International Telecommunication Union New Delhi, India, December 2011 ITU Workshop on Standards and Intellectual Property Rights (IPR) Issues Stephan Gauch, Berlin University of Technology IPR and standards: A summary of research findings

International Telecommunication Union New Delhi, India, December 2011 Why discuss IPR and standards? Strong growth of applications and registrations of IPR driven by strategic motives Role of IPRs (most notably patents) in fields like software quality discussion regarding IPRs Fear of fragmentation of technology landscapes Specific problems regarding IPR and standardization: Patent Holdups, Patent Ambush, Royalty Stacking (Blind et al., 2011)

International Telecommunication Union New Delhi, India, December 2011 What does research say?

International Telecommunication Union New Delhi, India, December 2011 Patents in standards are on the rise? Source: Simcoe et al (2009)

International Telecommunication Union What technologies? IPC class Number of essential patents H04L - Transmission of digital information, e.g. telegraphic communication1364 H04B - Transmission1356 H04Q - Selecting1308 H04J - Multiplex communication633 G06F - Electric digital data processing432 G10L - Speech analysis or synthesis; speech recognition363 H03M - Coding; decoding or code conversion, in general235 H04M - Telephonic communication225 G01S - Radio direction-finding; radio navigation; determining distance or velocity by use of radio waves; locating or presence-detecting by use of the reflection or reradiation of radio waves; analogous arrangements using other waves208 H04N - Pictorial communication, e.g. Television202 G06K - Recognition of data; presentation of data; record carriers; handling record carriers166 G06T - Image data processing or generation, in general73

International Telecommunication Union New Delhi, India, December 2011 What technologies? Standard (coded) Total patents claimed Unique patent families (INPADOC) UMTS GSM LTE OMA standards IETF standards IEEE Broadband Wireless Metropolitan Area Network ("WiMax") JTC RFID (Radio Frequency Identification for Item Management)14378 IEEE Wireless LAN (aka "WiFi")13698

International Telecommunication Union Who claims essential patents? Claiming company Total patents claimed Unique patent families (INPADOC) Nokia Qualcomm InterDigital Ericsson Motorola Siemens LG Electronics Nortel Networks17094 AlcatelLucent Samsung Electronics11570 Philips10260

International Telecommunication Union Who claims essential patents?

International Telecommunication Union Who claims essential patents? Claiming company Total patents claimed Unique patent families (INPADOC) US EU JP Asia (wo/ JP) Ca IS2516 Other1513

International Telecommunication Union Standards with IPR: four ‘leagues’ according to (Beckers et al., 2011) LeagueExamplesTypical no of patents 1. Telecom and ITGSM, UMTS, LTE, WiFi >100 (seven standards) <100 (another 20) 2. IT and consumer electronics Video coding, DVB, FireWire Mostly 20 – 100 patents 3. Enabling technologies RFID, ‘agricultural electronics identification’ >100 (one standard) 1-20 patents (few others) 4. ‘genuine’ non-ICT related standards Very few

International Telecommunication Union Results of a recent company and stakeholder survey Most important reason for including IPR in standards: freedom to operate & signaling Royalty Free preferred by companies without essential IPRs, but no dissent with IPR owners Threats: Non-practicing entities (NPE) and more rights-holders per standards and licensors Challenge: Determine the right “price” for IPRs in standards Future: more standards will and should be based on open source software

International Telecommunication Union New actors have entered the “IPR game”, but… … also Non-Practicing Entities and only few SMEs SMEs with IPR enter the standardization arena, but are also… … those that have a “greater likelihood of an initial public offering or acquisition.“(Waguespack and Felmming, 2009) IPR in standards is a game of “ big players”, but… … very patent-intensive players are less likely to participate than players with medium patent- intensity (Blind, forthcoming) Recent research results on IPR and standards

International Telecommunication Union Only few standards are impacted by patents, but… … those standards are almost all in the same sector (ICT) Patents in standards is an issue in ICT, but … … spillover to other sectors: cars, energy, health Disputes about IPR in standards are an exception, … … on the one hand they might have a substantial impact on technology… … on the other hand most disputes are settled (for now) Patents are most relevant now, but… … copyright might play a more prominent role in the future Recent research results on IPR and standards

International Telecommunication Union Standards are perceived as unattractive to some IPR holders, but… patents in standards receive twice more attention (Rysman & Simcoe, 2006) IPR in standards is believed to shake up standardization, but… … a standard including essential patents is less likely to be replaced by a different standard. (Baron et al., 2011) Recent research results on IPR and standards

International Telecommunication Union Patent pools are a useful tool, but … … only if they are complete, easy and large median pool size: ~20 companies and ~45 patents, skewed towards large pools Standards where a patent pool exists have 5 times more declaring companies compared to other standards with patents Standards where a patent pool exists have 1.5 times more declared patents compared to other standards with patents (Baron & Pohlmann, 2011) … some pools too might involve competition issues Recent research results on IPR and standards

International Telecommunication Union IPR in standards is believed to shake up standardization, but… … a standard including essential patents is less likely to be replaced by a different standard. (Baron et al., 2011) On average Royalty Free would “make implementation of standards easier”, but… … FRAND is a strong incentives of IPR holders to participate, but… … IPR holders have no clear cut preference regarding both Recent research results on IPR and standards

International Telecommunication Union Some policy options Clear rules: irrevocable and worldwide licensing commitments Legal certainty in case of transfer of IPR to third parties Incentives for “good faith” IPR inquiries and disclosure Transparent, complete and accessible IPR databases Elaborate cooperation with patent offices

International Telecommunication Union More information on IPR and standards Recent study on IPR and standards funded by the EC: More information on standardisation research at the European Academy for Standardization: More information on our research: Thank you.