Response to the USPTO, The ITA, and NIST call for Public Comments on Standards, Part 6 of 7
On November 6, 2023 I submitted a response to the public comments which can be found here. I have also included my comments in full on this blog in a series of posts including the below. The only change in my submission is that for each posts the footnoting was renumbered for just the individual post.
- Which, if any, actions would be advisable for the Department of Commerce to further explore regarding the interplay of intellectual property and standards, including but not limited to:
- educational guidance to SMEs to become more involved in standards;
While education is nice, it is unclear whether anyone in this field really cares to learn until it is in their interest to do so. More practically, standards compliance is inherently difficult for SMEs. The compliance requirements to develop standards and IP that works with the standard is very high. Providing a set of guidelines that (1) provide a safe harbor for those who comply in good faith; and (2) provide clear punishments (including being estopped from raising a FRAND defense) for those who materially and in bad faith deviate from those guidelines would be a significant step.
If there is interest in educational guidance programs, T.Q. Delta could be an interesting speaker, showing an example of an SME that was successfully involved in standards development.
- recommendations for standards development organizations regarding intellectual property policies and enforcement thereof;
In addition to the suggestion noted above, of handing ANSI’s authority back to governmental agencies, SDOs be forced them to be more transparent. Most deliberations in SDOs – as they relate to SEPs – should be open-door. This is especially the case if the SDO is interested in wading into governing the parameters of any licensing dispute between members. I think as a general matter getting too involved in how SEP owners and implementers should negotiate licenses is a potentially very dangerous to the SDO’s larger mission.[1] However, should the SDO’s membership believe it important to do so, it must be done in the open in contradistinction to IEEE’s approach.[2] Indeed, I would argue that any SDO that develops its policies behind secretive closed doors, should not only not benefit from the partial immunity offered by the Standards Development Organization’s Advancement Act of 2004, but also should be presumed to violate antitrust laws, with the burden on them to prove otherwise. U.S. Government tolerance towards SDOs’ development of policies in closed doors is dangerous because it would serve SDOs in places like China as a justification to develop policies through a process that US companies are excluded from. Naturally, this results in policies that undermine US companies’ interests.
- a database of judicially determined or otherwise voluntarily-made-public licensing rates for technologies covered by a FRAND commitment; and
There is an inherent misunderstanding with the premise of this question. It presumes that all SEP licenses are one-way licenses for just SEPs on readily ascertainable products with clear and precise royalty bases. Most agreements that companies negotiate – whether in a friendly manner or as settlement of a litigation – include transfers of multiple items of value: whether a cross license; ending a litigation; an acquisition; a product purchase; a patent sale; a technology transfer; a business deal wholly unrelated to the relevant SEPs but still relevant to the companies; and many more things. For such a database to be meaningful it would need to account for all these variables in a mutually comparable manner. Leaving aside the fact that no company will agree to disclose its highly confidential business information to third parties, arriving at a comparable value is virtually impossible and is merely an economist’s idle fantasy.[3]
- other voluntary and/or public disclosures?
Yes. In the context of SEP license negotiations, potential licensees should be encouraged to provide sales information and information on which products comply with which standards up front and without being hounded by SEP owners. Such requirements would greatly increase transparency and efficiency in licensing.
- How can the Department of Commerce reinforce the importance of IP-based incentives for participation in international technology standards development, especially around critical and emerging technologies?
Don’t take positions that devalue IP or make it difficult to enforce IP.
[1] See response to question 12 below.
[2] David L Cohen, The IEEE Ill-Advised 2015 IP Policy Continues to Fail (Kidon IP Blog May 6, 2021) available at https://kidonip.com/standard-essential-patents/the-ieee-ill-advised-2015-ip-policy-continues-to-fail/
[3] Indeed, when such a proposal was made in 2005/6 – the so-called “MCOI” proposal – it was debated but ultimately rejected because of competition law concerns and the simple fact that the parties could not agree on what such required rates would look like – indeed, no such proposal has been made since. See David J. Teece* & Edward F. Sherry, A Public Policy Evaluation of RAND Decisions in the U.S. Courts, at 139 (The Criterion vol. 1 2016). While some nine SEP owners shortly after MCOI was abandoned (and a few more a little later) made voluntary, public disclosures of royalty rates (albeit with plenty of caveats) see Stasik, Eric. “Royalty Rates and Licensing Strategies for Essential Patents on LTE(4G) Telecommunication Standards,” les Nouvelles, Sep. 2010, pp. 114-119, by 2020, for 5G, only four companies made similar such voluntary claims, with even more caveats, see Eric Stasik and David L Cohen, Royalty Rates And Licensing Strategies For Essential Patents On 5G Telecommunication Standards: What To Expect, les Nouvelles, Sep. 2020, pp. 176-180.
