In Search of Relevance, Not Solutions: The Truth About ITU’s ‘Patent Roundtable’ 24/10/2012 by Intellectual Property Watch 2 Comments Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) The views expressed in this article are solely those of the authors and are not associated with Intellectual Property Watch. IP-Watch expressly disclaims and refuses any responsibility or liability for the content, style or form of any posts made to this forum, which remain solely the responsibility of their authors. By Nick Ashton-Hart Meetings at UN agencies in Geneva are not often mainstream news – but given the high profile nature of legal disputes about smartphone and tablet technology taking place around the world, a meeting to discuss an arcane area of patent policy – the ITU Patent Roundtable – was widely covered, as it brought together some of the titans of the mobile and internet industry plus government regulators and standards bodies. In many ways, what was reported about the meeting and what really happened were dramatically different. My purpose in this article is to explain why, give you a more accurate sense of what really happened and why that’s important, and why all this has profound impacts on what (if anything) comes next. Why did so many industry-leading companies attend? Participating for CCIA, I talked to many attendees – especially industry attendees – starting long before the roundtable. I also talked to them afterwards. I can tell you that many – if not most – companies attended only because they were afraid to be left out, given the possibility their competitors or partners would choose to go. Not to negotiate. Not to ask the ITU to do anything. Just to listen. What really happened? From the public statements of the ITU, both before and after the meeting, one could get the impression that the ITU is riding to the rescue of the entire patent system in ICTs – and that it needs rescuing. The first line of the press release announcing the meeting is illustrative: “In light of recent patent disputes that have caused shipments of goods to be impounded at docks and the worldwide increase in standard essential patent (SEP) litigation, ITU will host a high-level roundtable discussion between standards organizations, key industry players and government officials at ITU headquarters…” Similar statements before and after the meeting, combined with the most substantive conversations being closed to the press and subject to the Chatham House Rule, ensured reporters heard the ITU’s perspective in depth but that is about all. This was reinforced by posts from commentators that weren’t present and only heard the small portions of the meeting that were audiocast (but felt free to extrapolate). 1 First, the was an overwhelming lack of support for action at the ITU by the participants. I’ve been to many international meetings over more than two decades. You can tell, through the often exaggerated politeness in which positions are inevitably couched, when a group is willing to continue to discuss an issue and when it is not. It was completely obvious long before the end of the day that there was insufficient interest in the room to take forward the discussion – at the ITU, at least. 2 Secondly, the ITU had clearly decided in advance what was going to happen, and expected the participants to rubber-stamp their conclusions. This was obvious when an ITU official read out a pre-prepared speech at the end of the meeting, including the following: “I believe that providing market players with clear, transparent, effective and up-to-date patent policies works for the benefit of the industry as a whole…As the Secretary-General stated in the opening, ITU has a determination to take a leading role in the development of effective RAND based policies in the ICT sector…” Followed by this bombshell: “I will therefore request the TSB Director’s Ad Hoc Group on Intellectual Property Rights, which will meet tomorrow, to begin work on a recommendation aimed at providing high level principles clarifying the meaning of reasonable, and the issue of injunctive relief, in the RAND context.” In other words, ‘we’re going to do what we want and we expect you to go along with it.’ What was said? Without breaching the ground rules of the meeting, here are some key points you should know: I recall only one of the 100 participants asking the ITU itself to do anything as an outcome of the meeting – though a few did suggest that standards organisations in general – of which the ITU is one of many – could usefully look at various technical issues (such as transparency of ownership of SEPs). Only a tiny minority of the industry participants (I believe only two) said there was a need for reform of the conditions related to licensing of SEPs. Many participants noted that there were many high-profile cases of patent litigation in the mobile space, but of those, only a tiny minority related to SEPs, and suggested it would not be prudent to look at this narrow area without considering the larger context of non-SEP patent licensing. Several participants noted that discussions about SEPs licensing terms were underway in other institutions – and had been for some time. One participant said that he’d started out the meeting thinking there was a problem with the licensing of SEPs, but by the middle of the meeting had changed his mind. Regulators present did suggest that looking at the restrictions placed upon owners of SEPs in licensing negotiations would be valuable, and said that standards bodies in general could or should work on this issue (noting that several already were). Who was not there? The organisers specifically invited “a unique mix of standards bodies, industry players and government representatives from around the world” but not representatives of consumers and citizens, who could be significantly impacted by any decisions that affect licensing in the mobile space. No representatives of SMEs; only one industry representative from any developing country – and that a large telecom operator. Only one representative from the Internet technical community. The stakes are enormous and the situation complex: standards-essential patents are only a small part of the picture. I think we all understand that with untold billions at stake, any discussion of how to restrict the negotiating room of those owning the relative handful of patents absolutely essential to making a working smartphone would be a difficult and very sensitive conversation. Leaving out the broader issues with patents in the space in general means such a discussion loses all context: Litigation related to mobile phone patents is taking place worldwide, and only a small number of cases relate to SEPs. Of those cases, some involve both SEPs and other, non-essential patents. Each country implements the international rules for patents differently. This means, for example, that each can have different rules that govern patentability itself – meaning, a patent registered for the same invention may be recognised as a valid patent in some countries, but judged unworthy of a grant of protection in another. Stakeholders are in very different situations. For example, some own many patents which others need, and can ‘cross license’ with those others on very different terms than a new entrant into the mobile space can expect. There is not just one kind of patent, there are several – but not all are implemented in the legal systems of all countries. In some cases multiple different kinds of patents are necessary to create a device. There is a trade dimension that goes beyond intellectual property, as cases are being brought deliberately in countries which are the port of entry of the devices which are the object of the dispute – meaning that a product can be blocked for an entire region based on the decision of one judge in one country. Given all this, clearly any discussion on how SEPs are licensed and what constraints upon licensing conditions the patentee retains cannot be prudently dealt with in isolation without the substantial risk – even likelihood – of unintended negative consequences. At stake is access to technology that is used by a significant proportion of the entire world’s population every day. Is there a role for the ITU? The ITU has three major problems persuading stakeholders to agree it should be a venue where discussions this critical take place: 1 ITU has only a tenuous mandate to discuss how SEP owners manage their IP. The organisation is tasked only with monitoring implementation of standards, on the basis of the ITU-T IPR policy, which requires licensing of SEPs on so-called RAND (reasonable and non-discriminatory) terms. 2 The ITU’s structure is an anachronism that only allows UN member-states and what it calls “Sector Members” to participate in its work – Sector Membership requires, in virtually all cases, payment of annual fees that start at several thousand Swiss Francs each year. This is strikingly different from the rest of the UN system, which has long allowed observers from the non-governmental world to attend meetings without any fees (since, after all, international organisations are funded by governments, so we have all paid for entry via taxation in the first place). The third is self-inflicted, one those who follow the ITU’s longstanding efforts to expand its mandate in Internet governance policy have long known: the ITU is often very far from an impartial, member-driven organisation. Patent licensing in the ICT sector is inherently a high-stakes, very sensitive subject as untold billions in revenue and future market share worldwide can be impacted. The convening organisation would need to trusted as an impartial by the participants to have a hope of success. The way the ITU has handled this meeting – and how it clearly decided in advance what the outcome would be – has made clear it is anything but impartial. We have seen a sea change in the past few years in the expectation of the public regarding transparency in decision-making that affects them. The Anti-Counterfeiting Trade Agreement (“ACTA”) was the subject of massive protests worldwide in part because it was negotiated in secret by a few, largely very wealthy, countries. There is now significant resistance to another trade agreement, the Trans Pacific Partnership (“TPP”) for the same reasons. Given the potential impact on the public, the idea that developing country stakeholders, SMEs and the public interest would be excluded from a discussion like this is simply a non-starter. At the ITU, there’s no question they would be excluded, as they couldn’t afford to write the large cheque required to participate each year. But lets assume you can get past these legitimacy problems. Lets assume that you agree that it makes sense to look at a subset of a much larger issue in isolation of the context and meaning of the system it is a part of. There are clearly different views on whether FRAND and RAND licensing conditions need to be amended or not. I think it is also true that the bruising and highly public battles we are seeing in relation to patents in the mobile space is endangering public perception of patents in general – which is unfortunate, as patents can and do have a place in incentivising innovation. Everyone should be concerned by the increasingly loud calls by major CEOs that the current situation isn’t sustainable. What to do? Even within CCIA’s membership views diverge on the conditions that should attach to licensing of SEPs – and positions are not static; they’re evolving. They diverge also on what the solutions should be for the broader issues – and even whether there is a problem. Whatever side you you take on these questions, everyone should agree that any conversation about the issues should be inclusive enough to be perceived as legitimate by those affected by it. I hope we can also agree that this should be an informed discussion, where the broader public policy issues intertwined with the narrow issue of SEP licensing terms can be heard to minimise unintended negative consequences. The ITU wasn’t the right venue to start with for the many reasons recounted above. A discussion that included the issues this meeting addressed could be of value, but only if: 1 It looks at the broader context and includes the many issues about licensing mentioned above. 2 It must be stakeholder-driven – and so convened by an authority that has the trust of all the participants 3 It would need to allow access to the broader interest groups so the outcome is seen as legitimately incorporating the interests of those who would be impacted by the outcome. 4 Last – but not least – nobody should have to write a cheque to get in the room. Maybe someday the ITU will fulfil these conditions. Today, it fulfils none of them. ——————– Nick Ashton-Hart is Geneva Representative of the Computer & Communications Industry Association (CCIA). His bio is available here and you can find him on twitter @nashtonhart.  See http://www.itu.int/en/ITU-T/Workshops-and-Seminars/patent/Pages/default.aspx  It should become clear why the reporters should not be blamed for the gap between their reportage and what really happened.  The full press release can be found here: http://www.itu.int/net/pressoffice/press_releases/2012/45.aspx  You can read his whole statement here: http://www.itu.int/ITU-T/presentations/tsbdir/2012/patent-20121010b.html.  Attendees list can be downloaded at http://www.itu.int/en/ITU-T/Workshops-and-Seminars/patent/Documents/list-organizations.pdf. 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