[A2k] IP-Watch: Balancing Patents and Standards Seen As Key For Mobile Phone Industry

[Thiru Balasubramaniam]

1/12/2006

By William New

Technology companies have long recognised the importance to their
economic growth of patents and standards, but increasingly they are
focusing on the intersection of the two in order to seek changes to the
patent system, industry experts told an event at the World Intellectual
Property Organization on 29 November.

The presenters were Tim Frain, director of IPR in the regulatory
affairs department of Nokia Corporation, and Paul Davey, director of
intellectual property at the Vodafone Group.

Both industry representatives encouraged government officials in the
audience to consider legislative remedies to problems they perceive in
patents interfering with standards related to technological innovation.

Davey and Frain discussed concerns that some holding licenses for
technology may not be willing to recognise the need for access to
standard-related patents in order to ensure the interoperability of
technologies. Frain argued that the current patent regime "may no
longer be sufficient," and suggested a legislative change might be
necessary.

In his presentation [.pdf], Davey said the competitive market for
technology in standards is "not working properly," and that consumer
price and innovation suffer. He also said that patent speed does not
match market speed, there are jurisdictional differences in patent
laws, variation in patent quality, and legal uncertainty for
businesses. He suggested that it may sometimes be better to proceed
without full knowledge of all patent regimes. "Ignorance is the best
defence!" he said.

Davey suggested greater transparency of licensing terms for technology,
earlier transparency of patents, better quality patents. He said the
group is urging policy makers to promote strong disclosure policies,
the adoption of early publication rules (under 18 months), faster
processes for patents, and harmonised protection regimes and
interpretation practices. Finally, he said, "grant quality patents, not
numerous patents, to promote innovation."

Frain's paper [.pdf] provided an overview of a related project at the
European Telecommunications Standards Institute (ETSI), which is
currently reviewing its internal intellectual property rights policy.

"Interoperability is the cornerstone of the information and
communications technology sector, and has an ever-growing role in the
era of digital convergence, where the traditional boundaries between
distinct computing and communications products are becoming
increasingly blurred," Frain said.

Frain described different kinds of standards, and said there is an
"innate tension" between patents and interoperability "because patents
could be used to hinder interoperability and prevent others from
developing new solutions that can talk to existing solutions." As a
result, standards-setting bodies oblige members to license their
essential patents on "reasonable and non-discriminatory" terms so
standards are not blocked.

But, he said, "There is growing concern in the market whether the
standard-setting bodies' IPR regimes can be potent enough to relieve
that tension in the case of an unwilling - or indeed an unreasonable -
licensor (or licensee)." He added that patent owners who are not
standard body members present an additional problem.

There are different potential ways to address this, Frain said. For
instance, there is external legislation such as competition law, which
prevents misuse of the dominant position a patent provides.

There also are "internal" legislative measures such as creating a
"narrow, well-defined" exception to the patent holder's exclusive
rights; providing a compulsory licensing framework for interoperability
purposes; or creating a misuse approach that would render a patent
unenforceable under certain specific circumstances, he said.

For use of compulsory licenses, Frain cited Article 31 of the World
Trade Organization Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS), which allows for use without authorisation of
the right holder.

The review of its IP policy by ETSI, an independent organisation based
in France with 654 members from 59 countries, was begun in January
2006. The review is examining perceived shortcomings in the body?s
policy, which leaves open patent owners? interpretation to the
requirement that licensing be permitted on "fair, reasonable and
non-discriminatory (FRAND) terms."

Frain said the group is looking at a problem of "royalty stacking,"
which arises from the continuous development of technologies that build
on previous patented technologies. In addition, there are problems of
participants who possess patents but do not themselves manufacture
standard-compliant products, or patent holders who are not at all
active in the technology field but seek merely to receive royalties,
entities referred to as "patent trolls."

Nokia along with Ericsson and Motorola have submitted a proposal to
ETSI for a clarification of the meaning of the FRAND terms. It would
strengthen dispute resolution mechanisms, increase transparency of
essential patents and clarify what is essential.

Francis Gurry, WIPO deputy director general in charge of patents, said
in an interview, that the patent and standards issue represents "the
intersection of two policy areas: the generation of technology where
there is a patent incentive, and the diffusion of technology where
there is an interoperability incentive." These two areas are essential
to economic growth in a knowledge economy, he said.

Gurry said a choice of a technology means by extension a choice of a
patent or patents related to that technology.

William New may be reached at wnew@ip-watch.ch.

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Thiru Balasubramaniam
Geneva Representative
CPTech
voice +41.22.791.6727
fax +41.22.723.2988
mobile +41 76 508 0997
thiru@cptech.org