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1 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Standard-Setting, Competition Law and the Ex Ante Debate Presentation to ETSI SOS Interoperability III Meeting Sofia Antipolis, France 21 February 2006 Gil Ohana Cisco Systems Legal Department
2 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public What Well Cover 1. Competition Law and Standard-Setting 2. Ex Ante and Competition Law 3. US Outreach Efforts by Ex Ante Supporters 4. Possible Future Directions for ETSI and Other SDOs
3 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Competition Law and Standard Setting 1
4 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Standard-Setting and Competition Law Typically, private standard-setting associations … include members having horizontal and vertical business relations. [M]embers of such associations often have economic incentives to restrain competition and that the product standards set by such associations have a serious potential for anticompetitive harm. Agreement on a product standard is, after all, implicitly an agreement not to manufacture, distribute, or purchase certain types of products. Accordingly, private standard-setting associations have traditionally been objects of antitrust scrutiny. Allied Tube & Conduit v. Indian Head Corp., US Supreme Court (1988)
5 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Standard Setting and Competition Law SDO IPR policies address two different competition law concerns in standard setting: –Patent-holder gaining market power by failing to disclose patent or refusing to license disclosed patent on FRAND terms Depends on FRAND commitment being meaningful constraint on patent-holders legal right to charge licensees whatever it wants (Broadcom v. Qualcomm) –Group boycott among participants with collective market power who extort cheap licenses from holder of valuable patents Where participants have market power, patent-holder cannot be compelled to license as condition of participating (Federal Trade Commission Sanitary Engineering Decision (1986), EU ETSI Investigation, )
6 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Ex Ante and Competition Law 2
7 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Ex Ante and Competition Law SDO IPR policies shaped by competition law concerns –Prohibitions on disclosure and negotiation of actual license terms within working groups FRAND substitutes for statement of actual terms Disclosure and negotiation happen outside standards process –Bilateral process (contributor and prospective licensee) –Makes real-time comparison of technology substitutes difficult
8 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Ex Ante and Competition Law Disclosure Ex ante proponents encourage SDOs to re-think role competition law concerns play in shaping SDO IPR policies –Wide range of interpretations patent-holders give to FRAND increases uncertainty participants and implementers face in creating standards and commercializing standards-compliant products –Ex ante proponents respond by urging SDOs to adopt rules that at least permit disclosure of detailed license commitments in standards forum –Proponents believe that benefits of disclosure of licensing terms in standard-setting outweighs minimal competition law risks that disclosure may raise
9 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Ex Ante and Competition Law Negotiation Ex ante proponents encourage SDOs to re- think role competition law concerns play in shaping SDO IPR policies –SDOs uniformly prohibit negotiation of licensing terms within standards bodies –Ex ante proponents suggest that SDO prohibition be re-examined in light of guidance from competition agencies that joint negotiation with suppliers does not necessarily raise competition law concerns
10 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public US Outreach Efforts by Ex Ante Supporters 3
11 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public US Outreach Efforts by Ex Ante Supporters Context: State of Play as of Early 2005 –DG Competition, European Commissions competition regulator, addresses ex ante issue in ¶ 225 of Technology Transfer Block Exemption Guidelines –Issue raised in US during 2002 Federal Trade Commission / Department of Justice Intellectual Property Hearings, but discussion not followed by guidance from US agencies
12 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public US Outreach Efforts by Ex Ante Supporters Response by ex ante proponents: –Approach US agencies, encourage them to offer guidance to SDOs and participants regarding agency enforcement intentions relative to ex ante disclosure and negotiation of licensing terms –Guidance needed to help SDOs and participants make realistic assessment of competition law risks associated with adoption of ex ante rules –Meetings with both Federal Trade Commission and Justice Department Antitrust Division scheduled for June 2005 IEEE, leading SDO in computing and networking, participates as observer
13 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public US Outreach Efforts by Ex Ante Supporters Even before meetings, Hewitt Pate, head of Antitrust Division of Justice Department, addresses ex ante issue: Hewitt Pate, Competition and Intellectual Property in the U.S.: Licensing Freedom and the Limits of Antitrust, available at Some standards development organizations have reported to the Department of Justice that they currently avoid any discussion of actual royalty rates, due in part to fear of antitrust liability. It would be a strange result if antitrust policy is being used to prevent price competition. There is a possibility of anticompetitive effects from ex ante license fee negotiations, but it seems only reasonable to balance that concern against the inefficiencies of ex post negotiations and licensing hold up.
14 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public US Outreach Efforts by Ex Ante Supporters Following meetings, FTC Chairman Majoras addresses issue in September, 2005 speech: Deborah Platt Majoras, Recognizing the Pro-Competitive Potential of Royalty Discussions In Standard Setting, available at First, a patent holders voluntary and unilateral disclosure of its maximum royalty rate … is highly unlikely to require antitrust scrutiny. * * * [J]oint ex ante royalty discussions that are reasonably necessary to avoid hold up do not warrant per se condemnation.
15 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Possible Future Direction for ETSI and Other SDOs 4
16 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Future Directions for SDOs Statements from US enforcement officials, like ¶ 225 of European Commissions TTBER Guidelines, should offer SDOs some comfort that: –SDO adoption of rules permitting ex ante disclosure of royalty rates is exceedingly unlikely to raise competition law concerns –SDO adoption of rules permitting joint negotiation of royalty rates does not necessarily violate competition law rules
17 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Future Directions for SDOs Now that agencies on both sides of Atlantic have offered high level guidance, more specific agency examination of ex ante issue awaits SDO adoption of ex ante rules –US agencies have formal process for seeking advice, but invoking process may require SDO to enact ex ante rules before seeking guidance –Discussions over adoption of ex ante rules underway at IEEE and other US SDOs
18 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Future Directions for SDOs SDOs, participants and others involved in ex ante discussion should approach agencies with realistic expectations: –Because agencies will not bless ex ante categorically, ex ante proponents will cling to argument that adoption of ex ante rules will necessarily create competition law concerns –Agency statements can, however, help SDOs realistically assess competition law risks and weigh them against benefits ex ante has for standards-development process –Competition agencies cannot address questions SDOs and participants face regarding impact of ex ante rules on standards process –Just as standard-setting is global, agency guidance needs to come from leading competition law regulators in US, EU, and elsewhere
19 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public Questions
20 © 2005 Cisco Systems, Inc. All rights reserved. Session Number Presentation_ID Cisco Public
SEM21-02 ETSI Seminar 2010 « Legal Considerations » Erik Jansen, LL.M. ETSI Legal Director Copyright © ETSI All rights reserved. ETSI Seminar Sophia.
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ABA China Inside and Out September , Beijing The interface between competition law and intellectual property Nicholas Banasevic, DG Competition,
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Summary of GSC-13 IPR WG Meeting Tom Goode, ATIS IPR WG Chair DOCUMENT #:GSC13-CL-05r1 FOR:Presentation SOURCE:Tom Goode, IPR WG Chair AGENDA ITEM:3.4.
LEGAL CONSIDERATIONS © ETSI All rights reserved ETSI Seminar 2012.
Exclusionary Conduct in the Context of Standard Setting William E. Cohen Deputy General Counsel for Policy Studies U.S. Federal Trade Commission Views.
Chapter 20 Antitrust and Regulation of Competition Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.
IEEE and Integrity in Standards Development Remarks for the 802 Plenary Session Michael A. Lindsay Legal Counsel to IEEE March 6, 2006.
Sangmin Song, Director, Anti-Monopoly Div., KFTC MRFTA & IP Rights 1.
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O rganisation for Economic Cooperation & Development Export Credits at the OECD OECD Secretariat 12 September 2007, Prague.
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1 WIPO-KIPO-KIPA IP Panorama Business School, October 6 to 10, 2008 IP Strategies in Standards Setting Tomoko Miyamoto Senior Counsellor, Patent Law Section.
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Global Standards Collaboration Intellectual Property Rights Working Group Antitrust-Related IP Issues in Standard Setting Melanie Sabo, Assistant Director.
Standards-Setting, IPR Policies, and Open Standards Steve Mutkoski Regional Director, Interoperability & Innovation Microsoft Corporation
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OECD International Futures Programme 1 OECD Futures Project The Commercialisation of Space and the Development of Space Infrastructure: The Role of Public.
Fostering worldwide interoperabilityGeneva, July 2009 General IPR Policy Issues Considerations for Developing or Revising PSO IPR Policies Kent Baker.
Merger Remedies Workshop October 25, 2010 Deborah P. Majoras Chief Legal Officer & Secretary The Procter & Gamble Company.
1 Forms of International Business Trade International licensing of technology and intellectual property (trademarks, patents and copyrights) Foreign direct.
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Access to Commercial Information A Comparative Overview Darian Pavli Open Society Justice Initiative.
1 AIPPI Forum 2011 Hyderabad, India, 15 October AIPPI Forum 2011 Hyderabad, India, 15 October 2011 Standardisation and Software Protection Strategies.
National Judicial Academy National Conference for Newly Elevated High Court Justices January, 2015 Bhopal, India Samuel Weinstein Attorney Legal.
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1 Hot Topics at the Interface of Intellectual Property and Competition Law Possible Antitrust Concerns Arising from Patent Pools ABA International Law.
Vertical agreements and competition law Doc. dr. sc. Jasminka Pecotić Kaufman University of Zagreb-Faculty of Economics and Business, Department of Law.
49-1 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.
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ITU WORKSHOP ON STANDARDS AND INTELLECTUAL PROPERTY RIGHTS (IPR) ISSUES Session 5: Software copyright issues Dirk Weiler, Chairman of ETSI General Assembly.
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Footer text (edit in View : Header and Footer) The interface between Standards and IPRs The ETSI IPR Policy Dr. Michael Fröhlich ETSI Legal Adviser Copyright.
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