The proposed IEEE-SA Patent Policy changes
- have been advanced without respect for the IEEE and IEEE-SA’s foundational and core principles of consensus, due process, openness, and collaboration,
- profoundly upset the necessary balance between technology contributors and technology implementers by adopting a policy that is biased against firms that contribute technology to IEEE Standards, and
- pose significant reputational, technical, and other harms to the IEEE and will diminish the IEEE’s role as a source of innovation and technological advancement for the benefit of the general public welfare.
The IEEE Board of Directors should not approve these changes. Instead, the Board should direct the IEEE-SA to restart the process of reviewing the IEEE-SA Patent Policy to determine whether any changes are warranted in view of actual concrete problems in IEEE standardization activities and, if any problems do exist, what changes should be made. Such a review should be undertaken by a balanced group of stakeholders that respect consensus, due process, openness, and collaboration.
Starting in March 2013, the IEEE-SA Patent Committee (“PatCom”) undertook significant substantive changes to the IEEE-SA Patent Policy. PatCom did so by:
- Forming an Ad Hoc Committee but limiting participation to individuals with an established position of diminishing the rights of technology holders.
- Expressly rejecting requests to participate in the Ad Hoc Committee from individuals with contrary views.
- Refusing to justify why changes to the Patent Policy are needed and how the proposed changes would actually address any purported problems or improve standard-setting.
- Rejecting the fact that there exists no legal, regulatory, or economic requirement to make any changes to the Patent Policy, instead relying on vague and unidentified “concerns” of U.S. and European regulatory officials. Significantly, some U.S. and European regulators are now raising serious concerns regarding the proposed changes. In particular, the European Commission has questioned whether the IEEE-SA has satisfied important procedural safeguards during this process, and whether the resulting changes will benefit standardization.
Over approximately fifteen months, the Ad Hoc Committee published four versions of a revised Patent Policy for comment, but:
- The Ad Hoc Committee systematically rejected hundreds of substantive comments and objections to the proposed Patent Policy changes, often with rote, non-substantive explanations.
- The Ad Hoc Committee expressly disclaimed its obligation to respect consensus, and PatCom made no effort to move the comments and objections toward consensual resolution.
- Comments and objections to version 39, which is before the IEEE Board for consideration, have never been addressed or responded to.
- The Ad Hoc Committee’s deliberations of the comments and objections was closed.
- Notably, no substantive changes to the proposed Policy changes were made from the initial draft.
The IEEE-SA Board of Governors’ approval of the proposed Patent Policy changes occurred over the continuing stated objections of at least 15 major global technology companies that contribute significant technology to IEEE standardization activities.
In an effort to bring these events to the attention of the broader IEEE membership, Qualcomm created a paid advertisement for placement in the February 2015 issue of IEEE Spectrum magazine. The purpose of the ad was to alert members to what is at stake and direct them to this website to learn more. We submitted the ad to the magazine and on January 9, 2015, the IEEE legal and compliance department notified us that they refused to include it in Spectrum magazine or any other IEEE-owned digital media properties, noting among other things that IEEE felt it had already met its duty to bring this topic to the attention of the membership.
IEEE's reputation and future are on the line.Substantive Concerns with the Unbalanced Policy
The proposed changes to the IEEE-SA Patent Policy will undermine the success of IEEE Standards, which to date have been based on a balanced respect for the interests of both technology contributors and implementers. The proposed changes will advance the interests of implementers at the expense of technology contributors by artificially reducing the value of standard-essential patents (SEPs) below market-based levels. This will result from:
- Creating unworkable rules that will exacerbate litigation over SEPs.
- Defining a “reasonable” royalty using controversial and unworkable valuation methodologies—including tying a royalty rate to the “smallest saleable component” of a standard-compliant device—all of which are intended to minimize licensing fees for SEPs. The European Commission has voiced its concern that the significant and far-reaching effects of this proposed provision should be carefully examined.
- Severely limiting injunctive relief available to SEP owners, requiring them to engage in costly multiyear litigation against infringers who refuse to license an SEP on reasonable and nondiscriminatory terms, providing them an advantage over their competitors who are licensed.
- Limiting consideration of market-based evidence and factors for determining whether a license offer is reasonable and nondiscriminatory, in contrast to the current IEEE-SA Patent Policy and industry practice.
If approved, the revised Patent Policy will:
- Erode the IEEE’s reputation as an organization that represents and respects the interests of all its stakeholders, rather than the commercial interests of those who can take control over and manipulate IEEE processes to their advantage.
- Lead to lesser quality IEEE Standards due to reduced incentives for technology owners to invent, develop, and contribute technology to IEEE Standards, leading to qualitatively inferior and more costly standardized products.
- Invite further legal or regulatory scrutiny, as evidenced by the European Commission’s recent letter raising concerns about the IEEE-SA’s actions.
- Risk potential loss of the IEEE’s tax-exempt status under Section 501(c)(3) of the IRS Code, due to the promotion of private commercial interests rather than broad technical and scientific advancement for the benefit of the general public.