GSM Association Presentation to ETSI SOS Interop IPR in Standards David O'Byrne 20 September 2005

Emerging trends in Standards 3GPP More patents declared essential More IPR-holding companies Longer to reach market equilibrium Higher IPR prices Open Mobile Alliance DRM 2.0 No discussion of commercial model for IPR in OMA Some patent holders declaring IPR late Unacceptably high royalties being demanded Market and standard delayed Increased likelihood of fragmented market Increased likelihood of proprietary solutions dominating

Summation The unpredictable nature of the cost of IPR associated with technology standards constitutes an overhanging threat to the mobile communications industry

Problems Timely IPR Declaration IPR Policy Policing All SDOs have as part of their membership a requirement for pertinent and timely IPR disclosure in any relevant work-stream. IPR Policy Policing Limited sanctions are available for those who breach IPR policy IPR Indemnification SDOs are unable to indemnify an operator if that operator uses a standard that contains at that moment undeclared IPR.

Problems FRAND Licensing. Essential IPR and Patents There is no commercial definition of FRAND (Fair Reasonable And Non Discriminatory) licensing Require an objective framework for agreeing these terms Essential IPR and Patents  Currently no independent examination of essentiality on patents that have been declared as essential patents Cumulative patent royalties / “Patent stacking” Increasing numbers of IPR holders looking for reasonable compensation Result is costs that have an adverse effect on market growth    

GSMA Objectives Identify weaknesses in the current IPR system and act to remedy these problems in a coordinated manner, including: Examination of modification of SDO IPR Policy Exploring the possibility of developing a framework for setting and managing commercial terms for IPR for the benefit of the industry & consumers Examining European, US law and guidelines on patents, patent frameworks and standards bodies

Scope In Scope Out of Scope Co-ordinate an initiative to examine rules on IPR. Examine ways to simplify IPR licensing Explore possible regulatory changes at EU and US level to clearly modify IPR rules & define FRAND. Out of Scope Seek to act outside of SDOs Seek a zero-royalty regime within SDOs Prevent fair and reasonable rewards for IPR

Emerging trends in Solutions Vodafone suggestions to SOS-Interop Agree terms before standards are set Capped cumulative royalties Vigorous response to 3rd party IPR Cisco et al, submission to FTC Early disclosure of licence terms SDO decisions based on all the facts ETSI Global Standards Collaboration Encourage transparency, FRAND and right to compensation Oppose zero-rating and overbroad patent declaration obligations Gil Ohana, Cisco Art Reily, Cisco Apple, Sun, HP, IBM, June 2005, FTC, DoJ

Conclusion Common ground for a solution emerging Commercial and technical issues in SDOs Agreement on rates of return for IPR Patent declaration and ‘essentiality’ in realistic timeframe Acknowledgement of the issues and cooperation on the solution is crucial Continuation of excellent start on IPR in ETSI is very desirable

Thank you