The International Telecommunications Union – the communications arm of the United Nations – has convened a round-table meeting to talk about patents, why they aren't working and what might be done to solve this.
The ITU sets international standards, and so has an interest in making them work, though the organisation hasn't been active in patent reform before. The meeting will take place in October, with representatives from the various standards organisations and governments meeting up in Geneva to talk about how FRAND patents are being used to stifle innovation, and what can be done internationally to stop that happening, with all options on the table.
FRAND stands for Fair, Reasonable and Non-Discriminatory, and is the deal by which those contributing patented technology to a standard agree to ensure those standards are widely adopted. But recently, non-participating parties have been joined by participants in deploying "submarine patents", "ambush patents" and other techniques which are against the spirit, if not the law, of patent protection.
Patents exist to ensure inventors reap the benefits of their inventions, so should you think of a better mousetrap then you can patent it and the big manufacturers have to stump up cash to use your design. Mostly it's those big manufacturers who file the patents, but few would deny them a return on the investment made in creating the invention.
When a standard is created, such as GSM or Wi-Fi, the participants authoring it are required to reveal any pertinent patents. Those patents then fall under FRAND arrangements. The problems start when other companies, which are not involved in the standardisation process, reveal that they have patents covering the technology – often sneakily waiting until the standard has been widely adopted in order to maximise their returns.
The owner of such a "submarine" patent can charge what they like, as it sits outside the FRAND deal, and assuming the owner isn't doing anything other than realising the value of its (probably purchased) patents then it has nothing to fear from its licensees.
A good example is IPCom, which was set up to exploit mobile patents originally owned by Bosch. IPCom has been pursuing Nokia through the courts for the last five years, trying to get €12bn out of the Finns as a prelude to fleecing the rest of the handset manufacturers for assigning priorities to callers as mandated by the GSM standard.
But disputes are emerging even where litigants are bound by FRAND agreements, such as Samsung's ongoing spat with Apple. Samsung claims Apple has rejected its Fair and Reasonable overtures and so has turned to the courts, a move which has also attracted EU attention.
FRAND agreements should prevent "ambush" patents, which result from a participant in a standard deliberately concealing its patents until the standard has been approved. The UK Ministry of Defence's licensing arm, Ploughshare Innovations, stands accused of using an ambush patent after it invoiced manufacturers of kit conforming to the new GPS III standard which was jointly developed with the American military.
The patent system is clearly being abused, and that is preventing innovation, but it's important to remember that these disputes only represent a tiny proportion of the patents issued. The vast majority of patents are issued and never exploited, while a significant minority do not succeed in rewarding the inventors as they should. The difficult bit is stopping the abuse without denying the inventors their just reward which is what the ITU is going to discuss come October. ®