Wednesday 27 September 2017

Development of innovative new standards jeopardised by IEEE patent policy

I recently wrote a paper for 4iP Council about the effect of the Institute of Electrical and Electronics Engineers' (IEEE) 2015 patent patent policy change on submissions of Letters of Assurance (LOAs) indicating whether patents are pledged to the new policy. In this, I have reviewed some third-party analysis on adoption of the new patent policy and LOAs. And, I have also included my own analysis of LOA data available from IEEE. The summary of my paper is reproduced below with some updated figures from one third-party analyst and with the addition of an IEEE logo:

Development of innovative new standards jeopardised by IEEE patent policy

In March 2015, IEEE significantly amended its patent policy in what was couched as an “update” but that seeks to significantly revise commitments from parties holding patent claims essential to IEEE standards to license those rights on reasonable and non-discriminatory (RAND) terms. Changes disallow patent holders from receiving any value attributable to the standards, require licensing at the smallest saleable patent practicing unit level, and deny these rights holders entitlement to seek an injunction against an unlicensed implementer until appellate review is exhausted.  IEEE’s stated objective was to protect implementers from patent holdup, which was alleged without any substantiation.[1]  IEEE is promoting, by reducing technology licensing costs, the short-term interests of certain implementers while undermining standard-essential patent values and the ability of SEP owners to receive adequate compensation, they are entitled to, from licensing their SEPs.

As I predicted in the IP Finance blog prior to the adoption of this controversial new patent policy,[2] and as indicated by others including senior government officials,[3]  the purported “clarification” is significantly jeopardising the IEEE Standards Association as a venue for development of open technology standards that include significant patented intellectual property. Large proportions of contributors to IEEE standards are now unwilling to provide “positive” Letters of Assurance (“LOAs”) under IEEE’s new patent policy.

In this paper, I have reviewed available data on LOAs and some third-party analysis of this. My conclusions are striking: almost three quarters (i.e. 73 percent) of LOAs for the IEEE flagship 802.11 WiFi standard, accepted by IEEE and posted on its website in the 18-month period to June 2017, are “negative” LOAs, indicating the submitter’s legitimate ex ante refusal to pledge RAND licensing under the new patent policy. Nearly half (i.e. 47 percent) of all accepted LOAs posted on the IEEE website over the same period are negative LOAs. More than one third (i.e. 42 percent) of companies portrayed as leaders with LOAs to IEEE standards are unwilling to pledge their SEPs under the new patent policy or have not provided LOAs when asked to do so.

The new patent policy has created a perverse situation among patent owners and implementers.  In the absence of positive LOAs, implementers are left uncertain about which patent policy applies, if any, and about future ability to implement the standard. Therefore, implementers may be unclear whether many SEPs are subject to new licensing terms, the old licensing terms or are not subject to RAND licensing terms under any patent policy at all. This is unacceptable. Proponents of the new patent policy are also lamenting this lack of clarity, while trying to use this as a pretext to breach binding contractual agreements between IEEE and patent owners in previously-accepted LOAs.[4]

Chart 1: More than one third (10/24=42%) of companies IPlytics portrays as leaders with LOAs to IEEE standards are unwilling to pledge their SEPs under the new patent policy or have not provided LOAs when asked to do so
Source: IPlytics empirical study report on patenting and standardisation activities at IEEE[5] (black and green); WiseHarbor added Chart titles in bold black, identifiers and annotations in other colours.
Orange is the successor to France Telecom.
“Not applicable:” Positive blanket LOA accepted prior to March 2015 under previous patent policy.

Approvals for “standard-amendments” 802.11ah and 802.11ah deferred with policy impasse

There is deadlock between the two sides of this argument – largely, patent owners who seek adequate compensation from licensing their SEPs versus some implementers[6] who would like to minimise their costs. Despite attempts by advocates of the new patent policy text to portray IEEE standardization work as continuing to proceed well, to the contrary, this is an illusion with unreconciled differences regarding applicable patent policy and LOAs. Previous attempts to significantly undermine rights of patent owners in other standard development organizations (SDOs) have failed: for example; with an intellectual property rights (IPR) policy change at ETSI in the 1990s that was abandoned before taking effect.

Unwillingness of SEP holders to pledge to the new patent policy are delaying standardization approval decisions. IEEE seeks to approve standards for which all known SEPs are pledged under the new patent policy with accepted IEEE LOA forms. But it is failing in this objective with an unprecedented high number of negative LOAs submitted and because LOAs requested from others are not forthcoming and should therefore be regarded as “missing.” Negative LOAs that have been accepted by IEEE are, for example, with standard-amendments 802.11ai and 802.11ah. However, numerous other prospective negative LOAs have been rejected by IEEE because patent owners have sought to indicate – and IEEE has refused to allow – willingness to license on a basis other than the new patent policy, such as on the basis of the previous IEEE patent policy. With numerous known SEPs for which there are no licensing commitments, the above amendments to the 802.11 standard have only been “conditionally approve[d]” by the IEEE-SA’s Standards Board.[7] 

Conditional approvals are merely deferral tactics because there can be no reasonable expectation that the LOA conditions preventing full approval with the new patent policy will ever be met. Patent holders who have submitted negative LOAs are not going to change their minds and replace them with positive LOAs in the prevailing circumstances. Similarly, it seems very unlikely that those who acknowledge receipt of a request for an LOA but refuse to submit a positive LOA are likely to change their minds about doing so and submit a positive LOA.  Deferring full approval until these two amendments are rolled up into the next version of the entire standard (i.e. 802.11/D10) amounts to “kicking the can down the road.” [8]

This impasse has occurred because many contributors to IEEE standards are, independently of each other, unwilling to pledge assurances under the new patent policy, which was established without consensus[9] among a closed group of interested parties. The new patent policy text is purported to be a “clarification” of existing patent policy and not a new patent policy — begging the question why many of the new positive LOAs submitted merely restate previous LOAs already-submitted pursuant to the previous patent policy needed to be submitted at all. It is, instead, increasingly creating ambiguities and concerns that courts might interpret new conditions as mandatory. Many patent owners are unwilling to agree to the new patent policy because being bound by it could undermine their licensing businesses — including pre-existing agreements.

Adjusted LOA counts have reduced dramatically since introduction of new patent policy

The counts of submitted LOAs have been misleadingly presented to suggest that the new patent policy is having no overall adverse effect on licensing commitments. The numbers of accepted LOAs since the patent policy change have been inflated by a large proportion of “duplicate” LOAs (resubmissions of LOAs for standards for which there are already existing LOAs) that are not required by IEEE bylaws. Instead, after some well-justified adjustments to LOA counts for these and for negative LOAs and “missing” LOAs (in cases where IEEE sought from a disclosed essential patent holder, but did not receive, an accepted LOA), figures indicate that LOAs are dramatically and statistically significantly lower since the patent policy change. This indicates major adverse effects.

Chart 2: Rejection of IEEE’s new patent policy is indicated by dramatic fall in positive LOAs[10]

Continuing activity in technical working groups, for now, is no assurance this will persist

Technical working group activity is continuing while participating companies wait to see if conflicts will be resolved so that new standards, as well as improvements and amendments to existing standards, will be approved. However, any suggestions that the continuing rate of Project Authorization Requests (PARs) — to commit IEEE-SA resources to new standard-development work — indicate that all is well in IEEE standardisation are phoney. Many IEEE projects do not include many, or even any, patented technologies: so, these might be unaffected by difficulties with the new patent policy. The standards that provide significant innovative value beyond compatibility are rich in patented technologies. LOAs identify these patents, their ownership, and the basis upon which they can be licensed. For those standardisation projects that include significant patented technologies, it is what is occurring with LOAs, rather that PARs, that spells trouble.

It could be several years before it is evident how much IEEE standardisation has been harmed. For example, clarity (to implementers, in particular) could be rapidly restored by allowing patent owners optionally to indicate their willingness to license based on the old patent policy. Meanwhile, IEEE standardisation work including supporting R&D and product implementation will suffer as participants consider switching to other SDOs. By then it could be too late to fix things.

The whole story

My entire paper can be accessed from 4iP Council's web site, here. Since its publication this month, Ron Katznelson has updated his analysis to 20th September 2017, here, as also reflected in my summary for IP Finance, above.

[2] Keith Mallinson: IEEE will jeopardise its attractiveness as venue for standards development if proposed new IP policies are adopted, February 6, 2015;
[3] See e.g. Former Rep. Terry Lee, Don’t turn off Wi-FI (January 8, 2015), available at; Adam Mossoff, Reality Check: Weakening Wireless Technology Patents Hurts Everyone (RCR Wireless News, January 28, 2015) available at; Leah Nylen and Lewis Crofts, EU Warns of Impact of IEEE’s Patent Policy Change (MLex, January 27, 2015); U.S. Senator Christopher Coons letter to U.S. Department of Justice (14 January 2015) available at    
[6] This paper’s author recognises that a large proportion of implementers are also patent owners.
[8]Put off confronting a difficult issue or making an important decision, typically on a continuing basis.” Oxford Living Dictionaries.
[9] To mask it, in the fall of 2014, the IEEE-SA removed the most-prominent indication of its previously long-standing principles of consensus, due process and openness from its website.  See comparative website snapshots versus new page:
[10] Standard Essential Patents – the empirical record since adoption. Symposium on Antitrust, Standard Essential Patents, and the Fallacy of the Anticommons Tragedy, Berkeley, CA. October 29, 2016. [Updated March, 2017 in my full report and, again, to September 2017 in this summary for IP Finance] Ron D. Katznelson, Ph.D.*

Tuesday 26 September 2017

The Deft Touch: Humor to Protect Trademarks

As every competent trademark attorney knows: beware sending a cease and desist letter.  There are many strategic reasons for care: forum selection; admitting a likelihood of confusion; and souring a potential profitable commercial relationship.  One important consideration is appearing to be a “trademark bully” with an overreaching claim—particularly against a small company and when free speech interests may be involved.  In the days of the Internet, you don't want your client portrayed as a "bully."  Some of my favorite cease and desist letters, include the Jack Daniels cease and desist letter and the recent Netflix cease and desist letter.  The recent (relatively hilarious) video by Velcro is perhaps the funniest educational video about genericide and a brand I’ve seen.  It is truly worth a watch.  I do have to say that I didn’t even know Velcro was a brand until now.  My apologies for my poor trademark usage.   

Monday 25 September 2017

New OxFirst webinar to share wisdom on IP valuation

IP Finance friend OxFirst Ltd is putting on another of its excellent webinar programs, this time on the topic--"Embracing the IP Valuation Universe”. CDP- Accredited, the Webinar will take place on October 4, 2017 - 15.00 BST = 16.00 CET - 09:00 CDT. The speaker will be Dominika Boehm, Senior IP Counsel Siemens AG. She will address that most basic yet analytically elusive of IP topics-- IP valuation, providing fresh insights into how it impacts at the core of the sale of IP rights, licensing transactions and litigation.

Dominika Boehm works in the Licensing and Transactions department at Siemens AG, where she is responsible for conducting monetary valuations of intellectual property and counseling and consulting internals stakeholders on various IP valuation topics. She is currently coordinating a task force on IP valuation and monetization at the International Chamber of Commerce. She also coordinated a group of professionals with respect to the sub-section “Valuation and Monetization of intellectual property assets” for the newly prepared edition of the ICC 2017 IP Roadmap.

OxFirst advises that to join this module, one will need to please purchase a £10 pass from the link below.Upon receipt of payment, OxFirst we will send you the necessary login information via email.

Here's the link--

Wednesday 20 September 2017

Congratulations Jeremy Phillips!

Jeremy Phillips, the founder of the IP Finance Blog among many other blogs, was awarded the David Goldring Volunteer Award from Marques.  The Marques website describes the award:

David Goldring was instrumental in the launch of MARQUES, having been involved from the very start and participating in the steering committee that discussed the setting up of an association of trade mark owners in 1984.

A UK and European trade mark attorney, he held a law degree from University College, London and originally worked in-house for Allied Lyons, an FMCG company.

In 1991, he became head of UK operations for the Novagraaf Group (J.E. Evans-Jackson & Co) and in 2010, he set up his own firm, Oakleigh IP Services.

David joined the MARQUES Council in 1996 and in June 2003 was appointed Treasurer. He played a pivotal role not just in managing the Association’s finances and budget, but also in planning and researching the Annual Conferences. David was instrumental in almost all aspects of the development of MARQUES and the recognition which MARQUES enjoys today is traceable to his guidance.

David’s attendance and participation at MARQUES was exceptional, only missing one Annual Conference in thirty years. A very down-to-earth man, David particularly enjoyed engaging in debates with established friends and was always keen to welcome new delegates.

David sadly passed away on 28th June 2016. In honour of his dedication to MARQUES and huge contribution to the organisation over the years, the David Goldring Volunteer award was inaugurated and was presented to his wife Delia (Dee) Goldring at the Annual meeting in September 2016 in Villaitana.

Congratulations Jeremy!  We miss you and hope you are enjoying your retirement!  The Marques Class 46 blog has more information as does the JIPLP blog. 

Friday 15 September 2017

Gaming Amazon Using Fake IP Claims for Competitive Advantage

CNBC has published an interesting article about fake IP claims on Amazon titled, "Amazon was Tricked by Fake Law Firm Into Removing a Hot Product, Costing This Seller $200,000."  The article alleges that competitors of sellers on Amazon are filing fake intellectual property complaints against sellers resulting in Amazon's immediate take-down of their product or service.  These claims appear to be timed before big sales days and at very profitable products.  Interestingly, part of the problem is that Amazon is overwhelmed with complaints and apparently doesn't have the time to review the claims carefully.  My guess is that the software Amazon uses to police and handle claims is not able to discern fake and legitimate complaints well.  Perhaps better software is the answer.  I am hopeful that some Internet companies that rely on software will hire more people instead to handle these complaints.  Because Amazon controls the platform and sellers make so much money using it, I doubt many sellers will push Amazon too hard.  Although continued complaints and lost sales may open the door for a competitor to Amazon, which may be a good thing.  

U.S. Copyright Office Releases Database Concerning Its Views

The U.S. Copyright Office has released a new publicly accessible database of information concerning copyright matters.  The database contains amicus briefs filed by the U.S. Department of Justice with Copyright Office assistance, Register of Copyright Review and Questions concerning Royalty Board decisions, filings by the Copyright Office in civil actions in which they have an interest, and Copyright Office Review Board decisions since April 2016.  The Copyright Office notice concerning the database states:

Under the Copyright Act, the Copyright Office is responsible for advising the courts on issues of copyright law. This advice manifests itself in many forms. For instance, based on advice received from the Office, the Department of Justice files briefs in federal court on behalf of the federal government on issues of copyright law. In addition, the Copyright Office issues binding opinions on questions of copyright law to the Copyright Royalty Board.

These briefs and legal opinions are valuable resources for those seeking to understand the Copyright Office’s view of copyright law. Today, for the first time, the Copyright Office has published at one place on its website an archive of these briefs and legal opinions. The Office plans to periodically update this archive with new documents and any older documents it discovers.

Wednesday 13 September 2017

Gaming IP: Smart or Damaging the Entire System

Here is an interesting case of gaming the IP system.  I believe this type of tactic hurts the IP system as whole even if we may disagree about the need for reforms. 

The New York Times has an informative article titled, “How to Protect a Drug Patent?  Give It to a Native American Tribe.”  The article describes how Allergen, the pharmaceutical company:

will pay the [Native American] tribe $13.75 million. In exchange, the tribe will claim sovereign immunity as grounds to dismiss a patent challenge through a unit of the United States Patent and Trademark Office. The tribe will lease the patents back to Allergan, and will receive $15 million in annual royalties as long as the patents remain valid.

As discussed in the article, this is apparently a strategy to protect the patents from Inter Partes Review Proceedings at the United States Patent and Trademark Office.  As discussed in other posts, public universities have successfully claimed sovereign immunity under the 11th amendment of the U.S. Constitution from IPR Proceedings.  I doubt this strategy will last long.  I can understand how Allergen may think this may play well with the public because Native American tribes will receive much needed funding, but really?  This looks very bad.  Of course, folks are going to start asking what that funding is being used for.  

Wednesday 6 September 2017

China's Move Toward More Enforcement of IP

As China continues to work toward a services/innovation based economy, China has made several efforts to improve intellectual property enforcement.  Professor V.K. Unni of the Indian Institute of Management of Calcutta has authored a short, concise and interesting paper concerning intellectual property courts and enforcement in China, titled, Specialized Intellectual Property Enforcement in China: Implications for Indian Companies” in  Professor V.K. Unni notes that, in addition to the IP specialized courts in Beijing, Shanghai and Guangzhou, China is creating “four new specialized IP Tribunals in Nanjing, Suzhou, Chengdu and Wuhan.”  He states that these tribunals will have jurisdiction that is regional and will extend beyond city limits.  Notably, he speculates that China may create a “national” appeals court similar to U.S. Court of Appeals for the Federal Circuit.  Professor V.K. Unni also states that: “It has been reported that during 2015 in the 63 IP disputes filed with the Beijing IP Court where foreigners were complainants, all the cases were won by foreigners.”  Notably, this progress is followed by the recent decisions concerning New Balance and Michael Jordan.
As reported by Bloomberg, China's Ministry of Commerce responded to Trump's action recently by stating that the U.S. should "cherish" its relationship with China and not harm the "business interests" of both countries' companies.