IP Presentation from Japan Planning Meeting
Benefits & Limitations of SDOs’ Patent Policies / Considerations on Anti-trust
(Prof. Manabu Eto, Ph.D., Hitotsubashi Univ., Institute of Innovation Research)
I would hereby like to show the limitations of the patent policies owned by most SDOs, including SEMI. The purposes of patent policy can be clearly and simply defined as:
- To respond to interference in the standards development process,
- To raise the awareness of any licensers,
- To stabilize contract conditions between licensers and standards users as much as possible.
However, there are some issues, as follows:
1. Patent search is very difficult for anyone, and it is almost impossible to create a comprehensive listing.
2. There is no incentive or obligation for any patent holder to submit a written declaration that the company holds the patent. Also, the increasing number of patents owned by “outsiders” due to mergers and acquisitions makes it more and more difficult to obtain a written declaration, which is not legally-effective because it is not a contract in the first place.
3. Patent policy can be exploited by IP holders to intentionally delay standards development process, while proceeding with their own engineering development, resulting in control of the market.
On the other, the issue of so-called “holdup” (to ambush someone who unintentionally infringes on a patent) has been becoming more and more prevalent, with the following characteristics:
- It is obvious that those who have been “ambushed” have been actually using portions of the patent material to a standard. Such “users” can defend themselves only in terms of validity of the patent.
- Due to the increasing number of “holdups” committed by nonmanufacturing companies, the traditional solution of cross-licensing agreements is no longer valid.
- Small companies, who cannot afford to pay expensive legal fees, are prime targets for “holdup.” Moreover, it is difficult to discourage “intentional holdup.”
The basic idea behind patent policy is to make any IP holder declare, prior to standards development, to be willing to negotiate licenses with applicants throughout the world wishing to use the IP on reasonable and non-discriminatory (RAND) terms and conditions in order to prevent any patent issues from occurring after the standard is widely used. However, in reality, difficult situations arise as follows:
It is not possible to accurately evaluate “Reasonable (R)” conditions, and the possibility of anti-trust issues may be raised if particular limitations are set to the license fee.
Proving the existence of discriminatory behavior is difficult. Due to the antitrust considerations, both “Reasonable (R)” and “Non Discriminatory (ND)” have to be decided on a company-by- company basis.
The limitations of patent policy can be summarized as follows:
- It is impossible to perfectly solve any patent issue using patent policy.
- It can be burdensome to strictly apply patent policy, and even worse, in some cases, honesty may not pay.
Nevertheless, patent policy has some restraining effects against those who act maliciously to gain profit via patents. Hence, we should try to maximize this effect.
I would like to conclude my presentation by referring to the relation between “Consensus-based standards” and “patent strategy.” Since cost reduction and marketplace creation are the single and most important results of consensus-based standards, it’s difficult to implement a business model to obtain profit based on patents implemented in standards. Also, SDOs should have a practice of intentionally making public any art created during standards development. It is correct that in reality any company would adjust their patent application based on standardization discussion; but by making public any material from the standardization process (for example, by submitting such material to the patent office, etc.), potential patent issuance can be invalidated (such a discussion has commenced in the International Telecommunication Union). On the other hand, it is ironically hard to track how patent issues are resolved in each company in Japan, because the Japanese Patent Office does such a good job (e.g. invalidation trials). From this point on, it will be important for Japanese companies to utilize external IP organizations in order to properly work on global standardization and patent issues.
As specified by Paragraph 126.96.36.199 of the Regulations Governing SEMI Standards Committees, each Regional Standards Committee conducts an annual planning meeting. This meeting is an opportunity for RSC members to take a step back from the management of each of their respective technical committees to focus on issues that may be facing many or all of those committees, and to determine how to best address these issues.
While strategic discussions are the main focus of planning meetings, the format of planning meetings varies across regions: For example, planning meetings in Japan have featured speakers from industry, academia, and government, while European Planning Meetings typically offer a tour of a nearby fab or research institute, giving members an opportunity to improve their knowledge of the industry. In North America, recent planning meetings have focused on increasing the use and acceptance of virtual meetings and better communication with technical committees in emerging regions and areas of technological focus.