The meeting, held at the UN agency’s instigation, is trying to find ways to let companies which own the key patents benefit from them, while preventing their being used as aggressive weapons in courtroom battles. Photograph: Alamy
The International Telecommunications Union has held a “patent round table” bringing together companies including Apple, Google, Motorola Mobility (MMI), RIM, Microsoft, Ericsson and Nokia to discuss the problems that have arisen as the smartphone wars have seen businesses suing over “standards-essential” patents (SEPs).
The meeting, held at the UN agency’s instigation, is trying to find ways to let companies which own the key patents benefit from them, while preventing their being used as aggressive weapons in courtroom battles.
In a statement, the ITU secretary-general Hamadoun Touré said: “We are seeing an unwelcome trend in today’s marketplace to use standards-essential patents to block markets. There needs to be an urgent review of this situation: patents are meant to encourage innovation, not stifle it. Acknowledging patent holders and user requirements, as well as market needs, is a balancing act. This timely multi-stakeholder roundtable will help press for a resolution on some of the critical issues.”
The meeting comes as Samsung and Google’s Motorola Mobility (MMI) subsidiary are under investigation by legislators in the US and Europe over their assertion of SEPs in legal fights with Apple and Microsoft. Samsung has claimed that Apple infringes patents that it owns on the 3G standard in its iPad and iPhone, while Google’s Motorola unit has sought injunctions against Microsoft over its use of its-own patents in the H.264 video codec standard — one which, ironically, the ITU helped to organise.
The key element of the discussion has been how to determine the “reasonable and non-disciminatory” (RAND) terms on which SEPs are licensed, and how to contain what could be unreasonable demands by one patent owner in a standard which might be made up of hundreds of even thousands of interlocking patents, each required to be used in order for equipment to meet an agreed standard such as the 802.11b Wi-Fi networking method.
Thus a smartphone incorporating GSM, GPRS, 3G, 4G-LTE and Wi-Fi standardised communications protocols can embody thousands of patents required to meet the standard. While each patent may not on its own be the only way to implement a process — such as countdown function during a mobile-originated transfer for a packet radio system, held by MMI — each will have been accepted by a standards committee as required simply to meet the standard.
The ITU noted that “key protocols implemented in devices sometimes encompassing hundreds of patents. If just one patent holder decides to demand unreasonable compensation for use of its intellectual property (IP), the cost of the device in which that IP is implemented can skyrocket.”
Samsung is being investigated by the European Commission’s competition group over its assertion of 3G-related patents against Apple in cases where Apple has been suing over its own, non-standards-essential patents. The latter form of patent does not have to be licensed to other companies at any price if the holder chooses not to do so.
SEPs, by contrast, are required to be licensed to anyone who wants them, at a standard price.
In the US, Judge Richard Posner — who dismissed a court fight between Apple and MMI in which the latter had been asserting SEPs relating to the way mobile phones link up to base stations — argued in his judgement that SEPs have minimal inherent value, and that they should be priced according to those inherent merits.
“The proper method of computing a FRAND royalty starts with what the cost to the licensee would have been of obtaining, just before the patent invention was declared essential to compliance with the industry standard, a license for the function performed by the patent,” Posner wrote, adding that “once a patent because essential to a standard, the patentee’s bargaining power surges because a prospective licensee has no alternative to licensing the patent; he is at the patentee’s mercy.”
But the New York Times reported on Wednesday that the US Federal Trade Commission (FTC), which is already considering whether Google’s search and search advertising businesses breach antitrust rules, has widened that to investigate MMI’s use on SEPs in court cases. Microsoft has claimed that the amount demanded by MMI for use of some patents — as much 2.5% of the retail price of items such as the Xbox 360 — is disproportionate, and does not reflect the value of the patent.
Charles Arthur / guardian.co.uk