Antitrust Division Gives IEEE Standard Setters the Okay to Ask Patentees How RAND They Are

The policy of the IEEE has long been to avoid embodying patented technology in IEEE standards unless the technology would be made available to users of the standard on reasonable and nondiscriminatory (RAND) royalty terms and conditions. But a recurrent problem has been that, once a standard was in place, the patentee and the standard users would have different ideas about what was RAND. As explained in the background sidebar, the IEEE and other standard-setting organizations were afraid to demand advance notice from patentees of what the allegedly RAND terms would really be, lest the courts hold the organizations liable for engaging in a price-fixing cartel. This timorous policy met years of criticism, however, including a speech in which the Assistant Attorney General in charge of the Antitrust Division said, "It would be a strange result if antitrust policy is being used to prevent price competition," and in which he praised the European Union's intellectual property licensing guidelines for ruling that "firms normally should be allowed to negotiate royalty rates [during] a standard setting effort, as well as after a standard is set." In 2005, Hewlett-Packard made a formal proposal to IEEE patent policy officials that IEEE should change its policy to require that owners of patents that a proposed standard would involve must give a binding commitment on what they would demand as a "reasonable" royalty.