EU Favours Disclosure Of Computer Patents Before Standards Are Set

By David Cronin for Intellectual Property Watch
BRUSSELS – Computer firms may be required to divulge details of patents they hold before technology standards are set, a senior European Commission official has said.

More than a year after the European Court of Justice ruled that Microsoft was abusing its dominant position in order to prevent its products being compatible with programmes developed by rivals, Brussels policymakers are continuing to assess what implications the judgment has for intellectual property and antitrust law.

Cecilio Madero, director of competition in the European Commission, said that the September 2007 verdict made clear that corporations who hold patents for particular items of technology should not be allowed to “impose” standards for an entire industry.

One way to avoid this occurring in the future, he suggested, would be to stipulate that companies must furnish information on what IP rights they enjoy before a standard is set. Known as ‘ex ante disclosure’, this would be designed to ensure that computer products designed by one company are interoperable with those designed by another.

“Ex ante [disclosure] might be the future,” said Madero, who argued that it would allow the question of what royalties should be paid to patent-holders to be discussed “in a fair and reasonable way.”

Madero was speaking at a seminar held on November 19 as part of a review that the Commission is conducting of standardisation policy for the information technology sector.

It is necessary, he argued, to ensure that no corporation can become so dominant that it ‘locks in’ its customers to using its products in a way that is detrimental to innovation. “I do believe in eternal life,” he said. “But I don’t believe that a lock-in system should be eternal.”

However, Madero said that the Commission did not wish to set standards itself, leaving this to international bodies that have been set up for that purpose. Instead, it would deal with the surrounding issues on a case-by-case basis when examining complaints relating to antitrust issues.

Ex-ante disclosures are already provided for by the European Telecommunications Standards Institute (ETSI). Comprising both private and public sector representatives, it has been tasked with overseeing the development of standards for a wide range of technological applications. For example, it bears responsibility for GSM (Global System for Mobile), the standard technology used for portable phones.

But ETSI spokesman Karsten Meinhold pointed out that the disclosure it facilitates is of a voluntary nature and that the institute takes no direct role in commercial negotiations. “ETSI cannot replace a court,” he said. “We cannot resolve cases between our members.”

Amy Marasco, a Microsoft manager dealing with standardisation, said that a balance must be struck between the interests of business and those of consumers.

A system that “devalues patents,” she argued, could reduce the incentive for innovation among small and medium-sized enterprises (SMEs), who provide some 85 million jobs in Europe. “To the extent that they get patents, I would suspect that they do not want their patents devalued,” she added. “In times of an economic downturn, we all think about scaling back. SMEs think about scaling back their investments to innovate.”

But Alexander Wurzer from the European Association of SMEs for Standardisation (NORMAPME) said that small firms are unrepresented in standard-setting bodies while large multinational companies are overrepresented. Small firms “need standards and need access to standards” but are frequently excluded from the discussion about them, he said.

Anne Catherine Lorrain from the Trans-Atlantic Consumer Dialogue, which bands together advocacy groups in Europe and America, argued that interoperability is “one of those rare concepts where both business and user interests should meet.” She urged governments to promote the development of hardware and software that is not dependent on one particular system but compatible with a range of different options. Public authorities should take interoperability into account when buying new equipment for the computer networks, she said.

Rigo Wenning from the World Wide Web Consortium (W3C), which develops technologies for the internet, claimed there is a clear benefit for innovation if computer data is shared, rather than subject to a patent. Conducting a search to see if a technology is subject to patent can cost €10,000 euros. As there are almost 2 million patent applications across the globe each year, such searches are too expensive for most firms, he added.

Industry Dialogue on EU Standards System

Meanwhile, the Intellectual Property Institute and the Center for European Law and Economics on Thursday announced the joint launch of an “open dialogue about the health of the standards system.”

The groups held a forum in Brussels of academics, industry representatives and government officials discussing standards and the information and communications technology sector. More such events will follow aimed at including more stakeholders in the discussion “in an honest, open and collaborative fashion,” the organisers said.

“Standards can promote innovation and competition, fuel market growth and protect investment,” Mattias Ganslandt of the Center for European Law and Economics said in a release from the event. “The standard-setting process should be designed to support these objectives.”

William New contributed to this report.

David Cronin may be reached at info@ip-watch.ch.