In recent years, lawsuits involving standards-essential patents (SEPs) have made headlines around the world, fueling a heated public debate regarding the role and impact of SEPs covering key interoperability standards. Enforcement agencies in the U.S., Europe and Asia have prosecuted alleged violations of competition law and private licensing commitments in connection with SEPs. But while this debate has broadly targeted standardization and patents in the information and communications technology (ICT) sector, regulators and commentators have paid little attention to differences among market segments within ICT.
Yet even a cursory look reveals that significant differences exist among these segments. In a recent article, I observe that patent litigation activity is substantially lower for Internet-related standards than for standards relating to telecommunications and other computing technologies. To begin to explain this disparity, I look to historical and social factors that characterize these different “layers” within the technology infrastructure. On one hand, standardization in the telecommunications sector began not as a cooperative effort among firms, but as a (largely successful) attempt by national telephone monopolies to exert and perpetuate control over the industry. As described by historian Andrew Russell, AT&T standardized many aspects of the U.S. telephony system to ensure that it could obtain a consistent and reliable supply of components from subcontracted manufacturers and to enable local telephone exchanges to connect to its long-haul lines and squelch competition in the long distance market. Other national operators in Europe and Asia exerted similar levels of control. With the advent of wireless telecommunications standardization in the 1990s, the same market players continued to emphasize proprietary and patent-heavy solutions to increasingly daunting technical challenges.
Internet standards, on the other hand, originated from early governmental and academic projects that had little interest in patenting. The original ethos and principles that motivated the researchers who developed the ARPANET in the 1960s and 1970s continue to guide groups such as the Internet Engineering Task Force (IETF) and the World Wide Web Consortium (W3C). These groups, while today dominated by commercial interests, adhere to norms such as Dave Clark’s 1992 maxim: “We reject: kings, presidents and voting. We believe in: rough consensus and running code,” exemplified by IETF’s famous consensus by ‘hum’. Unlike the situation in telecom-oriented groups, patents have been de-emphasized at both IETF and W3C, leading to many key standards that are licensed on a royalty-free (RF) basis, either by design or through industry practice. Nevertheless, these groups have remained successful in advancing and maintaining key standards such as IPv6, HTTP, HTML and their many variants and progeny, as well as standards that will be critical to the Internet of Things and other emerging fields. It is no exaggeration to say that the modern technology infrastructure would not exist but for the efforts of these groups, a development that the late Suzanne Scotchmer called “one of the most fortunate accidents in industrial history.”
The contrast between telecommunications and Internet standardization casts doubt on the dominant narrative that standards and SEPs are fraught with litigation and thereby necessitate radical systemic change. Instead, it shows that standards policies and practices that de-emphasize patent monetization may lead to lower levels of disputes and litigation, while still producing complex, widely-adopted and technologically necessary standards. Industry participants and policy makers would thus be wise to look to the successful evolution of Internet standardization when considering rules and policies for the technologies of the future.
Jorge L. Contreras* teaches in the areas of intellectual property, law and science, and property law. He is the recipient of the Early Career Teaching Award at the College of Law and serves on the Scientific Advisory Board of the Utah Genome Project.
* Mr. Contreras is a guest blogger and his views do not necessarily reflect All Things Frand or its members companies.