Brussels, 12th December 2005
The European Commission has closed its investigation of the European Telecommunications Standardisation Institute (ETSI) following ETSI’s recent change to its standard-setting rules. This change strengthens the requirement for early disclosure of those intellectual property rights (IPRs) which are essential for the implementation of a standard in order to minimise the risk of so-called ‘patent ambush’ (where a company hides the fact that it owns IPRs essential for a standard). The Commission also takes note of ETSI’s additional initiatives as regards its standard-setting rules, and will follow these with interest.
Competition Commissioner Neelie Kroes welcomed the changes, stating: “Standards are of increasing importance, particularly in hi-tech sectors of the economy. It is crucial that standard-setting bodies establish rules which ensure fair, transparent procedures and early disclosure of relevant intellectual property. We will continue to monitor the operation of standard-setting bodies in this regard.”
The Commission’s investigation of ETSI’s rules had been prompted by concerns that these rules did not sufficiently protect against the risk of ‘patent ambush’ during ETSI standard-setting procedures. An example of a patent ambush is where, during the development of a standard, a company intentionally conceals that it has essential IPR for that standard, and then declares and identifies these IPR after the standard has been agreed. In this way, the company can gain control over the standard and erect a potentially unjustified barrier to entry. Even if the essential IPR claim is in itself valid, the company’s actions mean that the possibility of considering alternative technologies has been artificially removed, and that the competitive process has been distorted.
At its General Assembly of 22 November 2005, ETSI unanimously approved changes to its standard-setting rules which the Commission had put forward, and which minimise the risk of patent ambush occurring.
ETSI’s General Assembly also established a group to examine possible further changes to ETSI’s standard-setting rules, in particular on the issue of ex ante licensing (i.e. where royalties are set or discussed before a standard is agreed). The Commission has indicated in its Guidelines on the application of Article 81 of the EC Treaty to technology transfer agreements (see IP/04/470) that such ex ante licensing can have pro-competitive benefits when subject to appropriate safeguards. The Commission will therefore follow ETSI’s forthcoming discussions with interest.