IEEE’s Policy for Patented Technologies Included in IEEE Standards

Policy update improves clarity and transparency

19 February 2015

IEEE’s standards come as close to embodying IEEE’s mission to advance technology for humanity as one can get. For more than a century, IEEE standards have protected us, connected us, and defined best engineering practices; they are renowned worldwide as pearls of technology. Some of them, such as the IEEE 802.11 and the 802.3 families of standards (popularly known also as Wi-Fi and Ethernet) are so ubiquitous and successful that they are perceived as global public goods. In particular, IEEE 802.11 has become synonymous with globally present connectedness and free Internet surfing through countless hot spots around the planet. One could say that people now feel at home wherever there is good Wi-Fi.

What looks so easy and free, however, is possible only through significant investments in technology development. Countless companies invest in both R&D and in the production of goods that embody our standards and touch upon all aspects of our lives. But investment in good technology alone is not enough.

The standards established under the rules of IEEE are bottom-up, voluntary, and market relevant. They are agreed upon by open and global communities, by people from many countries, and from otherwise fiercely competing companies. Those involved are not only the best technology experts but also very skilled ambassadors and diplomats in their fields. Thus, IEEE has also become the home of many companies from all around the world—big and small, startups and well-established powerful companies—that vie to contribute innovative technologies to our standards. In return, these companies receive substantial royalties for their patented technologies.

The inclusion of patented technologies, in particular in information and communications technology (ICT) interoperability standards, gives patent owners both the incentive and the means to steer technological development in certain directions. Without robust rules that help to create and maintain a level playing field for all participants, though, standardization ecosystems—even if they claim to be based on formally open processes—could rapidly deteriorate to become de facto closed or, at the very least, tightly controlled by a few powerful incumbents. Such an outcome would not only defy our mission statement but also undermine the future of IEEE’s standards system. Thus, it is vital that IEEE remains a neutral home, giving equal opportunity for stakeholders in any technology space to work together openly in order to advance innovation.

PATENT POLICY UPDATE

A standards development organization’s patent policy is at the core of the governance of its standardization process. The policy sets the balance between contributors and users of privately owned technologies and makes it possible to choose between different technological options early in the process. Each organization has its own set of rules, all trying to address complex questions and dilemmas, with two issues emerging as the most contentious: (1) what constitutes reasonable terms of licensing, and (2) under what circumstances can a patent owner seek a prohibitive order, that is, a court order or governmental trade regulatory organization exclusion order that bars the sale or importation of a product that infringes a patent simply by implementing a standard. 

The debate over these questions arose partly in response to high-profile court cases and to a series of statements of concern from antitrust and competition authorities from Europe, the United States, and, most recently, China. The discussions have been going on for several years in all important standards-development groups in the ICT field, including the IEEE Standards Association, the standards developing body of IEEE. The debate has become highly polarized as standards developers, technology owners, and standards implementers weigh in. This unfolded in a fast-evolving industry landscape with constantly shifting fronts and business interests (for instance, a strong technology owner in one standardization field may be mainly an implementer in another one).

As the decision-making process was advancing, IEEE members and the public became exposed to a flurry of articles and arguments, even advertising campaigns, from interested parties trying to convince the neutral IEEE governance structure of the strength of their positions.

At the end of a two-year rigorous and transparent process, with several independent approval phases and many opportunities for public comment, an update to the IEEE Standards Association patent policy has been approved. It was developed under the guidance of the Patent Committee of the IEEE-SA Standards Board and then endorsed by the Standards Board and the IEEE-SA Board of Governors, with supermajorities reaching up to 75 percent. Normally, the story would have ended there, as changes to the Standards Board Bylaws (to which the patent policy belongs) need to be ultimately approved by IEEE-SA’s Board of Governors.

However, in this case, IEEE made a unique exception. Given the formidable strategic and public policy dimensions of the matter, IEEE’s Board of Directors engaged in an extensive review of the proposal and ultimately decided on its merits. The patent policy was approved during the February 2015 Board of Directors meeting.

The approved policy improves clarity and transparency with respect to the two key questions mentioned above and also clarifies several other critical issues in the IEEE Standards Association Standards Board Patent Policy, that is, nondiscrimination between license seekers and reciprocity in licensing negotiations. In addition, a favorable Business Review Letter was issued by the U.S. Department of Justice in which the DOJ stated that it “has no present intention to take antitrust enforcement action against the conduct” described in the IEEE-SA Patent Policy update. Further, the DOJ “concludes that the Update has the potential to benefit competition and consumers by facilitating licensing negotiations, mitigating hold up and royalty stacking, and promoting competition among technologies for inclusion in standards.”

IEEE was able to conclude this exercise because of its unique nature, structure, and governance system, based on the ethos of the fiduciary duty of its volunteers. By enhancing clarity and transparency around virtually all key issues identified by regulatory authorities, IEEE-SA is aiming to make the rules of engagement more predictable for all players involved. The objective is for IEEE standards to continue to be broadly adopted and implemented worldwide, in accordance with IEEE’s aspiration to generate and disseminate technical knowledge as a global public good.

Konstantinos Karachalios is the managing director of the IEEE Standards Association. Eileen M. Lach is IEEE’s general counsel and chief compliance officer. 

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