1. Why Can a Patent and a Shared Standard Collide?
A patent is a legal right given to someone who invents something new. For a limited time (in many countries, up to about 20 years after the application is filed), the owner can stop others from using that invention without permission. In return, the invention has to be described publicly, so other people can learn from it.
A standard is a shared set of rules that lets things made by different people work together, like the shape of a USB plug or the way a Wi-Fi router and a laptop talk. Standards are written so that anyone can build something that follows them.
The collision happens when a standard happens to need a technique that someone has patented. A patent is called a standard-essential patent, or SEP, when anyone following the standard has to use the patented idea. With an ordinary patent, a maker can often switch to a different design. With an essential patent, switching means no longer following the standard. That is good news for the owner, whose idea may end up in billions of devices. It can be bad news for makers, who may have to pay. The same patent can help its owner while making things harder for the makers who need to use it.
2. How Did the GIF Image Format Run Into a Patent?
GIF is a good first example, even though it was never an official standard. CompuServe, an American online service, designed the format in 1987. GIF files are small, and they can hold simple animations. As the web grew, GIF became one of its most common picture formats.
To make files small, GIF uses a data-compression method called LZW. A researcher named Terry Welch at the company Sperry had developed it in 1983 and filed for a patent. The patent office granted it in December 1985, and the rights passed to Unisys, the company Sperry later became part of [1]. So the compression inside GIF had a patent behind it from the start.
The issue became public in late 1994. CompuServe announced a developer agreement, made with Unisys, under which people writing software that creates GIF files would need a license for the LZW technology. CompuServe said that ordinary users viewing or sending GIF images would not be charged, and that it would keep the GIF 89a specification open [2].
Many programmers were unhappy anyway. A group of them began designing a new picture format that nobody could be asked to pay for. That became PNG. Its official specification describes PNG as "a patent-free replacement for GIF," and the 2003 edition was also published as an international standard (ISO/IEC 15948) [3].
GIF shows the problem in a small way. A format that everybody had come to rely on turned out to contain an idea with an owner. If it happens even to a format that nobody voted on, what do official standards bodies do about it?
3. How Do the Groups That Write Standards Deal With Patents?
Different groups made different choices. Here are four.
- ISO, IEC, and ITU (international bodies for general, electrical, and telecommunications standards) share one patent policy. If someone tells them about a patent that a standard would need, the patent holder says which of three things is true: willing to license for free, willing to license on reasonable and non-discriminatory terms, or not willing to license. In the first two cases, the talks about money are left to the owner and the user, outside the organization [4].
- ETSI, the European telecommunications standards body, asks owners of essential patents to commit to license them on "fair, reasonable and non-discriminatory" terms, known as FRAND. ETSI says it takes no position on the actual licensing terms; those are business matters between companies [5].
- W3C, which writes web standards such as the rules for web pages, aims for the opposite: its 2004 patent policy says the goal is that its standards can be used royalty-free, meaning with no per-product fee [6]. The path was not smooth. An earlier 2001 draft allowed some standards to be licensed on paid "reasonable" terms, and many people objected [7].
- IETF, which writes internet standards, focuses on information. Its policy is designed so that everyone working on a proposal learns about any patent limits as early as possible [8].
So the main differences are between "free for all" and "fair fees," and between groups that require a promise and groups that mainly want to be told. Where licensing is part of the policy, the actual price is left to the parties, except where a group asks for "free."
4. How Did a Search for Black Holes End Up in Wi-Fi?
Wi-Fi gives a second case, and a more surprising one. In Australia, the national science agency CSIRO has told the story this way: its radio astronomers were trying to detect radio signals from tiny, exploding black holes. Signals from space arrive blurred, and fixing that blur took careful mathematics [9].
Indoors, radio signals have a similar problem. They bounce off walls and furniture, so several delayed copies of the same signal arrive together and smear the message. A CSIRO patent (US 5,487,069) describes a wireless network that can work in these bouncing-signal conditions [10]. In the 1990s, CSIRO says its wireless technology became part of the Wi-Fi standard, and it later took companies to court over it. In 2012, a settlement brought CSIRO more than $220 million (the news report does not name the currency), and the agency then had license agreements with 23 companies. Australia's science minister said total revenue had reached almost $430 million [11].
One caution: a Wi-Fi standard contains the work of many people and companies. This patent is one of many pieces, and the story above comes mostly from CSIRO's side and from news reports about that dispute, so other companies may tell it differently.
5. What Is Still Unsettled About Paying for Patents in Standards?
One problem is simply finding the owners. When a standard needs patents from many different companies, a maker would have to ask each one for permission. In 1997, a group tried a shortcut for MPEG-2, a standard for compressing video that was used for things like DVDs and digital television. Nine owners (eight companies and a university) put their essential patents into one package, and a shared agent called MPEG LA licensed the package in one step. This shared collection of patents, licensed together in one step, is called a patent pool [12]. The US Department of Justice, which enforces competition law there, reviewed the plan and said in June 1997 that it would not challenge it at that time [12].
Other questions remain open. If a patent is "essential," what is a "reasonable" price? How much of the patent's value comes from the invention itself, and how much simply comes from being inside a standard that everyone uses? Standards bodies mostly leave these questions to owners, users, and courts. Governments also publish guidance, and the answers can differ from country to country.
6. How Can You Check a Patent or a Standard's Patent Rules Yourself?
You can read real patents. Search for "Google Patents US4558302" (the LZW patent behind GIF) or "Google Patents US5487069" (the CSIRO wireless patent). Find the filing date and the expiry status, and see how many years separate them.
You can also look up the patent policy of a standard you use, such as an image format, a charging connector, or Bluetooth. Searching its name plus "patent policy" should show whether its group chose "free for everyone," "fair fees," or "just tell us." Do you think a patent that comes along with a standard deserves the same treatment as one that does not?