1. IPRs and standards setting: some issues Geneva, May 29 to 31, 2007 Philippe Baechtold Head, Patent Law Section Sector of PCT and Patents, Arbitration and Mediation Center and Global Intellectual Property Issues World Intellectual Property Organization (WIPO)

2. 2 Why standards? Interoperability necessary for producers, users and governments (e.g. DRM and e-government) in particular, in an environment increasingly relying on ICT Standardisation is a consensual, ex-ante means of achieving interoperability Main types of standards: formal, ad-hoc, de-facto Emergence of IP issues: copyright and patent rights. Fear of endangering establishment of standards, and thus of interoperability.

3. 3 Patents and standards: commonalities Patents encourage investment in innovation (R&D), and so does standardization Filing a patent application allows technology developers to disclose/share their ideas openly and early. Without patents, risk of secrecy Enables technical specifications to be promulgated for benefit of the industry and public Will often include patented technology

4. 4 Patents and standards: potential conflict Where implementation of standard requires use of patented technology Patents create an exclusive right entitle owner to exclude others Patent owner may have market power merely because his patent is in the standard others have to use patented technology to be compliant with the standard, i.e. for interoperability (= essential patent)

5. 5 Other aspects of the patent system relevant to standards Patent regimes differ throughout the world: –e.g. first to invent vs. first to file, grace period for first filing, software and business methods protectable in certain countries Implementation of patent systems also vary across jurisdictions: –the same patent may be subject to different examination and interpretation –many granted US patents are not even filed in Europe as simply unpatentable subject matter. Result: many infringement cases = legal uncertainty and delay.

6. 6 Challenges Find a balance between: the rights of the patent owner to enjoy the benefits of the patent the rights of third parties to make and sell interoperable products the public interest not to lock users into specific technology platforms or force consumers to pay too much for their products because of high cumulative royalties

7. 7 Standard-setting organizations (SSO) Typically, achieve interoperability (and balance) through standardization by SSO Process is usually –voluntary –consensus-driven –characterized by transparency and openness Increasing complexity in standardization has triggered increasing attention to IPR issues, in particular, patents, including in e-government services Has resulted in various SSO IPR policies

8. 8 Main features of patent policies Minimizing risk of conflict requires SSO to adopt patent policy. Some issues: –Obligation for participants in the standard- setting to disclose essential patents (and pending applications). Aim: know whether patent rights on future standards. Non-members not covered –If relevant patents, obligation to agree on licenses; conditions (RAND, FRAND, RF)? –Cumulative royalty issue: consider patent pools, where licenses are granted and revenues are shared among participants in the pool

9. 9 Some issues to consider What if a patent application or patent surfaces during the standard setting process? What if a relevant patent surfaces after the standard is agreed? (once standard published, no application possible). Depends on whether willful concealment by participant or whether external third party Observance of patent policy. Clarity? Avoid anti-competitive behavior (patent pools)

10. 10 Current Approach Today, main approach is to have no strong instruments within the patent system, but to rely on means outside of the patent system (e.g. competition law, health and other safety laws) to rely upon self-regulation within standard setting organisations (sometimes with dispute resolution, e.g. on amount of reasonable royalties, through bilateral negotiation, or national courts)

11. 11 Discussed solutions Legislative –Within the patent system (e.g. limited exception; compulsory license). Discussed by some, but also criticized –Outside of the patent system (in particular competition law) Within the standardization process –Self-regulation in SSOs, improve IPR policies (esp. disclosure and cumulative royalties)

12. 12 Examples for exceptions for interoperability within the IP system Copyright unenforceable for spare parts for repair –British Leyland v Armstrong, 1988,House of Lords, UK (car exhaust pipes) Exception for spare parts for repair –Draft EC directive amending the EC designs directive 98/71/EC Copyright: Reverse engineering exception for interoperability purposes –e.g. EUCD 1991 Patents: proposed computer-implemented inventions (CII) directive, including compulsory licences and limited exceptions –directive was rejected by the EP in July 2005

13. 13 Where can SSO procedures improve? Potential issues: –Disclosure of essential patents based on self- certification –No or late disclosure => patent ambush (anti- competitive) –Over-disclosure –distorts market perception of true ownership and license dues –Members can choose not to make a FRAND declaration

14. 14 Where can SSO procedures improve? (ctd) –Does not bind non-members (who can still block the standard) Unwilling or unreasonable licensors have potential to hinder or block standards by claiming unreasonable or disproportionate royalties –Or by attempting to distort their FRAND commitments

15. 15 Considerations for participants in standard setting processes To be informed about the precise obligations (and sanctions) before joining an SSO Identify when and what exactly will have to be disclosed and how long the obligations last Balance the level of detail to disclose against the potential loss of protection Know the applicable terms of licensing patent rights Be aware of possible anti-competition issues

16. 16 Copyright and standards (1) Many copyright laws require remedies against circumvention of technical measures, protection of rights management information, i.e. DRM Interoperable DRM technologies are needed for growth of global marketplace for legitimate delivery of digital content Lack of interoperable DRM contributes to unauthorized use of digital copyright content, including piracy Standardization is the optimal means to achieve DRM interoperability Recent copyright legislation and policy supports DRM standardization –Recital 54 of Dir. 2001/29/EC (interoperability of … different systems should be encouraged)

17. 17 Copyright and standards (2) Open source software (OSS) is collaboratively developed and licensed under copyright (50+ licenses, including GNU GPL) Open standards are technical specifications that meet criteria of openness in their creation, implementation and use, as defined by SSOs (e.g., under Resolution GSC-10/04) Possible conflict between some OS licenses and IPR policies of SSOs (RAND, FRAND), but market shows some degree of co-existence Further study required on options available to OS developers to implement open standards consistent with both OS licenses and SSO IPR policies Standards as such copyrighted (source of income for SSOs)

18. 18 Some issues for further work System works in many cases Enforcement of patent policy Review unaddressed issues for patent policies of SSO Improve information on existing rights (patent and copyright information). Publicize s-setting process Possible role of WIPO? –Information on patent rights and their effect –Input on SSO IPR policies –Dispute resolution concerning SSO obligations (WIPO Arbitration and Mediation Center) –Increased use of patent information (Patentscope: http://www.wipo.int/patentscope/en/) –International context

19. 19 Thank you philippe.baechtold@wipo.int