Competition, Intellectual Property and Standard Setting

Standard setting, the process of determining a common set of characteristics for a good or service, often promotes competition to the benefit of consumers. 

Standards are particularly important in the Information and Communication Technologies (ICT) sector because they allow products to interoperate and therefore make networks more valuable. However, ICT standards also raise challenges because they often rely on patented technologies. A tension arises because patents protect the owner’s exclusionary right to exploit an innovation, while standards are intended for widespread use. 

To review recent competition issues raised in this sector, the OECD gathered several experts in December 2014 for a hearing discussion which focused on recent cases and related issues.  Other issues under discussion included: Standard-essential patents; Injunctions and Commitments to licence on fair, reasonable, and non-discriminatory (FRAND) terms.

• Standards in the information and communication technology (ICT) sector are beneficial. The existence of standards has encouraged innovation and fast and continuing penetration of ICT devices (like smartphones) delivering important benefits to business, government and consumers.
• Many important ICT standards rely on technologies covered by standard-essential patents (SEPs). This may raise potential for harm to competition stemming from patent holdup or royalty stacking. Standard Setting Organisations (SSOs) aim to mitigate these risks in their intellectual property rights (IPR) policies by requiring members to commit to licensing SEPs on “royalty-free” or “fair, reasonable and non-discriminatory” (FRAND) terms. 
• Commercial disputes can arise between SEP holders and standard implementers regarding the definition of FRAND terms. While there is currently no generally accepted methodology for determining FRAND royalties, certain principles and techniques have emerged.
  
• The availability of patent infringement injunctions in respect of FRAND-encumbered SEPs may significantly affect licensing negotiations with implementers, leading to holdup. There are different views regarding FRAND-related injunctions but, overall, there is a growing reluctance by courts to grant them, and growing opposition by competition authorities.
  
• Co-operation between SSOs, patent offices and competition authorities can be useful. SSOs can play a very important role in this debate and there is support for further work within SSOs to continue efforts to clarify their IPR policies on FRAND.

The key findings of the discusion can be accessed here and a detailed summary here.

Executive summary with key findings | Synthèse avec points clefs

Summary of the discussion | Résumé détaillé de la discussion

OECD Background note | Note de référence de l'OCDE

Private Property in the Public Interest: The interplay of patents and standards 
by Antoine Dore 

Standard, Patents Rights and Competition 
by Giovanni NAPOLITANO  

IP, Standard Setting and Injunctions 
by Maurits DOLMANS

Patent holdup and royalty stacking theory and evidence and  The complements problem within standard setting 
by Anne LAYNE-FARRAR

Presentation by Antoine Dore

Presentation by Maurits DOLMANS

Presentation by Theon VAN DIJK on possible co-operation between patent offices, competition authorities and SSOs

Presentation by Anne LAYNE-FARRAR

EU

Finland

Germany

Italy

Japan

Korea

Russia

US

BIAC