Antitrust Division Gives IEEE Standard Setters the Okay to Ask Patentees How RAND They Are (original) (raw)
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The IEEE-SA Patent Policy Update under the Lens of EU Competition Law
2016
In 2015, the Institute of Electrical and Electronics Engineers (IEEE) Standardization Association made some controversial changes to its patent policy. The changes include a recommended method of calculation of FRAND royalty rates, and a request to members holding a standard essential patent (SEP) to forego their right to seek an injunction except under limited circumstances. The updated policy was adopted by the IEEE Board of Directors after obtaining a favorable Business Review Letter by the US Department of Justice, which found any potential competitive harm from the policy to be outweighed by potential pro-competitive benefits. In this paper, we examine whether the same favorable conclusion would be reached under EU competition analysis. After discussing the role of patent policies of Standard-Setting Organizations (SSO) and the rules and principles applicable to the IEEE's activities, the paper concludes that standardization agreements based on the updated policy may constitute a violation of article 101 TFEU.
Patent Holdup and Oligopsonistic Collusion in Standard-Setting Organizations
Journal of Competition Law and Economics, 2009
Current controversies over patent policy place standard-setting organizations (SSOs) on a collision course with antitrust law. Recent theoretical research conjectures that, in an SSO, patent owners can "hold up" patent users in the sense of demanding high royalties for a patented input after the SSO has adopted the patented technology as an industry standard and manufacturers within the SSO have incurred sunk costs to design end products that incorporate that standard. Consistent with this conjecture, actual SSOs have recently sought no-action letters from the Antitrust Division for a variety of amendments to SSO rules that would require or request, at the time a standard is under consideration, the ex ante disclosure by the patent owner of the maximum royalty that the patent owner would charge under the regime of fair, reasonable, and nondiscriminatory licensing. This price information-which is characterized as the "cost" of the patented input-would, under at least one recent SSO rule modification, be a permissible topic for potential users of the patent to discuss when deciding whether to select it in lieu of some alternative standard. This exchange of information among horizontal competitors would occur ostensibly because the cost of the patented technology had been characterized as simply one more technical attribute of the standard to be set, albeit an important technical attribute. The Antitrust Division and the Federal Trade Commission have jointly stated that such discussion, by prospective buyers who are competitors in the downstream market, of the price of a patented invention that might become part of an industry standard should be subject to antitrust scrutiny under the rule of reason rather than the rule of per se illegality. The rationale that the antitrust agencies
Intellectual Property and Standard Setting
2009
Abstract: This Chapter, forthcoming in the ABA Handbook on the Antitrust Aspects of Standards Setting (2010) provides an analytical overview of the antitrust issues involving intellectual property and standard setting including, but not limited to, patent holdup, royalty stacking, refusals to license, and patent pools.
An Estoppel Doctrine for Patented Standards
Berkeley Center For Law and Technology, 2008
Technical standards, such as interface protocols or file formats, are extremely important in the "network industries" that add so much value to the world economy today. Under some circumstances, the assertion of patent rights against established industry standards can seriously disrupt these network industries. We have in mind two particularly disruptive tactics: (1) the "snake in the grass," whereby a patentee intentionally keeps a patent "quiet" while a standard is being designed or adopted, and then later, after the standard is entrenched, asserts the patent widely in an attempt to capitalize on its popularity; (2) the "bait and switch" ploy where a patentee encourages adoption by offering royaltyfree use of standard-related patents, and then, after the standard has gone into widespread use, begins to enforce its patents against adopters of the standard. We propose to counteract these tactics with a simple solution: over time, adopters of a standard ought to build up a "reliance interest" in the standard. Under our approach-which we call "standards estoppel"-non-assertion of a patent right in the presence of widespread adoption should create immunity from patent infringement. The fundamental idea behind this doctrine is to prevent "strategic" assertions of patents that exploit the logic of network "lock-in." As we explain, though this is a simple doctrine based on deeply held common law principles, various gaps in the current doctrinal structure make this a necessary addition to the contemporary legal arsenal. In particular, "standards estoppel" plugs some dangerous conceptual holes in current rules relating to laches, waiver, estoppel, implied licensing, and patent misuse/antitrust. With this modest addition to the doctrinal fabric, patent law can more effectively guard against the risk of illegitimate leverage, thus more effectively fostering innovation in network industries.
RePEc: Research Papers in Economics, 2019
Standard-setting organizations (SSOs) generally request that their participants commit to offering licenses ex ante to implementers on fair, reasonable, and non-discriminatory (FRAND or RAND) terms. To adjust for the RAND context, court judges adopt modified Georgia-Pacific rules to determine patent damages ex post in infringement lawsuits involving standard essential patents (SEPs). In this paper, we review the literature on intellectual property rights policy in SSOs and modified Georgia-Pacific rules from court practices and explore the determinants of licensing terms in the RAND context from both technical and legal aspects in accordance with the review. By employing a novel dataset that consists of over a thousand declared SEPs in the Internet Engineering Task Force (IETF), we find that, in general, technical and legal characteristics are significantly associated with reciprocal licensing terms, despite most of their associations with royalty-free (or royalty-bearing) terms being nonetheless trivial.
Pricing Patents for Licensing in Standard Setting Organizations: Making Sense of Frand Commitments
2007
We explore potential methods for assessing whether licensing terms for intellectual property declared essential within a standard setting organization can be considered fair, reasonable, and non-discriminatory (FRAND). We first consider extending Georgia-Pacific to a standard setting context. We then evaluate numeric proportionality, which is modelled after certain patent pool arrangements and which has been proposed in a pending FRAND antitrust suit. We then turn to two economic models with potential. The first-the efficient component-pricing rule (ECPR)-is based on the economic concept of market competition. The second-the Shapley value method-is based on cooperative game theory models and social concepts for a fair division of rents. Interestingly, these two distinct methods suggest a similar benchmark for evaluating FRAND licenses, but ones which might appeal differently to the courts and competition authorities in the US as compared to Europe. We find that under any approach, patents covering "essential" technologies with a greater contribution to the value of the standard and without close substitutes before the standard gets adopted should receive higher royalty payments after the adoption of the standard.