Patent Licensing Assurances in Standards Organizations

Posted August 6, 2007 * Comments(1)

From a patent licensing perspective, most standards organizations are based on RAND principals. In other words, members are required to make their patents that are required to implement a specification available on reasonable and non-discriminatory terms.

Most standard organizations permit patent holders to charge royalties for their patents. Some, like W3C, require that those required patents be made available under RAND terms without royalty. This is often referred to as RAND-z (RAND with zero royalty) or RAND-RF (RAND Royalty Free). Still other organizations allow members to choose whether or not they will charge a royalty, or if they are willing to license their patents at all.

For example, the international standards setting organizations ITU-T, ITU-R, ISO, and IEC have adopted a common patent policy. Under this policy, a patent holder has the option to make its required patents available under 1 of 3 options, which I’ve paraphrased below.

  • Under the 1st option, a patent holder agrees to grant licenses for patents required to implement the standard on RAND-z terms. The patent holder may also select defensive options for a) reciprocity and b) reserving the right to offer royalty bearing RAND terms to third parties who are only willing to license their required patents on royalty bearing RAND terms.
  • Under the second option, a patent holder agrees to offer RAND terms for its required patents, with the option to condition the license grant on reciprocity.
  • Under the third option, a patent holder can declare it is unwilling to grant licenses under the first two options.

These options allow a patent holder to declare the general licensing scheme it will offer its required patents under, but the actual patent licensing terms are left for the patent holders and users of the patents to determine outside of the standards body itself (the reasons for this warrant their own post, but license negotiations within standards bodies carry antitrust risk).

This does not mean, however, the standard participants are unaware of the terms that will be included in the actual patent license. Before the standard is formally adopted, interested parties can contact the patent holders to inquire about licensing terms and cost. Patent holders may also make their terms available in a number of ways, before or after a standard is adopted. Patent terms can be established through bilateral negotiations, cross licensing arrangements, patent pools, or the patent holder publicly posting its terms.

Even when a patent holder declares a necessary patent to a standards organization, it does not mean that the patent holder will necessarily set up a licensing program around that patent. Patent licensing programs are expensive and complicated to develop and maintain. Licenses need to be drafted, negotiations may need to occur, and an infrastructure needs to be developed to maintain the program. Also, companies often maintain patent portfolios for reasons other than royalty-based licensing, such as for defensive purposes and cross licensing.

The reality is that an extremely large percentage of RAND based patent declarations to standards bodies do not result in the patent holder seeking to actually license those patents to implementers. To be fair, the percentage of RAND based patent programs can differ greatly depending on the types of standards involved. For example, it’s more common to see royalty based patent licensing around telecom standards than for Internet related standards. The percentage of formal licensing programs by standards participants around RAND-z declarations and standards is even lower (probably closer to the very low single digits, if that high). In spite of this, it is important for patent holders to retain the rights to require licenses in order to control and protect the value of their patents. Keep in mind that although a company may be making a commitment to make a patent available on a royalty free basis for a particular standard, it may still be charging royalties (or not licensing at all) in other contexts.

In the RAND-z standards space, even the most permissive RAND-z commitment has at times created tension with implementers, especially in the open source community. Even though the patent may be available without royalty, the license itself may include other terms that some believe are incompatible with certain open source licenses.

In response to these concerns, several companies, including Microsoft, are using a different approach to making their patents available for certain RAND-z standards. Rather than requiring parties to come to the patent holder to get a license to use the required patents, that patent holder agrees not to assert its patents as long as certain conditions are met. Essentially, rather than having to go to a patent holder to get permission in the form of a license to use the patent, the patent user automatically has the ability to use the patents available under the grant. The idea is that parties will be able to make use of the patents while still respecting the rights of the patent holders.

I’ll be looking at how these grants work in another post.

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HD Photo Submitted for Standardization

Posted July 31, 2007 * Comments(0)

Microsoft has started the process of standardizing HD Photo. Today, the Joint Photographic Expert Group (JPEG) announced a new work item around Microsoft’s HD Photo submission, which will tentatively be called JPEG XR.  The standardization process will follow JPEG’s conventional standards process, which is defined by JTC-1.  Based on that process, JPEG XR can progress to a Draft International Standard in approximately 1 year. 

It’s Microsoft’s intention to help ensure that, once standardized, JPEG XR will be widely adopted and deployed.  To that end, Microsoft submitted HD Photo to JPEG for standardization with the commitment to make royalty free grants for its patents that are required to implement the standard.

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Another Specification Available Under the Open Specification Promise

Posted July 10, 2007 * Comments(0)

I have the opportunity to work with a number of different groups at Microsoft.  Recently, I’ve been working with the folks in Microsoft Research on the release of the Decentralized Software Services Protocol (DSSP) protocol, which is used in Microsoft Robotics Studio.  Notably, Microsoft has added DSSP to the list of specifications available under the Open Specification Promise.  With this addition, Microsoft makes its patents available under the OSP for 47 specifications.

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Standards Law Link Blog Added

Posted April 10, 2007 * Comments(0)

Posting has been slow lately, but I am working on a couple of entries.  In the meantime, I’ve added a standards law link blog that will include standards related news from around the web.

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Floor Lamps are Not Software

Posted February 14, 2007 * Comments(6)

IBM’s Rob Weir wrote a nice piece about the standardization of electrical fixtures and the benefits those standards bring to consumers.

In fact, far from constraining choice, standards enable greater choice. Because the basic plugs, receptors and connectors are governed by standards, these core components have become commodities and are produced off-shore at low cost to you, the consumer. This causes lighting designers and manufacturers to compete on the basis of style, elegance, utility and features. So standards result in lower cost, greater competition and greater choice for the consumer.

Rob is certainly right that core electrical components have become commodities, which is why the outlets in a fifty year old house generally work fine with modern, stylized floor lamps. That’s a good thing, especially since electricity hasn’t changed much in recent memory. Safety and materials have certainly improved, but electricity itself remains pretty much the same.

Of course, there is more than one electrical socket standard in common use. While floor lamps work fine in common sockets, high power appliances such as dryers and cooking ranges require a more robust socket. Hence, NEMA 14-30 and 14-50 receptacles.

Clearly, a one size standard does not fit all.

Rob then equates electrical standards with document formats.

It is the same thing with document formats. Consumers don’t want to worry about document formats. They don’t want to even think about document formats. They just want them to work, invisibly, without problems. Of course consumers want choice, but it is the choice of applications, choice of features, choice of vendors, choice of support options, choice of open source versus proprietary source, choice of heavy weight versus web-based, a choice of buying a single application versus buying a suite, etc. A single universal file format is what makes these other choices possible, just like a choice of the Medium Edison Screw bulb leads to an affordable choice in lamp designs.

The problem is that software standards, which are generally concerned with software interoperability, are different than electrical standards, which govern physical objects. In the physical world, end users might need to use cumbersome physical converters to bridge US and European power socket standards (which, while inconvenient, enables interoperability). With software, applications can support multiple standards and can even translate between those standards in ways that are invisible to end users.

The iPod supports the AAC, MP3, Audible, Apple Lossless, AIFF, and WAV audio standards. In the document space, OpenOffice supports multiple formats including RTF, XHTML, and the OASIS Open Document Format. Sun’s Jonathan Schwartz is even promoting the ability for documents created in Google’s office to be “trivially” exported to OpenOffice and notes the coming availability of a plugin that enables Word to use the ODF document format.

Rob’s equating a single electrical standard with his call for a single universal file format also misses an important point. Electricity is a largely mature and stable technology and there is not much room for innovation in the socket and receptacle space. Document formats, on the other hand, are constantly evolving to keep pace with changing technology. Competition is vital to ensure that those formats continue to meet those ever changing needs. Imagine if a single document format was adopted 15 years ago. How would that format deal with things that we take for granted today like including links to web pages, adding digital photos, or even embedding video in our documents? Unlike electricity, document formats are evolving at a rapid pace and competition will help drive that innovation.

IBM wants to prevent that competition. It is actively trying to prevent ISO/IEC JTC1 from even considering the ECMA Open XML standard. Rather than let the marketplace decide which standardized format is best for a particular purpose, IBM wants to remove that choice. To go back to Rob Weir’s electrical fixture example, in IBM’s world, as long as there is a standard socket for a floor lamp, there is simply no place for a competing standard that is better suited to high powered appliances like dryers.

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DRM and Approaches to Interoperability

Posted February 12, 2007 * Comments(2)

Steve Jobs made headlines recently with his “Thoughts on Music.” While a great deal has been written about Jobs offering to embrace the distribution of DRM free music, I thought his comments on interoperability were interesting. In Jobs’ view, interoperability is achieved through licensing Apple’s FairPlay to 3rd party device manufacturers. Microsoft has taken a very different approach to DRM interoperability.

First, Microsoft licenses its WMDRM platform to third parties for implementation on a wide variety platforms and services. Contrary to Jobs’ assertion that maintaining DRM security is “near impossible” when the technology is licensed to third parties, third party implementations of WMDRM have proven to be fairly robust and the ecosystem has responded quickly to the inevitable breaches.

In addition to licensing, DRM interoperability can also be accomplished by design. Today Microsoft introduced Microsoft PlayReady, its next generation of content protection technology. PlayReady is already interoperable with DTCP, CPRM, and Helix DRM as a result of agreements between Microsoft and the entities behind those content protection systems. Moreover, 3rd parties can nominate other DRM systems and content protection technologies and request that Microsoft provide a “mapping” into that system. Once the mapping is established, content services can determine whether to allow their content to flow into that 3rd party system.

This multi-tiered approach allows services and device manufacturers to decide whether or not they want to provide DRM interoperability, and if they do, how they want to enable that interoperability. For example, if Apple wanted FairPlay to interoperate with PlayReady, we’ve got a couple of options for them to pick from.

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Patent Damages and Defensive Patents

Posted January 4, 2007 * Comments(2)

During the recent controversy regarding Microsoft’s RSS related patent, there seemed to be a general disbelief that Microsoft was filing the patent primarily for defensive purposes. As an example of the patent litigation landscape today, Don Dodge posted about a patent suit against Google, Apple, and Napster. Even more illustrative of the dangers of patent actions, Bloomberg published an article yesterday about patent litigation damages. Bloomberg found that patent damages have steadily increased and that patent actions in U.S. resulted in $1 billion in patent damages last year, an amount almost triple the 2005 amount.

Bloomberg listed Microsoft as suffering the second largest patent damage award.

A Texas jury awarded his client $133 million, including $115 million from Redmond, Washington-based Microsoft. U.S. District Judge Leonard Davis added $25 million in damages against Microsoft, based on a jury finding of willful infringement. Microsoft, the world’s largest software maker, has appealed.

What you don’t see on that list is any offensive patent claims by Microsoft. Given the size of a target that Microsoft presents for patent suits and the potential of incredibly high damages, it’s only prudent for Microsoft to take actions, including defensive patent applications, to protect itself.

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The RSS Controversy

Posted December 23, 2006 * Comments(5)

There’s been a lot of blog posts in the last several days regarding Microsoft’s filing of RSS related patents. Despite many negative posts, Don Dodge and Techdirt have provided a balancing perspective. While I am not a patent attorney and have no familiarity with these patents other than what I’ve read on other blogs, I am very familiar with Microsoft’s approach to patents.

Microsoft, like many technology companies such as IBM and Sun, files a larger number of patents every year. Patents serve a number of purposes, including protecting valuable research, licensing to third parties, cross licensing, and defensive reasons. What is exceedingly uncommon, however, is for Microsoft to use its patents offensively. In fact, while I am not aware of any offensive patent action by Microsoft in recent memory, Microsoft itself is the constant target of patent claims.

While the general tone of many posts on this matter is distrust of Microsoft, I think it’s important to look at how Microsoft actually makes its patents available. I’ve written about Microsoft’s Open Specification Promise in the past, and I think it is a great example of how Microsoft is making it’s patents for select standards available to the community at no charge.

In the RSS space, Microsoft has created the Simple Sharing Extensions for RSS and OPML. Microsoft made this RSS extension available under a Creative Commons License and agreed to license it’s patents that are infringed by the specification, if any, under royalty free terms. This actually goes beyond the licensing terms of RSS itself, which provides a copyright license under a Creative Commons license but offers no patent assurances at all.

Overall, if you look at Microsoft’s track record in the patent space, it simply does not support claims that Microsoft is going to use these patent claims offensively.

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Open Specification Promise Video on Channel 9

Posted November 22, 2006 * Comments(0)

Channel 9 has recently posted a video that gives additional information and background on Microsoft’s Open Specification Promise. The video features Jean Paoli, co-creator of XML and General Manager of Interoperability & XML Architecture, Tom Robertson, General Manager of IP and Corporate Standards Strategy, and Amy Marasco, General Manager of Standards Strategy.

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Microsoft, Google, and Yahoo! join together to support Sitemaps. A lot goes into these deals.

Posted November 16, 2006 * Comments(0)

Microsoft, Yahoo!, and Google have just announced a joint initiative to improve search engine results by providing a single way for web operators to notify each search engine about website details. Lots of great posts on the announcement are up on Techmeme. My colleagues at Microsoft, Google, and Yahoo! also have posted about the arrangement.

A great deal of work took place to make this collaboration happen. It took business leadership from all sides, technical collaboration, PR, and, of course, the establishment of a legal framework. Over many weeks of negotiation, Microsoft, Google, and Yahoo! established how we would work together, ranging from how the Sitemaps website will be hosted to how we will improve the specification going forward to how we will make Sitemaps available to the community.

Community support is important for Sitemaps, so one of the primarily goals of this collaboration was make sure the legal terms and conditions would encourage adoption. This was one reason we are making the Sitemaps specification available under the Creative Commons Attribution-ShareAlike License (version 2.5). This is also the same Creative Commons license that Microsoft made its Simple List Extensions and Simple Sharing Extensions specifications under.

All in all, it’s our hope that this collaboration will result in better and more efficient search results while also opening the door to future collaborations that help solve common problems among search engines and web operators for the benefit of the community.

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