Latonia Gordon Microsoft NJTIP 10 th Anniversary Symposium Chicago, March 7-8, 2013 The views expressed herein are solely those of the author; they should not be attributed to Microsoft or any SSO referenced in this presentation. SSOs and FRAND Latonia Gordon Microsoft NJTIP 10 th Anniversary Symposium Chicago, March 7-8, 2013 The views expressed herein are solely those of the author; they should not be attributed to Microsoft or any SSO referenced in this presentation.

IPR Policies Discussions: IPR Policies Discussions: SSO IPR Policy Standing Committees/Ad hoc Groups (“Committees”) typically reflect what is happening in the industry (e.g. ICT) The so called “Smartphone Wars” have spurred the latest round of discussions in several SSO Committees ( e.g. ETSI, ITU, ANSI, etc.). These discussions have primarily been focused on 4 topics: Transfer of Standards Essential Patents (SEPs) Subject to a F/RAND Licensing Commitment Injunctive Relief Reciprocity FRAND principles ( Compensation, Value, etc.) SSOs are at different stages of discussing the aforementioned topics in view of each SSO’s current IPR Policy/Guidelines as well as other factors

ETSI as an Example of the Ongoing Discussions ETSI as an Example of the Ongoing Discussions “Transfer of a Patent Subject to a FRAND Licensing Commitment Recognizing the statement made by the European Commission in paragraph 285 of its Horizontal Cooperation Agreement Guidelines expressing a preference for a ‘requirement on all participating IPR holders who provide such a commitment to ensure that any company to which the IPR owner transfers its IPR (including the right to license that IPR) is bound by that commitment, for example through a contractual clause between buyer and seller’, does ETSI need any changes in the IPR Policy and related Guide to bring ETSI’s approach more in line with this preference ?” “Injunctive Relief Should ETSI define under which conditions a patent owner will refrain from pursuing injunctive relief (including an order of exclusion or similar prohibition on importation) ? (such conditions may pertain to the conduct of either or both licensees and licensors.)” “Reciprocity: Should ETSI consider the scope of any option that a FRAND undertaking provided in accordance to Clause 6.1 of the ETSI IPR Policy may be made subject to the condition that those who seek licences agree to reciprocate?” “FRAND: Should ETSI provide guidelines/principles for compensation elements under the FRAND commitment ?” Source:

Recent Regulator Joint Statement “The risk to society, however, is that once a standard is in place, an SEP owner can use its resulting market power to engage in ‘hold-up.’ Hold-up occurs when the SEP owner approaches firms practicing the standard—after those firms have invested in developing their products that depend on the standard—with an onerous licensing demand. Assuming the patent is indeed essential and valid, the firm’s product must practice the patent in order to be interoperable, placing the firm in a poor bargaining position.” Article authored by Kai-Uwe Kuhn, Fiona Scott Morton, & Howard Shelanski (March 3013) cottMortonetalMar-13Special.pdf cottMortonetalMar-13Special.pdf

Recent Regulator Joint Statement “[W]e propose the following improvements to current IPR policies of SSOs”: “IPR policies should create as strong a commitment as possible to bind future owners of the IPR to any F/RAND commitments made to the SSO.” “A F/RAND commitment should include a process that is faster and lower cost for determining a F/RAND rate, or adjudicating disputes over F/RAND, than litigation.” “The F/RAND dispute resolution process should require that the licensor specify a cash price for its SEPs as an alternative to other pricing arrangements to aid in evaluation of the proposed license terms by the third party.”

Recent Regulator Joint Statement “The F/RAND commitment should include a process that SEP owners must follow before they can seek an injunction or exclusion order by the licensor. This process would include specifying what steps must be taken by parties to resolve disputes over a F/RAND’s rate, validity, essentiality, or infringement before an injunction or an exclusion order may be sought against the licensee.” “The essence of the F/RAND commitment is that the firm has voluntarily chosen to accept royalties rather than pursue a business model based on exclusion. This suggests that there can be no irreparable harm from the use of the SEP. Limits on the use of injunctions or exclusion orders are therefore appropriate.”