View from the U.S. The Swing of the Pendulum in the Antitrust Focus to IPR Licensing in the SDO Context Lauren S. Albert AXINN, VELTROP & HARKRIDER LLP

Where we came from Patent Ambush or Hold-Up 1995: FTC finds Dell Computer engaged in deceptive conduct by falsely certifying no knowledge of patent covered by SDO. 2006: FTC finds Rambus engaged in deceptive conduct that allowed it to hold up SDO through patents covering the patented technology AXINN, VELTROP & HARKRIDER LLP

Meanwhile the Courts Grapple with the Relationship between IPR and Antitrust Issues 1997: Ninth Circuit in Image Technical Services, Inc. v. Eastman Kodak Co. affirms Sherman Act liability relating to a unilateral refusal to license intellectual property. 2001: Federal Circuit in CSU v. Xerox holds patent owners, except in limited circumstances, have an unfettered right to refuse to license its patents 2006: Supreme Court holds in Illinois Tool Works that ownership of a patent does not create a presumption of market power AXINN, VELTROP & HARKRIDER LLP

Where we are today Like Europe, SDOs, to avoid a Rambus situation, are requiring ex ante licensing October 2006: VITA Letter: Approval of policy: (1) requiring disclosure of patents and patent applications; (2) requiring disclosure of irrevocable maximum terms applicable only to the standard; (3) prohibiting horizontal negotiations; (4) providing for arbitration relating to disputes on compliance. AXINN, VELTROP & HARKRIDER LLP

Where we are today continued April 2007: IEEE Letter: Approval of a policy that provides patent holder 5 options if it has a patent essential to the standard:  Provide no assurance  State that it does not hold essential patents  Commit not to assert its patents against implementers of the standard  Commit to license on RAND terms  Commit to maximum price terms or most restrictive terms No remedy for failure to comply AXINN, VELTROP & HARKRIDER LLP

Where we are today continued April 2007: IP2 Report:  Reaffirms holding in CSU v. Xerox that unilateral refusal to license patents generally will not impose antitrust liability  Ex ante consideration of licensing terms are likely to be pro-competitive and will be analyzed under the Rule of Reason AXINN, VELTROP & HARKRIDER LLP

Approval of Ex Ante Licensing Does Not Mean the Policy is Lawful Agencies recognize that they must balance pro- competitive effects from a plan to prevent ambush by requiring ex ante licensing against its anticompetitive effects  Joint negotiations may facilitate horizontal price fixing among the buyers  Joint negotiations also may create monopsonization or buyer market power against patent licensor Buyer cartel behavior has the potential to damage incentives to innovate, which has long term anticompetitive consequences AXINN, VELTROP & HARKRIDER LLP

Ex Ante licensing is not the only way to go Agencies emphasize that just because they have approved the ex ante licensing procedures in the VITA and IEEE letters, it does not mean that an SDO has to have such a policy for its conduct to be lawful under the antitrust laws Other ways to prevent hold-up than ex ante licensing:  Patent owners want to protect reputation because they have repeat business  Patent owners are interested in the success of the standard AXINN, VELTROP & HARKRIDER LLP

Conclusion Is there any more clarity or just more to worry about?