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Amy MarascoGeneral Manager, Standards StrategyMicrosoft Corporation
Amy MarascoGeneral Manager, Standards StrategyMicrosoft Corporation
Standards-Setting,IPR Policies and
Stakeholder Considerations
Standards-Setting,IPR Policies and
Stakeholder Considerations
2
Stakeholder Considerations ofStandardization Benefits/CostsStakeholder Considerations ofStakeholder Considerations ofStandardization Benefits/CostsStandardization Benefits/Costs
BenefitsFacilitate interoperabilitySimplify development – maximize efficiencies, reducecostsBusiness development opportunities
CostsResource drainIPR licensing considerationsImplementation issues with evolving specificationsLoss of opportunity to differentiate (if over-standardization)Legal obligation and liability
BenefitsFacilitate interoperabilitySimplify development – maximize efficiencies, reducecostsBusiness development opportunities
CostsResource drainIPR licensing considerationsImplementation issues with evolving specificationsLoss of opportunity to differentiate (if over-standardization)Legal obligation and liability
Standards @ MicrosoftStandards @ Microsoft
DHCP
TCP/IP
DNSIPX802.1x
EAP PEAP
PKI
KerberosSSL
RADIUS
L2TPIPSEC VPN
LDAP
UDDI
HTTP
BPEL4WS
ActiveSync
WAP
SMTP
XML
WS-IWBEM
CIM SNMP
WSDL
POP3POP3 FTPFTPSIPSIP NNTPNNTP
LDAP v3LDAP v3
Unicode 3.0
SOCKSSOCKS
IMAP4IMAP4
SMBSMB
AppleTalkAppleTalkSOAP
SQL
•• MS ships >500 productsMS ships >500 products
•• >400 annual engagements>400 annual engagements
•• Thousands of standards supportedThousands of standards supported
•• Hundreds of employees inHundreds of employees instandards setting activitiesstandards setting activities
•• Thousands of employees inThousands of employees instandards implementation activitiesstandards implementation activities
•• Global standards engagements viaGlobal standards engagements viaCountry Offices (character sets,Country Offices (character sets,broadcasting, verticals etc.)broadcasting, verticals etc.)
•• SIGsSIGs, Consortia, National, Consortia, National SSOsSSOs,,InternationalInternational SSOsSSOs
USB
JPEGJPEG
Examples ofStandards BodiesWhere WeParticipate
Examples ofStandards BodiesWhere WeParticipate
Microsoft participates inhundreds of standardsbodiesThe different Microsoftbusiness groups takeresponsibility for thecompany’s participation atstandards bodies thatprimarily impact the workof that particular groupThese are examples ofstandards bodies whereour participation impactsthe company acrossdifferent business groups
Microsoft participates inhundreds of standardsbodiesThe different Microsoftbusiness groups takeresponsibility for thecompany’s participation atstandards bodies thatprimarily impact the workof that particular groupThese are examples ofstandards bodies whereour participation impactsthe company acrossdifferent business groups
Goals of a Successful StandardsDevelopment EffortGoals of a Successful StandardsDevelopment Effort
Sound TechnologySound TechnologyChoicesChoices
MarketMarketAdoptionAdoption
Balanced Processes andBalanced Processes andPoliciesPolicies
IPR Policies Should Promote BroadParticipationIPR Policies Should Promote BroadParticipation
Standards patent policies must balance theinterests of both technical contributors and usersPolicies should promote broad participation bystakeholders
Encourage best technical solutionsEncourage IPR to be made available to allimplementers
Onerous policies inhibit participationOverly broad disclosure/licensing requirementsRequirements for patent searchesMandatory compensation-free licensing commitments
Essential patent claims should be available to allimplementers under reasonable licensing terms
Standards patent policies must balance theinterests of both technical contributors and usersPolicies should promote broad participation bystakeholders
Encourage best technical solutionsEncourage IPR to be made available to allimplementers
Onerous policies inhibit participationOverly broad disclosure/licensing requirementsRequirements for patent searchesMandatory compensation-free licensing commitments
Essential patent claims should be available to allimplementers under reasonable licensing terms
6
7
“Ex Ante” Proposal“Ex Ante” ProposalCompanies always have had opportunity for“ex ante” disclosure of licensing terms onbilateral basisVoluntary “ex ante” disclosure of terms to thestandards body widely supportedProposal is to require disclosure of licensingterms to the standards body and permit groupnegotiations of licensing terms
Goal is to prevent patent holders from “holdingup” implementersBut how often does that occur?
Does the proposal create more problemsthan it solves?
Different stakeholder views
Companies always have had opportunity for“ex ante” disclosure of licensing terms onbilateral basisVoluntary “ex ante” disclosure of terms to thestandards body widely supportedProposal is to require disclosure of licensingterms to the standards body and permit groupnegotiations of licensing terms
Goal is to prevent patent holders from “holdingup” implementersBut how often does that occur?
Does the proposal create more problemsthan it solves?
Different stakeholder views
“Ex Ante” Proposal“Ex Ante” ProposalMany legal and practical issues
How valuable is the information to thecommittee as a group?
Technical decisions often not based on a choiceamong equal alternativesAlmost no licensees want a license for justessential patent claims
A prospective implementer that has requested a licensewill negotiate on a private bilateral basis with the patentowner to determine whether they can arrive at a mutuallyacceptable agreement on RAND termsUsually will include non-essential patent claims that coverthe implementer’s entire commercial productMay include other business dealings between the parties,such as distribution agreements, co-branding agreements,cross-licenses involving other technologies
Typically no two licenses will be identical
Many legal and practical issuesHow valuable is the information to thecommittee as a group?
Technical decisions often not based on a choiceamong equal alternativesAlmost no licensees want a license for justessential patent claims
A prospective implementer that has requested a licensewill negotiate on a private bilateral basis with the patentowner to determine whether they can arrive at a mutuallyacceptable agreement on RAND termsUsually will include non-essential patent claims that coverthe implementer’s entire commercial productMay include other business dealings between the parties,such as distribution agreements, co-branding agreements,cross-licenses involving other technologies
Typically no two licenses will be identical 8
“Ex Ante” Proposal“Ex Ante” Proposal
Litigation and antitrust concerns?Possible buyer cartel and group boycottconduct
Practical delays?Technical committees make hundreds oftechnical decisionsTechnical committees populated by engineers
Impact on participation and incentives toinnovate?
Litigation and antitrust concerns?Possible buyer cartel and group boycottconduct
Practical delays?Technical committees make hundreds oftechnical decisionsTechnical committees populated by engineers
Impact on participation and incentives toinnovate?
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Definitions of “Open Standards”Definitions of “Open Standards”Traditional definition of an “open standard”(examples: Global Standards Collaboration, ITU-T, ANSI, TIA)
Standards developed or ratified through an open,consensus process
Covered by an open and transparent IPR policyContributors license essential IPRs toimplementers on Reasonable and Non-Discriminatory (RAND) terms (with or withoutroyalties/fees)
GSCResolution GSC‐12/05: (Opening Session) Open Standards ‐www.gsc.etsi.orgITU‐T –http://www.itu.int/ITU‐T/othergroups/ipr‐adhoc/openstandards.html;American National Standards Institute (ANSI) –http://publicaa.ansi.org/sites/apdl/Documents/Standards%20Activities/Critical%20Issues%20Papers/Griffin%20‐%20Open%20Standards%20‐
%2005‐05.doc
Traditional definition of an “open standard”(examples: Global Standards Collaboration, ITU-T, ANSI, TIA)
Standards developed or ratified through an open,Standards developed or ratified through an open,consensus processconsensus process
Covered by an open and transparent IPR policyContributors license essential IPRs toimplementers on Reasonable and Non-Discriminatory (RAND) terms (with or withoutroyalties/fees)
GSCResolution GSC‐12/05: (Opening Session) Open Standards ‐www.gsc.etsi.orgITU‐T –http://www.itu.int/ITU‐T/othergroups/ipr‐adhoc/openstandards.html;American National Standards Institute (ANSI) –http://publicaa.ansi.org/sites/apdl/Documents/Standards%20Activities/Critical%20Issues%20Papers/Griffin%20‐%20Open%20Standards%20‐
%2005‐05.doc 10
“Open Standards”“Open Standards”ISO, IEC, ITU approved a joint patent policy inFebruary, 2007
Requests patent holders to disclose whether theywill license their essential patent claims on RAND(with or without royalties/fees) or whether they arenot willing to provide RAND licenses
New possible definitions are causing confusion“Free to implement” – no royalty
Very few standards bodies mandate a RAND-Z(RAND terms but with zero royalty) approachAll essential patent claims may not be covered bysuch a policy
“Free to use freely”No standards meet this definition
No standards organization today requires that patentholders must waive most RAND terms
ISO, IEC, ITU approved a joint patent policy inFebruary, 2007
Requests patent holders to disclose whether theywill license their essential patent claims on RAND(with or without royalties/fees) or whether they arenot willing to provide RAND licenses
New possible definitions are causing confusion“Free to implement” – no royalty
Very few standards bodies mandate a RAND-Z(RAND terms but with zero royalty) approachAll essential patent claims may not be covered bysuch a policy
“Free to use freely”No standards meet this definition
No standards organization today requires that patentholders must waive most RAND terms 11
“Open Standard”“Open Standard”Possible negative effects of new definitions:
Fewer contributions to standards bodiesLess innovation in technology areas subject tostandardization
Confusion between “open standards” with“open source software” should be avoided
See TIA paper athttp://www.tiaonline.org/standards/about/documents/TIA-IPR_20080620-003_TIA_OPEN_STANDARDS-CLEAN_R4.pdf
Possible negative effects of new definitions:Fewer contributions to standards bodiesLess innovation in technology areas subject tostandardization
Confusion between “open standards” with“open source software” should be avoided
See TIA paper athttp://www.tiaonline.org/standards/about/documents/TIA-IPR_20080620-003_TIA_OPEN_STANDARDS-CLEAN_R4.pdf
12
Business Models Impact IPR PositionBusiness Models Impact IPR Position
More incentive forIPR to be morefreely available
More incentive tohave IPR respected
Components orProducts
Components orProducts
Services orConsultingServices orConsulting
Open Source is not a Business ModelOpen Source is not a Business Model
“Open source is not a business model. It is a development anddistribution model that is enabled by a licensing tactic. Vendors thatbuild revenue streams around open source software for the most partdo not choose between open source and proprietary development andlicensing; they choose business strategies that attempt to make the
best use of both open source and proprietary development andlicensing models in order to maximize their opportunities for
generating revenue and profit.”
“Open source is not a business model. It is a development anddistribution model that is enabled by a licensing tactic. Vendors thatbuild revenue streams around open source software for the most partdo not choose between open source and proprietary development andlicensing; they choose business strategies that attempt to make the
best use of both open source and proprietary development andlicensing models in order to maximize their opportunities for
generating revenue and profit.”
The 451 Group Report: Open Source is Not a Business Modelhttp://451group.com
“Customers must ensure that they are aware of vendors’strategies so they can understand and predict the behavior
of vendors encouraging them to become payingcustomers.”
ConclusionConclusionAs a stakeholder:
There are many different factors to weigh whendeciding whether to participate in a standardsactivity
Some are:Scope of workImportance of the activity to the business groupStandards body procedures and policiesCosts and resources required
Broader policy issues may impact decisionOnce a decision is made to participate, then theparticipation itself must be staffed
Appropriate internal coordination must beconsidered
As a stakeholder:There are many different factors to weigh whendeciding whether to participate in a standardsactivity
Some are:Scope of workImportance of the activity to the business groupStandards body procedures and policiesCosts and resources required
Broader policy issues may impact decisionOnce a decision is made to participate, then theparticipation itself must be staffed
Appropriate internal coordination must beconsidered 15