Dealing with IPR in Standardization is not difficult

IPR: mentioning these 3 letters can make many of those involved in standardization activities feel uneasy. It has a legal flavor, implying that it must be complicated. Talking about it with others seems risky – it’s like having the proverbial elephant in the room.

In our opinion however, dealing with IPR (Intellectual Property Rights) in a standardization setting is generally straightforward, and that’s what we hope to show in this blog. The one hairy aspect, which is beyond the responsibility of standardization alliances, is defining the price and conditions of use for IPR, and that topic is interesting enough for discussion in our next blog.

Intellectual property (IP) refers to unique creations of the mind, such as inventions; software models, literary and artistic works, designs and symbols, names, images or process know-how used in commerce. These creations are recognized and protected by law through patents, copyrights and trademarks – Intellectual Property Rights (IPR). Once granted, the creator (usually the employer) can use these rights to “obtain an economic advantage”, e.g. based on exclusivity.

When developing a standard, many parties work together and may contribute technical solutions that include their inventions, or part of the standard text which is their “literary work”. Later on, when applying the standard in products, they apply the IP that has been contributed in a collaborative setting. To avoid uncertainty and provide clarity on usage, standardization alliances include IPR clauses (rules of engagement) in their membership agreements to describe the obligations and rights of contributors and applicants.

Regarding copyrights, common practice requires contributors to transfer the copyright on their texts to the alliance, which is thus enabled to publish the specification or derivative texts without further ado. Otherwise, all contributors would have to agree to the publication of every version of the specification, even after they have stopped being a member.

Regarding inventions; alliances want to ensure several things, usually in the order we describe here. First of all, members should not be blocked from implementing the standard – otherwise the work would be in vain. This means that all contributors must be willing to license their inventions that are essential to implement the standard in products. If they are not (as is sometimes allowed), their invention has to be worked out of the final specification. This is often a painful and time-consuming exercise.

Secondly, the licensing fee that companies pay to the aggregate of IP holders should be non-discriminatory between applicants, and it should be reasonable in view of the product cost. Alliances thus specify that members mutually license their IP on RAND (reasonable and non-discriminatory), RAND-Zero or RAND-RF (Royalty Free) conditions.

The meanings of “Zero” and “Royalty Free” are clear, but “reasonable” is open to interpretation.

One way of boxing the aggregate licensing fee is to require contributors to disclose their IP on the standard. If the complete IP list is known, the price of each patent can be better established or “contained”. Disclosure obligations come in many different flavors, which often reflect the concerns of legal departments involved.  Another solution is that IP owners agree among themselves to form a patent pool, i.e. one joint entity that issues a license which covers all inventions on the standard. How to establish a reasonable license fee is the topic of our next blog.

So, participation to a standardization alliance has consequences for a company’s IPR: its creation, value and management. That is what makes standardization experts feel uneasy, and to counter that uneasiness, we propose the following rules:

  • Before joining, get buy-in for the objective of the initiative with your company’s business leader(s)
  • Before joining, get acceptance of the IPR clauses and approval for participation by the corporate IP and/or legal department
  • When making contributions, notify in time the IP department of the proposed contributions so they can promptly file for patents
  • Inform your product development department of the known IP subject to licensing and what this means for your innovation strategy
  • Inform your marketing/sales department on usage conditions of the alliance’s logo, the trademark and its commercial value

Thus, communication with the proper departments within a company helps to “fit” standardization (as your external innovation activity) with internal goals and policies, and relieves the standardization expert of considerations and decisions which are beyond his/her responsibility.

Standardization managers, R&D managers, legal counsels or others who want to understand the underlying essentials are recommended to attend our Standards-based Innovation Masterclass (SIM) in Spring 2018, where this will be one the topics we’re going to cover.  Check our website www.sim-masterclass.com. For questions, contact us at www.neovate-ip.com.