TheInterplayof IPR and Standards · 2015-11-24 · TheInterplayof IPR and Standards DIN FNS-Junge...

The Interplay of IPR and Standards

DIN FNS- Junge Unternehmen setzen erfolgreich Standards – Rolle von Normen und Patenten in weltweiten Märken

Dr. Tim PohlmannIPlytics GmbH– intelligent solutions for innovation and technology management

Ackerstrasse 76, 13355 Berlin, Germany,

www.IPlytics.com, [email protected]

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1. ICT StandardsSEPs and innovation

Knowledge input #1

Standard Knowledge input #2

Knowledge input #3

Application in sector #1



� Standards incorporate a variety of knowledge inputs: E.g. IEEE 802.11

(WiFI)� radio communications modulation technology, security and cyphering

technology, higher link packet technology, etc…

�1991: Initiated by the NCR Corporation� narrow (niche) application area, the

wireless interconnection of cash registers in large retail stores

� 2000er: Various applications in public telecommunications (local loop, public

hotspots) � integrated in many consumer devices

IPlytics GmbH, Ackerstrasse 76, 13355 Berlin, Germany ,www.IPlytics.com, [email protected]

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1. ICT StandardsSEPs and innovation

� ICT standards are indispensable

for interoperability

� Innovative technology is

protected by patents

� Strategic incentives to file

patents reading on a standards

� Fear of monopoly and lock-in

situation


4

1. ICT StandardsInterplay of Patents and Standards

R&D cooperation

negotiation

Firm1 Firm2

Firm5 Firm3

Firm4

Research

Standards Consortia

Patent Pool (IPR Consortia)

Standard Development

Firm3 Firm5Firm1 Firm4Firm2

Development

Standardization

Product/Component

Licensing

Technical Layer

Patent Declaration

Firm6

Patent Declaration

Patent Declaration

Patent Declaration

Patent Declaration

Firm1 Firm3

Firm7 Firm5

Firm6Firm2 Firm3

Firm9 Firm6

Firm8


5

2. Standards & PatentsInterplay of Patents and Standards

• Essential patents are these that someone would necessarily

infringe when adopting the standard

– Technical (patented component is technically used)

– Economic Essentiality (not using the of patented component

is economically not beneficial)

• Essential patents only represent a very small share of patents

that are technologically related to standards

• Standard relevant patents are not essential in a technical way

but may incorporate an economic relevant feature for the

standardized product (e.g. patents on implementing the

standard)


6

2. Standards & PatentsInterplay of Patents and Standards

• Patents:

• Exclusive rights granted by a sovereign state to an inventor or their

assignee for a limited period of time in exchange for the public disclosure

of an invention � Intended to allow its owner excluding others from

using the protected invention

• Standards:

• Common platform or specification of a technology to connect,

communicate and work on a common basis � Encourage the spread and

wide implementation of the standardized technology


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2. Standards & PatentsStandard Setting Organizations

• Consensus Standard Setting Organizations (SSOs)

– Standards Developers (international: ISO, IEC, ITU, IEEE, ETSI national: DIN, BSI, AFNOR, ANSI)

– Major consortia (W3C, IETF)

– Special Interest Groups (Bluetooth SIG)

• SSOs face difficult IPR trade-off

– Want/need option to use patented technology…

– … but essential (i.e. blocking) patents could

• Produce “unfair” ex post division of benefits

• Impede diffusion of standard

• Most IPR policies have two components

� 1. Disclosure Rules• Participants must declare “possibly essential” patents

• Generic vs. Specific IPR disclosure

• Disclosure timing

� 2. Licensing Commitments• FRAND


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2. Standards & PatentsStandard Setting Organizations

• FRAND (Fair, Reasonable and Non discriminatory)

• Fair � only essential essential� no bundling � no grant

backs � mandatory exclusivity

• Reasonable � What is a reasonable royalty? „royalty

stacking“

• Non-discriminatory � terms and the rates must treat each

individual licensee in a similar manner


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2. Standards & PatentsRoyalties

0 % 5 % 10 % 15 % 20 % 25 %

GSM, no cross licensing

Typical 8%

Typical 4%

Typical 12%

Typical 9%

Typical

11%?

GSM, cross licensing

GSM/UMTS, no cross licensing

GSM/UMTS, cross licensing

LTE (only), no cross licensing

LTE (only), cross licensing


10

2. Standards & PatentsRoyalties LTE


11

2. Standards & PatentsRoyalties Wifi


12

2. Standards & PatentsIndustry


0

20.000

40.000

60.000

80.000

100.000

120.000

140.000

160.000

ELECTRICITY PHYSICS PERFORMING

OPERATIONS;

TRANSPORTING

HUMAN

NECESSITIES

CHEMISTRY;

METALLURGY

MECHANICAL

ENGINEERING;

LIGHTING;

HEATING;

WEAPONS;

BLASTING

ENGINES OR

PUMPS

FIXED

CONSTRUCTIONS

TEXTILES; PAPER

H G B A C F E D

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2. Standards & PatentsWhy holding SEPs

1 2 3 4 5

Generating licensing revenue

Joining patent pools / increase bargaining position

in patent pools

Influencing technological trajectory or standards

competition

Entering into cross-licensing agreements /

increasing bargaining power in licensing…

Facilitating own market entry

Signalling own technological competencies

Securing freedom to operate / reducing risk of

being accused of infringing

Essential IPR owner


14

2. Standards & PatentsProblems with SEPs

Problems:

• Patent ambush

• Participant allegedly knows it has a SEP and intentionally fails to

disclose it (Dell, Rambus, Unocol FTC cases)

• Non-F/RAND licensing terms

• Participant discloses SEPs and makes F/RAND commitment, but later

offering non-F/RAND terms (Qualcomm/Broadcom case)

• Transfer of F/RAND commitments

• Are F/RAND commitments bound to the patent or holder?

• Vague IP Policies

• SEP owners state that they are “prepared to grant a license or that

they will enter license negotiations in good faith to offer FRAND

terms” (e.g. as to the ETSI IPR policy)


15

2. Standards & PatentsProblems with SEPs

Patent-Hold-Up? Reverse Hold-Up?

� Fear that an SEP owner may block a whole technology?

� Patent holder make use of their competitive position and may

increase royalties!

• Patent holders complain about “willing” licensees that delay payment or

do not agree to FRAND terms

• Constrain of injunctive relief kills leverage!

• Problem of enforcement, legal costs etc.


16

3. SEP declarationsEvolution


0

1000

2000

3000

4000

5000

6000

7000

8000Broadband Forum

ATIS

TIA

ANSI

IETF

ITU

ITUR

IEC

IEEE

ISO

ITUT

ETSI

17

3. SEP declarationsEvolution


0

2.000

4.000

6.000

8.000

10.000

12.000

14.000ATIS

Broadband Forum

TIA

IEC

ITUR

IETF

ITU

ANSI

IEEE

ISO

ITUT

0

50.000

100.000

150.000

200.000

250.000

300.000

350.000

400.000

ETSI

18

3. SEP declarationsBlanked Disclosures

Blanket

statement

34%

Specific

statement

66%

� Occurrence of blanket disclosures


19

3. SEPs & litigationEvolution

� 20-Year Cumulative Litigation Hazard

Declared Essential Patent 15.9%

Vintage / class baseline 2.9%


20

3. SEPs & transfer of ownershipSales of patents in the IT industry

0

200

400

600

800

1000

1200

1997 1999 2001 2003 2005 2007 2009

� SEP transfer 1997-2009


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4. SEPs & LicensingCumulative Patent License – Patent Pool

• Patent Pool: “…an agreement between two or more patent owners to

license one or more of their patents to one another or third parties.”

(USPTO)

� Single license contract for a bundle of patents “one-stop shopping”

� Pools may reduce multiple marginalization and transaction costs and

facilitate patent enforcement

� Patent pools are designed to mitigate patent thicket problems (Shapiro,

2001); help to enforce rights (Delcamp, 2013)


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23



24

� Patent Pool Launches and Success as to

coverage and



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5. Policy DiscussionPrivate vs. Policy governance

• Do nothing… let the courts sort it out

• Private governance

– Clarify (F)RAND policies

• Policy objectives, injunctions, damages, disclosure timing

– Alternative IPR rules

• Ex ante royalty caps, royalty-free IPR, “NAASTy”

– Alternative SSO structures

• Integrated collective licensing (Bluetooth, DVB, HDMI)

– Unilateral commitments

• Apple/MS/Cisco/Moto-Google: Rate, Base, Scope, Transfer and Injunctions

• Government policy

– Patent policy reforms (Office-SSO cooperation, Remedies Law)

– Antitrust “safe-harbors” for SSOs

– Procurement preferences (e.g. OMB A-119)


5. Policy DicussionIntermediate problems and solutions

Problems

• No transparency which patents are standard essential and need to be

licensed

• Especially new market entrants find it difficult to oversee which patents

to license � Legal uncertainty may lead inefficiencies and a competitive

disadvantage

Solution

� Most firms try to stay under the radar!

• Small firms are not observed by bigger players

• Litigation is expensive and usually aims to fight big market players

� Upfront know how about the extent of IPRs

� Patents and Standard Platform

27IPlytics GmbH, Ackerstrasse 76, 13355 Berlin, Germany ,www.IPlytics.com, [email protected]

IPlytics GmbHThe platform solution OpenPSP


Multiple Data Resources

160,000

Records on

Companies &

Products

300,000

Patent

Declarations

1,5 Mio.

Standards

Documents80 Mio.

Patent

Documents

1,500

Industry

Alliances

�IPlytics integrates multiple data sources


Patents

� 80 Mio. patent documentsStandards

� 1,5 Mio. standard documents

� IPlytics allows simultaneous searching


�Rank and Valuate Patent Portfolios


0

1,500

3,000

4,500

6,000

7,500

9,000

10,500

12,000

13,500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Qualcomm Incorporated InterDigital Technology Corp. LG Electronics Inc.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

0

1,500

3,000

4,500

6,000

7,500

9,000

10,500

12,000

13,500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Qualcomm Incorporated InterDigital Technology Corp. LG Electronics Inc.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

�Track Patent Portfolios over time


�Compare & Locate Patent Portfolios


IPlytics GmbHThe Search Interface

� Standardization activities vs. patent activities

Use Case

Security Issue

Energy

Supply

(8,491)

Energy

Generation

(1,908)

Power

Consumption

(4,774)

Smart Water

(16)

Smart Gas

(25)

Smart Heat

(16)

Smart

Electric

(78)

authentication (2,412) 2 2 1 0 0 0 2

privacy (462) 0 0 0 0 0 0 1

device identification (1,723) 26 1 7 0 0 0 0

security (15,465) 176 37 34 2 3 16 35

network security (1,965) 31 15 10 1 2 8 18

intrusion security (369) 54 1 2 0 0 0 0

firewall (43) 0 0 0 0 0 0 0

attack resistance (988) 1 0 0 0 0 0 0

device control (6,725) 366 21 203 1 3 9 11

Use Case

Security Issue

Energy

Supply

(8,491)

Energy

Generation

(1,908)

Power

Consumption

(4,774)

Smart Water

(16)

Smart Gas

(25)

Smart Heat

(16)

Smart

Electric

(78)

authentication (2,412) 2 2 1 0 0 0 2

privacy (462) 0 0 0 0 0 0 1

device identification (1,723) 26 1 7 0 0 0 0

security (15,465) 176 37 34 2 3 16 35

network security (1,965) 31 15 10 1 2 8 18

intrusion security (369) 54 1 2 0 0 0 0

firewall (43) 0 0 0 0 0 0 0

attack resistance (988) 1 0 0 0 0 0 0

device control (6,725) 366 21 203 1 3 9 11


IPlytics GmbHThe Search Interface

� Standardization activities vs. patent activities

Use Case

Security Issue

Near Field

Communication

(177)

Bluetooth

(39)

LTE

(7,420)

UMTS

(18,890)

WiFi-802.11

(225)

authentication (2,412) 0 0 112 198 18

privacy (462) 0 0 5 7 7

device identification (1,723) 0 0 0 0 0

security (15,465) 6 2 237 514 25

network security (1,965) 0 0 45 120 18

intrusion security (369) 0 0 0 0 0

firewall (43) 0 0 0 0 0

attack resistance (988) 0 0 0 0 0

device control (6,725) 0 5 1 0 14

Use Case

Security Issue

Near Field

Communication

(177)

Bluetooth

(39)

LTE

(7,420)

UMTS

(18,890)

WiFi-802.11

(225)

authentication (2,412) 0 0 112 198 18

privacy (462) 0 0 5 7 7

device identification (1,723) 0 0 0 0 0

security (15,465) 6 2 237 514 25

network security (1,965) 0 0 45 120 18

intrusion security (369) 0 0 0 0 0

firewall (43) 0 0 0 0 0

attack resistance (988) 0 0 0 0 0

device control (6,725) 0 5 1 0 14


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IPlytics GmbHIn press

� Handelsblatt Deutschland 9. Oktober 2013:

“IPlytics, Wegweiser durch den

Patent Dschungel”


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…more information on IPlytics.com


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Thanks for your attention!

Any Questions / Ideas / Thoughts ?

Dr. Tim Pohlmann

MINES ParisTech

[email protected]

http://www.cerna.ensmp.fr

www.innovationtomorrow.wordpress.com

Berlin Institute of Technology

[email protected]

www.inno.tu-berlin.de

,

Ackerstrasse 76, 13355 Berlin, Germany

Telefon: +49 314 78924,

Web: www.iplytics.com,

Email: [email protected]

TheInterplayof IPR and Standards · 2015-11-24 · TheInterplayof IPR and Standards DIN FNS-Junge...

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