Transcript Slide 1

Slides for Class #6
ASU Technology Standards Seminar
March 1, 2010
Brad Biddle
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IPR: RAND v. RF
IPR(+): “Openness”
IPR: Patent pools
Policy: private stnds & law
Policy: Role of government
Case study: China
Student presentations
Student presentations
3/29
4/5
4/12
4/19
4/26
Introduction
Taxonomy / “How”
Business strategy / “Why”
Antitrust
Student presentations
Guest discussion re USB
*
3/22
2
3/8
Royalty stacking
Ambush
Hold-up/hold-out
ANTITRUST
Ex-ante
F/RAND
PATENTS
Pools
ECPR
Disclosure
Anti-commons
TAX
COPYRIGHT
CORPORATE
CONSUMER
PROTECTION
TRADEMARK
Board member duties
WTO/TBT
EMPLOYMENT
PUBLIC POLICY
TRADE
Attorney-Client Privilege
ETHICS
PROCUREMENT
CONTRACT
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INTELLECTUAL PROPERTY
ANTITRUST / COMPETITION
STANDARDS LAW
Two primary ingredients
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PATENT CLAIM A
PATENT CLAIM B
NON-PATENTENED
TECHNOLOGY
PATENT CLAIM C
PATENT CLAIM D
STANDARDS-COMPLIANT PRODUCT
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400+ 802.11 “Letters of Assurance” at IEEE
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“RAND”
“RF”
• A promise to license (upon
request) on reasonable and
non-discriminatory terms
• License can (but does not
have to) include a royalty or
other fee
• “fair, reasonable and nondiscriminatory” (“FRAND”) is the
term used in Europe for the
same concept
• Precise definition of RAND is a
hotly debated topic – more on
this later
• For today, consider these
terms essentially equivalent:
Royalty Free (RF), Royalty Free
RAND (RF-RAND), RAND with
zero royalties (RAND-Zero)
• A “non-assert” is a similar
concept
• Typically a RF policy is a RAND
policy that prohibits collection of
fee or royalty
• Occasionally RF policies are
conceptualized differently (e.g.,
as a present license grant, or as
circumscribing other, nonroyalty terms)
Some preliminary vocabulary points
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Why have patented technology
in standards at all? Why allow
royalties? Do the benefits really
outweigh the costs?
Prof. Karjala’s question
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Innovation policy/
standards quality
• Patents incentivize innovation
• We want innovative technology in standards
• Innovators won’t contribute innovative (patented) technology
unless they can get a reasonable ROI
• Risk of less innovation in standards-focused areas absent ability
for ROI
Pragmatism
• If patent owners can’t get reasonable ROI (i.e. via RAND) they’ll
lurk outside the standards system and disrupt with unreasonable
royalty demands or litigation
• RAND isn’t necessarily about royalties: it enables companies to
participate in standards and keep the value of their patents for
broader cross-license deals
• Experience shows RAND works
Balance interests of
different biz models
“Strong IP”
principles
WTO rules
• Don’t advantage manufacturing firms or vertically integrated
firms over “pure R&D” firms
• Patent owner property rights should trump, absent compelling
factors to the contrary
• Forcing RF or reduced-RAND would be an illegal compulsory
license
Some typical answers to Prof. Karjala’s question
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Pure R&D firm
Easy:
(1) No commitment
(2) RAND
Integrated firm
Pure manufacturing firm
Easy: RF
Recoup R&D costs via product sales,
licensing, or both?
Business strategy and IP strategy are inexorably linked
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RAND (but
licensing
programs
uncommon)
RAND (w/ $
licensing
programs)
IT hardware
Telecom
Patent Pools
“lite”
RF (pragmatic
and ideological
rationales)
Consumer electronics
Software
Content protection
RF-like “non
asserts”
Common models (caution: vastly oversimplifies)
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“RAND pragmatism.” Experience shows
that RAND works, as a practical matter,
and best enables a reasonable balance
between various stakeholder interests.
“RAND promotes R&D/innovation”
RAND is necessary in order to enable
patent owners to get a return on their
R&D investment via patent license
revenue. Absent such ability, patent
owners will be unwilling to contribute
good technology to standards. Patent
royalties serve the public interest by
creating revenues that are reinvested in
more R&D.
“Balance interests using patent
pools.” Patent pools – efforts by several
patent holders to agree to 'pool' their
patents offering a single license for
multiple patents – can be used to enable
patent owners some ROI on their
contributed technology while still keeping
adoption costs low.
“Software must be RF.” Software
interoperability standards must be RF for
a pragmatic reason: the GPL can’t be
used for code implementing a standard in
cases where a patent is asserted over
that standard. Alternatively/additionally:
software patents are objectionable in
principle, and should not be incorporated
into standards.
“RF promotes adoption.” The benefits
of RF to promote inexpensive, widespread
adoption outweigh other risks/costs (e.g.,
disincentivized contributors).
“RF promotes innovation” If
foundational technologies are made
available RF, robust competition and
innovation will occur on top of this
foundation.
“RF promotes social justice.” RF can
advance public policy goals in areas such
as individual civil liberties, democratic
participation, and user choice.
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Some different RAND and RF paradigms
Standards Setting Organizations (SSOs)
MIXED
Consortia (sometimes
“SIGs”)
Formal, recognized standards
development orgs (SDOs)
“A collaboration of stakeholders with
the common goal of the
standardization of a specific
technology or application”
International
Special Interest
Groups (SIGs)
“focus on a single standard
for a specific technology or
industry”
“[usually] limited to
development and possibly
promotion”
“generally short-lived”
Alliances
“Big I” or “FISDOs”:
ITU, ISO, IEC, JTC1
[“Little I”: e.g. ASTM, IEEE]
“develop multiple related
standards for a
technology”
e.g. ETSI, COPANT
“may offer… logo and
certification programs,
marketing…”
National
“life cycle may be
relatively long”
Regional
Coordination bodies: e.g.
CESI, ANSI
Accredited SSOs: e.g. TIA,
INCITS, NEMA, SAE
 Develop “Specifications”
 Develop “Standards”
GENERALLY RAND
-Based on taxonomy described in IPO Standards Primer (Sept. 2009)
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RF
RAND
Pool “lite”
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IP models of the licensing programs, consortia and SDOs we reviewed in Class 2
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Some other, advanced RAND-related topics
• Determining a “reasonable” royalty
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Georgia Pacific factors
Efficient Component Pricing Rule
Shapley value method
Ex ante v. ex post valuation
• Defensive suspension
• Reciprocity
• Relationship to disclosure rules
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