Re: [PP-DIALOG] clarifying 'RAND'
Thank you Bob. The information concerning IEEE, however, merely suggests that CSIRO did exactly what it was supposed to do in the IEEE. It is hard to imagine that the standards related conduct is the only basis for the suits. I guess we'll find out more from others.
But more importantly, even assuming CSIRO did exactly as you say, nothing in your proposal for defining RAND would lessen the likelihood that lawsuits would be brought. Perhaps it would provide plaintiffs with another ground to rely upon, and as a result increase the likelihood of litigation even when there is no legitimate basis for the claim and the disgruntled licensee seeks to use the courts as a substitute for negotiation.
Further, the change would impact the litigation context by creating a ground to challenge perfectly lawful conduct. The recent decision iby the District Court in NJ dismissing antitrust claims against TI that challenged TI's licensing practices in connection with a Commitee T1 standard is illustrative (and this was after the jury awarded TI in excess of $100 million in patent infringement damages). There, the plaintiff, GlobespanVirata claimed that TI's licensing terms were not reasonable. The relevant claims were dismissed, suggesting again that the mere allegation of a problem does't mean there is a problem, and doesn't mean that the IEEE should adopt your proposed definition of RAND that would alter existing legal rights of parties actively engaged in standards development
Perhaps a more appropriate step would be for the IEEE to follow the practice of othe ANSI accredited SDOs and not disencourage licensees from engaging in ex ante lice negotiations outside the SDO. The practice of the IEEE adopted several years ago that discourages such conduct outside the SDO is uniqueN but eliminating it does not mean the scale should tip all the way to the other side and rule be adopted that do not accommodate all IEEE parrticipants.
Look forward to seeing you.
Richard S. Taffet, Esq.
Bingham McCutchen LLP
399 Park Avenue
New York, New York 10022-4689
T: (212) 705-7729
F: (212) 702-3603
Email: richard.taffet@bingham.com <mailto:richard.taffet@bingham.com>
Cell: (914) 582-2477
-----Original Message-----
From: Skitol, Robert A. <Robert.Skitol@dbr.com>
To: Taffet, Richard S. <richard.taffet@bingham.com>; PP-DIALOG@LISTSERV.IEEE.ORG <PP-DIALOG@LISTSERV.IEEE.ORG>
Sent: Sun Mar 26 08:45:38 2006
Subject: RE: [PP-DIALOG] clarifying 'RAND'
The background to all of the CSIRO litigation is CSIRO's RAND commitment during IEEE standard-setting (unaccompanied by any more specific indication of what that would mean) followed, years later, by demonstrably outrageous royalty demands. The circumstances can be detailed by any number of people in attendance at tomorrow's meeting.
-----Original Message-----
From: Taffet, Richard S. [mailto:richard.taffet@BINGHAM.COM]
Sent: Saturday, March 25, 2006 5:25 PM
To: PP-DIALOG@LISTSERV.IEEE.ORG
Subject: Re: [PP-DIALOG] clarifying 'RAND'
Bob
Also to avoid any confusion, I didn't mention the CSIRO cases below purposefully because as I understand they are DJ actions to invalidate CSIRO's patent. I think that type of case is not really on point for a discussion of whether the proposed definition of RAND is appropriate -- if a patent is invalid then whatever terms are sought may be unreasonable. Of course, I have not seen any decisions in those cases nor am I involved, so if you think it useful to provide additional insight into the cases I am sure many would be interested in learnging about them.
-----Original Message-----
From: Taffet, Richard S.
Sent: Saturday, March 25, 2006 5:00 PM
To: PP-DIALOG@LISTSERV.IEEE.ORG
Subject: Re: [PP-DIALOG] clarifying 'RAND'
Bob
Thank you for your clarification, but I think your conclusion of what these cases expose is curious. The cases can be viewed as a complaining party that simply didn't like the terms offered for a license to patented technology in a standard, and instead of negotiating and obtaining a license, as many other companies did, it brought a lawsuit claiming that the terms were not reasonable. Perhaps the best thing we can take from the Symbol v. Proxim case is that the US judicial system works and the claim was unsuccessful, and in Broadcom v. Qualcomm the motion to dismiss the complaint remains pending.
Indeed, it seems a weak basis to support the type of proposal that is pending in connection with defining RAND based upon these cases, which at best reflect what might be disagreements over what might be reasonable license terms, and at worst may reflect only unsupportable allegations by disgruntled potential licensees seeking to use litigation to achieve (albeit to date unsuccessfully) to achieve what they could not or would not at the bargaining table. Moreover, I think it is quite a leap to suggest that standards are being delayed as a result of any of the allegations in these cases, and even if they were I think it shows the de minimis nature of the "problem" that is sought to be addressed. And, it remains unexplained how the proposed definition of RAND would have avoided the claims asserted in the cases you cite. If anything, such a definition would most likely embolden even more claims of this type, which as commented have yet to be found to establish a cognizable!
legal claim and have simply resulted in expense and burden related to legitimate conduct.
Thank you again for providing this clarificaiton.
-----Original Message-----
From: Skitol, Robert A. [mailto:Robert.Skitol@dbr.com]
Sent: Saturday, March 25, 2006 3:26 PM
To: Taffet, Richard S.; PP-DIALOG@LISTSERV.IEEE.ORG
Subject: RE: [PP-DIALOG] clarifying 'RAND'
I don't want Richard to remain unhappy over my "declining to identify" the pending litigation to which I referred. I was referring to Broadcom v. Qualcomm in New Jersey and to Microsoft et al v. CSIRO and Intel v. CSIRO in California. (The recent but no longer pending Proxim litigation could also be cited.) All three cases involve standards incorporating patented technology and huge disagreements over what royalty rates and other terms do or do not comply with RAND commitments that the patent owners made during the applicable standards development processes. All three cases expose the pretense that RAND commitments are useful or meaningful in any practical sense when unaccompanied by either more specific disclosure of intended license terms or any definition for the "reasonable" component of them. In these circumstances, a RAND commitment is worthless. Failure to address that core fact through changes of the kind now on the table would ignore a real problem and !
thereby invite more highly mischievous cases of the sort identified above.
-----Original Message-----
From: Taffet, Richard S. [mailto:richard.taffet@bingham.com]
Sent: Saturday, March 25, 2006 1:25 PM
To: Skitol, Robert A.; PP-DIALOG@LISTSERV.IEEE.ORG
Subject: RE: [PP-DIALOG] clarifying 'RAND'
I am not sure I understand how Bob comes to his conclusion concerning the proposed definition of RAND. As presented on the agenda for Monday's meeting, and as originally raised in an email from Don, no suggestion exists that it is intended as a "default" definition or anything other than a proposal to have a definition that would specify the time during the standards development process at which reasonableness could be defined and what factors (to the exclusion of all others) that would be allowed to be considered for determining reasonableness.
As such, because three clearly is not consensus that the approach reflected by the proposed definition, it would necessarily "dictate" the parameters of RAND in a manner that could deprive a patent owner of the ability to obtain entirely reasonable license terms in light of all relevant factors. Not only will this raise significant questions regarding effect it will have on the ability to attract innovative technology to standards development and raise the prospect of potential claims by patent owners that they are collectively being deprived of the ablity to recoup their investment in their proprietary technology, it could also homogenize license terms and eliminate the benefit of license terms differentiation that benefits users depending on their particular relationship with the licensor and the specific characteristics of each licensing situation. Professor Hovenkamp recently explained how the elimination of product differentiation in standards development does not!
provide a social benefit, and the same can be said of eliminating licensing differentiation. See Herbert Hovenkamp, Standards Ownership and Competition Policy, University of Iowa Legal Studies Research Paper, Number 05-44 (February 2006) at 10 ("product differentiation is still an important value, primarily because consumers have different preferences but also because it makes collusion more difficult to sustain. Standards that do no more than reduce product differentiation in order to facilitate price matching do not provide a social benefit"), available at http://ssrn.com/absract-889335.
It is also not clear how the conclusion can be reached that the proposed definition of RAND will avoid "major litigation." Bob has in the past made reference to litigation while declining to identify it, and I, at least, am not sure exactly which cases are being referenced. But, whatever the cases are it remains unclear, regardless of the intent to do so, that the proposed definition will eliminate the likelihood of litigation. Perhaps more of an explanation would be useful here. This may be especially useful because, if anything, the proposed definition will likely give rise to more claims. Regardless of what a patent owner's license terms may be, a user that simply doesn't want to pay or agree to the other terms offered would argue that the offered terms are inconsistent with the special IEEE definition and that the patent owner has therefore violated the IEEE rules. Whether this is an antitrust claim or one under common law or equitable theories wouldn't much ma!
tter because the effect will be the same -- i.e., the use of the proposed definition as a sword to distort what would otherwise be an arms length negotiation between licensors and licensees based upon all relevant factors.
On a final note, I refer those who may still be struggling with understanding the relevance of the Golden Bridge's decison to issues involved with standards development, and some of the discussion taking place in IEEE, to Professor Hovenkamp's recent paper at p. 7 n.14. He states:
The recent and troublesome decision in Golden Bridge Technology, Inc. v. Nokia, Inc., __. F. Supp.2d
___, 2006 WL 385222 (E.D. Tex. Feb. 17, 2006) falls closest to [the] category [of standards cases involving
the faciliation of collusion], at least in the eyes of the court. The plaintiff complained that it developed a
patented technology for cellular phones which it wished to license to th cell phone companies. Acting
through their standards setting organization, however, the cell phone companies adopted standards that
excluded the technology and thus avoided the license fees. The court refused to disimss a complaint that
adopton of the standard amounted to a per se antitrust boycott. While a standard setting organization
is free to adopt a lower cost standard, the effect of its adoption may be to prevent individual members
from licensing the disapproved technology even if they wanted to. Nevertheless, antitrust's per se
rule is reserved for practices that are so clearly anticompetitive that detailed inquiry into the market
structure or the effects of the practice are unnecessary. This hardly seems like such a case. The
court analogized to Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 494 (1988) . . . .
But in Allied Tube the plaintiff was not askiing other manufacturers in the organizaton to license its
technology, it simply wanted market approval side-by-side with other products.
Look forward to seeing everyone on Monday, and I am sure continuing the discussion on many of these issues.
-----Original Message-----
From: Skitol, Robert A. [mailto:Robert.Skitol@DBR.COM]
Sent: Saturday, March 25, 2006 10:01 AM
To: PP-DIALOG@LISTSERV.IEEE.ORG
Subject: Re: [PP-DIALOG] clarifying 'RAND'
Respectfully, I believe that Michelle's and Kent's comments reflect a misunderstanding of the RAND definition proposal. It would not "dictate" anything or force any patent owner to abide by any given set of terms. It is more in the nature of a "default" definition for those owners who want to make a RAND commitment without being more specific about their terms. Owners would remain free to disclose their own different intent regarding the terms they will seek if their solutions are adopted. The proposal is not "in favor of user markets" or "one business model over another." It is in favor of replacing the current ignorance and confusion over what RAND means with transparency about it: more informed rather than less informed bases for decision-making.
The current lack of any definition has fostered disputes resulting in major litigation that stalls market acceptance of adopted standards. Everyone should be painfully aware of this litigation without our needing to get into specifics about what those pending cases are. We can do so on Monday if anyone wants. Avoiding or at least reducing conditions fostering more litigation of that sort would be a highly beneficial effect of the proposed definition. It would not alter existing caselaw or legal rights -- except to the extent it discourages or makes more difficult anticompetitive/exclusionary patent holdup conduct in the aftermath of a standard setting process. Again, that would be a highly desirable effect of the proposed policy.
The proposed definition will not "keep out advances or superior technologies from IEEE standards." It will only encourage technology owners to be more open about their license intentions before decisions are made on which among competing solutions are to be chosen for a given standard under development. Again, any owner would remain free to reject or replace the specified definition by telling participants what its terms will be. This can only enhance competition among competing solution providers, thereby enhancing the quality of decision-making and ensuring that adopted IEEE standards are in fact "open" standards that promote the growth of new and robustly competitive markets.
-----Original Message-----
From: Baker, Kent [mailto:kentb@QUALCOMM.COM]
Sent: Friday, March 24, 2006 8:49 PM
To: PP-DIALOG@LISTSERV.IEEE.ORG
Subject: Re: [PP-DIALOG] clarifying 'RAND'
I, as will many other members come Monday the 27th, agree with Michelle. The idea of defining RAND as proposed is unnecessary and disproportionately favors one business model over another – I refer folks to the in depth discussion we submitted last week. This alone is a very good reason for an SDO to not get involved, or find a better approach. This is even more important when a consensus of the concerned membership does not support such changes. We do not even need to get to the legal liabilities argument and the various opinions on the matter (in the end, only one opinion matters: outside counsel for IEEE.)
Still, the IP value an engineer needs to make a cost/benefit decision goes far beyond the simplicity of the price paid. The terms of a license can be more important than the price, evidenced by the folks who follow a business plan using an RF strategy. To them, every LOA will indicate RF. Of course, this information can already be found on most of these company’s websites. So how about the impact on the other part of the IEEE membership, the non-RF folks? Or is this to be minimized or not considered?
________________________________
From: Michelle Lee [mailto:mleelaw@nortel.com]
Sent: Friday, March 24, 2006 4:24 PM
To: PP-DIALOG@listserv.ieee.org
Subject: Re: [PP-DIALOG] clarifying 'RAND'
Hi Scott,
With all due respect, I disagree that the proposed definition of "reasonable rates or terms" is necessary or desirable for IEEE. We do not support or accept this definition.
(1) The definition of "reasonable" is not a clarification. It is a conceptual legal bound on royalties that can be earned for any IEEE standardized technologies and is an imbalance in favour of user markets.
(2) IEEE cannot dictate a licensing commitment by agreement or dictate what licensing commitment patent holders make. In my view, that is not voluntary.
(3) The proposed standard is based on a philosophical view that wrongly assumes licensing on RAND is entirely subjective without market, business, bargaining or objective legal constraints or incentives to act reasonably or come to reasonable terms in negotiation.
(4) How can a new reasonable royalty test not alter rights, remedies or laws when it overrides the judicial legal test for reasonable royalty under Georgia-Pacific law? IEEE does not have the authority to impose or agree upon a new test to assess reasonable royalties for patent infringement and rights to use standardized technologies.
(5) This test inappropriately treats all inventions alike (at the minimum) without regard to the advancement of the particular technology and its value add. Limiting value and royalty earnings to less than technology owners can expect to earn in the market for the technology is unreasonable by definition.
(6) Licensees that wish to access and use a proprietary technology before it is a standard that is available to all implementers are not practicing an IEEE standard and are not similarly situated to licensees that implement the adopted standard. Even if an assurance has been given, patent holders are not obliged to be willing to license its technology on RAND terms before it is adopted and is essential to practice the standard. Assessing royalties based on what parties would agree to before the standard is adopted is therefore not suitable or appropriate.
(7) A definition like this will only serve to keep out advances or superior technologies from IEEE standards. I don't see the benefits to IEEE standards (which are trying to become more international) to ask for an agreement or policy that eliminates or reduces incentives to attract the best technologies to IEEE standards and the willingness of patent holder developers to make available licenses in the first place.
(8) This new test will not reduce litigation and will likely drag IEEE into legal disputes over whether the test is fair, unbiased and appropriate or the terms are reasonable under it.
(9) The vast majority of licenses are more likely pro-competitive. How many disputes or complaints has IEEE received or have there been over "reasonable royalty" involving IEEE standards?
Kind regards,
Michelle
-----Original Message-----
From: Peterson, Scott K (HP Legal) [mailto:scott.k.peterson@HP.COM <mailto:scott.k.peterson@HP.COM> ]
Sent: Wednesday, March 22, 2006 5:20 PM
To: PP-DIALOG@listserv.ieee.org
Subject: [PP-DIALOG] clarifying 'RAND'
I have heard concerns expressed about some sort of external impact of providing more specificity as to what is meant by 'RAND' in the IEEE's policy. Those concerns are based on a misunderstanding of what is being clarified.
The proposed policy change provides greater clarity as to what licensing commitment the IEEE is asking patent owners to voluntarily make.
It does not change the meaning of that phrase in any more global context; for example, the proposed policy change does not purport to change the law concerning the measure of patent infringement damages.
______________________________
Scott K. Peterson
Senior Counsel
Hewlett-Packard Company
165 Dascomb Road
Andover, MA 01810
-----------------------------------------------------------------------------------
Disclaimer Required by IRS Rules of Practice:
Any discussion of tax matters contained herein is not intended or written to be used, and cannot be used, for the purpose of avoiding any penalties that may be imposed under Federal tax laws.
-----------------------------------------------------------------------------------
This message contains information which may be confidential and privileged. Unless you are the intended addressee (or authorized to receive for the intended addressee), you may not use, copy or disclose to anyone the message or any information contained in the message. If you have received the message in error, please advise the sender by reply at e-mail@dbr.com and delete the message.
Thank you very much.
============================================================================
Bingham McCutchen LLP Circular 230 Notice: To ensure compliance with IRS requirements, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding any federal tax penalties. Any legal advice expressed in this message is being delivered to you solely for your use in connection with the matters addressed herein and may not be relied upon by any other person or entity or used for any other purpose without our prior written consent.
============================================================================
-----------------------------------------------------------------------------------
Disclaimer Required by IRS Rules of Practice:
Any discussion of tax matters contained herein is not intended or written to be used, and cannot be used, for the purpose of avoiding any penalties that may be imposed under Federal tax laws.
-----------------------------------------------------------------------------------
This message contains information which may be confidential and privileged. Unless you are the intended addressee (or authorized to receive for the intended addressee), you may not use, copy or disclose to anyone the message or any information contained in the message. If you have received the message in error, please advise the sender by reply at e-mail@dbr.com and delete the message.
Thank you very much.
-----------------------------------------------------------------------------------
Disclaimer Required by IRS Rules of Practice:
Any discussion of tax matters contained herein is not intended or written to be used, and cannot be used, for the purpose of avoiding any penalties that may be imposed under Federal tax laws.
-----------------------------------------------------------------------------------
This message contains information which may be confidential and privileged. Unless you are the intended addressee (or authorized to receive for the intended addressee), you may not use, copy or disclose to anyone the message or any information contained in the message. If you have received the message in error, please advise the sender by reply at e-mail@dbr.com and delete the message.
Thank you very much.
============================================================================
Bingham McCutchen LLP Circular 230 Notice: To ensure compliance with IRS requirements, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding any federal tax penalties. Any legal advice expressed in this message is being delivered to you solely for your use in connection with the matters addressed herein and may not be relied upon by any other person or entity or used for any other purpose without our prior written consent.
============================================================================