In Search of a Balanced Solution to Access to Standard Essential Patents in the ICT Industry


  • Liguo Zhang



1.1 Background

Industrial standards generally define the characteristics of products, related processes and production methods for common and repeated use throughout the relevant industry. Standards can secure quality and safety of industrial products and services. Standards are also a common language of industry, which secure the interoperability and compatibility of the components of a product or a network supplied by different manufacturers or suppliers. 1 In a complex industrial society, standards have permeated every part of our lives. Standards usually are established by consensus in a formal, coordinated process in a standard-setting body. Key participants in a market, such as designers, technology providers, producers, consumers, other potential users, and regulatory authorities, may come together to seek formal consensus on making a standard following an established procedure in a standard-setting body. In a science and technology -based society, standardization necessarily relies on up-to-date technological knowledge. The technical committee of a standard-setting body is always composed of experts who are knowledgeable in a particular field and who pool and expand their knowledge to create up-to-date standards. Hence, standardization in a science and technology -based society has to be backed by intense innovation. The emergence and creation of new technology is highly dependent on the patent system. A patent grants an inventor the right to prevent others from using its ideas for a limited time. As an incentive, a patent enables the inventor to earn profits that exceed the ordinary rate of return on an investment.2 Since without the patent system the market would yield less than an optimum level of innovative activities, the patent system is designed to stimulate investment in research and development (R&D) and invention and to stimulate public disclosure of technological information. Patents may also signal ownership of a particular piece of technology, thereby preventing trespass by others. Furthermore, patents may stimulate commercial exploitation of technology by creating a defined set of legal rights known to both parties at the outset of negotiations and making trade in technological resources possible.3 Nonetheless, a patent grants an individual the right to exploit a piece of knowledge exclusively, while a standard is intended to identify a common pool of knowledge to be used by everyone.4 There is an obvious tension between the private character of patents and the public nature of standards.5 Because standards define design or performance characteristics that products or services must have, they inevitably overlap some claims of patents. When these patents are essential to a standard, it is unlikely for anyone to bypass them in implementing the standard. When it is not possible to make, sell, use or operate equipment or methods technically which comply with a standard without infringing a patent, the patent is considered essential to the standards.6 The interaction between patents and standards has lately raised growing concerns in the ICT industry. These highly controversial issues include industry standards embracing patented technologies, excessive royalties for the use of standard essential patents, and the refusal to grant licenses for the use of standard essential patents.

1.2 Research questions

The issue of how best to balance standardization and getting access to essential patents is no more settled in academia than in industry. This study sets out to investigate the patent licensing practice pertaining to standards in the ICT industry, and the EU regulations on standardization and intellectual property licensing. This study is an effort to (1) evaluate the basic presumption of conflict between standards and patents, which may lead to the notion of sacrificing one for the other, (2) re-evaluate the effect of traditional approaches that aim to guarantee access to patented technology, (3) attempt to find an appropriate solution to balance standardization and access to essential patents. To do this, I first demonstrate that standards and patents are not inherently in contradiction. I then apply a theoretical framework of property rule and liability rule entitlements developed by Calabresi and Melamed to analyze the traditional means of access to patents. I also want to borrow a model of governing the common resources from Ostrom to explain the relationship between standardization and licensing essential patents from the perspective of governing intellectual resources. The purpose of applying these theoretical frameworks is to evaluate the current standardization and patent licensing practice more effectively in order to determine the optimal arrangement in law to balance encouragement of individuals to contribute to standardization and encouragement of exploitation of patented technology. My approach provides a framework to analyze standardization and patent licensing from angles that diverge from traditional approaches. This study will propose a theoretical base for legal policy in facilitating standardization and access to essential patents. This book is composed of four parts. The first introduces the general issues, such as the aim of the study, background information, methodology and a road map of the study. The second part examines the European Union’s standardization policy and the legal framework governing standardization. The third part examines the function of and interaction between patents and standards in the ICT industry. The fourth part examines the licensing of patents in the light of standardization circumstances.

1.3 Main contributions

This study suggested that patent and standardization does not have to be conflict from the perspective of promotion of the application of new technology, the patent policy should switch from promotion of invention to promotion of commercialization of invention. It demonstrated several defects of current SSOs IPR Rules and clarified the way to define fair, reasonable and non-discriminatory (FRAND) terms. Moreover, it extended common pool resource governing framework to the exploitation of standards and patents. Finally, it developed a cooperative approach to facilitate technology exploitation.