Report on November 18, 2009 IP Section Luncheon: THE INTERPLAY OF PATENTS AND STANDARDS
On November 18, 2009, Jud Cary of CableLabs, Aaron Brodsky of Sun, Lexy DeVane of MPEG-LA, and David Rudin of Microsoft, in-house veterans and leaders in the standards area, presented and discussed about the current issues facing standards-settings organizations (SSO) and current issues facing companies’ involvement in SSOs.SSOs are important in many industries because they ensure that products developed in that industry will have widespread interoperability.To start the program, Mr. Cary gave a brief overview including an explanation of acronyms commonly used to orient those in the audience.Most SSOs require that members, holding patents that are utilized in a standard, be required to disclose the existence of the patents and offer licenses to the patents under fair, reasonable, and non-discriminatory (FRAND) terms.Mr. Brodsky and Mr. Rudin addressed processes and strategies that companies can utilize prior to becoming involved in SSOs and included helpful suggestions about what factors should be considered.Those factors included:
is the SSO a legal entity or just a group of companies working together;
how is the SSO governed;
what is the decision-making process for promulgating a standard;
what patents are owned by the company;
what is the company willing to license;
what is the scope of the working group (i.e., what standard will the members try and develop); and,
what provisions are made for continuing obligations on the part of former members.
Mr. Brodsky and Mr. Rudin also discussed the interplay between antitrust law and the SSO; especially when or if members of the SSO should discuss what FRAND terms will be included in any licenses.
The panel discussed the pros and cons surrounding SSOs, including the tension between wanting members to join and self policing members who behave badly.Mr. Rudin emphasized the number of promulgated standards versus the number of ‘bad’ actors as evidence that SSOs are managing the tension.There was discussion of patent pools and Ms. DeVane spoke of her experience in advising an independent patent pool administrator.Ms. DeVane also discussed the notion of royalty stacking and how patent pools can assist in preventing royalty stacking that prices everyone out the market.There was also discussion of a number of cases that are important when analyzing SSOs, including Rambus/Qualcomm; Visio/Westinghouse and Commonwealth Scientific v. Buffalo Tech.The panel also discussed the U.S. Department of Justice review and letters regarding the Philips DVD patent pools.
All of the panelists spoke from their rich experience in guiding their companies through the minefield of participation in standard-setting organizations and the discussion was lively.Their presentation materials are available to registered users of the IP Section Blog under the “Past Events” tab, and a video replay of the presentation is available through CBA/CLE.
Special thanks to Molly Kocialski, Senior Attorney, Patents at Qwest, for this summary.
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