FTC Settlement on Patent Abuse and Standards (and Open Source Implications)
Andy updegrove posted great news this morning on his standards blog. The US Federal Trade Commission (FTC) announced its resolution that a patent licensing promise made by a patent holder in a standards setting process is binding on a future holder of the patent.
National Semiconductor participated in an IEEE standards effort to develop the 100 Mbps "Fast Ethernet" specification in 1994. Two key (pending) patents were under their control, and they licensed them clearly, cleanly, and cheaply for US$1000 flat one-time fee to all takers. The patents changed hands, first to a group (2002) that wanted to change the licensing deal, then to N-Data (2003), a patent troll that was aggressively pursuing a changed expensive license.
Andy sums it up best:
"[T]he reliance upon promises made with respect to patents is of concern not only in the standard setting context, but with respect to open source software as well. The details of the settlement will provide significant guidance as to how the regulators would view similar conduct in an open source setting. Moreover, in the case of N-Data, the FTC has acted aggressively while acknowledging that the actions at issue might not rise to the level of violating relevant antitrust laws. In doing so, the Commissioners provide strong assurance to participants in standard setting that the FTC recognizes the importance of standards in the modern world. Finally, the details of the actual settlement demonstrate a willingness on the part of the FTC to craft a detailed and savvy set of requirements that addresses the realities of actual licensor-licensee conduct in the marketplace."
This is great news in the context of patent promises made to open source developers from the likes of IBM and Sun Microsystems, and through mechanisms like the Open Invention Network and the Linux Foundation's Patent Commons Project. It removes FUD slung around with respect to patents and intellectual property in both the standards arena and open source project communities. Each is a collaborative effort with significant economic importance and impact. Each will hopefully see the intellectual property landscape a little more clearly now.Full details on Andy's blog.