The effect of industry standard setting on patent licensing and enforcement

Patent policies issued by standard-setting organizations help resolve the tension between enforcing patent rights and adopting open standards. In this article we examine the application of these policies to patent licensing and enforcement situations. An industry standard consists of a specified set of technologies adopted by an industry group in order to effect compatibility among products. The tension between enforcing proprietary intellectual property rights and adopting open industry standards has become a central issue for standards-setting bodies as well as the courts called on to enforce patent rights. As patent rights become more and more prominent in the global economy, the issues presented by the incorporation of patented technology into standards have become increasingly important. The ideal of open, widely promulgated standards is at odds with a patent owner's right to exclude others from making, using, or selling the patented invention. The ability of an industry member to exclude others from practicing a standard by asserting a patent that covers the standard would serve to undermine rapid and widespread adoption of the standard, resulting in reduced value of the standard. To prevent this situation, standard-setting organizations have developed patent policies that require their members to disclose intellectual property that may impact a proposed standard. Furthermore, patent owners are required to either forgo enforcement of patent rights against standard users, or promise to license their patents to all comers at a fair, reasonable, nondiscriminatory rate. Such a policy resolves many of the tensions between proprietary technology and the desire for an open, widely practiced standard. However, the implementation of such a policy is not as straightforward as may at first appear.