Participation in Standard-Setting Organizations

Some patent-owning companies choose to participate in standard-setting organizations (SSOs), such as the IEEE, IETF and ANSI. They do so for a variety of business reasons, including the opportunity to monitor industry trends and to influence technological advancement. However, the business advantages of participation must be balanced against its potential legal consequences to the company's IP rights. Accidental or premature disclosure, failure to disclose, and licensing and enforcement practices can lead to loss of patent and trade secret rights, equitable defenses for infringers, and antitrust concerns. The current litigation between Rambus and Infineon provides a cautionary tale for both SSOs and member companies of what can happen if a company participates in an SSO whose IP patent policy is not clearly defined. See, e.g., Rambus, Inc. v. Infineon Technologies AG, 164 F. Supp. 2d 743 (E.D. Va. 2001), aff'd in part, rev'd in part, and vacated in part, 318 Fed. 3d 1081 (Federal Circuit 2003). In order to avoid such losses, companies need to investigate the IP policies of the SSOs to which they belong and carefully assess and monitor their compliance with those policies.

Investigating SSO Policies

Step 1: Identify the SSOs to which your company belongs. Perform an audit and discuss with technical personnel whether your company participates in SSOs or consortia.

Step 2: Locate the SSO's current intellectual property policy. It is in the SSO's best interest to have its policy well known to its participants. Finding an SSO's intellectual property policy, if it exists, should not be difficult. Perhaps the easiest way is to look at an organization's Web site. Also look in any manuals, bylaws, or written materials distributed to new members or at organization meetings or events. Keep in mind that your hardcopy files may not be current, so you should verify with the SSO that you have the current version, including any updates, revisions, or supplements to the basic policy. The table on page 4 lists Web links to the IP policies of some of the more popular standard-setting organizations. At least one of these organizations is currently rewriting its policy as this article is being written.

Step 3: Understand the duty of disclosure. The purpose of many SSO policies is to ensure that the SSO membership can make informed decisions by knowing the landscape of rights that surround proposed standards. Therefore, one of the most basic obligations that may attach to participation in an SSO is the duty to inform the SSO of the IP rights you claim. These rules are designed to prevent a participant from promoting the adoption of the standard in order to reap licensing fees or damages after the fact from those that unsuspectingly adopt the standard.

Understand when the duty to disclose begins. The obligation to disclose intellectual property rights does not attach to patent holders who do not participate in an SSO. The duty to disclose must be connected to some affirmative action that the party takes in relation to a particular SSO, such as attending a conference, or proposing or voting on a standard.

Understand when the duty to disclose ends. Usually, the duty to disclose intellectual property rights co-terminates with a participant's involvement in an SSO. However, it may be inequitable for a participant to disassociate from an SSO at the time that the participant is required to disclose if the express purpose of the withdrawal is to avoid the duty of disclosure.

Understand to whom the duty to disclose applies. One of the aspects of SSO policies that can be most unclear is who has the duty to disclose. If specified, the most common answer is the organization that owns the rights. Others may require exclusive licensees or others who merely know of the rights to disclose them. A still more complex question is who within the organization is under the duty to disclose.

Understand how to disclose. It is important to know the mechanism for communicating the existence of IP rights. Some SSOs include disclosure forms with voting ballots, while others rely on participants to notify the group by making announcements at conferences.

Understand when to disclose. The method of communicating the disclosure often provides hints as to when the disclosure must occur. Most SSOs require disclosure before a standard is officially adopted, but there are various points in the standard adoption process where disclosures may be appropriately timed. The most aggressive policies request disclosure of related intellectual property rights owned by anyone when any member first proposes a standard.

Understand what data to disclose. For example, participants may be expected to answer a yes/no question, provide patent numbers, or explain on a form what aspects of the proposed standard may be covered by known IP.

Understand what IP rights are covered. It is most common to include patent rights, but some policies also cover copyrights and trademarks in what must be disclosed. Many SSOs require disclosure of only issued patents, but some also require the disclosure of pending applications as well.

Understand your duty to investigate. This is one of the most controversial aspects of patent policies. Most SSO policies require representatives to disclose just those rights of which they are already aware. A small minority of others requires representatives to undertake patent searches or otherwise become informed of their company's holdings. For those policies in the latter group, identify the specifics of the requirement, eg, who has to search and how often.

Understand the scope of the standard. The recent Rambus case indicates the disclosure requirement is only triggered for claims that “reasonably might be necessary to practice the standard.” As some commentators point out, this is a difficult threshold to determine in practice because opinions differ as to what claims are reasonably necessary to practice the standard.

Step 4: Understand the duty to license. Some SSOs will not adopt standards that are covered by known IP. Others merely require owners to agree to license their rights. The most common terms of licenses range from licenses at no cost to licenses granted on reasonable and nondiscriminatory terms. The terms may specify that licenses must be granted to SSO participants or to the public at large. Ideally, the terms of the license should be clearly outlined in the SSO policy. It is also important to learn how terms like “reasonable” and “nondiscriminatory” are interpreted. Some policies may also specify a resolution proceeding for license disputes, such as arbitration.

Monitoring Compliance with SSO Policies

Step 1: Educate key representatives to SSOs. In most instances, it is not enough for just patent counsel to be knowledgeable about the policies of SSOs in which a company participates. The representatives of the company attending the SSO meetings also need to understand the rules in order to play by them. By educating key representatives, they are empowered to help assure the company's compliance on an ongoing basis.

Step 2: Institute or revise any mandatory internal processes. Some responsibilities of participating in an SSO require changes to internal IP management procedures. For example, if an internal patent search is required, establish procedures for who will run the search, how it will be conducted, how often, and who will supervise its reporting and retention of the reporting document.

Step 3: Follow up periodically. Currently, many SSOs are revamping their IP policies. In the past, some SSOs have used informal or poorly articulated intellectual property policies to govern participants. In response to Rambus, numerous SSOs are strengthening and clarifying their intellectual property policies. Also, changes in representatives to SSOs and staffing of internal projects may cause disruptions to an otherwise smooth internal IP system. Periodic checkups may be needed to ensure the efficacy of the internal processes and overall compliance.

The above framework is intended to be a starting point for participants to learn their obligations under SSO policies and to take steps to comply with them. We recommend that in-house counsel take the time to reassess their responsibilities and ensure their compliance.

Some patent-owning companies choose to participate in standard-setting organizations (SSOs), such as the IEEE, IETF and ANSI. They do so for a variety of business reasons, including the opportunity to monitor industry trends and to influence technological advancement. However, the business advantages of participation must be balanced against its potential legal consequences to the company's IP rights. Accidental or premature disclosure, failure to disclose, and licensing and enforcement practices can lead to loss of patent and trade secret rights, equitable defenses for infringers, and antitrust concerns. The current litigation between Rambus and Infineon provides a cautionary tale for both SSOs and member companies of what can happen if a company participates in an SSO whose IP patent policy is not clearly defined. See, e.g., Rambus, Inc. v. Infineon Technologies AG , 164 F. Supp. 2d 743 (E.D. Va. 2001), aff'd in part, rev'd in part, and vacated in part , 318 Fed. 3d 1081 (Federal Circuit 2003). In order to avoid such losses, companies need to investigate the IP policies of the SSOs to which they belong and carefully assess and monitor their compliance with those policies.

Investigating SSO Policies

Step 1: Identify the SSOs to which your company belongs. Perform an audit and discuss with technical personnel whether your company participates in SSOs or consortia.

Step 2: Locate the SSO's current intellectual property policy. It is in the SSO's best interest to have its policy well known to its participants. Finding an SSO's intellectual property policy, if it exists, should not be difficult. Perhaps the easiest way is to look at an organization's Web site. Also look in any manuals, bylaws, or written materials distributed to new members or at organization meetings or events. Keep in mind that your hardcopy files may not be current, so you should verify with the SSO that you have the current version, including any updates, revisions, or supplements to the basic policy. The table on page 4 lists Web links to the IP policies of some of the more popular standard-setting organizations. At least one of these organizations is currently rewriting its policy as this article is being written.

Step 3: Understand the duty of disclosure. The purpose of many SSO policies is to ensure that the SSO membership can make informed decisions by knowing the landscape of rights that surround proposed standards. Therefore, one of the most basic obligations that may attach to participation in an SSO is the duty to inform the SSO of the IP rights you claim. These rules are designed to prevent a participant from promoting the adoption of the standard in order to reap licensing fees or damages after the fact from those that unsuspectingly adopt the standard.

Understand when the duty to disclose begins. The obligation to disclose intellectual property rights does not attach to patent holders who do not participate in an SSO. The duty to disclose must be connected to some affirmative action that the party takes in relation to a particular SSO, such as attending a conference, or proposing or voting on a standard.

Understand when the duty to disclose ends. Usually, the duty to disclose intellectual property rights co-terminates with a participant's involvement in an SSO. However, it may be inequitable for a participant to disassociate from an SSO at the time that the participant is required to disclose if the express purpose of the withdrawal is to avoid the duty of disclosure.

Understand to whom the duty to disclose applies. One of the aspects of SSO policies that can be most unclear is who has the duty to disclose. If specified, the most common answer is the organization that owns the rights. Others may require exclusive licensees or others who merely know of the rights to disclose them. A still more complex question is who within the organization is under the duty to disclose.

Understand how to disclose. It is important to know the mechanism for communicating the existence of IP rights. Some SSOs include disclosure forms with voting ballots, while others rely on participants to notify the group by making announcements at conferences.

Understand when to disclose. The method of communicating the disclosure often provides hints as to when the disclosure must occur. Most SSOs require disclosure before a standard is officially adopted, but there are various points in the standard adoption process where disclosures may be appropriately timed. The most aggressive policies request disclosure of related intellectual property rights owned by anyone when any member first proposes a standard.

Understand what data to disclose. For example, participants may be expected to answer a yes/no question, provide patent numbers, or explain on a form what aspects of the proposed standard may be covered by known IP.

Understand what IP rights are covered. It is most common to include patent rights, but some policies also cover copyrights and trademarks in what must be disclosed. Many SSOs require disclosure of only issued patents, but some also require the disclosure of pending applications as well.

Understand your duty to investigate. This is one of the most controversial aspects of patent policies. Most SSO policies require representatives to disclose just those rights of which they are already aware. A small minority of others requires representatives to undertake patent searches or otherwise become informed of their company's holdings. For those policies in the latter group, identify the specifics of the requirement, eg, who has to search and how often.

Understand the scope of the standard. The recent Rambus case indicates the disclosure requirement is only triggered for claims that “reasonably might be necessary to practice the standard.” As some commentators point out, this is a difficult threshold to determine in practice because opinions differ as to what claims are reasonably necessary to practice the standard.

Step 4: Understand the duty to license. Some SSOs will not adopt standards that are covered by known IP. Others merely require owners to agree to license their rights. The most common terms of licenses range from licenses at no cost to licenses granted on reasonable and nondiscriminatory terms. The terms may specify that licenses must be granted to SSO participants or to the public at large. Ideally, the terms of the license should be clearly outlined in the SSO policy. It is also important to learn how terms like “reasonable” and “nondiscriminatory” are interpreted. Some policies may also specify a resolution proceeding for license disputes, such as arbitration.

Monitoring Compliance with SSO Policies

Step 1: Educate key representatives to SSOs. In most instances, it is not enough for just patent counsel to be knowledgeable about the policies of SSOs in which a company participates. The representatives of the company attending the SSO meetings also need to understand the rules in order to play by them. By educating key representatives, they are empowered to help assure the company's compliance on an ongoing basis.

Step 2: Institute or revise any mandatory internal processes. Some responsibilities of participating in an SSO require changes to internal IP management procedures. For example, if an internal patent search is required, establish procedures for who will run the search, how it will be conducted, how often, and who will supervise its reporting and retention of the reporting document.

Step 3: Follow up periodically. Currently, many SSOs are revamping their IP policies. In the past, some SSOs have used informal or poorly articulated intellectual property policies to govern participants. In response to Rambus, numerous SSOs are strengthening and clarifying their intellectual property policies. Also, changes in representatives to SSOs and staffing of internal projects may cause disruptions to an otherwise smooth internal IP system. Periodic checkups may be needed to ensure the efficacy of the internal processes and overall compliance.

The above framework is intended to be a starting point for participants to learn their obligations under SSO policies and to take steps to comply with them. We recommend that in-house counsel take the time to reassess their responsibilities and ensure their compliance.