RE: [PP-DIALOG] Business Review Letter
Thanks Michelle. I think that's right, though my
understanding is that VITA has been involved in the creation of a wide range of
standards in that area. While I don't believe VITA is quite as
prolific as IEEE as a generator of standards, from the standpoint of evaluating
whether the adoption of ex ante disclosure rules creates antitrust concerns, you
may need to enlighten me on the relevance of the fact that an SDO
promulgates 5 standards or 20 standards or a 100 standards.
After all, patent disclosures and disclosures of propose licensing terms are
being made only as to technology that is essential to practice a particular
standard.
Best regards,
Gil Ohana
Thanks, Gil. I'm not that familiar with VITA scope
either but may not have been clear what I meant.
I thought VITA specialized in h/w standards based only
on VMEBus computer architecture for VME cards/computer
systems.
Michelle
Michelle, thank you for your thoughtful
comments. One question for you and others: in your point 3, you state
that "Unlike VITA, IEEE SA process is not limited to a particular
standard." Cisco is not, so far as I am aware, a member of VITA, but
I do not believe that VITA is organized to create a single standard
either. Rather, like IEEE, VITA is an SDO that creates a range of
standards. I'm not sure if that addresses your point 3, but I did want to
point out that your understanding of VITA's scope is different
from mine.
Best regards,
Gil Ohana
Don, Clare, Michael:
Thank you for keeping us advised and asking for input
into the Business Review Letter.
I had assumed that at least
SASB officers would see and pre-approve the DOJ review letter about
the IEEE SA policy, and that once the letter was in a form
that's near ready for submission to the DOJ, it would be public and not
privileged. Is that not the case? I find it difficult to provide
informed input without seeing the review letter request that
is proposed.
In any case, here are topics we would
like addressed in the letter for DOJ guidance on IEEE proposed policy
and process:
1. IEEE SA
experience of abuse restricting use of IEEE
standards - findings of patent licensing terms held
unreasonable contrary to RAND, the extent of anti-competitive
hold-up of IEEE standards and the extent of IEEE member firms that
have caused significant restriction of use of an IEEE
standard.
2. Rate conditions on
adoption without full transparency for evaluation -
Unlike VITA proposed policy, IEEE SA does
not have a patent disclosure policy. Declaration of ex ante terms are not based on
patent disclosure or limited to member disclosed essential patents or
applications. Voluntary maximum rates and licensing terms conditioned
on selection of member's technology may be declared without patent
disclosure and knowing the likelihood of patent validity, essentiality or
minor vs. core feature coverage of the IEEE standard at issue.
Further to that,
we would like to know DOJ position with respect to:
a) Member declaration and IEEE SA acceptance of ex ante assurances of maximum
rates for member essential patent claims to an IEEE standard,
without known essential IPR position by the member making the
licensing declaration for the standard.
b) Blanket maximum
rates to a standard (portion of product price) vs. maximum rates to
essential claims of a disclosed patent(s) for a single patented technology to a
feature.
3. Guidance about how to
absolutely avoid anti-competitive purposes or effects in operation of the
ex ante royalty communications in IEEE SA conduct
given the severe penalty
consequences
Unlike VITA, IEEE SA process is not limited
to a particular standard. That makes ex ante royalty declaration
processes dramatically more complex and uncertain in IEEE. IEEE SA would
allow and accept ex ante T&C conditions on numerous IEEE
SA standards with widely varying technical objectives, scope, markets,
maturity levels, participants and IPR landscapes (irrespective of
standardization). We would like DOJ guidance whether and
how IEEE SA can properly carry out process to avoid
anti-competitive effects and with respect to competitors setting
their maximum rate conditions on IEEE
standards adoption in this context, including:
a) When complex
interrelated, complementary or premature technologies are
involved, any of which may not have multiple
substitutes
b) When component features will be used no matter which
technology
solution is selected
c) When selection of the standard by owners of
technologies competing for the standard based on maximum royalty will not
amount to technology price fixing or bid rigging of terms
for the patented technology selected.
d) When selection by competing implementer
participants (but not necessarily all market users) based on maximum
rates declared ex ante will not directly or indirectly/expressly
or impliedly fix a portion of product price they will
sell
e) If the mere exchange of voluntary royalty
through IEEE process and selection of technology will amount to adherence
to the announced price
f) Whether prohibitions on discussions are enough to help avoid
signalling about appropriate rates between the patent holder and WG members in
IEEE standards setting process.
g) How to avoid WG boycotts in the process and not preclude firms from
licensing alternatives, complements or non-essential patent
technology based on selection of a technology with a declared maximum
royalty
h) How to prevent manipulative or misleading advanced pricing schemes
with declared terms that lock in technology selection
i) When a person declaring royalty conditions may
dominate the WG selection process or have market power, and
including if others copy or discount their maximum royalty
conditions, irrespective of actual value of contributions
4. Group discussions inside the IEEE
Standards context or induced by IEEE
process
- Communication of LOA licensing terms to
Working Groups enticing but prohibiting discussion
amongst participants in meetings, including when the WG faces no
immediate or actual known risk of anti-competitive
hold-up
- backroom licensing term discussions and
information sharing amongst participants outside open WG process
5. Impacts on economic incentives and
pro-competitive benefits of policies that attract wide open
patent holder membership and contribution to IEEE national/multi-national
standards
LOA assurances of licenses on non-discriminatory basis are a voluntary
promise of a patent holder that do not relinquish
granted patent rights. The more open the patent policy is to encourage
access to patented essential technologies, the more potential to sustain the
pro-competitive benefits of IEEE standardization. The DOJ review
letter needs to outline impacts on future
IEEE membership and contribution of patented technologies to IEEE
standards that could reduce competition between technology rivals in
IEEE standards setting and between downstream
implementers, and which can increase rather than lessen the potential
for hold-up risks.
6. Impacts on benefits of ex ante and
ex post licensing of technology
a) Selection of
technologies based on ex ante
maximum pricing replacing, or at a minimum reducing incentives
for, bilateral licensing negotiations on reasonable terms and
non-discriminatory basis.
b) How will bid competition for an IEEE standard by patent
holders not reduce price competition between licensees on a
non-discriminatory basis and not limit licensing flexibility for use
of the patented technology that is proposed for adoption or that is
selected as the IEEE standard.
c) Refusal or non-availability of licenses
from essential patent holders on less than their declared maximum rate
7. Soliciting
affirmative
non-awareness of IPR assurances based on reasonable and good faith
inquiry of participants when there can't be actual
knowledge of all patent claims of patent portfolios to verify these promise
statements even in good faith and vis-a-vis
Dell
Michelle
A
number of you have expressed interest in the process for the IEEE-SA’s request
for a business review letter, and I wanted to let you know what the process will
be. We have decided to seek the business review letter from the U.S.
Department of Justice. (For those of you not familiar with the business
review letter process, see
http://www.usdoj.gov/atr/public/busreview/procedure.htm.)
I will be working with IEEE-SA senior leadership, senior
staff and counsel to draft the request which we plan to submit no later than
November 15 but possibly sooner. The request will describe the background,
the proposed policy and its key provisions (i.e., ex ante disclosures,
affiliates, and assignees), and the key concerns (e.g., to ensure that Justice
Department would not view the ex ante disclosure provisions of the policy as a
form of price-fixing or otherwise unlawful concerted behavior).
I do not plan to circulate drafts of the letter for
comment, but I want to advise you of two avenues for input in the process.
First, we do want to make sure that our request includes all topics that
might reasonably concern interested parties, so if there are topics or specific
phrasing that you want to suggest, we will consider it (at least if it is
received before November 7). Second, we are preparing a list of interested
persons (with contact information) that we will submit with our request, so that
the Justice Department can contact anyone from whom it wishes to receive further
input. We prepared a tentative list based on attendance at the 2006 PatCom
meetings, but if you want to be sure that your name is included, please send a
note to Dave Ringle (d.ringle@ieee.org), with your company name and your contact
information.
Finally, if you have not seen it
already, you should take a look at the business review letter that the Justice
Department issued this past Monday, October 30, concerning an ex ante disclosure
policy of the VITA standards development group. We would be particularly
interested in knowing if you have a concern about the IEEE policy that is not
addressed in the Justice Department’s VITA letter. (See
http://www.usdoj.gov/atr/public/press_releases/2006/219379.htm)
Thanks again for all of your input throughout this
process.
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Don
Wright
don@lexmark.com
f.wright@ieee.org /
f.wright@computer.org
Director of Standards
Lexmark International
INCITS Executive Board Vice-Chair
C14/082-3
IEEE SA
Standards Board Past Chair
740 New Circle Rd
IEEE SASB Patent Committee Chair
Lexington, Ky
40550 Member: IEEE SA Board of
Governors
859-825-4808 (phone) Member:
IEEE CS SAB & W3C AC
603-963-8352 (fax)
Director,
IEEE-ISTO
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