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The cold welcome to IEEE's latest patent policy explained

Posted: 31 Mar 2015     Print Version  Bookmark and Share

Keywords:IEEE  patent policy  Wi-Fi  InterDigital 

The Institute of Electrical and Electronics Engineers (IEEE), considered as one of the leading standards-making organisations in the world, exists with the objective being "scientific and educational, directed toward the advancement of the theory and practice of electrical, electronics, communications and computer engineering, as well as computer science, the allied branches of engineering and the related arts and sciences." That said, it is safe to assume that every action taken by IEEE should bring certain advantage to the industry. How then does the latest patent policy fit in the picture?

According to Bill Merritt, the CEO of InterDigital, the IEEE's new patent policy could slash royalty revenues and limit ways to enforce patents.

Last week, our company sent an open letter to the Institute of Electrical and Electronics Engineers (IEEE), the standards-setting organisation that brings us Wi-Fi among other things. In that letter, we advised the group we don't agree with its new patent policy and that in the future our company won't be submitting IEEE's Letters of Assurance, but will provide alternative licensing assurances on a case-by-case basis. I want to explain to you, technology people, like us, why we chose to do that and what it means.

Our company has almost 200 engineers focused on very advanced technology. We pay to conduct research, whiteboard out advanced algorithms, fly people around the world so they can collaborate on, or argue over, mathematical formulae or interference mitigation schemes, for the benefit of everyone in the industry.

We do this work because if you're successful at it, you make money. Not crazy money, there are a lot of bogus figures out there, and nothing that changes the cost category of a device or makes a profitable company unprofitable. In fact, because the research is shared across the industry, the process lowers the costs of devices by allowing the companies to effectively share R&D expenses.

WiFi, or IEEE 802.11 is one of the technologies that has advanced rapidly based on this system. Since 1997, standards research and innovation has driven speeds from 2Mb/s to almost 2Gb/s, a 1,000-fold increase, and massively extended the range of applications. These are standards-based improvements that come built into any Wi-Fi device you purchase.

Patents and royalties: Pre-'policy change'

Here's where patents come in. When an organisation does something to improve the standard, they have to commit to negotiate licenses for any patents they have on that technology on reasonable, non-discriminatory terms. What exactly was reasonable and how royalties were to be calculated was left to individual negotiations, which occurred without fanfare for 20 years. That system worked very well and the performance of Wi-Fi grew by leaps and bounds.

This year, the IEEE voted to change its patent licensing policy. Rather than leave it to the parties to decide how royalties would be calculated, the IEEE endorses a calculation based on the value of the chip inside the device, even if many other aspects of the device benefit from or use the contributed technology.

This move could slash revenues for standards developers. The IEEE also wants to make it pretty near impossible to stop someone from shipping products even if they refuse to pay a licence, and that refusal will become more commonplace if there are limited means to enforce patents.

So in a nutshell, they don't want developers to be paid much, and they've also made it as hard as possible for them to get paid at all. It's all very one-sided, and so was the process that led to the decision.

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