other standards groups would pass muster under U.S. antitrust laws. Michel said the rule of reason would apply in sorting out future antitrust and IP rights issues raised in standards deliberations.

Business review letters are a useful tool for helping standards groups understand antitrust enforcement, but they are "not a 'get out of jail free' card," said Earl Nied, an Intel standards executive who chairs the ANSI Patent Group. "It does not allow you to circumvent the law, and it cannot predict unanticipated actions."

While there is uncertainty among standards groups about how broadly the U.S. Justice Department guidelines on patent disclosure should be interpreted, some say the guidelines at least establish a threshold for rules used by standards organizations. For instance, John Kelly, the president of Jedec, said full disclosure of patents is not a panacea; indeed, he said, if IP holders are compelled to disclose all patent and licensing terms, participation in standards groups could decline.

Others, however, say that market forces and recent antitrust litigation provide strong incentives for companies to disclose their patent portfolios. Voluntary disclosure would improve transparency "without screwing up the standards process," one industry observer said.

Strike a balance
How to forge IP rights policies that strike a balance between innovation and efficient standards development has become a pressing requirement for antitrust enforcers, standards groups and industry stakeholders. Some for the first time are contemplating a broader government role in how technology standards are implemented and innovation fostered. A handful of lawmakers are suggesting that the federal government has a role to playperhaps as a "traffic cop" or honest brokerin resolving high-stakes standards disputes that frequently revolve around IP and disclosure issues.

Standards organizations are under the gun. Many feel pressured to review or change their IP rights policies.

There has been relatively little government involvement in IP management beyond enforcing trade rules and providing antitrust guidance, said Mike Remington, an IP specialist with Washington law firm Drinker, Biddle and Reath. But Remington told a recent conference on the standards dilemma that some sort of "traffic management" is needed and that regulators might serve as an IP rights "trustee or caretaker" to promote competition and ensure market efficiencies that ultimately benefit consumers.

'Antitrust bogeyman'
Such a role might help reduce the pervasive paranoia over patent disclosure and licensing terms that some see as overtaking standards deliberations, fending off what one observer referred to as the "antitrust bogeyman."

For now, the government's de facto role has been to enter the standards fray when regulators believe companies are manipulating the standards-setting process to further their own interests, at the expense of rivals, consumers and interoperability. The latter is deemed essential in a networked economy where different systems must work together in a standard framework.

The theory behind so-called open systems is that everyone's system will work on the network so long as everyone contributes something to the network in the form of IP. Globalization and the pace of technological change have strained that model. One industry response has been the formation of consortia to work out standards for industry segments ranging from wireless networks to memory chips.

While the consortium model has gained the acceptance of antitrust enforcers, who have moved to relax competition rules on industry collaboration, the model has been rife with internecine standards battles that often pit advocates of one technological approach against those championing another. The disputes frequently come down to who controls the IP.

Standards process
One of the most graphic examples of the fragmentation of the standards process is the series of patent infringement lawsuits filed by IP vendor Rambus Inc. against its rivals and the resulting FTC antitrust cases against Rambus. The FTC charged that Rambus was "gaming" Jedec's memory standards process to ensure its patented technology would become part of future SDRAM specs. Rambus has fought the allegations and is currently appealing an FTC ruling that limits future patent royalties Rambus can claim on its SDRAM technology. The ruling also seeks to reform the standards process by encouraging companies participating in such deliberations to disclose all patents, patent applications and licensing terms.

The Rambus saga and others like it could mean a broader government role in standards setting. Legislation is expected soon that would seek to make the standards process more transparent. The proposed law would respond to growing concerns over standards stalemates, expensive patent litigation and the resulting market uncertainties that threaten the introduction of new products based on open standards.

- George Leopold
EE Times

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