Request for Comments and Announcement of Workshop on Standard-Setting Issues, Project No. P111204 #00048 

Submission Number:
Brian Kahin
Computer & Communications Industry Association
District of Columbia
Initiative Name:
Request for Comments and Announcement of Workshop on Standard-Setting Issues, Project No. P111204

CCIA appreciates the FTC’s work on standards policies. We do not participate directly in standards processes, so while we hear members’ views on the questions posed, we leave it to others to supply specific comments. We have been concerned that the defining problem in IT standards is the low threshold of patentability and the consequent high volume of patents – both of which severely complicate and slow standards development. Accordingly, we urge the FTC to consider how the number of (potentially) relevant patents affects standards processes, as well as the jockeying for strategic advantage that goes on among the various entities that have a stake in the outcome. This should be considered in the context of the scope of the standard (whether it is a thin specification or a thick technology-rich standard) and the scope of the process (the number of participants and potential users). The jockeying for advantage may ultimately benefit some of the dominant stakeholders, but it explains why many participants with technical backgrounds prefer royalty-free standards or envision a trend toward royalty-free standards (as suggested in Knut Blind’s survey). While stakeholders with strong patent positions may prefer RAND, the tensions and maneuvering inevitably delay the standard setting process. Stakeholders more focused on getting products to market are likely to place a greater value on speed and reducing the potential for rent-seeking and friction. More conspicuously, of course, patents under a RAND policy mean a skewing of competition in the market that favors firms with patents at the expense of those without. In the absence of ex ante commitments, this also means that those with relevant patents will be able to negotiate one-on-one from a position of strength with all users of the standard. This offers opportunities to engage in broader licensing and cross-licensing discussions in which patent-poor users of the standard, especially small companies, are at a considerable disadvantage. Some holding one or two patents intended to provide exclusivity may find themselves forced to relinquish exclusivity in order to access the standard or other technologies that they may be inadvertently infringing. These are general problems related to high-volume patenting, low standards, and portfolio practices, but they are accelerated and heightened in the context of standards development. It is not possible to ignore or design around the standard, and once conversations about licensing start, they do not go away. We therefore urge the FTC to consider the implications for patent policy as part of this undertaking. In addition to the elusive goal of improving patent “quality,” one should consider increasing the requisite inventive step. CCIA has advocated raising the PHOSITA standard to a more meaningful “person of recognized skill in the art.” In practice, there is commonly little effort to identify the person having ordinary skill and how their relevant level of knowledge might be applied. “Recognition” on the other hand can be keyed objectively to publications and other forms of peer review. Brian Kahin Senior Fellow Computer & Communications Industry Association