Current patent policies are 'houses without foundations in regions of earthquake risk'

Konstantinos Karachalios, the managing director of the IEEE-Standards Association, believes more needs to be done to foster a healthy, inclusive standardisation ecosystem

Technology innovation, in particular in the field of ICT networks, works best in open and interconnected systems where the created value is appropriated and shared fairly. Open, global standards are not just fundamental tools of engineering - they are critical underpinnings of global innovation networks, international trade and social wellbeing.

One of the world's most powerful examples of this success is the IEEE (Institute of Electrical and Electronics Engineers) 802.11 family of Wi-Fi standards. Due to its broad availability and affordability, Wi-Fi has become synonymous to ubiquitous connectivity, truly advancing technology for humanity. Moreover, the vibrant diversity and open dynamics of the IEEE 802.11 ecosystem demonstrates that ICT networks-related innovation must not be a winner-take-all proposition that benefits just a few incumbent players.

Several studies show that there is room for improvement in the overall quality of the patent system, including in the specific field of ICT standards. The resulting systemic uncertainty can harm implementation and use of the standard. As the secretary-general of the International Telecommunication Union observed in 2012, "Patents are meant to encourage innovation, not stifle it."

IEEE was the first standards development organisation (SDO) that signed a memorandum of understanding with a patent office (with the European Patent Office, in 2010) to explicitly tackle this dystopia, but a much stronger global cooperation between patent offices and SDOs is urgently needed to cope with this acute problem.

Another important remedy is the patent policies of standards development organisations. They represent sui generis contracts, defining the conditions under which patented technologies or ideas can be integrated into a standard. However, with very few exceptions, these policies are often vague - or worse - totally silent on what could constitute a "reasonable" reward for a patent holder. This is a rather awkward situation, since the entire policies are usually based on a FRAND (fair, reasonable and not discriminatory) commitment. These policies resemble houses without foundations in regions of high earthquake risk. This paradox has been repeatedly criticised by judges and regulators worldwide.

Against this backdrop, IEEE recently updated its own patent policy introducing more clarity and predictability for patent holders, implementers and users around technologies that will be included in our standards going forward, such as the IEEE 802.11 family of Wi-Fi standards. As a neutral body, IEEE believes patent owners should be reasonably rewarded for their contributions to our standards. For precisely this reason we introduced a more explicit definition of "reasonableness," offering a focus for negotiating parties, leveling the playing field and enhancing value for all parties. We also defined more precisely under which conditions injunctive relief and other prohibitive orders could be used in the context of our standards.

In conclusion, we believe that more transparency and clarity is needed between the patent system and the standardization system in order to keep them both stable and to guarantee an open standardization ecosystem. Patent holders should, of course, be compensated-but not for appropriating for themselves the entire network effect of a standard such as IEEE 802.11.

IEEE's updated patent policy is still a rather cautious and modest step, but nevertheless it is an important one. By defining clear rules that are understood and respected by all participants, our patent policy reflects our intention of fostering a healthy, inclusive standardisation ecosystem that does not favor one party over another and gives everyone an equal seat at the table. We want innovation to remain open to all on a global basis, especially as we embark on the next generation of world-changing technologies.

Konstantinos Karachalios is managing director of the IEEE-Standards Association, with a background in public policy, strategic planning, and the non-profit sector.