Intellectual property rights and standard-setting organizations

Standard-setting organizations ("SSOs") regularly encounter situations in which one or more companies claim to own proprietary rights that cover, a proposed industry standard. The industry cannot adopt the standard without the permission of the intellectual property ("IP") owner (or owners). How SSOs respond to those who assert IP rights is critically important. Whether or not private companies retain IP rights in group standards will determine whether a standard is "open" or "closed." It will determine who can sell compliant products, and it may well influence Whether the standard, adopted. in the market is one chosen by a group or offered by a single company. SSO rules governing IP rights will also affect how standards change as technology improves. Given the importance of SSO rules governing IP rights, there has been surprisingly little treatment of SSO intellectual property rules in the legal literature. My aim in. this article is to fill that void To do so, I have studied the IP policies of dozens of SSOs, primarily but not exclusively in the computer networking and telecommunications industries. This is no accident; interface standards are much more prevalent in those industries than in other fields. In the end, I hope to convince the reader. of four things. First, SSO rules governing IP fundamentally change the way in which we must approach the study of IP. It is not enough to consider IP rights in a vacuum; we must consider them as they are actually used in practice. And that means considering how SSO rules affect IP incentives in different industries. Second, there is a remarkable diversity among SSOs in how they treat IP rights. This diversity is largely accidental, and does not reflect conscious competition between different policies. Third, the law must accommodate the modern role of SSOs. Antitrust rules may unduly restrict SSOs even when those organizations are serving procompetitive ends. And enforcement of SSO IP rules presents a number of important but unresolved problems of contract and IP law, issues that will need to be resolved if SSO IP rules are to fulfill their promise of solving patent holdup problems. My fourth conclusion is an optimistic one. SSOs are a species of private ordering that may help solve one of the fundamental dilemmas of IP law: the fact that intellectual property rights seem to promote innovation in some industries but harm innovation in others. SSOs may serve to ameliorate the problems of overlapping IP rights in those industries in which IP is most problematic for innovation, particularly in the semiconductor, software, and telecommunications fields. The best thing the government can do is to enforce. these private ordering agreements and avoid unduly restricting SSOs by overzealous antitrust scrutiny.