5 REASONS WHY PATENT DISCLOSURE IN STANDARDS SETTING ORGS DOESN’T WORK (AND WHAT TO DO INSTEAD) BRAD BIDDLE VISITING SCHOLAR, LEWIS AND CLARK LAW SCHOOL

1. Over-disclosure 2. Under-disclosure 3. Timing 4. Action 5. Cost

1.Licensing commitments 2.Disclosure obligations

EXAMPLE: ETSI

EXAMPLE: ANSI (1) Inclusion decisions; (2) facilitate licensing

EXAMPLE: IEEE Disclosure Licensing commitment Letter of Assurance Blanket LoA

EXAMPLE: MOST CONSORTIA Licensing commitment only USB, PCI-SIG, etc.

OBSERVATION: MANY STANDARDS DEVELOPED W/O DISCLOSURE Estimate: >50% of the 250+ standards in a laptop developed w/o a disclosure obligation

1. OVER-DISCLOSURE

ESSENTIALITY STUDIES

INCENTIVES FOR OVER- DISCLOSURE 1.Antitrust risks 2.Licensing negotiation leverage 3.Marketing/PR 4.Preserve enforcement rights 5.Uncertainty & timing

2. UNDER-DISCLOSURE

FACTOR #1: “KNOWLEDGE” OrganizationScopeStandard IEEEPersonal“personally aware” W3CPersonal“not required to contact” others IETFPersonal“reasonably and personally known” ITU/ISO/IECCorporate?“known to the participating party” ETSICorporate“reasonable endeavors… to investigate” VITACorporate“good faith and reasonable inquiry”  Companies will have patents that are not disclosed

FACTOR #2: IPR RULES DON’T APPLY TO EVERYONE

3. TIMING

LATE DISCLOSURES COMMON, E.G.: OrgSpecs# of disclosures # received post spec finalization % IEEE801.11a, b, g, n, ac, ad % ETSI3GPP TS Release 8 (LTE) % ETSI3GPP TS Release 11 (LTE) %

EXPLANATIONS FOR LATE DISCLOSURE 1.Impossible to determine essentiality early 2.‘Just-in-time’ patenting 3.Gamesmanship  Huge disconnect between theory and practice

4. ACTION

THE ACTION DILEMMA A disclosed SEP might be highly impactful Impossible for engineers to judge Difficult for lawyers to coordinate & to judge

W3C: PAGs take up to 24 months to resolve issues ETSI: 170,000 disclosures, 100s per month  no impact at working level

5. COST

SOME MATH: 1 disclosure = 12 hours of patent lawyer / patent agent / engineer time 12 $250 / hour = $3, ,270 disclosure documents in ETSI database 167,270 x $3,000 = $501,810,000 # of ICT standards orgs: 500+

+ RISKS: Over-disclose  unwanted RAND or RF commitment Under-disclose  antitrust or non-enforcement risk “Reasonable endeavors”  compliance program 3 rd party disclosure = intentional infringement ‘knowledge’?

1. Over-disclosure 2. Under-disclosure 3. Timing 4. Action 5. Cost Undermine licensing facilitation goal Undermine inclusion decision goal

“AND WHAT TO DO INSTEAD”

STEP 1: Licensing commitment only

STEP 2: More predictable and efficient RAND commitments o Injunctions o Royalties o IPR policy innovation needed

STEP 3: Patent remedies reform o Address non-participant problem o Broader than standards o ICT v. pharma

BRAD BIDDLE