Earlier this year, the Board of Governors for the IEEE Standards Association (IEEE-SA) instituted a review of its 2015 Patent Policy Update regarding the licensing of standard-essential patents (SEPs). This month that process reached a pivotal moment when an overwhelming majority expressed support to retain the policy. Over 100 organizations including 52 members of ACT | The App Association from all over the globe, urged the IEEE to preserve the 2015 Patent Policy Update. These respondents include innovators who are among the most prolific and constructive contributors to standardization efforts within IEEE represented an overwhelming five to one ratio seeking to preserve the current patent policy compared to the just over 20 respondents who are attempting to have IEEE rescind a patent policy update that benefited standardization in IEEE.
A little background on how IEEE-SA got here—building on an open, transparent, and deliberative process, at the time of their adoption, the 2015 Policy Update was widely recognized for providing much-needed clarity on the meaning of fair, reasonable, and non-discriminatory (FRAND) behavior and enjoyed support from an overwhelming number of IEEE-SA participants as well as industry stakeholders like the App Association. The updates made in 2015 provided key clarifications, articulating the narrow set of circumstances when SEP holders can employ prohibitive orders against someone using an IEEE-SA standard, reiterating that the FRAND commitment required SEP holders to license to all willing licensees, and providing guidance on what “reasonable” means in the context of royalty analysis.
Since then, a small handful of companies that have chosen to rely on exploiting ambiguities in what FRAND means in order to demand supra-FRAND SEP licensing royalties have engaged in a sustained campaign to undermine these clarifications to force IEEE-SA to roll them back.
Why IEEE-SA’s Patent Policy Matters for Small Business Innovators
The IEEE-SA 2015 Patent Policy Update provides a balanced approach to SEP licensing issues for patent owners and licensees. All parties, and in particular small business innovators like our members, have gained much-needed clarity on the licensing issues they must address so that they can develop, invest in, innovate on, and implement IEEE-SA standards.
Our small business member companies that build internet of things (IoT) and connected products that depend on IEEE-SA standards to support interoperability heavily rely on the clarity the current policy provides. The 2015 Patent Policy clarifications have demonstrably reduced SEP licensing-related abuses, deterred unnecessary and burdensome litigation, and supported ingenuity and innovation in the market. In particular, IEEE’s requirement that SEP holders must license their patents to companies at both the product and component level allows companies with little experience in wireless networking or SEP licensing to know they can reliably integrate Wi-Fi into their products.
Evidence Supports Maintaining the 2015 Patent Policy Updates
Changing the current IEEE-SA Patent Policy would not create any meaningful benefits for our members and could, in fact, inflict harm on them and members of the app economy at large. Undoing the clarifications made to the Patent Policy in 2015 would simply enable more of the SEP abuses that drove IEEE-SA to clarify its patent policy in 2015.
Further, the empirical record demonstrates that the 2015 Patent Policy facilitated unprecedented growth and success for IEEE-SA and its standards. In the years since the policy updates went into effect, ever-increasing evidence demonstrates the benefits of IEEE-SA’s approach, particularly in comparison to other standards-setting organizations such as the European Telecommunications Standards Institute (ETSI). By contrast, the evidence is clear that the public arguments made against IEEE-SA’s updated policy are without merit. The updates have had no negative effects on participation or contributions of patented technology to IEEE-SA standards, and they helped ensure that IEEE’s Standards Association continues to deliver on its important mission of advancing technology for the benefit of humanity.
IEEE-SA should put its mission and the standards ecosystem (including the Wi-Fi ecosystem) first and reject the self-serving demands of a few vocal companies seeking to rescind the 2015 Patent Policy for their narrow gains. The global IoT economy provides a key path towards transforming industries from agriculture to automobiles, creating more jobs, and expanding how consumers seamlessly work, live, and play from any location. But if some SEP holders can break the promises they made to get their patents included in the standard by excluding anyone from licensing their technology in a FRAND way, we risk losing small businesses, like our members, that are the future of innovation.