ITU Invites Tech Giants To Discuss Patent Crisis

Max ‘Beast from the East’ Smolaks covers open source, public sector, startups and technology of the future at TechWeekEurope.

If you find him looking lost on the streets of London, feed him coffee and sugar.

Follow on: Google +

Microsoft wants to fight patent “trolls” while Qualcomm denies the existence of patent warfare

This morning, a meeting in Geneva brought together regulators, researchers and representatives of the world’s largest technology companies to discuss whether the current patent system is fit for purpose.

The Patent Roundtable was organised by the International Telecommunication Union (ITU) – the UN agency responsible for regulating information and communication technologies and establishing worldwide standards.

The event participant list reads like a ‘Who’s Who’ of IT world and includes Apple, Nokia, Microsoft, Qualcomm, Cisco, Samsung, Google, Research in Motion, Intel, Philips, Huawei, Sony and Hewlett-Packard.

The meeting follows a string of widely criticised, high-profile patent lawsuits, such as Apple versus Samsung and Oracle versus Google.

Be reasonable

The main focus of the meeting at the ITU headquarters was on Fair, Reasonable And Non-Discriminatory (FRAND) licensing terms for standard-essential patents.

Patents, Law © Gor Shutterstock 2012“Firms benefit from having their ideas included in new standards, and in exchange for this, firms usually make a promise: that if they have any patents that are “essential” to implementing a standard, they will make these patents available to all,” explained Microsoft in its submission to the ITU.

The FRAND terms are meant to ensure that companies can use popular technology that consumers have come to expect, without paying excessive fees. Once a standard is widely adopted, companies often have no choice but to implement it in their products. However, many experts agree that recently, the standard-essential patents have been used to fight competitors and stifle innovation.

Even with FRAND patents, the organisation which developed the technology is able to impose its own licensing conditions. And when the companies can’t agree on a “reasonable” rate of payment, it often results in litigation, with patent holder demanding payment, and device manufacturers claiming that the licence wasn’t conforming to FRAND.

According to the BBC, several participants including Apple, Microsoft and Cisco used the meeting to call for a change in legislation that would make it impossible to apply sales bans as a punitive measure in standard-essential patent disputes.

“Any patent holder that promises to make its standard essential patents available on reasonable and nondiscriminatory terms should do just that,” wrote Microsoft. “That means that such patent holders should not seek to block shipments of competing products just because they implement an industry standard— a license on reasonable terms is always available.”

Microsoft has also suggested that when a patent holder sells its patents, it should contractually require the buyer to live up to FRAND terms.

All’s fair in love and war

However, other companies have defended the current patent system, saying that “patent wars” are a sign of a “vibrant and functioning market”. 

“Patent litigation as such is not a sign of market failure – rather it represents the only available remedy ultimately for IP holders to enforce their right to exclusivity or to compensation from unwilling licensees,” wrote Nokia in its submission.

Qualcomm was another participant which dismissed the talk of a patent crisis. According to the chipmaker, changing rules now would actually result in more court cases, as companies try to wiggle their way out of FRAND engagements.

“The available evidence compels the conclusion that existing [F]RAND-based licensing practices function precisely as intended and have permitted spectacular innovation and growth in the mobile communications industry,” says a statement from the company.

The session concluded with a confidential meeting, which was inaccessible to journalists. Analysts predict that it’s unlikely any change in legislation will be agreed upon today, but the roundtable might set the course for future patent law decisions.

Are you a patent expert? Take our quiz!