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Dear Colleagues, Below is a second email that I transmitted to the members of the SASB today. Best regards, --Fabian Dear SASB Members, I write regarding the email I transmitted to you on behalf of Qualcomm Incorporated, Nokia Solutions and Networks Oy, Nokia Oy, and Blackberry Ltd. (collectively, the “Four Companies” and the email, the “Four Company Letter”) to reply
to Gil Ohana’s response (the “Response”). Please note that this email is over my own signature, in my capacity as an employee of Qualcomm, and not on behalf of the Four Companies. The gravamen of the Four Company Letter is that the process followed by PatCom to draft changes to the IEEE patent policy has been wholly inconsistent with the principles of “consensus, due process, openness, and balance” that the SASB
is tasked with upholding. The Four Company Letter discusses each of these principles, and demonstrates by reference to specific facts how the process adopted by PatCom has fallen short. The Response states that each of the facts asserted in the Four Company Letter (which the Response mistakenly calls “Mr. Gonell’s allegations”) “is false.” If that were true – which it is not – one would expect that the Response would
be replete with references to contrary facts. But it is not. Indeed, most of the facts cited in the Four Company Letter stand unrebutted, and the Response’s attempts to rebut the remainder miss the mark. Composition of the PatCom Ad Hoc and Lack of Balance The Response attempts to elide the issue of the closed nature of the PatCom Ad Hoc and its lack of balance by claiming that PatCom itself “has prepared proposed text.” That is incorrect. As the PatCom minutes reflect, work on the IEEE
patent policy has been carried out by an Ad Hoc led by Phil Wennblom, and not by PatCom itself. See, e.g.,
http://standards.ieee.org/about/sasb/patcom/0314patmins.pdf. The Response does not dispute the following facts about the composition of the Ad Hoc and its lack of balance:
•
The Ad Hoc group is restricted to persons selected by Chairman Law.
•
Previous ad hocs to PatCom were open to all interested parties (see, e.g.,
http://grouper.ieee.org/groups/pp-dialog/email/msg00229.html).
•
Past ad hoc committees considering revisions to the IEEE patent policy have included much broader and balanced participation (see, e.g., PatCom Meeting Minutes June 2006).
•
When the Ad Hoc was first constituted, Chairman Law named Don Wright, who was not at that time a member of PatCom, as a member of the Ad Hoc, while excluding all other non-PatCom members.
•
There has never been any explanation as to why Don Wright, who is a consultant to a company supporting the changes, merited such special treatment.
•
From the outset the Ad Hoc has been dominated by employees or consultants of companies that for the past two years have been seeking to change the patent policies of other standards organizations around the world to devalue the essential
patents of others. Lack of Openness The Response seems to suggest that sending proposed changes to a public reflector and soliciting input by itself satisfies the IEEE’s openness requirements. We disagree. In the IEEE, “Openness is defined as the quality of being
not restricted to a particular type or category of participants. All meetings involving standards development shall be open to all interested parties.” IEEE-SA Standards Board Bylaws section 5.2.1.4. The Response does not dispute the following facts about the lack of openness in the Ad Hoc:
•
None of the proposed changes to the IEEE-SA patent policy has been openly attributed to any particular member of the Ad Hoc, nor has there been any requirement that the proponent of a change publicly justify it or provide any rationale
or evidence for any supposed problem with the current patent policy that might merit such change.
•
None of the deliberations of the Ad Hoc have been open to non-members, and there has been no public announcement of any vote taken by the Ad Hoc. Lack of Consensus The Response does not even mention the word “consensus.” It is indisputable that the changes currently being proposed by PatCom do not enjoy consensus. Moreover, the Response does not dispute that even within the Ad Hoc the proceedings
are by bare majority vote and not by consensus. Lack of Due Process The Response does not dispute that the sole method by which interested parties may submit comments on the draft changes to the IEEE-SA patent policy to the Ad Hoc is by using a spreadsheet formula used in technical standards development
in the 802.3 Working Group. Nor does the letter dispute that redlines and other markups of the proposed document were expressly prohibited, and that commenters have no procedural recourse (for example, by maintaining a “no” vote and thereby ensuring that
their comments get escalated to the next stage of the process, as is usually the case in standards development) if their concerns are ignored or brushed aside. Instead, the Response argues that the SASB should disregard the lack of the procedural safeguards normally present in standards development because it can review for itself the comment dispositions. Such optional review, however, is
not a substitute for a process in which a continuing objection is formally recorded and the objector’s concerns are automatically escalated to the next level. With respect to the lopsided record of comment rejections cited in the Four Company Letter, the Response argues that disparate treatment of the Four Companies’ comments was justified because the Four Companies raised procedural objections
in addition to substantive objections. While we disagree with that argument, it is non-responsive to the point made in the Four Company Letter. The Four Company Letter compared the acceptance rate of comments from companies with representatives on the Ad
Hoc with the acceptance rates of comments from IBM and GTW Associates. The Response provides no justification for the disparate treatment of those companies’ comments. * * * The fundamental disagreement between the Four Company Letter and the Response is over whether the Ad Hoc’s process is one that “is familiar to developers of IEEE standards.” In that regard, we urge you to consider the following:
•
IEEE standards meeting are open for people to attend. The Ad Hoc meetings are closed private meetings.
•
At IEEE comment resolution meetings the person who submitted the comment is permitted to speak to his comment. In the Ad Hoc the submitter is not permitted to attend the meeting.
•
At an IEEE comment resolution meeting votes on comment resolutions are recorded in the minutes and those minutes are made public for anyone to read. In the Ad Hoc, it is unclear if detailed voting minutes are kept since there are no
public minutes made available.
•
In IEEE standards development unresolved comments are forwarded to RevCom and the process is scrutinized to ensure that the comment was considered by a broad group of people voting on the draft. If the Ad Hoc rejects a comment the commenter
has no recourse. We respectfully submit that the SASB would be obliged to reject a proposed standard that was developed by a group (a) that is closed and unbalanced; (b) that met in secret; (c) that did not operate by consensus; and (d) that provided
non-members of the group with no procedural recourse to ensure that their concerns were addressed in a fair and impartial manner. So, too, should the SASB reject revisions to the IEEE patent policy developed in such a manner. We urge the SASB to grant the
Four Companies’ request to direct PatCom to (1) open up the Ad Hoc to all interested participants, and reflect the principle of balance; (2) require that the Ad Hoc conduct itself consistent with the principle of openness; (3) require that the Ad Hoc make
decisions by consensus, with particular attention to making a “concerted effort” to resolve all objections; and (4) require that the Ad Hoc adopt procedures that will ensure due process. Respectfully, Fabian D. Gonell VP, Division Counsel QUALCOMM Incorporated 5775 Morehouse Drive San Diego CA 92121 From: Gil Ohana (gilohana) [mailto:gilohana@xxxxxxxxx]
Thanks Dina. While the “closed doors” metaphor is a powerful one, it may be helpful if you could be more specific as to what “doors” were “closed” to Ericsson. Specifically:
1.
The door to four (as of next Tuesday, five) meetings of the Patent Committee were open to Ericsson, as it was open to many other companies. Indeed, I believe Ericsson attended each of those meetings,
with multiple representatives, who actively participated in the discussion. So the door to live participation at public Patent Committee meetings was, as far as I can tell, wide open.
2.
The door to submission of comments was open to Ericsson, again, just as it was open to many other companies. To reassure myself of the validity of that statement, I went back and reviewed the series
of responses to comments released by the Patent Committee to count the number of comments submitted by Ericsson, many of which list you as the author. Here is what I learned:
a.
Comment Disposition Report issued by the Patent Committee on November 14, 2013: Ericsson submitted comments 123-137 (14 comments)
b.
Comment Disposition Report issued by the Patent Committee on March 4, 2014: Ericsson submitted comments 36-51 (15 comments)
c.
Comment Disposition Report issued by the Patent Committee on May 10, 2014: Ericsson submitted comments 48-60 (12 comments)
d.
Comment Disposition Report issued by the Patent Committee on May 26, 2014: Ericsson submitted comments 110-125 (15 comments) In total, Ericsson submitted 56 comments over four comment periods. So you can hardly claim to have been deprived of the right to submit comments. That door, too, was open wide.
3.
I think the focus of your complaint is that you were not able to participate in the meetings of the Patent Committee at which decisions were made as to how to respond to the comments that you and
other participants submitted. I was similarly disadvantaged. I take comfort in the fact that I received a substantive response to each of the comments I submitted that included a proposed disposition and the reasons for that disposition. The various comment
dispositions are available to any interested party on a website, so that they can decide whether the comments I submitted (and the comments you and others submitted) were resolved fairly. I would also note that at some of those meetings, an Ericsson employee
(Glenn Parsons, in the latest example of an illustrious career of service to the Institute and the Standards Association) participated as member of the Patent Committee. Since in their comments others (Qualcomm, Blackberry, and the Nokias) have made much
of the participation on the Patent Committee of company representatives from companies whose views they disagree with, I hope you won’t mind me noting the participation of an employee of the same company you work for. The door to the meetings of the Patent
Committee was open to Ericsson, if not to you personally.
4.
Which brings me to my last point: when I distill the concern I have heard you express, and the concern in the earlier comment from Qualcomm, Blackberry, and the Nokias, what I come up with is that
the IEEE Standards Association has chosen to conduct its review of its IPR policy in a different way than the ITU or ETSI have chosen to structure theirs. The process at those organizations has consisted of frequent, multi-day meetings at which little actual
drafting has been accomplished, but we have both heard lots of long expositions of the positions different companies take. The IEEE process has been structured differently. Meetings have been less frequent and (mercifully, not that I don’t enjoy my time
in Piscataway) shorter. The process has emphasized written contributions, each of which has been followed by a detailed response. The record of comments and responses is, as noted previously, available for anyone to see in documents posted to the Patent
Committee website. Some companies have chosen to use their responses to make statements of their positions akin to informational contributions at ETSI and ITU (I am pasting a copy of one of your comments at the end of this e-mail so that people can see what
I mean). Others have chosen to focus on specific textual suggestions, and some (including Ericsson) have done both. You seem to view this process as inherently suspect, but you need to go beyond stressing the differences between how the IEEE Standards Association has chosen to structure
its process and the processes at ETSI and ITU to explaining how, precisely, Ericsson and other companies that (like Cisco) have not participated in the meetings of the Patent Committee have been prejudiced. Has the response to your comments been insufficiently
detailed? Have you been denied the opportunity to be heard at meetings? You speak of doors that have been closed to you, but I’m struggling to understand what doors you mean. The door is open to you to explain.
5.
I’m not really sure how to respond to your comment regarding the effect of the language on future IEEE standards. All I can say is that quite a few large, innovative companies that both contribute
patented technology to and implement IEEE standards (including my company, which is the largest implementer of both 802.3 and 802.11 in the world) believe strongly that the interests of standards development would be well served by the adoption of rules that
limit reduce the risk that we will (again) be held up by patentees (often, at least in Cisco’s experience, patent trolls) that own patents that they claim are essential to implement IEEE standards. If hope that what Ericsson is saying is not “if denied the
opportunity to engage in hold up involving IEEE standards we will avoid the IEEE.” That attitude would be unworthy of your company’s proud history in the forefront of many innovations in telecommunications. Best regards, Gil Ohana ----------------------------------------
Attempting to define “Reasonable Rate” [Comment 116 from May 26, 2014 Comment Disposition Report] Any determination of what constitutes a “reasonable rate” is highly fact-specific and
depends on all the facts and circumstances of the particular case. Not all circumstances
can be predicted in advance. For that reason, Ericsson objects to the narrow definition proposed in rows 46-56 The Georgia Pacific factors set out 15 evidentiary rules aimed at assisting in calculating
adequate royalties/damages. It is unclear why the Ad-Hoc has chosen to focus on two of
specific evidentiary rules, and thus render them more important than other. In addition the
second proposed rules, in lines 54-56 is divorced from market reality, because in practice it
is the added value to the *end user* that dictates how much more a consumer would be
willing to pay for a product that implements proprietary technology. Furthermore, the policy should reflect the existing industry practice by relating to end-user
products, rather than components or the “smallest saleable Compliant Implementation”.
There is also no way to define a “smallest saleable” implementation in standard setting
contexts. Therefore the reference to “smallest saleable Compliant Implementation” is also
impractical, and therefor fails to improve the clarity that the proposed amendments allegedly
aim to achieve. Another reason for the importance of deleting the term “smallest saleable
Compliant Implementation” is the fact that the value discussed here should be the value to
the end user. The value of the patented technology to a component is not measured on the
component level, but rather on the end user’s experience level. Consideration of the
Essential Patents’ contribution to the end-user implementation of the applicable standard is
a well-accepted factor in RAND licensing and has been used as a baseline metric in
numerous completed arms-length license agreements between willing parties per the
Georgia-Pacific standard. This concept, however, is essentially absent from the proposed
“Reasonable Rate” definition and the ad-hoc Committee has previously rejected Ericsson’s
proposal for consideration of comparable license agreements as part of the determination of
value. By contrast, the proposed “Reasonable Rate” definition makes exclusive reference linking
considerations of “value” to the functionality of the “smallest saleable Complaint
Implementation.” Ericsson believes this is merely another means to try and impose a
change in industry practice and understanding from end-use device licensing to compulsory
component level licensing. Ericsson believes that the intent and effect of the ad-hoc
Committee’s proposed amendment is to drive down licensing rates to sub-RAND levels.
This intent was made clear, inter alia, through the rejection of Ericsson’s comment #128 in
the December 2013 CD Document that requested that comparable licenses be added as a
primary “reasonable rate” factor. As you may be aware, comparable licenses i.e. royalty
rates already paid by existing licensees, are repeatedly recognized by U.S. case law as the
most useful Georgia Pacific factor element for evaluating the reasonableness of royalties.
Therefore ongoing rejection of Ericsson’s comment previous proposal to add this factor, by a drafting committee that comprises of individuals working for Intel, Apple, and Hewlett
Packard suggests a collective intention to drive royalties down from where they are under
current applicable law. Ericsson repeats and reiterates the principles expressed in Comment #38 of the December
2013 CD Document, especially the fact that the U.S. Department of Justice business review
letter to IEEE does not authorize collective rate bargaining by licensees. Furthermore, the ad-hoc’s response to Comment # 52 in the May CD Document referred
loosely to “regulators” who may have “suggested that standard setting organizations explore
setting guidelines on what constitutes a FRAND rate” Although antitrust enforcement is different from regulation, to the extent that the drafting
committee meant to suggest that such a supposed “suggestion to explore” originated from
antitrust enforcers and justifies the proposed changes in any way, it is important to set the
record straight in this regard. The joint 2007 DOJ-FTC “Antitrust Enforcement and Intellectual Property Rights: Promoting
Innovation and Competition” Report, that is available online at http://www.ftc.gov/reports/antitrust-enforcement-intellectual-property-rights-promotinginnovation- competition-report includes a chapter (Chapter 2) titled: “Competition Concerns when patents are Incorporated into Collaboratively set Standards”. That chapter, that summarizes the FTC And DOJ policy in this area states that: “Neither Agency advocates that SSOs adopt any specific disclosure or licensing policy, and the Agencies do not suggest that any specific disclosure or licensing policy is required” To the extent that the term “regulators” referred to “antitrust agencies”, the ad-hoc’s response in this regard is, at best, unconvincing. SuggestedRemedy Proposed new text in lines 46-56 should be deleted. In the alternative, should the the ad-hoc group insist on inserting a new “Reasonable Rate” term definition into the patent policy, Ericsson proposes the following textinstead of the new text currently proposed in lines 46-56: “Reasonable Rate” shall mean compensation that is based on all relevant factors for determining reasonable patent compensation under applicable law. From: Dina Kallay [mailto:dina.kallay@xxxxxxxxxxxx]
As reflected, repeatedly, in multiple comments submitted to PatCom, Ericsson is similarly troubled by the process through which the PatCom group formed the closed ad-hoc
Committee that meets in closed doors to consider far-reaching changes to the IEEE-SA Bylaws’ patent chapter.
Furthermore, we believe that, if adopted as such, the proposed new language may compromise future IEEE-SA standards. Sincerely, Dina
DINA KALLAY, SJD
Tel +1-202-824-0115
This communication is confidential. Communication from and to Ericsson is sent and received under the
terms set out at
www.ericsson.com/email_disclaimer From: Gonell, Fabian [mailto:fgonell@xxxxxxxxxxxx]
Dear Colleagues, Below please find an email I transmitted on behalf of the signatory companies (Qualcomm, Nokia, NSN, and Blackberry) to the members of the SASB yesterday morning.
Best regards, --Fabian From: Gonell, Fabian
Dear SASB Members, The undersigned companies write regarding proposed revisions to the IEEE-SA patent policy, which we
understand may be presented to SASB for a final vote on June 12, 2014, to document our continuing objection to the process followed by PatCom, and to request the intervention of the SASB. The process has been wholly inconsistent with the principles of “consensus,
due process, openness, and balance” that the SASB is tasked with upholding. See
http://standards.ieee.org/about/sasb/.
PatCom has been developing revisions to the IEEE-SA Standards Board Bylaws which, if adopted, would fundamentally and radically change the IEEE-SA patent policy.
These revisions are substantially similar to revisions proposed to the patent policies of other standards organizations such as ETSI and ITU-T which have been discussed at great length over the last 2 years but are highly controversial and have not met with
majority let alone consensus support in those organizations. These proposed revisions have not been adopted in any standards organization in the world. Adopting these revisions in IEEE-SA would have a profound impact upon IEEE standards and the IEEE standards
process. In our view, the proposed revisions are fundamentally unbalanced and represent the commercial interests of only a subset of IEEE-SA members to the detriment of others. Some members may decide to reduce participation or withdraw from IEEE-SA altogether,
no longer submit contributions, or not file LoAs. This could result in a reduction in the quality of IEEE standards, put more of a patent focus rather than technical focus in the technical groups, and increase the uncertainty surrounding the patents relating
to a standard. Due to this profound impact, it is extremely important that IEEE-SA and its subgroups fully understand all the implications of this level of change in the patent policy and fully adhere to “consensus, due process, openness, and balance” in developing
and deciding on whether to adopt these revisions. We have at least the following specific concerns regarding the processes followed by PatCom: Composition of the PatCom Ad Hoc and Lack of Balance The Ad Hoc group - the only avenue through which PatCom is currently accepting proposed revisions
to the IEEE patent policy - is restricted to persons selected by Chairman Law. This contrasts with previous practice, in which ad hocs to PatCom were open to all interested parties (see, e.g.,
http://grouper.ieee.org/groups/pp-dialog/email/msg00229.html).
Indeed, past ad hoc committees considering revisions to the IEEE patent policy have included much broader and balanced participation (see, e.g., PatCom Meeting Minutes June 2006). Moreover, Chairman Law has not selected members of the Ad Hoc by a fair and open process. When the
Ad Hoc was first constituted, Chairman Law named Don Wright, who was not at that time a member of PatCom, as a member of the Ad Hoc, while excluding all other non-PatCom members. There has never been any explanation as to why Don Wright, who is a consultant
to a company supporting the changes, merited such special treatment, and such special treatment is all the more troubling as we understand that Mr. Wright is the primary author of the far-reaching changes in the draft revisions. Indeed, from the outset the Ad Hoc has been unbalanced in that it has been dominated by employees
or consultants of companies that for the past two years have been seeking to change the patent policies of other standards organizations around the world to devalue the essential patents of others. Such dominance would
be impermissible in an IEEE-SA technical body and should not have been artificially created by Chairman Law. Lack of Openness Section 5.2.1.4 of the IEEE-SA Standards Board Bylaws provides that “Openness is defined as the
quality of being not restricted to a particular type or category of participants. All meetings involving standards development shall be open to all interested parties.” Similarly, section 5.3.3 of the IEEE-SA Standards Board Operations Manual states that
“Standards development meetings are to be conducted consistent with the principle of openness.” These principles have been sadly lacking in the work of the Ad Hoc. Instead, the Ad Hoc has shrouded
its work in secrecy. None of the proposed changes to the IEEE-SA patent policy has been openly attributed to any particular member of the Ad Hoc, nor has there been any requirement that the proponent of a change publicly justify it or provide any rationale
or evidence for any supposed problem with the current patent policy that might merit such change. None of the deliberations of the Ad Hoc have been open to non-members, and there has been no public announcement of any vote taken by the Ad Hoc. This secrecy
stands in stark contrast to not only the IEEE’s stated principles, but also the practices of every major standards organization that is considering similar issues. Moreover, this secrecy is particularly troubling in the context of the IEEE where committee
members have fiduciary duties and are required to avoid conflicts of interest (see
http://standards.ieee.org/about/sasb/nmo_ct.pdf). Lack of Consensus The foundation of standards development in the IEEE is a consensus-based approach. The IEEE-SA Bylaws
define consensus as follows: “Consensus is established when, in the judgment of the IEEE-SA Standards Board, substantial agreement has been reached by directly and materially affected interest categories. Substantial agreement means much more than a simple
majority, but not necessarily unanimity. Consensus requires that all views and objections be considered, and that a concerted effort be made toward their resolution.” This principle, too, has been absent from the Ad Hoc. The drafters of the proposed changes to the
IEEE-SA patent policy have not made a “concerted effort” to resolve objections raised by the undersigned companies. Indeed, in certain respects the proposed changes have become more objectionable, not less. Moreover, we understand that since at last the beginning
of 2014 the Ad Hoc has been proceeding by a bare majority vote, and not the “much more than a simple majority” that consensus requires. Lack of Due Process Chairman Law decreed that the sole method by which interested parties may submit comments on the draft
changes to the IEEE-SA patent policy to the Ad Hoc is by using a spreadsheet formula used in technical standards development in the 802.3 Working Group. See, e.g.,
http://grouper.ieee.org/groups/pp-dialog/email/msg00242.html.
Redlines or other markups of the proposed document were expressly prohibited.
See, e.g., http://grouper.ieee.org/groups/pp-dialog/email/msg00249.html.
A limited time for verbal input has been allowed at PatCom meetings, but Chairman Law has announced each time that for comments to be considered they must be submitted using the tool. It is strange that part of the process used by 802.3 was adopted, yet the core aspects of comment
resolution which ensure fair treatment for all were not adopted. In any IEEE group, draft standards must be adopted by consensus. Commenters whose objections are ignored or brushed aside have the option to maintain their objections, which, even if the chair
declares consensus, must be forwarded to the next level in the standards approval process. Here, PatCom is not working by consensus even in the Ad Hoc, and it is not even trying to determine whether there is a consensus amongst all interested parties. Thus,
there is no due process check against arbitrary treatment of comments as commenters have no recourse if their comments have been rejected by the Ad Hoc, or if they believe they have been treated unfairly. This lack of due process has resulted in a stark difference between how the Ad Hoc treats comments
submitted by companies that for the past two years have been seeking to change the patent policies of other standards organizations around the world to devalue standards essential patents and comments submitted by others. For example, in the first set of comment
dispositions, the Ad Hoc accepted 100% of Intel’s comments (see comments 207-212) and 66% of Apple’s comments (see comments 149-157), but only 25% of IBM’s comments (see comments 234-253) and 19% of GTW Associates’ comments (see comments 284-299). The Ad Hoc
has rejected comments by Qualcomm and Ericsson at even greater rates.
* * * The undersigned companies have repeatedly urged PatCom and Chairman Law to open the Ad Hoc to all
interested participants and to adopt a consensus-based approach but have been repeatedly rebuffed. By this email, we ask the SASB to intervene. Specifically, we request that the SASB direct PatCom to (1) open up the Ad Hoc to all interested participants, and
reflect the principle of balance; (2) require that the Ad Hoc conduct itself consistent with the principle of openness; (3) require that the Ad Hoc make decisions by consensus, with particular attention to making a “concerted effort” to resolve all objections;
and (4) require that the Ad Hoc adopt procedures that will ensure due process. Respectfully submitted, Qualcomm Incorporated Nokia Solutions and Networks Oy Nokia Oy Blackberry Ltd |