Competition, Intellectual Property and Standard Setting
OECD Competition Policy Roundtable - 17 December 2014
Antoine Dore
Senior Legal Officer
International Telecommunication Union
Overview of Discussion
Why are policy makers
interested in ICT standardization?
The ICT standardization
landscape
A closer look at ITU’s patent
policy
Specific issues with standards
and patents
Uptake in Mobile Communications • 7.1 billion mobile subscriptions by end of 2014
• More than 50% in APAC (3.47 B); then Africa (880 M) and LATAM (720 M) • No. of mobile subscriptions = world’s population, but digital divide still
exists as no. of subscribers (4.6 B) is lower than no. of subscriptions (7.1 B)
• 9.5 billion mobile subscriptions by 2020
• 90% of world pop. over 6 years old will have mobile phone by 2020
• Global mobile penetration reached 95% in 2014
Source: Ericsson Mobility Report – June 2014
Driving Factors in Mobile Growth
• 4G and soon 5G
• Social media
• News
• Advertising
• YouTube, Netflix, Hulu
• ITU-T’s H.264 / H.265 video codecs
• 80% of Internet video traffic compressed / decompressed using these standards
• Bigger screens
• Higher resolutions
New Devices
Better Techno-
logy
Faster Network Speeds
More (Video) Content
Flip Side of the Coin: Decline of Fixed Telephony
• Decline in fixed telephony in all regions of world in 2014, and especially in developing countries
• Fixed-telephone penetration will drop to 1.1 billion subscriptions by end 2014 (lower than at turn of 21st century)
28 Billion “Things” Connected by 2020
• ICT devices present everywhere
• 5 key “connected” sectors: • Wearables (e.g.,
health and fitness devices)
• Cars
• Homes
• Cities
• Industries
Many Standards – Many Standards Bodies
ITU develops voice and video standards
3GPP develops standards for the radiocommunication between the
mobile phone and the network
IEEE develops Wi-Fi standards IETF develops internet protocols
such as TCP/IP and HTTP
Smartphone
Different standards bodies and their resulting standards
Standards-setting entity Produces Examples
Single companies ‘Proprietary specifications’. Standards that evolve from a specific
company or vendor.
Formal standards-developing organizations
(SDOs)
‘Open standards’ (which can become ‘de
jure standards’ if their implementation is
mandated by law).
ITU, ISO, IEC, ETSI, various national
standards bodies, etc.
Forums and consortia (quasi-formal SDOs) Typically, open standards, but may produce
closed standards, depending on the
organization in question.
IETF, Broadband Forum, W3C, Bluetooth
consortium, OASIS, etc.
Possible advantages and disadvantages of standards
Possible advantages
•Encourage innovation and competition
•More suppliers; lower risk for one-supplier dominated
markets
•Lower switching costs
•Easier evaluation of offerings
•Facilitate interoperability - easier combination of products or
services
•Easier interchangeability of products or services
• Increase cost efficiency
Possible disadvantages
•Transfer power to participants in the standardization process
•Less diversity between technical approaches, particularly early
in product life cycle
•Biased to large vendors
•Biased to large purchasers
•Protect markets by obstructing their access
•Hamper competition through a reluctance to adopt new or
improved standards
Examples of patent statements per standard
Standard Number of patent statements
2G +7’400
3G +16’000
4G +3’800
H.264 +1’600
Wi-Fi +400
A closer look at ITU’s patent policy
Early disclose of SEPs
Whom?
When?
What?
How?
Specific issues with patents in standards
Non-discrimination
• The non-discriminatory prong of the RAND commitment prohibits discrimination.
• Certain companies have taken the position that providing “access” to the standard via licenses to one level of the supply chain is permissible whereas other companies object to this type of selective licensing practice.
Meaning of reasonable in RAND
• The first prong of the RAND commitment requires an SEP holder to license on reasonable terms and conditions
• The meaning of reasonable is not defined in most RAND-based patent policies
• Possible principles and guideposts
• Separating the value of the patented technology from the value of standardization
• Royalty stacking and aggregate reasonable royalties
• Royalty base
Availability of injunctive reliefs for RAND-encumbered SEPs
• National laws provides the framework to determine when injunctive relief is an appropriate remedy for patent infringement.
• Certain stakeholders believe that injunctive relief for RAND-encumbered SEPs are never appropriate and may lead to patent hold-ups.
• Other stakeholders argue that the threat of injunction is necessary to provide incentives for negotiations and avoid reverse hold-ups.