The Internet of Things (IoT) requires seamless interconnectivity among hardware and software products which can only be achieved through technological standards like WiFi, LTE, Bluetooth, etc. However, it is up to regulatory bodies to ensure that standards’ holders do not exploit their unearned market power to overcharge licensees, ACT | The App Association described in comments to the National Telecommunications and Information Association (NTIA) on June 2, 2016, in response to a request for public comment titled The Benefits, Challenges, and Potential Roles for the Government in Fostering the Advancement of the Internet of Things.
While we addressed a wide array of issues impacting the IoT, notably in this filing ACT highlighted the importance of technical standards in the rise of the IoT. More specifically, because of the inherent market power that holders of standards-essential patents - patents in these technical standards so integral to use of the standard that one must use the patent to implement the standard - hold, these SDOs typically require such SEP holders to license their patents on fair, reasonable and non-discriminatory (FRAND) terms. Because FRAND obligations underlie reasonable access to these increasingly important standards, the integrity and reliability of these promises are themselves crucial to innovation and the rise of the IoT. If reneging on FRAND commitments through anti-competetive and abusive behavior is allowed to go unchecked, access to standards will become increasingly difficult, SDOs will be undermined, and competition and innovation will be severely impacted.
Today, a subset of FRAND-committed standard-essential patent (SEP) holders are abusing their position and imposing unfair, unreasonable or discriminatory patent licensing practices. Yet, there has been little enforcement or punishment for these actions. As we discuss in our IoT-themed filing, it is time for the NTIA and the U.S. Department of Commerce to establish the role the U.S. government plays enforcing the responsibilities of SEPs to enable IoT to reach its full potential.
I urge you to view ACT’s full comments submitted to NTIA, which can be found here.