Standards, open standards and Interoperability ETSI, Sophia Antipolis, 20 September 2005 Track 3 – SOS and IPR break out session Status, discussion and way forward Moderators Track 3 Markus Münkler, Vodafone Karl Heinz Rosenbock, ETSI Director General

IPR policy: can one size fit all? Need to define (F)RAND (a possible enhancement) In (F)RAND context, IPR claims (and timeliness) should be made mandatory and be controlled Companies’ IPR strategies change over time and depending on market segments/competitive positioning IPR strategy can be both open and proprietary (see IBM) Technologies/standards IPR : threat of fear, uncertainty & doubt Range of policies is probably the model to explore

Objectives of SOS II - Track 3 Agree on a problem definition on IRP issues Assess requirements on an updated IPR regime Position ETSI an the “IPR think tank” for IPRs & Standards Ensure that ETSI is part of the solution to be found

Summary of contributions People’s Republic of China Call for WTO to act on IPR regime Vodafone evaluation of IPR challenges and requirements Highlighting key challenges of today’s IPR regime Focus on commercial impacts decreasing value of standardisation Pointing out requirements for an updated ETSI IPR regime Focus on creating a predictable commercial environment within ETSI and increasing visibility of 3rd party IPR Reactions on Vodafone contributions Tim Frain, Nokia: In agreement, adding issues “proportionality”, “essentiality assessment”, “transparency of essential patent holdings”, and “transparency of licensing terms” Mark Paxman, PA Consulting: In agreement, (1) pointing at effort to conduct multiple licence negotiations and (2) suggesting to explore scoping and implementation aspects: “IPR overseeing entity”, “handover of IPR matters”, “fixing 3G and GSM/timing”

Summary of contributions (cont.) GSC#10 Resolution N° 15 "IPR Policies" Posted by ETSI Secretariat Today’s IPR policies typically provide effective incentives to interoperate, innovate and compete IPR policies of the majority of SDOs provision for standards users to license essential IP under RAND/FRAND compensatory or compensation-free (e.g. royalty free) terms and conditions Some IPR policies seek to have overbroad disclosure obligations that discourage participation implicitly requiring patent searches to avoid severe penalties for inadvertently failing to make a disclosure Rigo Wenning, W3C, commenting: “Grosso modo the GSC#10 confirmed the current policy; not recognizing the troubles that were discussed at our last conference.”; “I think mixing and mangeling discriminatory patent-pool policies and reasonable and non-discriminatory royalty free approaches together in one phrase is showing that there is trouble and concern, but a rather profound dislike of change.”; “I'm rather confused by the message of GSC#10 and I think they missed the opportunity for good directions when everybody was listening.”

Summary of contributions (cont.) Posted by George T. Willingmyre, GTW Associates Open Standards and the Problem with Submarine Patents (Aura H. Soininen) Patents that surface after the technology has been widely adopted without the knowledge of lurking rights may create problems in the marketplace, harming both companies and consumers It has often been assumed that antitrust (U.S.) and competition laws (Europe) will help in alleviating those problems. I have found, however, that neither the Sherman Act nor the Treaty of Rome provide much help in the submarine-patent dilemma Evaluating the Performance of Standard Setting Organizations with Patent Data (Marc Rysman, Tim Simcoe) Attempt to systematically measure SSO’s role in economic performance or technological change Showing that the SSO patents collect many more citations, typically around three times as many, and receiving them over a longer time Found an economically and statistically significant correlation of citations with disclosure

Summary of contributions (cont.) Comments on the discussion to date Posted by Isabelle Valet-Harper, Microsoft Focus remains on patents rather than software/copyright issues; careful balance interests of IPR holders and implementers Resist urge to make quick changes as it may cause significant contributors to discontinue participation, in effect move their patent claims outside relevant IP policy First demonstrate that problems are real and systemic Cumulative patents or pool pricing may be more appropriately addressed through market forces or other mechanisms that lay outside the scope of a standards organization or its IPR policy

Summary of contributions (cont.) GSMA IPR Advisory Group problem statement on IPR Posted by David O’Byrne, GSMA Problem lies in IPR disclosure, ambiguous understanding of FRAND licensing, patent ambush, unpredictable IPR payments, and true patent essentiality Unless the SDOs and operators develop an approach to perfecting a solution for these issues, the industry could soon find itself impeded by oppressive royalties for all new technologies, stifling competition and growth

Way forward / next steps Goals of SOS II IPR Agree on a problem definition on IPR policy Position ETSI as the “IPR think tank” for IPRs & Standards Ensure that ETSI is part of the solution to be found Assess requirements on an updated IPR policy SOS II IPR to ETSI GA in November Agree to present problem statement and requirements assessment along with other workshop results for information Agree to propose to the GA to mandate official IPR work stream for IPR reform (if required) and first pilot case under new IPR regime by March GA SOS III IPR workshop at middle of February 2006 ? Continue debate through SOS web forum Focus on requirements and solutions for an updated IPR regime Discuss possible pilot case with new IPR regime Outline steps to IPR reform